CHAPTER 8.9. FINANCING OF SUBSTITUTE NATURAL GAS COSTS
IC 8-1-8.9
Chapter 8.9. Financing of Substitute Natural Gas Costs
IC 8-1-8.9-1
"Assignee" defined
Sec. 1. (a) As used in this chapter, "assignee" means anyindividual, corporation, or other legal entity to which an SNGproperty interest is transferred.
(b) The term includes an assignee of a person described insubsection (a).
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-2
"Commission" defined
Sec. 2. As used in this chapter, "commission" refers to the Indianautility regulatory commission created by IC 8-1-1-2.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-3
"Energy utility" defined
Sec. 3. As used in this chapter, "energy utility" has the meaningset forth in IC 8-1-2.5-2.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-4
"Financing entity" defined
Sec. 4. As used in this chapter, "financing entity" means a personthat provides:
(1) equity financing; or
(2) debt financing;
that is secured by an SNG property interest.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-5
"Qualified contract" defined
Sec. 5. As used in this chapter, "qualified contract" means acontract with a term of at least thirty (30) years for the sale ofsubstitute natural gas to an energy utility.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-6
"Qualified cost" defined
Sec. 6. As used in this chapter, "qualified cost" means any costincurred by an energy utility in purchasing substitute natural gasunder a qualified contract.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-7
"Qualified order" defined
Sec. 7. As used in this chapter, "qualified order" means a final and
irrevocable order that:
(1) is issued by the commission; and
(2) approves a qualified contract adopted in accordance withthis chapter and IC 8-1-2-42.1.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-8
"Substitute natural gas" defined
Sec. 8. As used in this chapter, "substitute natural gas" or "SNG"has the meaning set forth in IC 8-1-2-42.1(a).
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-9
"SNG property interest" defined
Sec. 9. As used in this chapter, "SNG property interest" means theright, title, and interest that:
(1) are held by an energy utility or its assignee;
(2) are created by a qualified order; and
(3) entitle the energy utility or its assignee to recover qualifiedcosts under IC 8-1-2-42.1.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-10
"SNG seller" defined
Sec. 10. As used in this chapter, "SNG seller" means anyindividual, corporation, or other legal entity that engages in theproduction and sale of substitute natural gas.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-11
Qualified order for cost recovery
Sec. 11. (a) Notwithstanding any other law, the commission may,in accordance with this chapter and IC 8-1-2-42.1, issue a qualifiedorder that:
(1) approves the terms of a qualified contract; and
(2) authorizes the recovery of qualified costs by an energyutility from its customers.
(b) A qualified order issued under this section may not be:
(1) rescinded;
(2) nullified; or
(3) modified;
in such a manner that reduces or otherwise impairs the value of anSNG property interest.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-12
SNG property interest; property rights
Sec. 12. (a) An SNG property interest, including any right tofuture purchases of substitute natural gas during the term of aqualified contract, constitutes a present property right. (b) Qualified costs recovered by an energy utility under aqualified order constitute proceeds of only the SNG property interestthat is created by the qualified order.
(c) If the commission issues a qualified order under section 11 ofthis chapter, the state covenants and agrees, for the benefit of theenergy utility and any assignee or financing entity involved, that thestate will not take or permit any action that would:
(1) reduce or otherwise impair the value of the SNG propertyinterest created by the qualified order; or
(2) limit, alter, or impair:
(A) the qualified order;
(B) the SNG property interest created by the qualified order;or
(C) qualified costs that are:
(i) imposed on and collected by the energy utility; and
(ii) remitted to the SNG seller;
under the terms of the qualified contract;
until the qualified contract has been performed in full.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-13
SNG property interest; assignability
Sec. 13. (a) An energy utility may assign an SNG property interestto an assignee, including:
(1) another party to the qualified contract; or
(2) a financing entity.
An assignee may in turn assign an SNG property interest to afinancing entity that provides financing to the assignee.
(b) An assignment to a financing entity under this section may be:
(1) an absolute assignment of the SNG property interest; or
(2) an assignment of the SNG property interest as collateral foran obligation owed to the financing entity.
(c) An assignee under this section may enforce the SNG propertyinterest by all applicable legal and equitable means.
(d) Any amounts collected by an energy utility in connection withthe sale, transfer, or disposition of substitute natural gas under aqualified contract that forms the basis of an SNG property interestassigned under this section constitute the property of the assignee.Pending the transfer of the SNG property interest to the assignee, theamounts described in this subsection shall be:
(1) segregated by the energy utility; and
(2) held in trust for the benefit of the assignee;
subject to the terms of the qualified contract that forms the basis ofthe SNG property interest that is being assigned.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-14
SNG property interest; bankruptcy setoff
Sec. 14. The interests of an assignee in:
(1) an SNG property interest transferred to the assignee under
section 13 of this chapter; and
(2) any revenues or collections arising from the SNG propertyinterest transferred;
are not subject to setoff by the energy utility that transferred the SNGproperty interest, or by any other person, in connection with anybankruptcy proceeding involving the energy utility.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-15
SNG property interest; true sale
Sec. 15. (a) If an agreement by an energy utility or an assignee toassign an SNG property interest expressly states that the assignmentis a sale or is otherwise an absolute transfer:
(1) the resulting transaction:
(A) is a true sale; and
(B) is not a secured transaction; and
(2) title, both legal and equitable, passes to the person to whichthe SNG property interest is assigned.
(b) A transaction resulting from an agreement described insubsection (a) is a true sale regardless of whether:
(1) the assignee has recourse against the assignor; or
(2) the agreement provides for any of the following:
(A) The assignor's retention of an equity interest in the SNGproperty interest transferred.
(B) Continuing obligations of the energy utility under thequalified contract, including the obligation of the energyutility to serve as the collector of qualified costs.
(C) The treatment of the transfer as a financing for tax,financial reporting, or other purposes.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-16
SNG property interest; security interests
Sec. 16. (a) An SNG property interest does not constitute anaccount or a general intangible under IC 26-1-9.1-102. The creation,granting, perfection, and enforcement of liens and security interestsin SNG property interests are governed by this chapter and not byIC 26-1-9.1.
(b) A valid and enforceable lien and security interest in an SNGproperty interest may be created only by the execution and deliveryof a security agreement with a financing entity in connection with theissuance of indebtedness. The security interest attaches automaticallyfrom the time that value is received for the indebtedness secured bythe SNG property interest and, upon perfection through the filing ofnotice with the secretary of state:
(1) constitutes a continuously perfected lien and securityinterest in the SNG property interest and all proceeds of theSNG property interest, whether or not accrued;
(2) has priority in the order of its filing; and
(3) takes precedence over any subsequent judicial lien or other
creditor's lien.
If notice is filed with the secretary of state not later than ten (10)days after value is received for the indebtedness, the security interestis perfected retroactive to the date the value was received. If noticeis not filed with the secretary of state within ten (10) days after valueis received for the indebtedness, the security interest is perfected asof the date of filing.
(c) Transfer of an SNG property interest to an assignee isperfected against all third parties, including subsequent judicial orother lien creditors, upon:
(1) the delivery of transfer documents to the assignee; and
(2) the filing of notice with the secretary of state in accordancewith subsection (b).
However, if notice of the transfer is not filed with the secretary ofstate within ten (10) days after the delivery of the transferdocumentation, the transfer of the SNG property interest is notperfected against third parties until the notice is filed.
(d) The priority of a lien and security interest under this sectionis not impaired by either of the following:
(1) A later modification of the qualified order creating the SNGproperty interest being transferred.
(2) The commingling of other funds with funds collected inconnection with a qualified contract. Any other security interestthat may apply to funds collected in connection with a qualifiedcontract terminates when the funds are transferred to asegregated account for the benefit of the assignee or a financingentity. If an SNG property interest has been transferred to anassignee, any proceeds from the SNG property interest shall beheld in trust for the assignee.
(e) If a default or termination occurs in connection with afinancing secured by an SNG property interest, the financing entityor its representative may foreclose on or otherwise enforce its lienand security interest in the SNG property interest as if the financingentity were a secured party under IC 26-1-9.1. Amounts arising fromthe qualified contract that is the basis of the SNG property interestshall be transferred to a separate account for the financing entity'sbenefit and are subject to the financing entity's security interest andlien.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-17
SNG property interest; status of parties to transaction
Sec. 17. An assignee or a financing party is not considered anenergy utility solely by virtue of its participation in any transactiondescribed in this chapter.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-18
SNG property interest; successor obligations
Sec. 18. Any entity that becomes a successor to an energy utility
as the result of:
(1) any bankruptcy, reorganization, or other insolvencyproceeding;
(2) any merger, sale, or transfer involving the energy utility; or
(3) the operation of law;
or for any other reason, shall perform and satisfy any obligations ofthe energy utility incurred under this chapter in the same manner andto the same extent as the energy utility would have been obligated toperform, including the obligation to pay to an assignee any fundscollected by the energy utility in connection with the SNG propertyinterest assigned to the assignee.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-19
SNG property interest; SNG seller contract with energy utility
Sec. 19. An SNG seller that is an assignee may contract with theenergy utility, in the qualified contract or in another contract, for theperformance of services related to the sale of substitute natural gasunder the qualified contract, including:
(1) the transportation and distribution of substitute natural gas;and
(2) billing, collection, and other related services;
according to terms and conditions that reasonably compensate theenergy utility for its services and adequately secure payment to theSNG seller.
As added by P.L.175-2007, SEC.21.
IC 8-1-8.9-20
SNG property interest; SNG seller rights
Sec. 20. If an energy utility makes a true sale of an SNG propertyinterest to an SNG seller under section 15 of this chapter, the SNGseller:
(1) retains title to all substitute natural gas distributed by theenergy utility to the energy utility's retail end use customers;
(2) is entitled to all amounts collected by the energy utility fromits retail end use customers for the distribution of the substitutenatural gas, subject to the terms of the qualified contract; and
(3) has the same rights to payments made by the energy utility'sretail end use customers as does the energy utility that providesthe substitute natural gas to those customers.
As added by P.L.175-2007, SEC.21.