(220 ILCS 5/18‑101) Sec. 18‑101. Short title and applicability. This Article may be cited as the Electric Utility Transitional Funding Law of 1997 and shall apply to electric utilities as defined in this Article. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑102) Sec. 18‑102. Definitions. For the purposes of this Article the following terms shall be defined as set forth in this Section. Terms defined in Article XVI shall have the same meanings in this Article. "Assignee" means any party, other than an electric utility or grantee, to which an interest in intangible transition property shall have been assigned, sold or transferred. The term "assignee" includes any corporation, public authority, trust, financing vehicle, partnership, limited liability company or other entity. "Grantee" means any party, other than an electric utility or an assignee which acquires its interest from an electric utility, to whom or for whose benefit the Commission shall create, establish and grant rights in, to and under intangible transition property. The term "grantee" includes any corporation, public authority, trust, financing vehicle, partnership, limited liability company or other entity. "Grantee instruments" means (a) any instruments, documents, notes, debentures, bonds or other evidences of indebtedness evidencing any contractual right to receive the payment of money from a grantee or (b) any certificates of participation, certificates of beneficial interest or other instruments evidencing a beneficial or ownership interest in a grantee or in intangible transition property of such grantee which are (i) issued (A) by or on behalf of a grantee pursuant to a transitional funding order and (B) pursuant to an executed indenture, pooling agreement, security agreement or other similar agreement of such grantee creating a security interest, ownership interest or other beneficial interest in intangible transition property and (ii) payable solely from proceeds of intangible transition property, including amounts received with respect to the related instrument funding charges. "Holder" means any holder of transitional funding instruments, including a trustee, collateral agent, nominee or other such party acting for the benefit of such a holder. "Instrument funding charge" means a non‑bypassable charge expressed in cents per kilowatt‑hour authorized in a transitional funding order to be applied and invoiced to each retail customer, class of retail customers of an electric utility or other person or group of persons obligated to pay any base rates, transition charges or other rates for tariffed services from which such instrument funding charge has been deducted and stated separately pursuant to subsection (j) of Section 18‑104. "Intangible transition property" means the right, title, and interest of an electric utility or grantee or assignee arising pursuant to a transitional funding order to impose and receive instrument funding charges, and all related revenues, collections, claims, payments, money, or proceeds thereof, including all right, title, and interest of an electric utility, grantee or assignee in, to, under and pursuant to such transitional funding order, whether or not such intangible transition property described above is characterized on the books of the electric utility as a regulatory asset or as a cost incurred by the electric utility or otherwise. Intangible transition property shall arise and exist only when, as, and to the extent that instrument funding charges are authorized in a transitional funding order that has become effective in accordance with this Article and shall thereafter continuously exist to the extent provided in the order. "Issuer" means any party, other than an electric utility, which has issued transitional funding instruments. The term "issuer" includes any corporation, public authority, trust, financing vehicle, partnership, limited liability company or other entity. "Transitional funding instruments" means any instruments, pass‑through certificates, notes, debentures, certificates of participation, bonds, certificates of beneficial interest or other evidences of indebtedness or instruments evidencing a beneficial interest (i) which are issued by or on behalf of an electric utility or issuer pursuant to a transitional funding order, (ii) which are issued pursuant to an executed indenture, pooling agreement, security agreement or other similar agreement of an electric utility or issuer creating a security interest, ownership interest or other beneficial interest in intangible transition property or grantee instruments, if any, and (iii) the proceeds of which are to be used for the purposes set forth in subparagraph (1) of subsection (d) of Section 18‑103 of this Article. "Transitional funding order" means an order of the Commission issued in accordance with the provisions of this Article creating and establishing intangible transition property and the rights of any party therein and approving the sale, pledge, assignment or other transfer of intangible transition property and grantee instruments, if any, the issuance of transitional funding instruments and grantee instruments, if any, and the imposition and collection of instrument funding charges. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑103) Sec. 18‑103. Transitional funding orders. (a) Notwithstanding any other provision of this Act or other law, the Commission is hereby authorized to issue transitional funding orders in accordance with the provisions of this Section, in order to facilitate (i) the issuance of transitional funding instruments by or on behalf of electric utilities or issuers and (ii) the issuance of grantee instruments by or on behalf of grantees. (b) A transitional funding order may be issued by the Commission only upon the application of an electric utility and shall become effective in accordance with its terms only after such electric utility files with the Commission its written consent to all terms and conditions of such order. After the issuance of a transitional funding order, the electric utility or grantee shall retain sole discretion regarding whether to assign, sell, pledge or otherwise transfer intangible transition property and grantee instruments, if any, or to cause transitional funding instruments and grantee instruments, if any, to be issued, including the right to defer or postpone such assignment, sale, transfer, pledge or issuance or to change the terms thereof as allowed by such order. (c) After the effective date of this amendatory Act of 1997, an electric utility may file any number of applications for transitional funding orders. Each application for a transitional funding order shall contain detailed information regarding the electric utility's proposal for (i) the assignment, sale, pledge or other transfer of, or the establishment, creation and granting of rights in and to, intangible transition property and grantee instruments, if any, (ii) the issuance of transitional funding instruments and grantee instruments, if any, (iii) the total dollar amount of intangible transition property to be created and the amount to be sold, pledged, assigned or otherwise transferred or granted hereunder (which amount may be in excess of the principal and interest payable on the transitional funding instruments and grantee instruments, if any, in order to provide for servicing costs and the funding or maintenance of debt service and other reserves, costs and fees as security to the holders of the transitional funding instruments and grantee instruments, if any), (iv) the amount of transitional funding instruments and grantee instruments, if any, to be issued, (v) the amount, expressed in cents per kilowatt‑hour, of instrument funding charges to be collected from retail customers or other persons, (vi) the time to maturity for the transitional funding instruments and grantee instruments, if any, and (vii) the electric utility's planned use of the proceeds from the issuance of transitional funding instruments including the amounts allocated for the respective uses specified in subparagraph (1) of subsection (d) of Section 18‑103 of this Article. (d) The Commission shall, after proper notice, hold a hearing for the sole purpose of determining whether the application and requested transitional funding order are in compliance with this Article and shall complete its review of the application and issue its final transitional funding order by no later than 90 days after the filing of such application by the electric utility; provided, that, in contested cases where the public interest is in issue pursuant to subparagraph (1)(B) of this subsection (d) or pursuant to subsection (m) of Section 18‑104, the Commission may complete its review and issue its final transitional funding order by no later than 120 days after the filing of such application. The order shall create and establish the proposed intangible transition property in the amount requested by the applicant and approve the proposed sale, pledge, assignment or other transfer of, or the establishment, creation and granting of rights in and to, intangible transition property and grantee instruments, if any, the proposed issuance of transitional funding instruments and grantee instruments, if any, and the proposed imposition and collection of the corresponding instrument funding charges, if the Commission finds that each of the following conditions are met: (1) the electric utility will use the proceeds of
the sale and issuance of the transitional funding instruments for one or more of the following purposes:
(A) to refinance debt or equity, or both, in a
manner which the electric utility reasonably demonstrates will result in an overall reduction in its cost of capital, taking into account the costs of financing; provided, however, that any proceeds transferred to a parent company through a common stock repurchase transaction shall be used to retire publicly traded common stock of the parent company or to pay commercially reasonable transaction costs associated with such retirement;
(B) if the Commission finds that the sale or
issuance of transitional funding instruments for the following purposes is in the public interest, then the following uses of proceeds: (i) to repay or retire fuel contracts or obligations related to nuclear spent fuel previously incurred by the electric utility in providing electric power or energy services prior to the effective date of this amendatory Act of 1997 or (ii) to pay any expenditures required to be undertaken by such electric utility by the provisions of Section 16‑128 of this Act including labor severance costs and employee retraining costs;
(C) to fund debt service and other reserves,
commercially reasonable costs and fees necessary or desirable in connection with the marketing of the transitional funding instruments and grantee instruments, if any;
(D) to pay for commercially reasonable costs
associated with the issuance and collateralization of transitional funding instruments and grantee instruments, if any; and
(E) to pay for the commercially reasonable costs
associated with the issuance of such transitional funding instruments, including the costs incurred since the effective date of this amendatory Act of 1997, or to be incurred, in connection with transactions to recapitalize, refinance or retire stock and/or debt, any associated taxes, and the costs incurred or to be incurred to obtain, collateralize, issue, service and administer transitional funding instruments and grantee instruments, including interest and other related fees, costs and charges;
provided, (i) that the transitional funding order shall
require the electric utility to use (1) at least 80% of such proceeds for the purposes specified in subparagraphs (A) and (B) above and (2) no more than 20% of the maximum amount of such proceeds permitted under subparagraph (6)(B) of this subsection for purposes other than those specified in subparagraph (A) above; (ii) that the electric utility's use of such proceeds for the purposes specified in subparagraph (A) above shall not, as of the date of application of such proceeds, result in the common equity component of its capital structure, exclusive of the portion of its capital structure that consists of obligations representing transitional funding instruments or grantee instruments, being reduced below the lesser of (1) 40% and (2) the common equity percentage as of December 31, 1996 adjusted to reflect any write‑off of assets or common equity implemented or required to be implemented as a result of this amendatory Act of 1997; and (iii) in no event shall the electric utility use the proceeds of the sale of grantee instruments or transitional funding instruments to repay or retire obligations incurred by any affiliate of the electric utility (other than in connection with any refinancing of grantee instruments or transitional funding instruments issued by such affiliate), without the consent of the Commission;
(2) the expected maturity date for the grantee
instruments or the transitional funding instruments, and the final date on which the electric utility, grantee or assignee shall be entitled to charge and collect instrument funding charges, shall each be set to occur no later than December 31, 2008, subject to the provisions of subsections (l) and (m) of Section 18‑104;
(3) the instrument funding charges authorized in
such order will be deducted and stated separately from base rates and transition charges, and, where applicable, other rates for tariffed services, all as provided in subsection (j) of Section 18‑104 and in a manner conforming to the allocation of the instrument funding charges implemented pursuant to subparagraph (4) of this subsection;
(4) the instrument funding charges authorized in
such order shall have been allocated among classes of retail customers in accordance with percentage ratios determined by dividing the base rate revenue from each class by the electric utility's total base rate revenue for the 1996 calendar year;
(5) the issuance of the transitional funding
instruments will not cause the rates for tariffed services to increase over the rates then in existence as adjusted for the rate decreases provided in subsection (b) of Section 16‑111; and
(6) the aggregate principal amount of grantee
instruments or, if such transitional funding order does not provide for the issuance of grantee instruments, transitional funding instruments, to be issued pursuant to such order, together with the aggregate amount of such instruments issued under any prior orders requested by such electric utility, shall not exceed:
(A) during the twelve‑month period commencing
August 1, 1998, an amount equal to 25% of the applicable electric utility's total capitalization, including both debt and equity, as of December 31, 1996, multiplied by the ratio of the electric utility's revenues from Illinois electric utility retail customers in the 1996 calendar year to its total electric retail revenues for such 1996 year; and
(B) thereafter, an amount equal to 50% of the
applicable electric utility's total capitalization, including both debt and equity, as of December 31, 1996 multiplied by the ratio of the electric utility's revenues from Illinois electric utility retail customers in the 1996 calendar year to its total electric retail revenues for such 1996 year.
(Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑104) Sec. 18‑104. Terms and provisions of transitional funding orders. (a) Each transitional funding order shall create and establish intangible transition property in an amount not to exceed the sum of (i) the rate base established by the Commission in the electric utility's last rate case prior to the effective date of this amendatory Act of 1997, plus (ii) any expenditures required to be undertaken by such electric utility by the provisions of Section 16‑128 of this Act, including labor severance costs and employee retraining costs, plus (iii) amounts necessary to fund debt service and other reserves, commercially reasonable costs and fees necessary in connection with the marketing of the transitional funding instruments and grantee instruments, if any, plus (iv) commercially reasonable costs incurred from and after the effective date of this amendatory Act of 1997 or to be incurred which are associated with the issuance and collateralization of transitional funding instruments and grantee instruments, if any, plus (v) commercially reasonable costs incurred from and after the effective date of this amendatory Act of 1997 or to be incurred which are associated with issuance of such transitional funding instruments, including the costs incurred from and after the effective date of this amendatory Act of 1997, or to be incurred, in connection with transactions to recapitalize, refinance or retire stock and/or debt, any associated taxes and the costs incurred to obtain, collateralize, issue, service and/or administer transitional funding instruments and grantee instruments, if any, including interest and other related fees, costs and charges (all of the foregoing costs described in clauses (i) through (v) above to include any taxes, where applicable, to the extent the costs thereof would otherwise have been recoverable by an electric utility through rates for tariffed services under the Public Utilities Act as in effect prior to this amendatory Act of 1997), minus (vi) the amount of any intangible transition property previously created and established at the request of and for the benefit of such electric utility in a prior transitional funding order. The transitional funding order shall authorize (A) the sale, pledge, assignment or other transfer of, or the establishment, creation and granting of an electric utility's, assignee's or grantee's rights in and to, a specific dollar amount of intangible transition property (which amount may be in excess of the principal and interest payable on the transitional funding instruments and grantee instruments, if any, in order to provide for servicing costs and the funding or maintenance of debt service and other reserves as security to the holders of the transitional funding instruments), (B) the issuance of a specific dollar amount of grantee instruments or, if the transitional funding order does not provide for the issuance of grantee instruments, a specific dollar amount of transitional funding instruments, by or on behalf of an electric utility, assignee, issuer or grantee, as the case may be, and (C) the imposition and collection of a specific amount of instrument funding charges projected to be sufficient to pay when due the principal of and interest on the corresponding grantee instruments or, if the transitional funding order does not provide for the issuance of grantee instruments, the corresponding transitional funding instruments, in each case, together with premium, servicing fees and other fees, costs and charges related thereto, and to maintain any required reserves. Except as otherwise specifically set forth in the transitional funding order, the transitional funding instruments issued pursuant to such order shall be non‑recourse to the credit or to any assets of the electric utility other than any assets comprising intangible transition property or grantee instruments, as applicable. The obligation of retail customers and other persons to pay instrument funding charges shall be contingent upon the receipt by such retail customers and other persons of electric power and energy, the kilowatt hours of which are included in the calculation of the dollar amount of such instrument funding charges, but the transitional funding order shall specifically provide that such instrument funding charges will not be subject to any defense, counterclaim or right of set off arising as a result of failure by the pertinent electric utility, upon whose application the intangible transition property was created, to perform or provide past, present or future services. For purposes of the foregoing sentence, an electric utility or alternative retail electric supplier obligated to pay transition charges under subsection (b) of Section 16‑118 on behalf of certain retail customers shall be deemed to have received the electric power and energy provided to such retail customers. The transitional funding order shall also set forth the time to maturity for the grantee instruments or, if the transitional funding order does not provide for the issuance of grantee instruments, the time to maturity for the transitional funding instruments issued thereunder. Concurrently with the sale, pledge, assignment or other transfer of, or the establishment, creation and granting of an electric utility's, assignee's or grantee's rights in and to, intangible transition property and grantee instruments, if any, and the issuance of transitional funding instruments, an electric utility, grantee, issuer or an assignee shall begin to impose and collect the specified instrument funding charges from retail customers, classes of retail customers, and any other persons or groups of persons as set forth in the pertinent transitional funding order and shall file tariffs in accordance with subsection (j) of Section 18‑104 of this Article. (b) The transitional funding order shall require that the proceeds from the issuance of transitional funding instruments shall be used for the purposes set forth in subparagraph (1) of subsection (d) of Section 18‑103 of this Article. (c) Notwithstanding any other provision of law, neither the transitional funding order nor the intangible transition property created and established thereby nor the instrument funding charges authorized to be imposed and collected thereunder shall be subject to reduction, postponement, impairment or termination by any subsequent action of the Commission; provided, however, that nothing in this paragraph is intended to supersede any right of any party to the Commission's proceeding relating to the transitional funding order to seek judicial review of such transitional funding order. (d) The Commission shall provide in any transitional funding order for a procedure for periodic adjustments to the instrument funding charges set forth therein in order to ensure the repayment in accordance with the projections set forth in the transitional funding order of all grantee instruments or, if such transitional funding order does not provide for the issuance of grantee instruments, the corresponding transitional funding instruments authorized therein and to reconcile the revenues received from instrument funding charges during the applicable adjustment period with the revenues projected to be received from such charges as set forth in the relevant transitional funding order. Unless the transitional funding order otherwise provides, such adjustments shall be required whenever the instrument funding charges actually collected during the applicable adjustment period by the appropriate party or parties were greater or less than the instrument funding charges projected in the relevant transitional funding order to be collected in such adjustment period; provided that, if so requested by an electric utility in any application for a transitional funding order, the transitional funding order may (i) specify a dollar or percentage amount of variation from the projected revenues within which no such adjustments will be required and/or (ii) set forth a maximum adjustment amount for the instrument funding charges. The electric utility (or such other party as may be specified in the pertinent transitional funding order) shall determine, within 90 days of the end of each adjustment period (or such shorter period as may be provided in the documents relating to the pertinent transitional funding instruments or grantee instruments, as applicable), whether any adjustments described above in this subsection (d) of Section 18‑104 are required. If any such adjustments are so required, such adjustments shall be implemented by the electric utility, grantee, issuer or assignee, as applicable, with written notice to the Commission, within such 90‑day period (or such shorter period as may be provided for in the documents relating to the pertinent transitional funding instruments or grantee instruments, as applicable). Any such adjustment shall be calculated to include amounts necessary for recovery of any additional costs incurred by the grantee, electric utility, assignee or issuer as a result of the relevant delay in collections of instrument funding charges. If, as a result of any adjustment, the amount of any instrument funding charge, as so adjusted, will exceed an amount per kilowatt‑hour greater than the amount per kilowatt‑hour of the instrument funding charge initially authorized by the Commission in its transitional funding order, then the relevant electric utility shall be obligated to file amendatory tariffs in compliance with subsection (k) of Section 18‑104. (e) Except where this Article specifically requires otherwise, the collection of instrument funding charges and the allocation of any such collections as among holders, assignees, issuers, grantees and any other parties entitled to receive portions thereof, may be accomplished according to the provisions set forth in the applicable transitional funding order, or, if the order is silent on any such matters, according to the provisions set forth in the documents relating to the pertinent transitional funding instruments or grantee instruments, as applicable. Notwithstanding the foregoing, the electric utility, grantee, issuer or assignee, as applicable, shall determine no later than 90 days after the stated maturity date of each series of grantee instruments or, if the related transitional funding order does not provide for the issuance of grantee instruments, the stated maturity date of transitional funding instruments, whether the aggregate amount of instrument funding charges collected prior to such stated maturity date exceeds the amount required to provide for the payment of all principal, interest, premium and servicing and other fees, costs and charges owing under such grantee instruments or transitional funding instruments, as the case may be. If it is determined that the aggregate amount of instrument funding charges collected exceeds the amount required to provide for the payment of all principal, interest, premium and servicing and other fees, costs and charges related to such grantee instruments or transitional funding instruments, as the case may be, such excess, together with any investment earnings thereon, shall be paid to the owner of the pertinent intangible transition property. (f) Notwithstanding any other provision of law, on such conditions as the Commission may approve in the pertinent transitional funding order, the interest of an electric utility, assignee, issuer or grantee in intangible transition property or grantee instruments, as applicable, may be assigned, sold or otherwise transferred, in whole or in part, and may, in whole or in part, be pledged or assigned as security to or for the benefit of a holder or holders. To the extent that any such interest or portion thereof is assigned, sold or otherwise transferred or is established, created and granted to a grantee or is pledged or assigned as security, the Commission, in the pertinent transitional funding order, shall authorize the electric utility or any affiliate thereof to contract with the grantee, issuer, assignee or holders to collect the applicable instrument funding charges for the benefit and account of the grantee, issuer, assignee or holder, and such electric utility or affiliate will, except as otherwise specified in the transitional funding order, account for and remit the applicable instrument funding charge, without the obligation to remit any investment earnings thereon, to or for the account of the grantee, issuer, assignee or holder. The obligation of such electric utility or affiliate to collect and remit the applicable instrument funding charges hereunder shall continue irrespective of whether such electric utility is providing electric power and/or other services to the retail customers and other persons obligated to pay such instrument funding charges. If the documents creating the transitional funding instruments or grantee instruments, if any, so provide, such obligations shall, in the event of a default by such electric utility or affiliate in performing such obligations, be undertaken and performed by any other entity selected by the assignee or any holder, group of holders or trustee or agent on behalf of such holder or holders, as the case may be, (i) which provides electric power or services to a person that was a retail customer of such electric utility and (ii) from whom such electric utility is entitled to recover transition charges under Section 16‑108; provided, however, that any failure by the designated party to perform such obligations shall not affect the existence of the intangible transition property or the instrument funding charges or the validity or enforceability of the instrument funding charges in accordance with their terms. (g) In its transitional funding order, the Commission shall afford flexibility in establishing the terms and conditions of the transitional funding instruments and the grantee instruments, if any, including repayment schedules, collateral, required debt service and other reserves, interest rates and other financing costs and the ability of the electric utility, at its option, to effect a series of issuances of transitional funding instruments and grantee instruments and correlated assignments, sales, pledges or other transfers of intangible transition property and grantee instruments, if any, not to exceed the aggregate dollar amounts approved in the transitional funding order. (h) The electric utility shall file a statement of the final terms of the issuance of any series of transitional funding instruments or grantee instruments, if any, with the Commission within 90 days of the receipt of proceeds from such issuance. In addition, the Commission may require the electric utility to file periodic reports on its use of the proceeds at intervals of not less than one year. (i) Any adjustment to instrument funding charges that is necessary due to subsequent refinancing of transitional funding instruments or grantee instruments, if any, shall be authorized by the Commission in a supplemental order. (j) In connection with the issuance of a transitional funding order and as a precondition to the imposition of any instrument funding charges authorized thereby, the relevant electric utility shall file tariffs directing that the amount of such instrument funding charges be deducted, stated, and collected separately from the amounts otherwise billed by such electric utility for base rates and transition charges and, where applicable, other rates for tariffed services as set forth in the transitional funding order. Upon the effectiveness of such tariff, the amounts of instrument funding charges thereby deducted and to be deducted shall have become intangible transition property as specified in the transitional funding order. The Commission shall have no authority to review such tariffs except to confirm that the instrument funding charges authorized in the transitional funding order have been deducted, stated, and collected separately from base rates and transition charges and, where applicable, other rates for tariffed services otherwise in effect at such time, and the filing of any such tariff may not be suspended for any other reason. No such deductions referred to in this subsection shall be construed as a change in or otherwise require a recalculation of the authorized amounts of such base rates, transition charges, and other rates for tariffed services under Section 16‑102, 16‑107, 16‑108, or 16‑110, as applicable. Instrument funding charges shall be recoverable with respect to electric power and energy or other services for which the deductions provided in this subsection have become effective and no such deduction shall be effective with respect to any services or power in respect of which instrument funding charges have not been so authorized and imposed. (k) If any adjustment under subsection (d) of Section 18‑104 results in the amount of any instrument funding charge as so adjusted exceeding an amount per kilowatt‑hour greater than the amount per kilowatt‑hour of the instrument funding charge initially authorized by the Commission in its transitional funding order, the relevant electric utility shall file amendatory tariffs reducing the amounts otherwise billed by such electric utility for base rates and transition charges or, where applicable, other rates for tariffed services, by the amount of such excess. Such amendatory tariff shall be subject to the provisions of subsection (j) of Section 18‑104, except that (i) the failure of such amendatory tariff to become effective for any reason shall not delay or impair the effectiveness of the adjustments required under subsection (d) of Section 18‑104 and (ii) the obligation of retail customers and other persons or groups of persons to pay instrument funding charges as so adjusted shall not be subject to any defense, counterclaim or right of set off arising as a result of failure by the pertinent electric utility to comply with this subsection (k) of Section 18‑104. Nothing in this subsection (k) of Section 18‑104 shall restrict any retail customer or other person from bringing any suit in any court or from exercising any other legal or equitable remedy against an electric utility for any failure by such electric utility to comply with this subsection (k) of Section 18‑104. (l) The intangible transition property created under a transitional funding order and the authority of the grantee, assignee, issuer, electric utility or other person authorized thereunder to impose and collect instrument funding charges shall continue beyond the final date set forth in the applicable transitional funding order until such time as all grantee instruments authorized in such order or, if the applicable transitional funding order does not provide for grantee instruments, the related transitional funding instruments authorized in such order, have been paid in full. Upon the later of the final date set forth in the applicable transitional funding order for the imposition and collection of instrument funding charges or the repayment in full of any grantee instruments or transitional funding instruments, as applicable, authorized in such order, the authority to impose and collect the related instrument funding charges shall cease and the relevant electric utility shall be entitled to file tariffs revoking any deductions from base rates, transition charges or other rates for tariffed services which were granted in connection with such instrument funding charges pursuant to subsection (j) of Section 18‑104 or subsection (k) of Section 18‑104. The Commission shall have no authority to review such tariffs except to determine that the rates and charges resulting from such revocation do not exceed the applicable base rates, transition charges, or other rates for tariffed services which would otherwise have been in effect at the time of such revocation had no instrument funding charges ever been deducted therefrom. (m) If so requested by an electric utility in its application for a transitional funding order, the Commission, in the relevant transitional funding order, may authorize (i) the issuance of grantee instruments and/or transitional funding instruments with expected maturity dates later than December 31, 2008 but not later than December 31, 2010 and (ii) the imposition and collection of instrument funding charges by electric utilities, grantees, or assignees later than December 31, 2008 but not later than December 31, 2010 if the electric utility includes in its application a pro forma calculation of the impact of the issuance of the transitional funding instruments or grantee instruments and the associated use of proceeds on the revenue requirement established by the Commission in the electric utility's last rate case, with such calculation to be presented for illustrative purposes only, and the Commission, in its review of the relevant application for the transitional funding order, finds that such action is in the public interest and that the instrument funding charges to be applied toward payment of transitional funding instruments after December 31, 2008 will be deducted, stated, and collected separately from base rates and, where applicable, other rates for tariffed services otherwise in effect at such time and as scheduled to be in effect through such expected maturity date. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑105) Sec. 18‑105. Intangible transition property. (a) Notwithstanding any other provision of this Act or other law, the Commission is hereby authorized, in accordance with the application for a transitional funding order, to create, establish and grant rights in, to and under intangible transition property in and to any grantee, electric utility, issuer or assignee, and such party shall be granted the power to levy general tariffs on retail customers of an electric utility or any other person required to pay an instrument funding charge in order to collect the instrument funding charges related to the intangible transition property in which such party has been granted rights and in order to facilitate the issuance of transitional funding instruments and grantee instruments, if any, to, by or on behalf of electric utilities, grantees, issuers or assignees. The Commission shall be authorized to create, establish and grant such rights hereunder in and to such party with or without receiving consideration from such party. (b) The State pledges to and agrees with the holders of any transitional funding instruments who may enter into contracts with an electric utility, grantee, assignee or issuer pursuant to this Article XVIII that the State will not in any way limit, alter, impair or reduce the value of intangible transition property created by, or instrument funding charges approved by, a transitional funding order so as to impair the terms of any contract made by such electric utility, grantee, assignee or issuer with such holders or in any way impair the rights and remedies of such holders until the pertinent grantee instruments or, if the related transitional funding order does not provide for the issuance of grantee instruments, the pertinent transitional funding instruments and interest, premium and other fees, costs and charges related thereto, as the case may be, are fully paid and discharged. Electric utilities, grantees and issuers are authorized to include these pledges and agreements of the State in any contract with the holders of transitional funding instruments or with any assignees pursuant to this Article XVIII and any assignees are similarly authorized to include these pledges and agreements of the State in any contract with any issuer, holder or any other assignee. Nothing in this Article XVIII shall preclude the State of Illinois from requiring adjustments as may otherwise be allowed by law to the electric utility's base rates, transition charges, delivery services charges, or other charges for tariffed services, so long as any such adjustment does not directly affect or impair any instrument funding charges previously authorized by a transitional funding order issued by the Commission. (c) Transitional funding instruments and grantee instruments, if any, issued under this Article do not constitute debt or liability of the State or of any political subdivision thereof, and transitional funding orders authorizing such issuance do not constitute a pledge of the full faith and credit of the State or of any of its political subdivisions. The issuance of transitional funding instruments and grantee instruments, if any, under this Article 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, and any such transitional funding instruments and grantee instruments, if any, shall be payable solely from the intangible transition property or grantee instruments, as the case may be, or from such other proceeds or property as may be pledged therefor. Nothing in this Section shall be construed to prevent the State or any political subdivision thereof from owning any interest in a grantee, assignee or issuer or to prevent any electric utility, issuer, grantee or assignee from selling, pledging or assigning intangible transition property or grantee instruments, as the case may be, or from providing recourse or guarantees or any other third‑party credit enhancement in connection with such sale, pledge or assignment. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑106) Sec. 18‑106. Grantee instruments. (a) If an electric utility to which grantee instruments have been issued discontinues providing electric power and energy services prior to the maturity date of such grantee instruments, such electric utility shall not be entitled to receive any payment on such grantee instruments on and after the date of such discontinuance. (b) Notwithstanding the provisions of subsection (a) of this Section, any assignee holding such grantee instruments or any holder of transitional funding instruments which are secured by such grantee instruments shall nevertheless be entitled to recover amounts payable by such grantee under such grantee instruments in accordance with their terms as if such electric utility had not discontinued the provision of electric power and energy. (c) Notwithstanding any other provision of law, the issuance of any grantee instruments in accordance with the terms and provisions of a transitional funding order shall for all purposes be exempt from the application of Article 39 of the Criminal Code of 1961 and the Interest Act. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑107) Sec. 18‑107. Security interests in intangible transition property and grantee instruments. (a) Notwithstanding any other provision of law, neither intangible transition property, grantee instruments nor any right, title or interest therein, shall constitute property in which a security interest may be created under the Uniform Commercial Code nor shall any such rights be deemed proceeds of any property which is not intangible transition property or grantee instruments, as the case may be. For purposes of the foregoing, the terms "account", "general intangible", "instrument", and "payment intangible" (as defined under Section 9‑102 of the Uniform Commercial Code) shall, as used in the Uniform Commercial Code, be deemed to exclude any such intangible transition property, grantee inst
(220 ILCS 5/18‑101) Sec. 18‑101. Short title and applicability. This Article may be cited as the Electric Utility Transitional Funding Law of 1997 and shall apply to electric utilities as defined in this Article. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑102) Sec. 18‑102. Definitions. For the purposes of this Article the following terms shall be defined as set forth in this Section. Terms defined in Article XVI shall have the same meanings in this Article. "Assignee" means any party, other than an electric utility or grantee, to which an interest in intangible transition property shall have been assigned, sold or transferred. The term "assignee" includes any corporation, public authority, trust, financing vehicle, partnership, limited liability company or other entity. "Grantee" means any party, other than an electric utility or an assignee which acquires its interest from an electric utility, to whom or for whose benefit the Commission shall create, establish and grant rights in, to and under intangible transition property. The term "grantee" includes any corporation, public authority, trust, financing vehicle, partnership, limited liability company or other entity. "Grantee instruments" means (a) any instruments, documents, notes, debentures, bonds or other evidences of indebtedness evidencing any contractual right to receive the payment of money from a grantee or (b) any certificates of participation, certificates of beneficial interest or other instruments evidencing a beneficial or ownership interest in a grantee or in intangible transition property of such grantee which are (i) issued (A) by or on behalf of a grantee pursuant to a transitional funding order and (B) pursuant to an executed indenture, pooling agreement, security agreement or other similar agreement of such grantee creating a security interest, ownership interest or other beneficial interest in intangible transition property and (ii) payable solely from proceeds of intangible transition property, including amounts received with respect to the related instrument funding charges. "Holder" means any holder of transitional funding instruments, including a trustee, collateral agent, nominee or other such party acting for the benefit of such a holder. "Instrument funding charge" means a non‑bypassable charge expressed in cents per kilowatt‑hour authorized in a transitional funding order to be applied and invoiced to each retail customer, class of retail customers of an electric utility or other person or group of persons obligated to pay any base rates, transition charges or other rates for tariffed services from which such instrument funding charge has been deducted and stated separately pursuant to subsection (j) of Section 18‑104. "Intangible transition property" means the right, title, and interest of an electric utility or grantee or assignee arising pursuant to a transitional funding order to impose and receive instrument funding charges, and all related revenues, collections, claims, payments, money, or proceeds thereof, including all right, title, and interest of an electric utility, grantee or assignee in, to, under and pursuant to such transitional funding order, whether or not such intangible transition property described above is characterized on the books of the electric utility as a regulatory asset or as a cost incurred by the electric utility or otherwise. Intangible transition property shall arise and exist only when, as, and to the extent that instrument funding charges are authorized in a transitional funding order that has become effective in accordance with this Article and shall thereafter continuously exist to the extent provided in the order. "Issuer" means any party, other than an electric utility, which has issued transitional funding instruments. The term "issuer" includes any corporation, public authority, trust, financing vehicle, partnership, limited liability company or other entity. "Transitional funding instruments" means any instruments, pass‑through certificates, notes, debentures, certificates of participation, bonds, certificates of beneficial interest or other evidences of indebtedness or instruments evidencing a beneficial interest (i) which are issued by or on behalf of an electric utility or issuer pursuant to a transitional funding order, (ii) which are issued pursuant to an executed indenture, pooling agreement, security agreement or other similar agreement of an electric utility or issuer creating a security interest, ownership interest or other beneficial interest in intangible transition property or grantee instruments, if any, and (iii) the proceeds of which are to be used for the purposes set forth in subparagraph (1) of subsection (d) of Section 18‑103 of this Article. "Transitional funding order" means an order of the Commission issued in accordance with the provisions of this Article creating and establishing intangible transition property and the rights of any party therein and approving the sale, pledge, assignment or other transfer of intangible transition property and grantee instruments, if any, the issuance of transitional funding instruments and grantee instruments, if any, and the imposition and collection of instrument funding charges. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑103) Sec. 18‑103. Transitional funding orders. (a) Notwithstanding any other provision of this Act or other law, the Commission is hereby authorized to issue transitional funding orders in accordance with the provisions of this Section, in order to facilitate (i) the issuance of transitional funding instruments by or on behalf of electric utilities or issuers and (ii) the issuance of grantee instruments by or on behalf of grantees. (b) A transitional funding order may be issued by the Commission only upon the application of an electric utility and shall become effective in accordance with its terms only after such electric utility files with the Commission its written consent to all terms and conditions of such order. After the issuance of a transitional funding order, the electric utility or grantee shall retain sole discretion regarding whether to assign, sell, pledge or otherwise transfer intangible transition property and grantee instruments, if any, or to cause transitional funding instruments and grantee instruments, if any, to be issued, including the right to defer or postpone such assignment, sale, transfer, pledge or issuance or to change the terms thereof as allowed by such order. (c) After the effective date of this amendatory Act of 1997, an electric utility may file any number of applications for transitional funding orders. Each application for a transitional funding order shall contain detailed information regarding the electric utility's proposal for (i) the assignment, sale, pledge or other transfer of, or the establishment, creation and granting of rights in and to, intangible transition property and grantee instruments, if any, (ii) the issuance of transitional funding instruments and grantee instruments, if any, (iii) the total dollar amount of intangible transition property to be created and the amount to be sold, pledged, assigned or otherwise transferred or granted hereunder (which amount may be in excess of the principal and interest payable on the transitional funding instruments and grantee instruments, if any, in order to provide for servicing costs and the funding or maintenance of debt service and other reserves, costs and fees as security to the holders of the transitional funding instruments and grantee instruments, if any), (iv) the amount of transitional funding instruments and grantee instruments, if any, to be issued, (v) the amount, expressed in cents per kilowatt‑hour, of instrument funding charges to be collected from retail customers or other persons, (vi) the time to maturity for the transitional funding instruments and grantee instruments, if any, and (vii) the electric utility's planned use of the proceeds from the issuance of transitional funding instruments including the amounts allocated for the respective uses specified in subparagraph (1) of subsection (d) of Section 18‑103 of this Article. (d) The Commission shall, after proper notice, hold a hearing for the sole purpose of determining whether the application and requested transitional funding order are in compliance with this Article and shall complete its review of the application and issue its final transitional funding order by no later than 90 days after the filing of such application by the electric utility; provided, that, in contested cases where the public interest is in issue pursuant to subparagraph (1)(B) of this subsection (d) or pursuant to subsection (m) of Section 18‑104, the Commission may complete its review and issue its final transitional funding order by no later than 120 days after the filing of such application. The order shall create and establish the proposed intangible transition property in the amount requested by the applicant and approve the proposed sale, pledge, assignment or other transfer of, or the establishment, creation and granting of rights in and to, intangible transition property and grantee instruments, if any, the proposed issuance of transitional funding instruments and grantee instruments, if any, and the proposed imposition and collection of the corresponding instrument funding charges, if the Commission finds that each of the following conditions are met: (1) the electric utility will use the proceeds of
the sale and issuance of the transitional funding instruments for one or more of the following purposes:
(A) to refinance debt or equity, or both, in a
manner which the electric utility reasonably demonstrates will result in an overall reduction in its cost of capital, taking into account the costs of financing; provided, however, that any proceeds transferred to a parent company through a common stock repurchase transaction shall be used to retire publicly traded common stock of the parent company or to pay commercially reasonable transaction costs associated with such retirement;
(B) if the Commission finds that the sale or
issuance of transitional funding instruments for the following purposes is in the public interest, then the following uses of proceeds: (i) to repay or retire fuel contracts or obligations related to nuclear spent fuel previously incurred by the electric utility in providing electric power or energy services prior to the effective date of this amendatory Act of 1997 or (ii) to pay any expenditures required to be undertaken by such electric utility by the provisions of Section 16‑128 of this Act including labor severance costs and employee retraining costs;
(C) to fund debt service and other reserves,
commercially reasonable costs and fees necessary or desirable in connection with the marketing of the transitional funding instruments and grantee instruments, if any;
(D) to pay for commercially reasonable costs
associated with the issuance and collateralization of transitional funding instruments and grantee instruments, if any; and
(E) to pay for the commercially reasonable costs
associated with the issuance of such transitional funding instruments, including the costs incurred since the effective date of this amendatory Act of 1997, or to be incurred, in connection with transactions to recapitalize, refinance or retire stock and/or debt, any associated taxes, and the costs incurred or to be incurred to obtain, collateralize, issue, service and administer transitional funding instruments and grantee instruments, including interest and other related fees, costs and charges;
provided, (i) that the transitional funding order shall
require the electric utility to use (1) at least 80% of such proceeds for the purposes specified in subparagraphs (A) and (B) above and (2) no more than 20% of the maximum amount of such proceeds permitted under subparagraph (6)(B) of this subsection for purposes other than those specified in subparagraph (A) above; (ii) that the electric utility's use of such proceeds for the purposes specified in subparagraph (A) above shall not, as of the date of application of such proceeds, result in the common equity component of its capital structure, exclusive of the portion of its capital structure that consists of obligations representing transitional funding instruments or grantee instruments, being reduced below the lesser of (1) 40% and (2) the common equity percentage as of December 31, 1996 adjusted to reflect any write‑off of assets or common equity implemented or required to be implemented as a result of this amendatory Act of 1997; and (iii) in no event shall the electric utility use the proceeds of the sale of grantee instruments or transitional funding instruments to repay or retire obligations incurred by any affiliate of the electric utility (other than in connection with any refinancing of grantee instruments or transitional funding instruments issued by such affiliate), without the consent of the Commission;
(2) the expected maturity date for the grantee
instruments or the transitional funding instruments, and the final date on which the electric utility, grantee or assignee shall be entitled to charge and collect instrument funding charges, shall each be set to occur no later than December 31, 2008, subject to the provisions of subsections (l) and (m) of Section 18‑104;
(3) the instrument funding charges authorized in
such order will be deducted and stated separately from base rates and transition charges, and, where applicable, other rates for tariffed services, all as provided in subsection (j) of Section 18‑104 and in a manner conforming to the allocation of the instrument funding charges implemented pursuant to subparagraph (4) of this subsection;
(4) the instrument funding charges authorized in
such order shall have been allocated among classes of retail customers in accordance with percentage ratios determined by dividing the base rate revenue from each class by the electric utility's total base rate revenue for the 1996 calendar year;
(5) the issuance of the transitional funding
instruments will not cause the rates for tariffed services to increase over the rates then in existence as adjusted for the rate decreases provided in subsection (b) of Section 16‑111; and
(6) the aggregate principal amount of grantee
instruments or, if such transitional funding order does not provide for the issuance of grantee instruments, transitional funding instruments, to be issued pursuant to such order, together with the aggregate amount of such instruments issued under any prior orders requested by such electric utility, shall not exceed:
(A) during the twelve‑month period commencing
August 1, 1998, an amount equal to 25% of the applicable electric utility's total capitalization, including both debt and equity, as of December 31, 1996, multiplied by the ratio of the electric utility's revenues from Illinois electric utility retail customers in the 1996 calendar year to its total electric retail revenues for such 1996 year; and
(B) thereafter, an amount equal to 50% of the
applicable electric utility's total capitalization, including both debt and equity, as of December 31, 1996 multiplied by the ratio of the electric utility's revenues from Illinois electric utility retail customers in the 1996 calendar year to its total electric retail revenues for such 1996 year.
(Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑104) Sec. 18‑104. Terms and provisions of transitional funding orders. (a) Each transitional funding order shall create and establish intangible transition property in an amount not to exceed the sum of (i) the rate base established by the Commission in the electric utility's last rate case prior to the effective date of this amendatory Act of 1997, plus (ii) any expenditures required to be undertaken by such electric utility by the provisions of Section 16‑128 of this Act, including labor severance costs and employee retraining costs, plus (iii) amounts necessary to fund debt service and other reserves, commercially reasonable costs and fees necessary in connection with the marketing of the transitional funding instruments and grantee instruments, if any, plus (iv) commercially reasonable costs incurred from and after the effective date of this amendatory Act of 1997 or to be incurred which are associated with the issuance and collateralization of transitional funding instruments and grantee instruments, if any, plus (v) commercially reasonable costs incurred from and after the effective date of this amendatory Act of 1997 or to be incurred which are associated with issuance of such transitional funding instruments, including the costs incurred from and after the effective date of this amendatory Act of 1997, or to be incurred, in connection with transactions to recapitalize, refinance or retire stock and/or debt, any associated taxes and the costs incurred to obtain, collateralize, issue, service and/or administer transitional funding instruments and grantee instruments, if any, including interest and other related fees, costs and charges (all of the foregoing costs described in clauses (i) through (v) above to include any taxes, where applicable, to the extent the costs thereof would otherwise have been recoverable by an electric utility through rates for tariffed services under the Public Utilities Act as in effect prior to this amendatory Act of 1997), minus (vi) the amount of any intangible transition property previously created and established at the request of and for the benefit of such electric utility in a prior transitional funding order. The transitional funding order shall authorize (A) the sale, pledge, assignment or other transfer of, or the establishment, creation and granting of an electric utility's, assignee's or grantee's rights in and to, a specific dollar amount of intangible transition property (which amount may be in excess of the principal and interest payable on the transitional funding instruments and grantee instruments, if any, in order to provide for servicing costs and the funding or maintenance of debt service and other reserves as security to the holders of the transitional funding instruments), (B) the issuance of a specific dollar amount of grantee instruments or, if the transitional funding order does not provide for the issuance of grantee instruments, a specific dollar amount of transitional funding instruments, by or on behalf of an electric utility, assignee, issuer or grantee, as the case may be, and (C) the imposition and collection of a specific amount of instrument funding charges projected to be sufficient to pay when due the principal of and interest on the corresponding grantee instruments or, if the transitional funding order does not provide for the issuance of grantee instruments, the corresponding transitional funding instruments, in each case, together with premium, servicing fees and other fees, costs and charges related thereto, and to maintain any required reserves. Except as otherwise specifically set forth in the transitional funding order, the transitional funding instruments issued pursuant to such order shall be non‑recourse to the credit or to any assets of the electric utility other than any assets comprising intangible transition property or grantee instruments, as applicable. The obligation of retail customers and other persons to pay instrument funding charges shall be contingent upon the receipt by such retail customers and other persons of electric power and energy, the kilowatt hours of which are included in the calculation of the dollar amount of such instrument funding charges, but the transitional funding order shall specifically provide that such instrument funding charges will not be subject to any defense, counterclaim or right of set off arising as a result of failure by the pertinent electric utility, upon whose application the intangible transition property was created, to perform or provide past, present or future services. For purposes of the foregoing sentence, an electric utility or alternative retail electric supplier obligated to pay transition charges under subsection (b) of Section 16‑118 on behalf of certain retail customers shall be deemed to have received the electric power and energy provided to such retail customers. The transitional funding order shall also set forth the time to maturity for the grantee instruments or, if the transitional funding order does not provide for the issuance of grantee instruments, the time to maturity for the transitional funding instruments issued thereunder. Concurrently with the sale, pledge, assignment or other transfer of, or the establishment, creation and granting of an electric utility's, assignee's or grantee's rights in and to, intangible transition property and grantee instruments, if any, and the issuance of transitional funding instruments, an electric utility, grantee, issuer or an assignee shall begin to impose and collect the specified instrument funding charges from retail customers, classes of retail customers, and any other persons or groups of persons as set forth in the pertinent transitional funding order and shall file tariffs in accordance with subsection (j) of Section 18‑104 of this Article. (b) The transitional funding order shall require that the proceeds from the issuance of transitional funding instruments shall be used for the purposes set forth in subparagraph (1) of subsection (d) of Section 18‑103 of this Article. (c) Notwithstanding any other provision of law, neither the transitional funding order nor the intangible transition property created and established thereby nor the instrument funding charges authorized to be imposed and collected thereunder shall be subject to reduction, postponement, impairment or termination by any subsequent action of the Commission; provided, however, that nothing in this paragraph is intended to supersede any right of any party to the Commission's proceeding relating to the transitional funding order to seek judicial review of such transitional funding order. (d) The Commission shall provide in any transitional funding order for a procedure for periodic adjustments to the instrument funding charges set forth therein in order to ensure the repayment in accordance with the projections set forth in the transitional funding order of all grantee instruments or, if such transitional funding order does not provide for the issuance of grantee instruments, the corresponding transitional funding instruments authorized therein and to reconcile the revenues received from instrument funding charges during the applicable adjustment period with the revenues projected to be received from such charges as set forth in the relevant transitional funding order. Unless the transitional funding order otherwise provides, such adjustments shall be required whenever the instrument funding charges actually collected during the applicable adjustment period by the appropriate party or parties were greater or less than the instrument funding charges projected in the relevant transitional funding order to be collected in such adjustment period; provided that, if so requested by an electric utility in any application for a transitional funding order, the transitional funding order may (i) specify a dollar or percentage amount of variation from the projected revenues within which no such adjustments will be required and/or (ii) set forth a maximum adjustment amount for the instrument funding charges. The electric utility (or such other party as may be specified in the pertinent transitional funding order) shall determine, within 90 days of the end of each adjustment period (or such shorter period as may be provided in the documents relating to the pertinent transitional funding instruments or grantee instruments, as applicable), whether any adjustments described above in this subsection (d) of Section 18‑104 are required. If any such adjustments are so required, such adjustments shall be implemented by the electric utility, grantee, issuer or assignee, as applicable, with written notice to the Commission, within such 90‑day period (or such shorter period as may be provided for in the documents relating to the pertinent transitional funding instruments or grantee instruments, as applicable). Any such adjustment shall be calculated to include amounts necessary for recovery of any additional costs incurred by the grantee, electric utility, assignee or issuer as a result of the relevant delay in collections of instrument funding charges. If, as a result of any adjustment, the amount of any instrument funding charge, as so adjusted, will exceed an amount per kilowatt‑hour greater than the amount per kilowatt‑hour of the instrument funding charge initially authorized by the Commission in its transitional funding order, then the relevant electric utility shall be obligated to file amendatory tariffs in compliance with subsection (k) of Section 18‑104. (e) Except where this Article specifically requires otherwise, the collection of instrument funding charges and the allocation of any such collections as among holders, assignees, issuers, grantees and any other parties entitled to receive portions thereof, may be accomplished according to the provisions set forth in the applicable transitional funding order, or, if the order is silent on any such matters, according to the provisions set forth in the documents relating to the pertinent transitional funding instruments or grantee instruments, as applicable. Notwithstanding the foregoing, the electric utility, grantee, issuer or assignee, as applicable, shall determine no later than 90 days after the stated maturity date of each series of grantee instruments or, if the related transitional funding order does not provide for the issuance of grantee instruments, the stated maturity date of transitional funding instruments, whether the aggregate amount of instrument funding charges collected prior to such stated maturity date exceeds the amount required to provide for the payment of all principal, interest, premium and servicing and other fees, costs and charges owing under such grantee instruments or transitional funding instruments, as the case may be. If it is determined that the aggregate amount of instrument funding charges collected exceeds the amount required to provide for the payment of all principal, interest, premium and servicing and other fees, costs and charges related to such grantee instruments or transitional funding instruments, as the case may be, such excess, together with any investment earnings thereon, shall be paid to the owner of the pertinent intangible transition property. (f) Notwithstanding any other provision of law, on such conditions as the Commission may approve in the pertinent transitional funding order, the interest of an electric utility, assignee, issuer or grantee in intangible transition property or grantee instruments, as applicable, may be assigned, sold or otherwise transferred, in whole or in part, and may, in whole or in part, be pledged or assigned as security to or for the benefit of a holder or holders. To the extent that any such interest or portion thereof is assigned, sold or otherwise transferred or is established, created and granted to a grantee or is pledged or assigned as security, the Commission, in the pertinent transitional funding order, shall authorize the electric utility or any affiliate thereof to contract with the grantee, issuer, assignee or holders to collect the applicable instrument funding charges for the benefit and account of the grantee, issuer, assignee or holder, and such electric utility or affiliate will, except as otherwise specified in the transitional funding order, account for and remit the applicable instrument funding charge, without the obligation to remit any investment earnings thereon, to or for the account of the grantee, issuer, assignee or holder. The obligation of such electric utility or affiliate to collect and remit the applicable instrument funding charges hereunder shall continue irrespective of whether such electric utility is providing electric power and/or other services to the retail customers and other persons obligated to pay such instrument funding charges. If the documents creating the transitional funding instruments or grantee instruments, if any, so provide, such obligations shall, in the event of a default by such electric utility or affiliate in performing such obligations, be undertaken and performed by any other entity selected by the assignee or any holder, group of holders or trustee or agent on behalf of such holder or holders, as the case may be, (i) which provides electric power or services to a person that was a retail customer of such electric utility and (ii) from whom such electric utility is entitled to recover transition charges under Section 16‑108; provided, however, that any failure by the designated party to perform such obligations shall not affect the existence of the intangible transition property or the instrument funding charges or the validity or enforceability of the instrument funding charges in accordance with their terms. (g) In its transitional funding order, the Commission shall afford flexibility in establishing the terms and conditions of the transitional funding instruments and the grantee instruments, if any, including repayment schedules, collateral, required debt service and other reserves, interest rates and other financing costs and the ability of the electric utility, at its option, to effect a series of issuances of transitional funding instruments and grantee instruments and correlated assignments, sales, pledges or other transfers of intangible transition property and grantee instruments, if any, not to exceed the aggregate dollar amounts approved in the transitional funding order. (h) The electric utility shall file a statement of the final terms of the issuance of any series of transitional funding instruments or grantee instruments, if any, with the Commission within 90 days of the receipt of proceeds from such issuance. In addition, the Commission may require the electric utility to file periodic reports on its use of the proceeds at intervals of not less than one year. (i) Any adjustment to instrument funding charges that is necessary due to subsequent refinancing of transitional funding instruments or grantee instruments, if any, shall be authorized by the Commission in a supplemental order. (j) In connection with the issuance of a transitional funding order and as a precondition to the imposition of any instrument funding charges authorized thereby, the relevant electric utility shall file tariffs directing that the amount of such instrument funding charges be deducted, stated, and collected separately from the amounts otherwise billed by such electric utility for base rates and transition charges and, where applicable, other rates for tariffed services as set forth in the transitional funding order. Upon the effectiveness of such tariff, the amounts of instrument funding charges thereby deducted and to be deducted shall have become intangible transition property as specified in the transitional funding order. The Commission shall have no authority to review such tariffs except to confirm that the instrument funding charges authorized in the transitional funding order have been deducted, stated, and collected separately from base rates and transition charges and, where applicable, other rates for tariffed services otherwise in effect at such time, and the filing of any such tariff may not be suspended for any other reason. No such deductions referred to in this subsection shall be construed as a change in or otherwise require a recalculation of the authorized amounts of such base rates, transition charges, and other rates for tariffed services under Section 16‑102, 16‑107, 16‑108, or 16‑110, as applicable. Instrument funding charges shall be recoverable with respect to electric power and energy or other services for which the deductions provided in this subsection have become effective and no such deduction shall be effective with respect to any services or power in respect of which instrument funding charges have not been so authorized and imposed. (k) If any adjustment under subsection (d) of Section 18‑104 results in the amount of any instrument funding charge as so adjusted exceeding an amount per kilowatt‑hour greater than the amount per kilowatt‑hour of the instrument funding charge initially authorized by the Commission in its transitional funding order, the relevant electric utility shall file amendatory tariffs reducing the amounts otherwise billed by such electric utility for base rates and transition charges or, where applicable, other rates for tariffed services, by the amount of such excess. Such amendatory tariff shall be subject to the provisions of subsection (j) of Section 18‑104, except that (i) the failure of such amendatory tariff to become effective for any reason shall not delay or impair the effectiveness of the adjustments required under subsection (d) of Section 18‑104 and (ii) the obligation of retail customers and other persons or groups of persons to pay instrument funding charges as so adjusted shall not be subject to any defense, counterclaim or right of set off arising as a result of failure by the pertinent electric utility to comply with this subsection (k) of Section 18‑104. Nothing in this subsection (k) of Section 18‑104 shall restrict any retail customer or other person from bringing any suit in any court or from exercising any other legal or equitable remedy against an electric utility for any failure by such electric utility to comply with this subsection (k) of Section 18‑104. (l) The intangible transition property created under a transitional funding order and the authority of the grantee, assignee, issuer, electric utility or other person authorized thereunder to impose and collect instrument funding charges shall continue beyond the final date set forth in the applicable transitional funding order until such time as all grantee instruments authorized in such order or, if the applicable transitional funding order does not provide for grantee instruments, the related transitional funding instruments authorized in such order, have been paid in full. Upon the later of the final date set forth in the applicable transitional funding order for the imposition and collection of instrument funding charges or the repayment in full of any grantee instruments or transitional funding instruments, as applicable, authorized in such order, the authority to impose and collect the related instrument funding charges shall cease and the relevant electric utility shall be entitled to file tariffs revoking any deductions from base rates, transition charges or other rates for tariffed services which were granted in connection with such instrument funding charges pursuant to subsection (j) of Section 18‑104 or subsection (k) of Section 18‑104. The Commission shall have no authority to review such tariffs except to determine that the rates and charges resulting from such revocation do not exceed the applicable base rates, transition charges, or other rates for tariffed services which would otherwise have been in effect at the time of such revocation had no instrument funding charges ever been deducted therefrom. (m) If so requested by an electric utility in its application for a transitional funding order, the Commission, in the relevant transitional funding order, may authorize (i) the issuance of grantee instruments and/or transitional funding instruments with expected maturity dates later than December 31, 2008 but not later than December 31, 2010 and (ii) the imposition and collection of instrument funding charges by electric utilities, grantees, or assignees later than December 31, 2008 but not later than December 31, 2010 if the electric utility includes in its application a pro forma calculation of the impact of the issuance of the transitional funding instruments or grantee instruments and the associated use of proceeds on the revenue requirement established by the Commission in the electric utility's last rate case, with such calculation to be presented for illustrative purposes only, and the Commission, in its review of the relevant application for the transitional funding order, finds that such action is in the public interest and that the instrument funding charges to be applied toward payment of transitional funding instruments after December 31, 2008 will be deducted, stated, and collected separately from base rates and, where applicable, other rates for tariffed services otherwise in effect at such time and as scheduled to be in effect through such expected maturity date. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑105) Sec. 18‑105. Intangible transition property. (a) Notwithstanding any other provision of this Act or other law, the Commission is hereby authorized, in accordance with the application for a transitional funding order, to create, establish and grant rights in, to and under intangible transition property in and to any grantee, electric utility, issuer or assignee, and such party shall be granted the power to levy general tariffs on retail customers of an electric utility or any other person required to pay an instrument funding charge in order to collect the instrument funding charges related to the intangible transition property in which such party has been granted rights and in order to facilitate the issuance of transitional funding instruments and grantee instruments, if any, to, by or on behalf of electric utilities, grantees, issuers or assignees. The Commission shall be authorized to create, establish and grant such rights hereunder in and to such party with or without receiving consideration from such party. (b) The State pledges to and agrees with the holders of any transitional funding instruments who may enter into contracts with an electric utility, grantee, assignee or issuer pursuant to this Article XVIII that the State will not in any way limit, alter, impair or reduce the value of intangible transition property created by, or instrument funding charges approved by, a transitional funding order so as to impair the terms of any contract made by such electric utility, grantee, assignee or issuer with such holders or in any way impair the rights and remedies of such holders until the pertinent grantee instruments or, if the related transitional funding order does not provide for the issuance of grantee instruments, the pertinent transitional funding instruments and interest, premium and other fees, costs and charges related thereto, as the case may be, are fully paid and discharged. Electric utilities, grantees and issuers are authorized to include these pledges and agreements of the State in any contract with the holders of transitional funding instruments or with any assignees pursuant to this Article XVIII and any assignees are similarly authorized to include these pledges and agreements of the State in any contract with any issuer, holder or any other assignee. Nothing in this Article XVIII shall preclude the State of Illinois from requiring adjustments as may otherwise be allowed by law to the electric utility's base rates, transition charges, delivery services charges, or other charges for tariffed services, so long as any such adjustment does not directly affect or impair any instrument funding charges previously authorized by a transitional funding order issued by the Commission. (c) Transitional funding instruments and grantee instruments, if any, issued under this Article do not constitute debt or liability of the State or of any political subdivision thereof, and transitional funding orders authorizing such issuance do not constitute a pledge of the full faith and credit of the State or of any of its political subdivisions. The issuance of transitional funding instruments and grantee instruments, if any, under this Article 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, and any such transitional funding instruments and grantee instruments, if any, shall be payable solely from the intangible transition property or grantee instruments, as the case may be, or from such other proceeds or property as may be pledged therefor. Nothing in this Section shall be construed to prevent the State or any political subdivision thereof from owning any interest in a grantee, assignee or issuer or to prevent any electric utility, issuer, grantee or assignee from selling, pledging or assigning intangible transition property or grantee instruments, as the case may be, or from providing recourse or guarantees or any other third‑party credit enhancement in connection with such sale, pledge or assignment. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑106) Sec. 18‑106. Grantee instruments. (a) If an electric utility to which grantee instruments have been issued discontinues providing electric power and energy services prior to the maturity date of such grantee instruments, such electric utility shall not be entitled to receive any payment on such grantee instruments on and after the date of such discontinuance. (b) Notwithstanding the provisions of subsection (a) of this Section, any assignee holding such grantee instruments or any holder of transitional funding instruments which are secured by such grantee instruments shall nevertheless be entitled to recover amounts payable by such grantee under such grantee instruments in accordance with their terms as if such electric utility had not discontinued the provision of electric power and energy. (c) Notwithstanding any other provision of law, the issuance of any grantee instruments in accordance with the terms and provisions of a transitional funding order shall for all purposes be exempt from the application of Article 39 of the Criminal Code of 1961 and the Interest Act. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑107) Sec. 18‑107. Security interests in intangible transition property and grantee instruments. (a) Notwithstanding any other provision of law, neither intangible transition property, grantee instruments nor any right, title or interest therein, shall constitute property in which a security interest may be created under the Uniform Commercial Code nor shall any such rights be deemed proceeds of any property which is not intangible transition property or grantee instruments, as the case may be. For purposes of the foregoing, the terms "account", "general intangible", "instrument", and "payment intangible" (as defined under Section 9‑102 of the Uniform Commercial Code) shall, as used in the Uniform Commercial Code, be deemed to exclude any such intangible transition property, grantee inst
(220 ILCS 5/18‑101) Sec. 18‑101. Short title and applicability. This Article may be cited as the Electric Utility Transitional Funding Law of 1997 and shall apply to electric utilities as defined in this Article. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑102) Sec. 18‑102. Definitions. For the purposes of this Article the following terms shall be defined as set forth in this Section. Terms defined in Article XVI shall have the same meanings in this Article. "Assignee" means any party, other than an electric utility or grantee, to which an interest in intangible transition property shall have been assigned, sold or transferred. The term "assignee" includes any corporation, public authority, trust, financing vehicle, partnership, limited liability company or other entity. "Grantee" means any party, other than an electric utility or an assignee which acquires its interest from an electric utility, to whom or for whose benefit the Commission shall create, establish and grant rights in, to and under intangible transition property. The term "grantee" includes any corporation, public authority, trust, financing vehicle, partnership, limited liability company or other entity. "Grantee instruments" means (a) any instruments, documents, notes, debentures, bonds or other evidences of indebtedness evidencing any contractual right to receive the payment of money from a grantee or (b) any certificates of participation, certificates of beneficial interest or other instruments evidencing a beneficial or ownership interest in a grantee or in intangible transition property of such grantee which are (i) issued (A) by or on behalf of a grantee pursuant to a transitional funding order and (B) pursuant to an executed indenture, pooling agreement, security agreement or other similar agreement of such grantee creating a security interest, ownership interest or other beneficial interest in intangible transition property and (ii) payable solely from proceeds of intangible transition property, including amounts received with respect to the related instrument funding charges. "Holder" means any holder of transitional funding instruments, including a trustee, collateral agent, nominee or other such party acting for the benefit of such a holder. "Instrument funding charge" means a non‑bypassable charge expressed in cents per kilowatt‑hour authorized in a transitional funding order to be applied and invoiced to each retail customer, class of retail customers of an electric utility or other person or group of persons obligated to pay any base rates, transition charges or other rates for tariffed services from which such instrument funding charge has been deducted and stated separately pursuant to subsection (j) of Section 18‑104. "Intangible transition property" means the right, title, and interest of an electric utility or grantee or assignee arising pursuant to a transitional funding order to impose and receive instrument funding charges, and all related revenues, collections, claims, payments, money, or proceeds thereof, including all right, title, and interest of an electric utility, grantee or assignee in, to, under and pursuant to such transitional funding order, whether or not such intangible transition property described above is characterized on the books of the electric utility as a regulatory asset or as a cost incurred by the electric utility or otherwise. Intangible transition property shall arise and exist only when, as, and to the extent that instrument funding charges are authorized in a transitional funding order that has become effective in accordance with this Article and shall thereafter continuously exist to the extent provided in the order. "Issuer" means any party, other than an electric utility, which has issued transitional funding instruments. The term "issuer" includes any corporation, public authority, trust, financing vehicle, partnership, limited liability company or other entity. "Transitional funding instruments" means any instruments, pass‑through certificates, notes, debentures, certificates of participation, bonds, certificates of beneficial interest or other evidences of indebtedness or instruments evidencing a beneficial interest (i) which are issued by or on behalf of an electric utility or issuer pursuant to a transitional funding order, (ii) which are issued pursuant to an executed indenture, pooling agreement, security agreement or other similar agreement of an electric utility or issuer creating a security interest, ownership interest or other beneficial interest in intangible transition property or grantee instruments, if any, and (iii) the proceeds of which are to be used for the purposes set forth in subparagraph (1) of subsection (d) of Section 18‑103 of this Article. "Transitional funding order" means an order of the Commission issued in accordance with the provisions of this Article creating and establishing intangible transition property and the rights of any party therein and approving the sale, pledge, assignment or other transfer of intangible transition property and grantee instruments, if any, the issuance of transitional funding instruments and grantee instruments, if any, and the imposition and collection of instrument funding charges. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑103) Sec. 18‑103. Transitional funding orders. (a) Notwithstanding any other provision of this Act or other law, the Commission is hereby authorized to issue transitional funding orders in accordance with the provisions of this Section, in order to facilitate (i) the issuance of transitional funding instruments by or on behalf of electric utilities or issuers and (ii) the issuance of grantee instruments by or on behalf of grantees. (b) A transitional funding order may be issued by the Commission only upon the application of an electric utility and shall become effective in accordance with its terms only after such electric utility files with the Commission its written consent to all terms and conditions of such order. After the issuance of a transitional funding order, the electric utility or grantee shall retain sole discretion regarding whether to assign, sell, pledge or otherwise transfer intangible transition property and grantee instruments, if any, or to cause transitional funding instruments and grantee instruments, if any, to be issued, including the right to defer or postpone such assignment, sale, transfer, pledge or issuance or to change the terms thereof as allowed by such order. (c) After the effective date of this amendatory Act of 1997, an electric utility may file any number of applications for transitional funding orders. Each application for a transitional funding order shall contain detailed information regarding the electric utility's proposal for (i) the assignment, sale, pledge or other transfer of, or the establishment, creation and granting of rights in and to, intangible transition property and grantee instruments, if any, (ii) the issuance of transitional funding instruments and grantee instruments, if any, (iii) the total dollar amount of intangible transition property to be created and the amount to be sold, pledged, assigned or otherwise transferred or granted hereunder (which amount may be in excess of the principal and interest payable on the transitional funding instruments and grantee instruments, if any, in order to provide for servicing costs and the funding or maintenance of debt service and other reserves, costs and fees as security to the holders of the transitional funding instruments and grantee instruments, if any), (iv) the amount of transitional funding instruments and grantee instruments, if any, to be issued, (v) the amount, expressed in cents per kilowatt‑hour, of instrument funding charges to be collected from retail customers or other persons, (vi) the time to maturity for the transitional funding instruments and grantee instruments, if any, and (vii) the electric utility's planned use of the proceeds from the issuance of transitional funding instruments including the amounts allocated for the respective uses specified in subparagraph (1) of subsection (d) of Section 18‑103 of this Article. (d) The Commission shall, after proper notice, hold a hearing for the sole purpose of determining whether the application and requested transitional funding order are in compliance with this Article and shall complete its review of the application and issue its final transitional funding order by no later than 90 days after the filing of such application by the electric utility; provided, that, in contested cases where the public interest is in issue pursuant to subparagraph (1)(B) of this subsection (d) or pursuant to subsection (m) of Section 18‑104, the Commission may complete its review and issue its final transitional funding order by no later than 120 days after the filing of such application. The order shall create and establish the proposed intangible transition property in the amount requested by the applicant and approve the proposed sale, pledge, assignment or other transfer of, or the establishment, creation and granting of rights in and to, intangible transition property and grantee instruments, if any, the proposed issuance of transitional funding instruments and grantee instruments, if any, and the proposed imposition and collection of the corresponding instrument funding charges, if the Commission finds that each of the following conditions are met: (1) the electric utility will use the proceeds of
the sale and issuance of the transitional funding instruments for one or more of the following purposes:
(A) to refinance debt or equity, or both, in a
manner which the electric utility reasonably demonstrates will result in an overall reduction in its cost of capital, taking into account the costs of financing; provided, however, that any proceeds transferred to a parent company through a common stock repurchase transaction shall be used to retire publicly traded common stock of the parent company or to pay commercially reasonable transaction costs associated with such retirement;
(B) if the Commission finds that the sale or
issuance of transitional funding instruments for the following purposes is in the public interest, then the following uses of proceeds: (i) to repay or retire fuel contracts or obligations related to nuclear spent fuel previously incurred by the electric utility in providing electric power or energy services prior to the effective date of this amendatory Act of 1997 or (ii) to pay any expenditures required to be undertaken by such electric utility by the provisions of Section 16‑128 of this Act including labor severance costs and employee retraining costs;
(C) to fund debt service and other reserves,
commercially reasonable costs and fees necessary or desirable in connection with the marketing of the transitional funding instruments and grantee instruments, if any;
(D) to pay for commercially reasonable costs
associated with the issuance and collateralization of transitional funding instruments and grantee instruments, if any; and
(E) to pay for the commercially reasonable costs
associated with the issuance of such transitional funding instruments, including the costs incurred since the effective date of this amendatory Act of 1997, or to be incurred, in connection with transactions to recapitalize, refinance or retire stock and/or debt, any associated taxes, and the costs incurred or to be incurred to obtain, collateralize, issue, service and administer transitional funding instruments and grantee instruments, including interest and other related fees, costs and charges;
provided, (i) that the transitional funding order shall
require the electric utility to use (1) at least 80% of such proceeds for the purposes specified in subparagraphs (A) and (B) above and (2) no more than 20% of the maximum amount of such proceeds permitted under subparagraph (6)(B) of this subsection for purposes other than those specified in subparagraph (A) above; (ii) that the electric utility's use of such proceeds for the purposes specified in subparagraph (A) above shall not, as of the date of application of such proceeds, result in the common equity component of its capital structure, exclusive of the portion of its capital structure that consists of obligations representing transitional funding instruments or grantee instruments, being reduced below the lesser of (1) 40% and (2) the common equity percentage as of December 31, 1996 adjusted to reflect any write‑off of assets or common equity implemented or required to be implemented as a result of this amendatory Act of 1997; and (iii) in no event shall the electric utility use the proceeds of the sale of grantee instruments or transitional funding instruments to repay or retire obligations incurred by any affiliate of the electric utility (other than in connection with any refinancing of grantee instruments or transitional funding instruments issued by such affiliate), without the consent of the Commission;
(2) the expected maturity date for the grantee
instruments or the transitional funding instruments, and the final date on which the electric utility, grantee or assignee shall be entitled to charge and collect instrument funding charges, shall each be set to occur no later than December 31, 2008, subject to the provisions of subsections (l) and (m) of Section 18‑104;
(3) the instrument funding charges authorized in
such order will be deducted and stated separately from base rates and transition charges, and, where applicable, other rates for tariffed services, all as provided in subsection (j) of Section 18‑104 and in a manner conforming to the allocation of the instrument funding charges implemented pursuant to subparagraph (4) of this subsection;
(4) the instrument funding charges authorized in
such order shall have been allocated among classes of retail customers in accordance with percentage ratios determined by dividing the base rate revenue from each class by the electric utility's total base rate revenue for the 1996 calendar year;
(5) the issuance of the transitional funding
instruments will not cause the rates for tariffed services to increase over the rates then in existence as adjusted for the rate decreases provided in subsection (b) of Section 16‑111; and
(6) the aggregate principal amount of grantee
instruments or, if such transitional funding order does not provide for the issuance of grantee instruments, transitional funding instruments, to be issued pursuant to such order, together with the aggregate amount of such instruments issued under any prior orders requested by such electric utility, shall not exceed:
(A) during the twelve‑month period commencing
August 1, 1998, an amount equal to 25% of the applicable electric utility's total capitalization, including both debt and equity, as of December 31, 1996, multiplied by the ratio of the electric utility's revenues from Illinois electric utility retail customers in the 1996 calendar year to its total electric retail revenues for such 1996 year; and
(B) thereafter, an amount equal to 50% of the
applicable electric utility's total capitalization, including both debt and equity, as of December 31, 1996 multiplied by the ratio of the electric utility's revenues from Illinois electric utility retail customers in the 1996 calendar year to its total electric retail revenues for such 1996 year.
(Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑104) Sec. 18‑104. Terms and provisions of transitional funding orders. (a) Each transitional funding order shall create and establish intangible transition property in an amount not to exceed the sum of (i) the rate base established by the Commission in the electric utility's last rate case prior to the effective date of this amendatory Act of 1997, plus (ii) any expenditures required to be undertaken by such electric utility by the provisions of Section 16‑128 of this Act, including labor severance costs and employee retraining costs, plus (iii) amounts necessary to fund debt service and other reserves, commercially reasonable costs and fees necessary in connection with the marketing of the transitional funding instruments and grantee instruments, if any, plus (iv) commercially reasonable costs incurred from and after the effective date of this amendatory Act of 1997 or to be incurred which are associated with the issuance and collateralization of transitional funding instruments and grantee instruments, if any, plus (v) commercially reasonable costs incurred from and after the effective date of this amendatory Act of 1997 or to be incurred which are associated with issuance of such transitional funding instruments, including the costs incurred from and after the effective date of this amendatory Act of 1997, or to be incurred, in connection with transactions to recapitalize, refinance or retire stock and/or debt, any associated taxes and the costs incurred to obtain, collateralize, issue, service and/or administer transitional funding instruments and grantee instruments, if any, including interest and other related fees, costs and charges (all of the foregoing costs described in clauses (i) through (v) above to include any taxes, where applicable, to the extent the costs thereof would otherwise have been recoverable by an electric utility through rates for tariffed services under the Public Utilities Act as in effect prior to this amendatory Act of 1997), minus (vi) the amount of any intangible transition property previously created and established at the request of and for the benefit of such electric utility in a prior transitional funding order. The transitional funding order shall authorize (A) the sale, pledge, assignment or other transfer of, or the establishment, creation and granting of an electric utility's, assignee's or grantee's rights in and to, a specific dollar amount of intangible transition property (which amount may be in excess of the principal and interest payable on the transitional funding instruments and grantee instruments, if any, in order to provide for servicing costs and the funding or maintenance of debt service and other reserves as security to the holders of the transitional funding instruments), (B) the issuance of a specific dollar amount of grantee instruments or, if the transitional funding order does not provide for the issuance of grantee instruments, a specific dollar amount of transitional funding instruments, by or on behalf of an electric utility, assignee, issuer or grantee, as the case may be, and (C) the imposition and collection of a specific amount of instrument funding charges projected to be sufficient to pay when due the principal of and interest on the corresponding grantee instruments or, if the transitional funding order does not provide for the issuance of grantee instruments, the corresponding transitional funding instruments, in each case, together with premium, servicing fees and other fees, costs and charges related thereto, and to maintain any required reserves. Except as otherwise specifically set forth in the transitional funding order, the transitional funding instruments issued pursuant to such order shall be non‑recourse to the credit or to any assets of the electric utility other than any assets comprising intangible transition property or grantee instruments, as applicable. The obligation of retail customers and other persons to pay instrument funding charges shall be contingent upon the receipt by such retail customers and other persons of electric power and energy, the kilowatt hours of which are included in the calculation of the dollar amount of such instrument funding charges, but the transitional funding order shall specifically provide that such instrument funding charges will not be subject to any defense, counterclaim or right of set off arising as a result of failure by the pertinent electric utility, upon whose application the intangible transition property was created, to perform or provide past, present or future services. For purposes of the foregoing sentence, an electric utility or alternative retail electric supplier obligated to pay transition charges under subsection (b) of Section 16‑118 on behalf of certain retail customers shall be deemed to have received the electric power and energy provided to such retail customers. The transitional funding order shall also set forth the time to maturity for the grantee instruments or, if the transitional funding order does not provide for the issuance of grantee instruments, the time to maturity for the transitional funding instruments issued thereunder. Concurrently with the sale, pledge, assignment or other transfer of, or the establishment, creation and granting of an electric utility's, assignee's or grantee's rights in and to, intangible transition property and grantee instruments, if any, and the issuance of transitional funding instruments, an electric utility, grantee, issuer or an assignee shall begin to impose and collect the specified instrument funding charges from retail customers, classes of retail customers, and any other persons or groups of persons as set forth in the pertinent transitional funding order and shall file tariffs in accordance with subsection (j) of Section 18‑104 of this Article. (b) The transitional funding order shall require that the proceeds from the issuance of transitional funding instruments shall be used for the purposes set forth in subparagraph (1) of subsection (d) of Section 18‑103 of this Article. (c) Notwithstanding any other provision of law, neither the transitional funding order nor the intangible transition property created and established thereby nor the instrument funding charges authorized to be imposed and collected thereunder shall be subject to reduction, postponement, impairment or termination by any subsequent action of the Commission; provided, however, that nothing in this paragraph is intended to supersede any right of any party to the Commission's proceeding relating to the transitional funding order to seek judicial review of such transitional funding order. (d) The Commission shall provide in any transitional funding order for a procedure for periodic adjustments to the instrument funding charges set forth therein in order to ensure the repayment in accordance with the projections set forth in the transitional funding order of all grantee instruments or, if such transitional funding order does not provide for the issuance of grantee instruments, the corresponding transitional funding instruments authorized therein and to reconcile the revenues received from instrument funding charges during the applicable adjustment period with the revenues projected to be received from such charges as set forth in the relevant transitional funding order. Unless the transitional funding order otherwise provides, such adjustments shall be required whenever the instrument funding charges actually collected during the applicable adjustment period by the appropriate party or parties were greater or less than the instrument funding charges projected in the relevant transitional funding order to be collected in such adjustment period; provided that, if so requested by an electric utility in any application for a transitional funding order, the transitional funding order may (i) specify a dollar or percentage amount of variation from the projected revenues within which no such adjustments will be required and/or (ii) set forth a maximum adjustment amount for the instrument funding charges. The electric utility (or such other party as may be specified in the pertinent transitional funding order) shall determine, within 90 days of the end of each adjustment period (or such shorter period as may be provided in the documents relating to the pertinent transitional funding instruments or grantee instruments, as applicable), whether any adjustments described above in this subsection (d) of Section 18‑104 are required. If any such adjustments are so required, such adjustments shall be implemented by the electric utility, grantee, issuer or assignee, as applicable, with written notice to the Commission, within such 90‑day period (or such shorter period as may be provided for in the documents relating to the pertinent transitional funding instruments or grantee instruments, as applicable). Any such adjustment shall be calculated to include amounts necessary for recovery of any additional costs incurred by the grantee, electric utility, assignee or issuer as a result of the relevant delay in collections of instrument funding charges. If, as a result of any adjustment, the amount of any instrument funding charge, as so adjusted, will exceed an amount per kilowatt‑hour greater than the amount per kilowatt‑hour of the instrument funding charge initially authorized by the Commission in its transitional funding order, then the relevant electric utility shall be obligated to file amendatory tariffs in compliance with subsection (k) of Section 18‑104. (e) Except where this Article specifically requires otherwise, the collection of instrument funding charges and the allocation of any such collections as among holders, assignees, issuers, grantees and any other parties entitled to receive portions thereof, may be accomplished according to the provisions set forth in the applicable transitional funding order, or, if the order is silent on any such matters, according to the provisions set forth in the documents relating to the pertinent transitional funding instruments or grantee instruments, as applicable. Notwithstanding the foregoing, the electric utility, grantee, issuer or assignee, as applicable, shall determine no later than 90 days after the stated maturity date of each series of grantee instruments or, if the related transitional funding order does not provide for the issuance of grantee instruments, the stated maturity date of transitional funding instruments, whether the aggregate amount of instrument funding charges collected prior to such stated maturity date exceeds the amount required to provide for the payment of all principal, interest, premium and servicing and other fees, costs and charges owing under such grantee instruments or transitional funding instruments, as the case may be. If it is determined that the aggregate amount of instrument funding charges collected exceeds the amount required to provide for the payment of all principal, interest, premium and servicing and other fees, costs and charges related to such grantee instruments or transitional funding instruments, as the case may be, such excess, together with any investment earnings thereon, shall be paid to the owner of the pertinent intangible transition property. (f) Notwithstanding any other provision of law, on such conditions as the Commission may approve in the pertinent transitional funding order, the interest of an electric utility, assignee, issuer or grantee in intangible transition property or grantee instruments, as applicable, may be assigned, sold or otherwise transferred, in whole or in part, and may, in whole or in part, be pledged or assigned as security to or for the benefit of a holder or holders. To the extent that any such interest or portion thereof is assigned, sold or otherwise transferred or is established, created and granted to a grantee or is pledged or assigned as security, the Commission, in the pertinent transitional funding order, shall authorize the electric utility or any affiliate thereof to contract with the grantee, issuer, assignee or holders to collect the applicable instrument funding charges for the benefit and account of the grantee, issuer, assignee or holder, and such electric utility or affiliate will, except as otherwise specified in the transitional funding order, account for and remit the applicable instrument funding charge, without the obligation to remit any investment earnings thereon, to or for the account of the grantee, issuer, assignee or holder. The obligation of such electric utility or affiliate to collect and remit the applicable instrument funding charges hereunder shall continue irrespective of whether such electric utility is providing electric power and/or other services to the retail customers and other persons obligated to pay such instrument funding charges. If the documents creating the transitional funding instruments or grantee instruments, if any, so provide, such obligations shall, in the event of a default by such electric utility or affiliate in performing such obligations, be undertaken and performed by any other entity selected by the assignee or any holder, group of holders or trustee or agent on behalf of such holder or holders, as the case may be, (i) which provides electric power or services to a person that was a retail customer of such electric utility and (ii) from whom such electric utility is entitled to recover transition charges under Section 16‑108; provided, however, that any failure by the designated party to perform such obligations shall not affect the existence of the intangible transition property or the instrument funding charges or the validity or enforceability of the instrument funding charges in accordance with their terms. (g) In its transitional funding order, the Commission shall afford flexibility in establishing the terms and conditions of the transitional funding instruments and the grantee instruments, if any, including repayment schedules, collateral, required debt service and other reserves, interest rates and other financing costs and the ability of the electric utility, at its option, to effect a series of issuances of transitional funding instruments and grantee instruments and correlated assignments, sales, pledges or other transfers of intangible transition property and grantee instruments, if any, not to exceed the aggregate dollar amounts approved in the transitional funding order. (h) The electric utility shall file a statement of the final terms of the issuance of any series of transitional funding instruments or grantee instruments, if any, with the Commission within 90 days of the receipt of proceeds from such issuance. In addition, the Commission may require the electric utility to file periodic reports on its use of the proceeds at intervals of not less than one year. (i) Any adjustment to instrument funding charges that is necessary due to subsequent refinancing of transitional funding instruments or grantee instruments, if any, shall be authorized by the Commission in a supplemental order. (j) In connection with the issuance of a transitional funding order and as a precondition to the imposition of any instrument funding charges authorized thereby, the relevant electric utility shall file tariffs directing that the amount of such instrument funding charges be deducted, stated, and collected separately from the amounts otherwise billed by such electric utility for base rates and transition charges and, where applicable, other rates for tariffed services as set forth in the transitional funding order. Upon the effectiveness of such tariff, the amounts of instrument funding charges thereby deducted and to be deducted shall have become intangible transition property as specified in the transitional funding order. The Commission shall have no authority to review such tariffs except to confirm that the instrument funding charges authorized in the transitional funding order have been deducted, stated, and collected separately from base rates and transition charges and, where applicable, other rates for tariffed services otherwise in effect at such time, and the filing of any such tariff may not be suspended for any other reason. No such deductions referred to in this subsection shall be construed as a change in or otherwise require a recalculation of the authorized amounts of such base rates, transition charges, and other rates for tariffed services under Section 16‑102, 16‑107, 16‑108, or 16‑110, as applicable. Instrument funding charges shall be recoverable with respect to electric power and energy or other services for which the deductions provided in this subsection have become effective and no such deduction shall be effective with respect to any services or power in respect of which instrument funding charges have not been so authorized and imposed. (k) If any adjustment under subsection (d) of Section 18‑104 results in the amount of any instrument funding charge as so adjusted exceeding an amount per kilowatt‑hour greater than the amount per kilowatt‑hour of the instrument funding charge initially authorized by the Commission in its transitional funding order, the relevant electric utility shall file amendatory tariffs reducing the amounts otherwise billed by such electric utility for base rates and transition charges or, where applicable, other rates for tariffed services, by the amount of such excess. Such amendatory tariff shall be subject to the provisions of subsection (j) of Section 18‑104, except that (i) the failure of such amendatory tariff to become effective for any reason shall not delay or impair the effectiveness of the adjustments required under subsection (d) of Section 18‑104 and (ii) the obligation of retail customers and other persons or groups of persons to pay instrument funding charges as so adjusted shall not be subject to any defense, counterclaim or right of set off arising as a result of failure by the pertinent electric utility to comply with this subsection (k) of Section 18‑104. Nothing in this subsection (k) of Section 18‑104 shall restrict any retail customer or other person from bringing any suit in any court or from exercising any other legal or equitable remedy against an electric utility for any failure by such electric utility to comply with this subsection (k) of Section 18‑104. (l) The intangible transition property created under a transitional funding order and the authority of the grantee, assignee, issuer, electric utility or other person authorized thereunder to impose and collect instrument funding charges shall continue beyond the final date set forth in the applicable transitional funding order until such time as all grantee instruments authorized in such order or, if the applicable transitional funding order does not provide for grantee instruments, the related transitional funding instruments authorized in such order, have been paid in full. Upon the later of the final date set forth in the applicable transitional funding order for the imposition and collection of instrument funding charges or the repayment in full of any grantee instruments or transitional funding instruments, as applicable, authorized in such order, the authority to impose and collect the related instrument funding charges shall cease and the relevant electric utility shall be entitled to file tariffs revoking any deductions from base rates, transition charges or other rates for tariffed services which were granted in connection with such instrument funding charges pursuant to subsection (j) of Section 18‑104 or subsection (k) of Section 18‑104. The Commission shall have no authority to review such tariffs except to determine that the rates and charges resulting from such revocation do not exceed the applicable base rates, transition charges, or other rates for tariffed services which would otherwise have been in effect at the time of such revocation had no instrument funding charges ever been deducted therefrom. (m) If so requested by an electric utility in its application for a transitional funding order, the Commission, in the relevant transitional funding order, may authorize (i) the issuance of grantee instruments and/or transitional funding instruments with expected maturity dates later than December 31, 2008 but not later than December 31, 2010 and (ii) the imposition and collection of instrument funding charges by electric utilities, grantees, or assignees later than December 31, 2008 but not later than December 31, 2010 if the electric utility includes in its application a pro forma calculation of the impact of the issuance of the transitional funding instruments or grantee instruments and the associated use of proceeds on the revenue requirement established by the Commission in the electric utility's last rate case, with such calculation to be presented for illustrative purposes only, and the Commission, in its review of the relevant application for the transitional funding order, finds that such action is in the public interest and that the instrument funding charges to be applied toward payment of transitional funding instruments after December 31, 2008 will be deducted, stated, and collected separately from base rates and, where applicable, other rates for tariffed services otherwise in effect at such time and as scheduled to be in effect through such expected maturity date. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑105) Sec. 18‑105. Intangible transition property. (a) Notwithstanding any other provision of this Act or other law, the Commission is hereby authorized, in accordance with the application for a transitional funding order, to create, establish and grant rights in, to and under intangible transition property in and to any grantee, electric utility, issuer or assignee, and such party shall be granted the power to levy general tariffs on retail customers of an electric utility or any other person required to pay an instrument funding charge in order to collect the instrument funding charges related to the intangible transition property in which such party has been granted rights and in order to facilitate the issuance of transitional funding instruments and grantee instruments, if any, to, by or on behalf of electric utilities, grantees, issuers or assignees. The Commission shall be authorized to create, establish and grant such rights hereunder in and to such party with or without receiving consideration from such party. (b) The State pledges to and agrees with the holders of any transitional funding instruments who may enter into contracts with an electric utility, grantee, assignee or issuer pursuant to this Article XVIII that the State will not in any way limit, alter, impair or reduce the value of intangible transition property created by, or instrument funding charges approved by, a transitional funding order so as to impair the terms of any contract made by such electric utility, grantee, assignee or issuer with such holders or in any way impair the rights and remedies of such holders until the pertinent grantee instruments or, if the related transitional funding order does not provide for the issuance of grantee instruments, the pertinent transitional funding instruments and interest, premium and other fees, costs and charges related thereto, as the case may be, are fully paid and discharged. Electric utilities, grantees and issuers are authorized to include these pledges and agreements of the State in any contract with the holders of transitional funding instruments or with any assignees pursuant to this Article XVIII and any assignees are similarly authorized to include these pledges and agreements of the State in any contract with any issuer, holder or any other assignee. Nothing in this Article XVIII shall preclude the State of Illinois from requiring adjustments as may otherwise be allowed by law to the electric utility's base rates, transition charges, delivery services charges, or other charges for tariffed services, so long as any such adjustment does not directly affect or impair any instrument funding charges previously authorized by a transitional funding order issued by the Commission. (c) Transitional funding instruments and grantee instruments, if any, issued under this Article do not constitute debt or liability of the State or of any political subdivision thereof, and transitional funding orders authorizing such issuance do not constitute a pledge of the full faith and credit of the State or of any of its political subdivisions. The issuance of transitional funding instruments and grantee instruments, if any, under this Article 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, and any such transitional funding instruments and grantee instruments, if any, shall be payable solely from the intangible transition property or grantee instruments, as the case may be, or from such other proceeds or property as may be pledged therefor. Nothing in this Section shall be construed to prevent the State or any political subdivision thereof from owning any interest in a grantee, assignee or issuer or to prevent any electric utility, issuer, grantee or assignee from selling, pledging or assigning intangible transition property or grantee instruments, as the case may be, or from providing recourse or guarantees or any other third‑party credit enhancement in connection with such sale, pledge or assignment. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑106) Sec. 18‑106. Grantee instruments. (a) If an electric utility to which grantee instruments have been issued discontinues providing electric power and energy services prior to the maturity date of such grantee instruments, such electric utility shall not be entitled to receive any payment on such grantee instruments on and after the date of such discontinuance. (b) Notwithstanding the provisions of subsection (a) of this Section, any assignee holding such grantee instruments or any holder of transitional funding instruments which are secured by such grantee instruments shall nevertheless be entitled to recover amounts payable by such grantee under such grantee instruments in accordance with their terms as if such electric utility had not discontinued the provision of electric power and energy. (c) Notwithstanding any other provision of law, the issuance of any grantee instruments in accordance with the terms and provisions of a transitional funding order shall for all purposes be exempt from the application of Article 39 of the Criminal Code of 1961 and the Interest Act. (Source: P.A. 90‑561, eff. 12‑16‑97.)
(220 ILCS 5/18‑107) Sec. 18‑107. Security interests in intangible transition property and grantee instruments. (a) Notwithstanding any other provision of law, neither intangible transition property, grantee instruments nor any right, title or interest therein, shall constitute property in which a security interest may be created under the Uniform Commercial Code nor shall any such rights be deemed proceeds of any property which is not intangible transition property or grantee instruments, as the case may be. For purposes of the foregoing, the terms "account", "general intangible", "instrument", and "payment intangible" (as defined under Section 9‑102 of the Uniform Commercial Code) shall, as used in the Uniform Commercial Code, be deemed to exclude any such intangible transition property, grantee inst
