H.B. No. 4492
 
 
 
 
AN ACT
  relating to financing certain costs associated with electric
  markets; granting authority to issue bonds; authorizing fees.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 404.0241, Government Code, is amended by
  adding Subsections (b-1), (b-2), (b-3), (b-4), and (b-5) to read as
  follows:
         (b-1)  Notwithstanding any other law, directly or indirectly
  through a separately managed account or other investment vehicle,
  the comptroller shall invest not more than $800 million of the
  economic stabilization fund balance to finance the default balance
  as defined by Section 39.602, Utilities Code, to be repaid by ERCOT
  market participants through default charges established by the
  Public Utility Commission of Texas. The interest rate charged in
  connection with the debt obligations must be calculated by adding
  the rate determined by the Municipal Market Data Municipal Electric
  Index, as published by Refinitiv TM3, based on the credit rating of
  the independent organization, as defined by Section 39.602,
  Utilities Code, plus 2.5 percent. The term of the debt obligations
  may not exceed 30 years.
         (b-2)  A person may not bring a civil action against this
  state, the Texas Treasury Safekeeping Trust Company, or an
  employee, independent contractor, or official of this state,
  including the comptroller, for any claim, including breach of
  fiduciary duty or violation of any constitutional, statutory, or
  regulatory requirement, in connection with any action, inaction,
  decision, divestment, investment, report, or other determination
  made or taken in connection with Subsections (b-1), (b-4), and
  (b-5).
         (b-3)  A person who brings an action described by Subsection
  (b-2) is liable to the defendant for the defendant's costs and
  attorney's fees resulting from the action.
         (b-4)  The comptroller shall manage the investments required
  by Subsection (b-1) as a separate investment portfolio. The
  comptroller shall provide separate accounting and reporting for the
  investments in that portfolio. The comptroller shall credit to that
  portfolio all payments, distributions, interest, and other
  earnings on the investments in that portfolio.
         (b-5)  The comptroller has any power necessary to accomplish
  the purposes of managing and investing the assets of the portfolio
  described by Subsection (b-4). In managing the assets of that
  portfolio, through procedures and subject to restrictions the
  comptroller considers appropriate, the comptroller may acquire,
  sell, transfer, or otherwise assign the investments as appropriate,
  taking into consideration the purposes, terms, distribution
  requirements, and other circumstances of that portfolio then
  prevailing.
         SECTION 2.  Section 39.002, Utilities Code, is amended to
  read as follows:
         Sec. 39.002.  APPLICABILITY. This chapter, other than
  Sections 39.151, 39.1516, 39.155, 39.157(e), 39.159, 39.203,
  39.904, 39.9051, 39.9052, and 39.914(e), and Subchapters M and N,
  does not apply to a municipally owned utility or an electric
  cooperative. Sections 39.157(e), 39.203, and 39.904, however,
  apply only to a municipally owned utility or an electric
  cooperative that is offering customer choice. If there is a
  conflict between the specific provisions of this chapter and any
  other provisions of this title, except for Chapters 40 and 41, the
  provisions of this chapter control.
         SECTION 3.  Section 39.151, Utilities Code, is amended by
  adding Subsection (j-1) to read as follows:
         (j-1)  Notwithstanding Subsection (j) of this section,
  Section 39.653(c), or any other law, the independent system
  operator in the ERCOT power region may not reduce payments to or
  uplift short-paid amounts to a municipally owned utility that
  becomes subject to the jurisdiction of that independent system
  operator on or after May 29, 2021, and before December 30, 2021,
  related to a default on a payment obligation by a market participant
  that occurred before May 29, 2021.
         SECTION 4.  Subchapter D, Chapter 39, Utilities Code, is
  amended by adding Section 39.159 to read as follows:
         Sec. 39.159.  AMOUNTS OWED TO INDEPENDENT ORGANIZATION BY
  MARKET PARTICIPANTS. (a) The commission shall require that all
  market participants fully and promptly pay to the independent
  organization certified under Section 39.151 for the ERCOT power
  region all amounts owed to the independent organization, or provide
  for the full and prompt payment of those amounts owed, which must
  be calculated solely according to the protocols of the independent
  organization in effect during the period of emergency and subject
  to the jurisdiction of the commission, to qualify, or to continue
  to qualify, as a market participant in the ERCOT power region.
         (b)  The independent organization shall report to the
  commission that a market participant is in default for the failure
  to pay, or provide for the full and prompt payment of, all amounts
  owed to the independent organization as calculated in accordance
  with this section. The commission may not allow the defaulting
  market participant to continue to be a market participant in the
  ERCOT power region for any purpose or allow the independent
  organization to accept the defaulting market participant's loads or
  generation for scheduling in the ERCOT power region until all
  amounts owed to the independent organization by the market
  participant as calculated in this section are fully paid.
         (c)  The commission and the independent organization shall
  pursue collection in full of amounts owed to the independent
  organization by any market participant to reduce the costs that
  would otherwise be borne by other market participants or their
  customers.
         SECTION 5.  Chapter 39, Utilities Code, is amended by adding
  Subchapters M and N to read as follows:
  SUBCHAPTER M. WINTER STORM URI DEFAULT BALANCE FINANCING
         Sec. 39.601.  PURPOSE. (a) The purpose of this subchapter is
  to address the Winter Storm Uri default balance, as defined by
  Section 39.602, in a manner that benefits the public interest by:
               (1)  enabling the independent organization to finance
  the payment of the default balance with debt obligations; and
               (2)  authorizing the commission to contract with the
  comptroller under Section 404.0241, Government Code, to finance the
  payment of the default balance with debt obligations.
         (b)  Financing the default balance in the manner provided by
  this subchapter will:
               (1)  allow wholesale market participants that are owed
  money to be paid in a more timely manner;
               (2)  replenish financial revenue auction receipts
  temporarily used by the independent organization to reduce the
  Winter Storm Uri-related amounts short-paid to the wholesale market
  participants; and
               (3)  allow the wholesale market to repay the default
  balance over time.
         (c)  The legislature finds that the financing authorized by
  this subchapter serves the public purpose of preserving the
  integrity of the electricity market in the ERCOT power region.
         (d)  The proceeds of debt obligations issued under this
  subchapter must be used solely for the purpose of financing default
  balances that otherwise would be or have been uplifted to the
  wholesale market.
         (e)  The commission shall ensure that the structuring and
  pricing of debt obligations issued under this subchapter result in
  the lowest financing costs consistent with market conditions and
  the terms of the commission's order. The present value calculation
  must use a discount rate equal to the proposed interest rate on the
  debt obligations.
         Sec. 39.602.  DEFINITIONS. In this subchapter:
               (1)  "Default balance" means an amount of money of not
  more than $800 million that includes only:
                     (A)  amounts owed to the independent organization
  by competitive wholesale market participants from the period of
  emergency that otherwise would be or have been uplifted to other
  wholesale market participants;
                     (B)  financial revenue auction receipts used by
  the independent organization to temporarily reduce amounts
  short-paid to wholesale market participants related to the period
  of emergency; and
                     (C)  reasonable costs incurred by a state agency
  or the independent organization to implement a debt obligation
  order under Sections 39.603 and 39.604, including the cost of
  retiring or refunding existing debt.
               (2)  "Default charges" means charges assessed to
  wholesale market participants to repay amounts financed under this
  subchapter to pay the default balance.
               (3)  "Independent organization" means the independent
  organization certified under Section 39.151 for the ERCOT power
  region.
               (4)  "Period of emergency" means the period beginning
  12:01 a.m., February 12, 2021, and ending 11:59 p.m., February 20,
  2021.
         Sec. 39.603.  DEBT OBLIGATION ORDER. (a) On application by
  the independent organization, the commission by order may authorize
  the independent organization to establish a debt financing
  mechanism to finance the default balance if the commission finds
  that the debt obligations are needed to preserve the integrity of
  the wholesale market and the public interest, after considering:
               (1)  the need to timely replenish financial revenue
  auction receipts used by the independent organization to reduce
  amounts short-paid to wholesale market participants;
               (2)  the interests of wholesale market participants
  that are owed balances; and
               (3)  the potential effects of uplifting those balances
  to the wholesale market without a financing vehicle.
         (b)  The order must state:
               (1)  the default balance to be financed; and
               (2)  the period over which the default charges must be
  assessed to repay the debt obligations, which may not exceed 30
  years.
         (c)  The order must include an adjustment mechanism
  requiring the independent organization to adjust default charges to
  refund, over the remaining period of the default charges, any
  payments made by a market participant toward unpaid obligations
  from the period of emergency that were included in the financed
  default balance.
         (d)  The independent organization shall collect from and
  allocate among wholesale market participants the default charges
  using the same allocated pro rata share methodology under which the
  charges would otherwise be uplifted under the protocols in effect
  on March 1, 2021. The default charges must be assessed on all
  wholesale market participants, including market participants who
  are in default but still participating in the wholesale market and
  who enter the market after a debt obligation order is issued under
  this subchapter, and may be based on periodically updated
  transaction data to prevent market participants from engaging in
  behavior designed to avoid the default charges.
         (e)  Not later than the 30th day after the date the
  independent organization receives a default charge payment from a
  wholesale market participant, the independent organization shall
  remit the payment to the comptroller toward repayment of debt
  obligations in which the comptroller made an investment under
  Section 404.0241(b-1), Government Code, if applicable.
         (f)  Notwithstanding another provision of this subchapter,
  default charges may not be collected from or allocated to a market
  participant that:
               (1)  otherwise would be subject to a default charge
  solely as a result of acting as a central counterparty
  clearinghouse in wholesale market transactions in the ERCOT power
  region; and
               (2)  is regulated as a derivatives clearing
  organization, as defined by Section 1a, Commodity Exchange Act (7
  U.S.C. Section 1a).
         (g)  Not later than the 90th day after the date the
  independent organization files an application for an order under
  Subsection (a), the commission shall issue an order described by
  Subsection (a) or an order denying the application. The order
  becomes effective in accordance with its terms and the order,
  together with the default charges authorized in the order, shall be
  irrevocable and not subject to reduction, impairment, or adjustment
  by further action of the commission after the order takes effect.
  Notwithstanding this requirement, the commission may refinance any
  debt obligations created by an order issued under this subchapter
  if the commission determines that the refinancing is in the public
  interest, considering the interest of both the ERCOT market and the
  state's interest in the economic stabilization fund, and otherwise
  meets the requirements of this subchapter.
         (h)  An order described by Subsection (a) or (g) is not
  subject to rehearing by the commission. The order may be reviewed by
  appeal by a party to the proceeding to a Travis County district
  court that is filed not later than the 15th day after the date the
  order is signed by the commission. The judgment of the district
  court may be reviewed only by a direct appeal to the Supreme Court
  of Texas that is filed not later than the 15th day after the date of
  the entry of judgment. All appeals shall be heard and determined by
  the district court and the Supreme Court of Texas as expeditiously
  as possible with lawful precedence over other matters. Review on
  appeal shall be based solely on the record before the commission and
  briefs to the court and shall be limited to whether the order
  conforms to the constitution and laws of this state and the United
  States and is within the authority of the commission under this
  chapter.
         (i)  A debt obligation issued under this section is a
  nonrecourse debt secured solely by the default charges explicitly
  assessed to repay the obligation. The independent organization's
  obligations authorized under this section do not create personal
  liability for the independent organization.
         Sec. 39.604.  COMMISSION-AUTHORIZED FINANCING. (a) The
  commission may contract with another state agency with expertise in
  public financing to establish a debt financing mechanism for the
  payment of the default balance as defined in this subchapter, under
  an order that meets the requirements of Section 39.603. This
  section does not apply to a default balance securitized under
  Subchapter D, Chapter 41.
         (b)  The contracted state agency and any issuer, along with
  the independent organization, must be a party to the commission's
  proceedings that address the issuance of an order.
         (c)  In addition to the other applicable requirements of this
  subtitle, an order issued under this section must:
               (1)  require the sale, assignment, or other transfer to
  the contracted state agency of default charges created by the order
  and, following that sale, assignment, or transfer, require that
  default charges paid under any order be created, assessed, and
  collected as the property of the contracted state agency, subject
  to subsequent sale, assignment, or transfer by the contracted state
  agency as authorized under this subchapter;
               (2)  authorize:
                     (A)  the issuance of debt obligations by the
  contracted state agency secured by a pledge of default charge
  revenue, and the application of the proceeds of those debt
  obligations, net of issuance costs, to the independent
  organization; or
                     (B)  the acquisition of default charge revenue
  from the independent organization by the contracted state agency,
  financed:
                           (i)  by a loan by an issuer to the contracted
  state agency of the proceeds of debt obligations, net of issuance
  costs; or
                           (ii)  by the acquisition by an issuer from
  the contracted state agency of the default charge revenue and in
  each case the pledge of the revenue to the repayment of the loan or
  other debt obligation, as applicable; and
               (3)  authorize the independent organization to serve as
  collection agent to collect the default charges and transfer the
  collected default charges to the contracted state agency or the
  issuer, as appropriate.
         (d)  After issuance of the order, the contracted state agency
  shall arrange for the issuance of debt obligations, as specified by
  the order, by the contracted state agency or another issuer
  selected by the contracted state agency and approved by the
  commission.
         (e)  Debt obligations issued pursuant to an order issued
  under this section are secured only by the default charge revenue
  and any other funds pledged under the bond documents. No assets of
  the state or the independent organization are subject to claims by
  the holders of the debt obligations. Following assignment of the
  default charge revenue, the independent organization does not have
  any beneficial interest or claim of right in the revenue.
         (f)  Effective on the date the first debt obligations are
  issued under this subchapter, if any provision of this title or
  portion of this title is held to be invalid or is invalidated,
  superseded, replaced, or repealed, or expires for any reason, that
  occurrence does not affect the validity or continuation of this
  subchapter or any other provision of this title that is relevant to
  the issuance, administration, payment, retirement, or refunding of
  debt obligations authorized under this subchapter or to any actions
  of the independent organization, its successors, an assignee, a
  collection agent, the contracted state agency, or an issuer and
  those provisions shall remain in full force and effect.
         Sec. 39.605.  DEFAULT CHARGES NONBYPASSABLE. An order
  issued under Section 39.603 or 39.604 must:
               (1)  include terms ensuring that the imposition and
  collection of default charges authorized in the order shall be
  nonbypassable by wholesale market participants; and
               (2)  authorize the independent organization to
  establish appropriate fees and other methods for pursuing amounts
  owed from entities exiting the wholesale market.
         Sec. 39.606.  TRUE-UP MECHANISM. An order issued under
  Section 39.603 or 39.604 must include a mechanism requiring that
  default charges be reviewed and adjusted at least annually, not
  later than the 45th day after the anniversary date of the issuance
  of the order, to:
               (1)  correct over-collections or under-collections
  over the preceding 12 months; and
               (2)  ensure the expected recovery of amounts sufficient
  to timely provide all payments of debt service.
         Sec. 39.607.  TAX EXEMPTION. The transfer and receipt of
  default charges are exempt from state and local sales and use,
  franchise, and gross receipts taxes.
         Sec. 39.608.  PROPERTY RIGHTS. (a)  The rights and interests
  of the independent organization or its successor under a debt
  obligation order issued under this subchapter, including the right
  to impose, collect, and receive default charges, shall be only
  contract rights until they are first transferred to an assignee or
  pledged in connection with an investment agreement entered into
  under Section 404.0241, Government Code, or the issuance of debt
  obligations, at which time they will become default property, as
  described by Subsection (b).
         (b)  Default property shall constitute a present property
  right for purposes of contracts concerning the sale or pledge of
  property, even though the imposition and collection of default
  charges depends on further acts of the independent organization or
  others that have not yet occurred. A debt obligation order issued
  under this subchapter shall remain in effect and the property shall
  continue to exist for the same period as the pledge of the state
  described by Section 39.609.
         (c)  All revenues and collections resulting from default
  charges shall constitute proceeds only of the default property
  arising from the debt obligation order.
         Sec. 39.609.  PLEDGE OF STATE. Debt obligations issued
  pursuant to this subchapter, including any bonds, are not a debt or
  obligation of the state and are not a charge on its full faith and
  credit or taxing power. The state pledges, however, for the benefit
  and protection of financing parties and the independent
  organization that it will not take or permit any action that would
  impair the value of default property, or reduce, alter, or impair
  the default charges to be imposed, collected, and remitted to
  financing parties, until the principal, interest and premium, and
  any other charges incurred and contracts to be performed in
  connection with the related debt obligations have been paid and
  performed in full. Any party issuing a debt obligation under this
  subchapter is authorized to include this pledge in any
  documentation relating to the obligation.
  SUBCHAPTER N. WINTER STORM URI UPLIFT FINANCING
         Sec. 39.651.  PURPOSE; USE OF PROCEEDS. (a) The purpose of
  this subchapter is to address the Winter Storm Uri uplift balance
  by:
               (1)  enabling the independent organization certified
  under Section 39.151 for the ERCOT power region to finance the
  uplift balance on behalf of wholesale market participants through
  debt obligations; and
               (2)  authorizing the commission to contract with
  another state agency to finance the payment of the uplift balance
  with debt obligations or use any another financial mechanism
  consistent with this subchapter for that purpose.
         (b)  Financing the uplift balance in the manner provided by
  this subchapter will allow wholesale market participants who were
  assessed extraordinary uplift charges due to consumption during the
  period of emergency to pay those charges over a longer period of
  time, alleviating liquidity issues and reducing the risk of
  additional defaults in the wholesale market.
         (c)  The legislature finds that authorizing financing under
  this subchapter serves the public purpose of allowing the
  commission to stabilize the wholesale electricity market in the
  ERCOT power region.
         (d)  The proceeds of debt obligations issued under this
  subchapter must be used solely for the purpose of financing
  reliability deployment price adder charges and ancillary service
  costs that exceeded the commission's system-wide offer cap and were
  uplifted to load-serving entities based on consumption during the
  period of emergency. A load-serving entity that receives proceeds
  from the debt obligations may use the proceeds solely for the
  purposes of fulfilling payment obligations directly related to such
  costs and refunding such costs to retail customers who have paid or
  otherwise would be obligated to pay such costs.
         (e)  The commission shall ensure that the structuring and
  pricing of the debt obligations results in the lowest uplift
  charges consistent with market conditions and the terms of the
  order issued under this subchapter. The present value calculation
  must use a discount rate equal to the proposed interest rate on the
  debt obligations.
         Sec. 39.652.  DEFINITIONS. In this subchapter:
               (1)  "Independent organization" means the independent
  organization certified under Section 39.151 for the ERCOT power
  region.
               (2)  "Load-serving entity" means a municipally owned
  utility, an electric cooperative, or a retail electric provider.
               (3)  "Period of emergency" means the period beginning
  12:01 a.m., February 12, 2021, and ending 11:59 p.m., February 20,
  2021.
               (4)  "Uplift balance" means an amount of money of not
  more than $2.1 billion that was uplifted to load-serving entities
  on a load ratio share basis due to energy consumption during the
  period of emergency for reliability deployment price adder charges
  and ancillary services costs in excess of the commission's
  system-wide offer cap, excluding amounts securitized under
  Subchapter D, Chapter 41. The term does not include amounts that
  were part of the prevailing settlement point price during the
  period of emergency.
               (5)  "Uplift charges" means charges assessed to
  load-serving entities to repay amounts financed under this
  subchapter to pay the uplift balance and reasonable costs incurred
  by a state agency or the independent organization to implement a
  debt obligation order under Section 39.653, 39.654, or 39.655,
  including the cost of retiring or refunding existing debt.
         Sec. 39.653.  DEBT OBLIGATION ORDER. (a) The independent
  organization shall file an application with the commission to
  establish a debt financing mechanism for the payment of the uplift
  balance if the commission finds that such financing will support
  the financial integrity of the wholesale market and is necessary to
  protect the public interest, considering the impacts on both
  wholesale market participants and retail customers.
         (b)  An order issued under this section must:
               (1)  state the uplift balance to be financed;
               (2)  state the period over which the uplift charges
  must be assessed to repay the debt obligations, which may not exceed
  30 years; and
               (3)  provide the process for remitting the proceeds of
  the financing to load-serving entities who were exposed to the
  costs included in the uplift balance, including a requirement for
  the load-serving entities to submit documentation of their
  exposure.
         (c)  The independent organization shall assess uplift
  charges to all load-serving entities on a load ratio share basis,
  which may be translated to a kWh charge, including load serving
  entities who enter the market after an order has been issued under
  this subchapter, but excluding the load of entities that opt out
  under Subsection (d).
         (d)  The commission shall develop a one-time process that
  allows municipally owned utilities, electric cooperatives, river
  authorities, a retail electric provider that has the same corporate
  parent as each of the provider's customers, a retail electric
  provider that is an affiliate of each of the provider's customers,
  and transmission-voltage customers served by a retail electric
  provider to opt out of the uplift charges by paying in full all
  invoices owed for usage during the period of emergency.
  Load-serving entities and transmission-voltage customers that opt
  out under this subsection shall not receive any proceeds from the
  uplift financing.
         (e)  An order issued under this section must include a
  requirement that any load-serving entity that receives proceeds
  from the financing that exceed the entity's actual exposure to
  uplift charges from consumption during the period of emergency
  notify the independent organization and remit any excess receipts.
  Any payments received under this subsection must be credited
  against the uplift balance to reduce the remaining uplift charges.
         (f)  Not later than the 90th day after the date the
  independent organization files an application for an order under
  Subsection (a), the commission shall issue an order described by
  Subsection (a) or an order denying the application. The order
  becomes effective in accordance with its terms and the order,
  together with the uplift charges authorized in the order, shall be
  irrevocable and not subject to reduction, impairment, or adjustment
  by further action of the commission after it takes effect.
  Notwithstanding this requirement, the commission may refinance any
  debt obligations created by an order under this subchapter if the
  commission determines that the refinancing is in the public
  interest and otherwise meets the requirements of this subchapter.
         (g)  An order issued under this section is not subject to
  rehearing by the commission. An order may be reviewed by appeal by a
  party to the proceeding to a Travis County district court filed not
  later than the 15th day after the date the order is signed by the
  commission. The judgment of the district court may be reviewed only
  by direct appeal to the Supreme Court of Texas filed not later than
  the 15th day after the date of the entry of judgment. All appeals
  shall be heard and determined by the district court and the Supreme
  Court of Texas as expeditiously as possible with lawful precedence
  over other matters. Review on appeal shall be based solely on the
  record before the commission and briefs to the court and shall be
  limited to whether the order conforms to the constitution and laws
  of this state and the United States and is within the authority of
  the commission under this chapter.
         (h)  A debt obligation issued under this section is a
  nonrecourse debt secured solely by the uplift charges explicitly
  assessed to repay the obligation. The independent organization's
  obligations authorized under this section do not create personal
  liability for the independent organization.
         (i)  This section does not apply to any balance securitized
  under Subchapter D, Chapter 41.
         Sec. 39.654.  COMMISSION-AUTHORIZED FINANCING. (a) The
  commission may contract with another state agency with expertise in
  public financing to establish a debt financing mechanism to finance
  the payment of the uplift balance under an order that meets the
  requirements of Section 39.653.
         (b)  The contracted state agency and any issuer must be a
  party to the commission's proceedings that address the issuance of
  an order along with the independent organization.
         (c)  In addition to the other applicable requirements of this
  subtitle, an order issued under this section must:
               (1)  require the sale, assignment, or other transfer to
  the contracted state agency of uplift charges created by the order
  and, following that sale, assignment, or transfer, require that
  uplift charges paid under any order be created, assessed, and
  collected as the property of the contracted state agency, subject
  to subsequent sale, assignment, or transfer by the contracted state
  agency as authorized under this subchapter;
               (2)  authorize:
                     (A)  the issuance of debt obligations by the
  contracted state agency secured by a pledge of uplift charge
  revenue, and the application of the proceeds of those debt
  obligations, net of issuance costs, to the independent
  organization; or
                     (B)  the acquisition of uplift charge revenue from
  the independent organization by the contracted state agency,
  financed:
                           (i)  by a loan by an issuer to the contracted
  state agency of the proceeds of debt obligations, net of issuance
  costs; or
                           (ii)  by the acquisition by an issuer from
  the contracted state agency of the uplift charge revenue and in each
  case the pledge of the revenue to the repayment of the loan or debt
  obligations, as applicable; and
               (3)  authorize the independent organization to serve as
  collection agent to collect the uplift charges and transfer the
  collected uplift charges to the contracted state agency or the
  issuer, as appropriate.
         (d)  After issuance of the order, the contracted state agency
  shall arrange for the issuance of debt obligations, as specified by
  the order, by the contracted state agency or another issuer
  selected by the contracted state agency and approved by the
  commission.
         (e)  Debt obligations issued pursuant to an order issued
  under this section are secured only by the uplift charge revenue and
  any other funds pledged under the bond documents. No assets of the
  state or the independent organization are subject to claims by the
  holders of the debt obligations. Following assignment of the
  uplift charge revenue, the independent organization does not have
  any beneficial interest or claim of right in the revenue.
         Sec. 39.655.  OTHER FINANCIAL MECHANISM. The commission may
  use a financial mechanism other than the mechanisms described by
  Sections 39.653 and 39.654 that meets the requirements of this
  subchapter to accomplish the purposes of this subchapter.
         Sec. 39.656.  UPLIFT CHARGES NONBYPASSABLE. An order issued
  under Section 39.653, 39.654, or 39.655 must:
               (1)  include terms ensuring that the imposition and
  collection of uplift charges authorized in the order shall be
  nonbypassable, except for entities excluded under Section
  39.653(d); and
               (2)  authorize the independent organization to
  establish appropriate fees and other methods for pursuing amounts
  owed from entities exiting the wholesale market.
         Sec. 39.657.  TRUE-UP. An order shall include a mechanism
  requiring that uplift charges be reviewed and adjusted at least
  annually, not later than the 45th day after the anniversary date of
  the issuance of the debt obligations, to:
               (1)  correct over-collections or under-collections
  over the preceding 12 months; and
               (2)  ensure the expected recovery of amounts sufficient
  to timely provide all payments of debt service and other required
  amounts and charges in connection with the debt obligations.
         Sec. 39.658.  TAX EXEMPTION. Transactions involving the
  transfer and ownership of uplift property and the receipt of uplift
  charges are exempt from state and local income, sales, franchise,
  gross receipts, and other taxes or similar charges.
         Sec. 39.659.  SEVERABILITY. Effective on the date the first
  debt obligations are issued under this subchapter, if any provision
  in this title or portion of this title is held to be invalid or is
  invalidated, superseded, replaced, repealed, or expires for any
  reason, that occurrence does not affect the validity or
  continuation of this subchapter or any other provision of this
  title that is relevant to the issuance, administration, payment,
  retirement, or refunding of debt obligations or to any actions of
  the independent organization, its successors, an assignee, a
  collection agent, or a financing party, which shall remain in full
  force and effect.
         Sec. 39.660.  CUSTOMER CHARGES. All load-serving entities
  that receive offsets to specific uplift charges from the
  independent organization under this subchapter must adjust
  customer invoices to reflect the offsets for any charges that were
  or would otherwise be passed through to customers under the terms of
  service with the load-serving entity, including by providing a
  refund for any offset charges that were previously paid. An
  electric cooperative, including an electric cooperative that
  elects to receive offsets, shall not otherwise become subject to
  rate regulation by the commission and receipt of offsets does not
  affect the applicability of Chapter 41 to an electric cooperative.
         Sec. 39.661.  ENFORCEMENT. The commission may use any
  enforcement mechanism established by Chapter 15 or this chapter,
  including revocation of certification by the commission, against
  any entity that fails to remit excess receipts from the uplift
  balance financing under Section 39.653(e) or otherwise
  misappropriates or misuses amounts received from the uplift balance
  financing this subchapter.
         Sec. 39.662.  PROPERTY RIGHTS. (a) The rights and interests
  of the independent organization or its successor under a debt
  obligation order issued under this subchapter, including the right
  to impose, collect, and receive uplift charges authorized in a debt
  obligation order under this subchapter, shall be only contract
  rights until they are first transferred to an assignee or pledged in
  connection with the issuance of a financing agreement entered into
  under Section 39.654(a) or the issuance of debt obligations, at
  which time they will become uplift property, as described by
  Subsection (b).
         (b)  Uplift property shall constitute a present property
  right for purposes of contracts concerning the sale or pledge of
  property, even though the imposition and collection of uplift
  charges depends on further acts of the independent organization or
  others that have not yet occurred. A debt obligation order issued
  under this subchapter shall remain in effect and the property shall
  continue to exist for the same period as the pledge of the state
  described by Section 39.663.
         (c)  All revenues and collections resulting from uplift
  charges shall constitute proceeds only of the uplift property
  arising from the debt obligation order.
         Sec. 39.663.  PLEDGE OF STATE. Debt obligations issued
  pursuant to this subchapter, including any bonds, are not a debt or
  obligation of the state and are not a charge on its full faith and
  credit or taxing power. The state pledges, however, for the benefit
  and protection of financing parties and the independent
  organization that it will not take or permit any action that would
  impair the value of uplift property, or reduce, alter, or impair the
  uplift charges to be imposed, collected, and remitted to financing
  parties, until the principal, interest and premium, and any other
  charges incurred and contracts to be performed in connection with
  the related debt obligations have been paid and performed in full.
  Any party issuing a debt obligation under this subchapter is
  authorized to include this pledge in any documentation relating to
  the obligation.
         Sec. 39.664.  LEGAL ACTIONS INVOLVING PRICING OR UPLIFT
  ACTIONS. A load-serving entity that receives proceeds from the
  financing under this subchapter shall return an amount of the
  proceeds equal to any amount of money received by the entity due to
  litigation seeking judicial review of pricing or uplift actions
  taken by the commission or the independent organization in
  connection with the period of emergency.
         SECTION 6.  The independent organization to which Section
  39.653(a), Utilities Code, applies shall file the application
  required by that section not later than the 30th day after the
  effective date of this Act.
         SECTION 7.  Sections 404.0241(b-2) and (b-3), Government
  Code, as added by this Act, apply only to a cause of action that
  accrues on or after the effective date of this Act.
         SECTION 8.  This Act takes effect immediately if it receives
  a vote of two-thirds of all the members elected to each house, as
  provided by Section 39, Article III, Texas Constitution. If this
  Act does not receive the vote necessary for immediate effect, this
  Act takes effect September 1, 2021.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 4492 was passed by the House on May 6,
  2021, by the following vote:  Yeas 129, Nays 15, 1 present, not
  voting; that the House refused to concur in Senate amendments to
  H.B. No. 4492 on May 28, 2021, and requested the appointment of a
  conference committee to consider the differences between the two
  houses; and that the House adopted the conference committee report
  on H.B. No. 4492 on May 30, 2021, by the following vote:  Yeas 116,
  Nays 18, 2 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 4492 was passed by the Senate, with
  amendments, on May 26, 2021, by the following vote:  Yeas 31, Nays
  0; at the request of the House, the Senate appointed a conference
  committee to consider the differences between the two houses; and
  that the Senate adopted the conference committee report on H.B. No.
  4492 on May 30, 2021, by the following vote:  Yeas 25, Nays 6.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor