H.B. No. 1520         AN ACT   relating to certain extraordinary costs incurred by certain gas   utilities relating to Winter Storm Uri and a study of measures to   mitigate similar future costs; providing authority to issue bonds   and impose fees and assessments.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 1232.002, Government Code, is amended to   read as follows:          Sec. 1232.002.  PURPOSE. The purpose of this chapter is to   provide a method of financing for:                (1)  the acquisition or construction of buildings;   [and]                (2)  the purchase or lease of equipment by executive or   judicial branch state agencies; and                (3)  customer rate relief bonds authorized by the   Railroad Commission of Texas in accordance with Subchapter I,   Chapter 104, Utilities Code.          SECTION 2.  Section 1232.066(a), Government Code, is amended   to read as follows:          (a)  The board's authority under this chapter is limited to   the financing of:                (1)  the acquisition or construction of a building;                (2)  the purchase or lease of equipment; [or]                (3)  stranded costs of a municipal power agency; or                (4)  customer rate relief bonds approved by the   Railroad Commission of Texas in accordance with Subchapter I,   Chapter 104, Utilities Code.          SECTION 3.  Subchapter C, Chapter 1232, Government Code, is   amended by adding Section 1232.1072 to read as follows:          Sec. 1232.1072.  ISSUANCE OF OBLIGATIONS FOR FINANCING   CUSTOMER RATE RELIEF PROPERTY. (a)  The definitions in Section   104.362, Utilities Code, apply to terms used in this section.          (b)  The authority may create an issuing financing entity for   the purpose of issuing customer rate relief bonds approved by the   Railroad Commission of Texas in a financing order, as provided by   Subchapter I, Chapter 104, Utilities Code.          (c)  An issuing financing entity created under this section   is a duly constituted public authority and instrumentality of the   state and is authorized to issue customer rate relief bonds on   behalf of the state for the purposes of Section 103, Internal   Revenue Code of 1986 (26 U.S.C. Section 103).          (d)  The issuing financing entity must be governed by a   governing board of three members appointed by the authority.  A   member of the governing board may be a current or former director of   the authority.  A member of the governing board serves without   compensation but is entitled to reimbursement for travel expenses   incurred in attending board meetings.          (e)  The issuing financing entity must be formed in   accordance with, be governed by, and have the powers, rights, and   privileges provided for a nonprofit corporation organized under the   Business Organizations Code, including Chapter 22 of that code,   subject to the express exceptions and limitations provided by this   section and Subchapter I, Chapter 104, Utilities Code.  A single   organizer selected by the executive director of the authority shall   prepare the certificate of formation of the issuing financing   entity under Chapters 3 and 22, Business Organizations Code.  The   certificate of formation must be consistent with the provisions of   this section.          (f)  The authority shall establish the issuing financing   entity to act on behalf of the state as its duly constituted   authority and instrumentality to issue customer rate relief bonds   approved under Subchapter I, Chapter 104, Utilities Code.          (g)  On a request to the authority from the Railroad   Commission of Texas, the authority shall direct an issuing   financing entity to issue customer rate relief bonds in accordance   with a financing order issued by the railroad commission as   provided in Subchapter I, Chapter 104, Utilities Code.          (h)  Before the issuance of any customer rate relief bonds,   the authority and the Railroad Commission of Texas shall ensure   that adequate provision is made in any financing order for the   recovery of all issuance costs and all other fees, costs, and   expenses of the authority, the issuing financing entity, and any   advisors or counsel hired by the authority or the entity for the   purposes of this section during the life of the customer rate relief   bonds.          (i)  Customer rate relief bonds are limited obligations of   the issuing financing entity payable solely from customer rate   relief property and any other money pledged by the issuing   financing entity to the payment of the bonds and are not a debt of   this state, the Railroad Commission of Texas, the authority, or a   gas utility.          (j)  The Railroad Commission of Texas shall ensure that   customer rate relief charges are imposed, collected, and enforced   in an amount sufficient to pay on a timely basis all bond   obligations, financing costs, and bond administrative expenses   associated with any issuance of customer rate relief bonds.          (k)  The authority and the Railroad Commission of Texas have   all the powers necessary to perform the duties and responsibilities   described by this section.  This section shall be interpreted   broadly in a manner consistent with the most cost-effective   financing of customer rate relief property, including regulatory   assets, extraordinary costs, and related financing costs approved   by the Railroad Commission of Texas in accordance with Subchapter   I, Chapter 104, Utilities Code.          (l)  Any interest on the customer rate relief bonds is not   subject to taxation by and may not be included as part of the   measurement of a tax by this state or a political subdivision of   this state.          (m)  The authority shall make periodic reports to the   Railroad Commission of Texas and the public regarding each   financing made in accordance with Section 104.373(b), Utilities   Code, and if required by the applicable financing order.          (n)  The issuing financing entity shall issue customer rate   relief bonds in accordance with and subject to other provisions of   Title 9 applicable to the authority.          (o)  The issuing financing entity may exercise the powers   granted to the governing body of an issuer with regard to the   issuance of obligations and the execution of credit agreements   under Chapter 1371.  A purpose for which bonds, obligations, or   other evidences of indebtedness are issued under this section and   Subchapter I, Chapter 104, Utilities Code, constitutes an eligible   project for purposes of Chapter 1371 of this code.          (p)  Assets of an issuing financing entity may not be   considered part of any state fund and must be held outside the state   treasury.  The liabilities of the issuing financing entity may not   be considered to be a debt of the state or a pledge of the state's   credit.  An issuing financing entity must be self-funded from   customer rate relief property and established in accordance with   Subchapter I, Chapter 104, Utilities Code.  A state agency may   provide money appropriated for the purpose to the issuing financing   entity to provide for initial operational expenses of the issuing   financing entity.          SECTION 4.  Section 1232.108, Government Code, is amended to   read as follows:          Sec. 1232.108.  LEGISLATIVE AUTHORIZATION REQUIRED. Except   as permitted by Section 1232.1072, 1232.109, 2166.452, or 2166.453,   before the board may issue and sell bonds, the legislature by the   General Appropriations Act or other law must have authorized:                (1)  the specific project for which the bonds are to be   issued and sold; and                (2)  the estimated cost of the project or the maximum   amount of bonded indebtedness that may be incurred by the issuance   and sale of bonds for the project.          SECTION 5.  Chapter 104, Utilities Code, is amended by   adding Subchapter I to read as follows:   SUBCHAPTER I.  CUSTOMER RATE RELIEF BONDS          Sec. 104.361.  PURPOSE; RAILROAD COMMISSION DUTY.  (a)  The   purpose of this subchapter is to reduce the cost that customers   would otherwise experience because of extraordinary costs that gas   utilities incurred to secure gas supply and provide service during   Winter Storm Uri, and to restore gas utility systems after that   event, by providing securitization financing for gas utilities to   recover those costs. The securitization financing mechanism   authorized by this subchapter will:                (1)  provide rate relief to customers by extending the   period during which the costs described by this subsection are   recovered from customers; and                (2)  support the financial strength and stability of   gas utility companies.          (b)  The railroad commission shall ensure that   securitization provides tangible and quantifiable benefits to   customers, greater than would have been achieved absent the   issuance of customer rate relief bonds.          Sec. 104.362.  DEFINITIONS. In this subchapter:                (1)  "Ancillary agreement" means a financial   arrangement entered into in connection with the issuance or payment   of customer rate relief bonds that enhances the marketability,   security, or creditworthiness of customer rate relief bonds,   including a bond, insurance policy, letter of credit, reserve   account, surety bond, interest rate or currency swap arrangement,   interest rate lock agreement, forward payment conversion   agreement, credit agreement, other hedging arrangement, or   liquidity or credit support arrangement.                (2)  "Authority" means the Texas Public Finance   Authority.                (3)  "Bond administrative expenses" means all costs and   expenses incurred by the railroad commission, the authority, or any   issuing financing entity to evaluate, issue, and administer   customer rate relief bonds issued under this subchapter, including   fees and expenses of the authority, any bond administrator, and the   issuing financing entity, fees for paying agents, trustees, and   attorneys, and fees for paying for other consulting and   professional services necessary to ensure compliance with this   subchapter, applicable state or federal law, and the terms of the   financing order.                (4)  "Bond obligations" means the principal of a   customer rate relief bond and any premium and interest on a customer   rate relief bond issued under this subchapter, together with any   amount owed under a related ancillary agreement or credit   agreement.                (5)  "Credit agreement" has the meaning assigned by   Section 1371.001, Government Code.                (6)  "Customer rate relief bonds" means bonds, notes,   certificates, or other evidence of indebtedness or ownership the   proceeds of which are used directly or indirectly to recover,   finance, or refinance regulatory assets approved by the railroad   commission, including extraordinary costs and related financing   costs, and that are:                      (A)  issued by an issuing financing entity under a   financing order; and                      (B)  payable from and secured by customer rate   relief property and amounts on deposit in any trust accounts   established for the benefit of the customer rate relief bondholders   as approved by the applicable financing order.                (7)  "Customer rate relief charges" means the amounts   authorized by the railroad commission as nonbypassable charges to   repay, finance, or refinance regulatory assets, including   extraordinary costs, financing costs, bond administrative   expenses, and other costs authorized by the financing order:                      (A)  imposed on and included in customer bills of   a gas utility that has received a regulatory asset determination   under Section 104.365;                      (B)  collected in full by a gas utility that has   received a regulatory asset determination under Section 104.365, or   its successors or assignees, or a collection agent, as servicer,   separate and apart from the gas utility's base rates; and                      (C)  paid by all existing or future customers   receiving service from a gas utility that has received a regulatory   asset determination under Section 104.365 or its successors or   assignees, even if a customer elects to purchase gas from an   alternative gas supplier.                (8)  "Customer rate relief property" means:                      (A)  all rights and interests of an issuing   financing entity or any successor under a financing order,   including the right to impose, bill, collect, and receive customer   rate relief charges authorized in the financing order and to obtain   periodic adjustments to those customer rate relief charges as   provided in the financing order and in accordance with Section   104.370; and                      (B)  all revenues, collections, claims, rights to   payments, payments, money, or proceeds arising from the rights and   interests specified by Paragraph (A), regardless of whether the   revenues, collections, claims, rights to payments, payments,   money, or proceeds are imposed, billed, received, collected, or   maintained together with or commingled with other revenues,   collections, rights to payments, payments, money, or proceeds.                (9)  "Financing costs" means any of the following:                      (A)  interest and acquisition, defeasance, or   redemption premiums that are payable on customer rate relief bonds;                      (B)  a payment required under an ancillary   agreement or credit agreement or an amount required to fund or   replenish reserve or other accounts established under the terms of   an indenture, ancillary agreement, or other financing document   pertaining to customer rate relief bonds;                      (C)  issuance costs or ongoing costs related to   supporting, repaying, servicing, or refunding customer rate relief   bonds, including servicing fees, accounting or auditing fees,   trustee fees, legal fees or expenses, consulting fees,   administrative fees, printing fees, financial advisor fees or   expenses, Securities and Exchange Commission registration fees,   issuer fees, bond administrative expenses, placement and   underwriting fees, capitalized interest, overcollateralization   funding requirements including amounts to fund or replenish any   reserve established for a series of customer rate relief bonds,   rating agency fees, stock exchange listing and compliance fees,   filing fees, and any other bond administrative expenses; and                      (D)  the costs to the railroad commission of   acquiring professional or consulting services for the purpose of   evaluating extraordinary costs under this subchapter.                (10)  "Financing order" means an order adopted under   Section 104.366 approving the issuance of customer rate relief   bonds and the creation of customer rate relief property and   associated customer rate relief charges for the recovery of   regulatory assets, including extraordinary costs, related   financing costs, and other costs authorized by the financing order.                (11)  "Financing party" means a holder of customer rate   relief bonds, including a trustee, a pledgee, a collateral agent,   any party under an ancillary agreement, or other person acting for   the holder's benefit.                (12)  "Gas utility" means:                      (A)  an operator of natural gas distribution   pipelines that delivers and sells natural gas to the public and that   is subject to the railroad commission's jurisdiction under Section   102.001; or                      (B)  an operator that transmits, transports,   delivers, or sells natural gas or synthetic natural gas to   operators of natural gas distribution pipelines and whose rates for   those services are established by the railroad commission in a rate   proceeding filed under this chapter.                (13)  "Issuing financing entity" means a special   purpose nonmember, nonstock, nonprofit public corporation   established by the authority under Section 1232.1072, Government   Code.                (14)  "Nonbypassable" means a charge that:                      (A)  must be paid by all existing or future   customers receiving service from a gas utility that has received a   regulatory asset determination under Section 104.365 or the gas   utility's successors or assignees, even if a customer elects to   purchase gas from an alternative gas supplier; and                      (B)  may not be offset by any credit.                (15)  "Normalized market pricing" means the average   monthly pricing at the Henry Hub for the three months immediately   preceding the month during which extraordinary costs were incurred,   plus contractual adders to the index price and other non-indexed   gas procurement costs.                (16)  "Regulatory asset" includes extraordinary costs:                      (A)  recorded by a gas utility in the utility's   books and records in accordance with the uniform system of accounts   prescribed for natural gas companies subject to the provisions of   the Natural Gas Act (15 U.S.C. Section 717 et seq.) by the Federal   Energy Regulatory Commission and generally accepted accounting   principles; or                      (B)  classified as a receivable or financial asset   under international financial reporting standards under the   railroad commission's authorization in the Notice of Authorization   for Regulatory Asset Accounting for Local Distribution Companies   Affected by the February 2021 Winter Weather Event issued February   13, 2021.                (17)  "Servicer" means, with respect to each issuance   of customer rate relief bonds, the entity identified by the   railroad commission in the financing order as servicer responsible   for collecting customer rate relief charges from participating gas   utilities, remitting all collected funds to the applicable issuing   financing entity or the bond trustee, calculating true-up   adjustments, and performing any other duties as specified in the   financing order.                (18)  "Winter Storm Uri" means the North American   winter storm that occurred in February 2021.          Sec. 104.363.  EXTRAORDINARY COSTS. For the purposes of   this subchapter, extraordinary costs are the reasonable and   necessary costs related to Winter Storm Uri, including carrying   costs, placed in a regulatory asset and approved by the railroad   commission in a regulatory asset determination under Section   104.365.          Sec. 104.364.  JURISDICTION AND POWERS OF RAILROAD   COMMISSION AND OTHER REGULATORY AUTHORITIES. (a) The railroad   commission may authorize the issuance of customer rate relief bonds   if the requirements of Section 104.366 are met.          (b)  The railroad commission may assess to a gas utility   costs associated with administering this subchapter. Assessments   must be recovered from rate-regulated customers as part of gas   cost.          (c)  The railroad commission has exclusive, original   jurisdiction to issue financing orders that authorize the creation   of customer rate relief property. Customer rate relief property   must be created and vested in an issuing financing entity and does   not constitute property of the railroad commission or any gas   utility.          (d)  Except as provided by Subsection (c), this subchapter   does not limit or impair a regulatory authority's plenary   jurisdiction over the rates, charges, and services rendered by gas   utilities in this state under Chapter 102.          Sec. 104.365.  REGULATORY ASSET DETERMINATION. (a) The   railroad commission, on application of a gas utility to recover a   regulatory asset, shall determine the regulatory asset amount to be   recovered by the gas utility. A gas utility may request recovery of   a regulatory asset under this subchapter only if the regulatory   asset is related to Winter Storm Uri.          (b)  A gas utility desiring to participate in the customer   rate relief bond process under a financing order by requesting   recovery of a regulatory asset must file an application with the   railroad commission on or before the 60th day after the effective   date of the Act enacting this subchapter.          (c)  If the railroad commission does not make a final   determination regarding the regulatory asset amount to be recovered   by a gas utility before the 151st day after the gas utility files   the application, the railroad commission is considered to have   approved the regulatory asset amount requested by the gas utility.          (d)  The regulatory asset determination is not subject to   reduction, impairment, or adjustment by further action of the   railroad commission, except as authorized by Section 104.370.          (e)  The regulatory asset determination is not subject to   rehearing by the railroad commission and may be appealed only to a   Travis County district court by a party to the proceeding.  The   appeal must be filed not later than the 15th day after the date the   order is signed by the railroad commission.          (f)  The judgment of the district court may be reviewed only   by direct appeal to the Supreme Court of Texas.  The appeal must be   filed not later than the 15th day after the date of entry of   judgment.          (g)  All appeals shall be heard and determined by the   district court and the Supreme Court of Texas as expeditiously as   possible with lawful precedence over other matters. Review on   appeal shall be based solely on the record before the railroad   commission and briefs to the court and limited to whether the   financing order:                (1)  complies with the constitution and laws of this   state and the United States; and                (2)  is within the authority of the railroad commission   to issue under this subchapter.          (h)  The railroad commission shall establish a schedule,   filing requirements, and a procedure for determining the prudence   of the costs included in a gas utility's regulatory asset.          (i)  To the extent a gas utility subject to this subchapter   receives insurance proceeds, governmental grants, or other sources   of funding that compensate or otherwise reimburse or indemnify the   gas utility for extraordinary costs following the issuance of   customer rate relief bonds, the gas utility may record the amount in   a regulatory liability account and that amount shall be reviewed in   a future proceeding. If an audit conducted under a valid gas   purchase agreement identifies a change of greater than five percent   to the total amount of the gas supply costs incurred during the   event for which regulatory asset recovery was approved, the gas   utility may record the amount in a regulatory asset or regulatory   liability account and that amount shall be reviewed for recovery in   a future proceeding.          Sec. 104.366.  FINANCING ORDERS AND ISSUANCE OF CUSTOMER   RATE RELIEF BONDS. (a) If the railroad commission determines that   customer rate relief bond financing for extraordinary costs is the   most cost-effective method of funding regulatory asset   reimbursements to be made to gas utilities, the railroad   commission, after the final resolution of all applications filed   under Section 104.365, may request the authority to direct an   issuing financing entity to issue customer rate relief bonds.   Before making the request, the railroad commission must issue a   financing order that complies with this section.          (b)  To make the determination described by Subsection (a),   the railroad commission must find that the proposed structuring,   expected pricing, and proposed financing costs of the customer rate   relief bonds are reasonably expected to provide benefits to   customers by:                (1)  considering customer affordability; and                (2)  comparing:                      (A)  the estimated monthly costs to customers   resulting from the issuance of customer rate relief bonds; and                      (B)  the estimated monthly costs to customers that   would result from the application of conventional recovery methods.          (c)  The financing order must:                (1)  include a finding that the use of the   securitization financing mechanism is in the public interest and   consistent with the purposes of this subchapter;                (2)  detail the total amount of the regulatory asset   determinations to be included in the customer rate relief bond   issuance;                (3)  authorize the recovery of any tax obligation of   the gas utilities arising or resulting from:                      (A)  receipt of customer rate relief bond   proceeds; or                      (B)  collection or remittance of customer rate   relief charges through the gas utilities' gas cost recovery   mechanism or other means that the railroad commission determines   reasonable;                (4)  authorize the issuance of customer rate relief   bonds through an issuing financing entity;                (5)  include a statement of:                      (A)  the aggregated regulatory asset   determination to be included in the principal amount of the   customer rate relief bonds, not to exceed $10 billion for any   separate bond issue;                      (B)  the maximum scheduled final maturity of the   customer rate relief bonds, not to exceed 30 years, except that the   legal final maturity may be longer based on rating agency and market   considerations; and                      (C)  the maximum interest rate that the customer   rate relief bonds may bear, not to exceed the maximum net effective   interest rate allowed by law;                (6)  provide for the imposition, collection, and   mandatory periodic formulaic adjustment of customer rate relief   charges in accordance with Section 104.370 by all gas utilities and   successors of gas utilities for which a regulatory asset   determination has been made under Section 104.365 to ensure that   the customer rate relief bonds and all related financing costs will   be paid in full and on a timely basis by customer rate relief   charges;                (7)  authorize the creation of customer rate relief   property in favor of the issuing financing entity and pledge of   customer rate relief property to the payment of the customer rate   relief bonds;                (8)  direct the issuing financing entity to disperse   the proceeds of customer rate relief bonds, net of bond issuance   costs, reserves, and any capitalized interest, to gas utilities for   which a regulatory asset determination has been made under Section   104.365 and include the amounts to be distributed to each   participating gas utility;                (9)  provide that customer rate relief charges be   collected and allocated among customers of each gas utility for   which a regulatory determination has been made under Section   104.365 through uniform monthly volumetric charges to be paid by   customers as a component of the gas utility's gas cost or in another   manner that the railroad commission determines reasonable; and                (10)  reflect the commitment made by a gas utility   receiving proceeds that the proceeds are in lieu of recovery of   those costs through the regular ratemaking process or other   mechanism to the extent the costs are reimbursed to the gas utility   by customer rate relief bond financing proceeds.          (d)  The financing order may provide for a centralized   servicer to coordinate with participating gas utilities who bill   and collect customer rate relief charges and to provide certain   collection and forecast data required for calculating true-up   adjustments. The financing order may not provide for the railroad   commission, the authority, the issuing financing entity, or a   participating utility to act as servicer.          (e)  The principal amount determined by the railroad   commission must be increased to include an amount sufficient to:                (1)  pay the financing costs associated with the   issuance, including all bond administrative expenses to be paid   from the proceeds of the bonds;                (2)  reimburse the authority and the railroad   commission for any costs incurred for the issuance of the customer   rate relief bonds and related bond administrative expenses;                (3)  provide for any applicable bond reserve fund; and                (4)  capitalize interest for the period determined   necessary by the railroad commission.          (f)  The authority, consistent with this subchapter and the   terms of the financing order, shall:                (1)  direct an issuing financing entity to issue   customer rate relief bonds at the railroad commission's request, in   accordance with the requirements of Chapter 1232, Government Code,   and other provisions of Title 9, Government Code, that apply to bond   issuance by a state agency;                (2)  determine the methods of sale, types of bonds,   bond forms, interest rates, principal amortization, amount of   reserves or capitalized interest, and other terms of the customer   rate relief bonds that in the authority's judgment best achieve the   economic goals of the financing order and effect the financing at   the lowest practicable cost; and                (3)  reimburse the railroad commission, the authority,   or any issuing financing entity for bond administrative expenses   and other costs authorized under this subchapter.          (g)  To the extent authorized in the applicable financing   order, an issuing financing entity may enter into credit agreements   or ancillary agreements in connection with the issuance of customer   rate relief bonds.          (h)  The financing order becomes effective in accordance   with its terms.  The financing order, together with the customer   rate relief property and the customer rate relief charges   authorized by the financing order, is irrevocable and not subject   to reduction, impairment, or adjustment by further action of the   railroad commission, except as provided under Subsection (j) and   authorized by Section 104.370.          (i)  The railroad commission shall issue a financing order   under this section not later than the 90th day following the date of   the conclusion of all proceedings filed under Section 104.365.          (j)  A financing order is not subject to rehearing by the   railroad commission. A financing order may be appealed only to a   Travis County district court by a party to the proceeding.  The   appeal must be filed not later than the 15th day after the date the   financing order is signed by the railroad commission.          (k)  The judgment of the district court may be reviewed only   by direct appeal to the Supreme Court of Texas.  The appeal must be   filed not later than the 15th day after the date of entry of   judgment.          (l)  All appeals shall be heard and determined by the   district court and the Supreme Court of Texas as expeditiously as   possible with lawful precedence over other matters. Review on   appeal shall be based solely on the record before the railroad   commission and briefs to the court and is limited to whether the   financing order:                (1)  complies with the constitution and laws of this   state and the United States; and                (2)  is within the authority of the railroad commission   to issue under this subchapter.          (m)  The railroad commission shall transmit a financing   order to the authority after all appeals under this section have   been exhausted.          (n)  The authority shall direct an issuing financing entity   to issue customer rate relief bonds as soon as practicable and not   later than the 180th day after receipt of a financing order issued   under this section, except that the authority may cause the   issuance after the 180th day if necessary based on bond market   conditions, the receipt of necessary approvals, and the timely   receipt of necessary financial disclosure information from each   participating gas utility.          (o)  The issuing financing entity shall deliver customer   rate relief bond proceeds net of upfront financing costs in   accordance with the applicable financing order.          (p)  For the benefit of the authority, the issuing financing   entity, holders of customer rate relief bonds, and all other   financing parties, the railroad commission shall guarantee in a   financing order that the railroad commission will take all actions   in the railroad commission's powers to enforce the provisions of   the financing order to ensure that customer rate relief charge   revenues are sufficient to pay on a timely basis scheduled   principal and interest on the customer rate relief bonds and all   related financing costs and bond administrative expenses.          (q)  The railroad commission shall make periodic reports to   the public regarding each financing.          Sec. 104.367.  PROPERTY RIGHTS. (a) Customer rate relief   bonds are the limited obligation solely of the issuing financing   entity and are not a debt of a gas utility or a debt or a pledge of   the faith and credit of this state or any political subdivision of   this state.          (b)  Customer rate relief bonds are nonrecourse to the credit   or any assets of this state or the authority.  A trust fund created   in connection with the issuance of customer rate relief bonds is not   subject to Subtitle B, Title 9, Property Code.          (c)  The rights and interests of an issuing financing entity   or the successor under a financing order, including the right to   receive customer rate relief charges authorized in the financing   order, are only contract rights until pledged in connection with   the issuance of the customer rate relief bonds, at which time the   rights and interests become customer rate relief property.          (d)  Customer rate relief property created under a financing   order is vested ab initio in the issuing financing entity.  Customer   rate relief property constitutes a present property right for   purposes of contracts concerning the sale or pledge of property,   notwithstanding that the imposition and collection of customer rate   relief charges depends on further acts of the gas utility or others   that have not yet occurred. The financing order remains in effect,   and the customer rate relief property continues to exist, for the   same period as the pledge of the state described by Section 104.374.          (e)  All revenue and collections resulting from customer   rate relief charges constitute proceeds only of a property right   arising from the financing order.          (f)  An amount owed by an issuing financing entity under an   ancillary agreement or a credit agreement is payable from and   secured by a pledge and interest in the customer rate relief   property to the extent provided in the documents evidencing the   ancillary agreement or credit agreement.          Sec. 104.368.  PROPERTY INTEREST NOT SUBJECT TO SETOFF,   COUNTERCLAIM, SURCHARGE, OR DEFENSE. The interest of an issuing   financing entity or pledgee in customer rate relief property,   including the revenue and collections arising from customer rate   relief charges, is not subject to setoff, counterclaim, surcharge,   or defense by the gas utility or any other person or in connection   with the bankruptcy of the gas utility, the authority, or any other   entity. A financing order remains in effect and unabated   notwithstanding the bankruptcy of the gas utility, the authority,   an issuing financing entity, or any successor or assignee of the gas   utility, authority, or issuing financing entity.          Sec. 104.369.  CUSTOMER RATE RELIEF CHARGES NONBYPASSABLE.   A financing order must include terms ensuring that the imposition   and collection of the customer rate relief charges authorized in   the order are nonbypassable.          Sec. 104.370.  TRUE-UP MECHANISM. (a) A financing order   must include a formulaic true-up charge adjustment mechanism that   requires that the customer rate relief charges be reviewed and   adjusted at least annually by the servicer or replacement servicer,   including a subservicer or replacement subservicer, at time periods   and frequencies provided in the financing order, to:                (1)  correct any overcollections or undercollections   of the preceding 12 months; and                (2)  ensure the expected recovery of amounts sufficient   to provide for the timely payment of customer rate relief bond   principal and interest payments and other financing costs.          (b)  True-up charge adjustments must become effective not   later than the 30th day after the date the railroad commission   receives a true-up charge adjustment letter from the servicer or   replacement servicer notifying the railroad commission of the   pending adjustment.          (c)  Any administrative review of true-up charge adjustments   must be limited to notifying the servicer of mathematical or   clerical errors in the calculation.  The servicer may correct the   error and refile a true-up charge adjustment letter, with the   adjustment becoming effective as soon as practicable but not later   than the 30th day after the date the railroad commission receives   the refiled letter.          Sec. 104.371.  SECURITY INTERESTS; ASSIGNMENT; COMMINGLING;   DEFAULT. (a) Customer rate relief property does not constitute an   account or general intangible under Section 9.106, Business &   Commerce Code. The creation, granting, perfection, and enforcement   of liens and security interests in customer rate relief property   that secures customer rate relief bonds are governed by Chapter   1208, Government Code.          (b)  The priority of a lien and security interest perfected   under this section is not impaired by any later adjustment of   customer rate relief charges under a mechanism adopted under   Section 104.370 or by the commingling of funds arising from   customer rate relief charges with other funds. Any other security   interest that may apply to those funds is terminated when the funds   are transferred to a segregated account for the issuing financing   entity or a financing party. If customer rate relief property has   been transferred to a trustee or another pledgee of the issuing   financing entity, any proceeds of that property must be held in   trust for the financing party.          (c)  If a default or termination occurs under the customer   rate relief bonds, a district court of Travis County, on   application by or on behalf of the financing parties, shall order   the sequestration and payment to the financing parties of revenue   arising from the customer rate relief charges.          Sec. 104.372.  BOND PROCEEDS IN TRUST. (a) The issuing   financing entity may deposit proceeds of customer rate relief bonds   issued by the issuing financing entity under this subchapter with a   trustee selected by the issuing financing entity or the proceeds   may be held by the comptroller in a dedicated trust fund outside the   state treasury in the custody of the comptroller.          (b)  Bond proceeds, net of the financing costs and reserves   described by Subdivisions (2) and (3), including investment income,   must be held in trust for the exclusive benefit of the railroad   commission's policy of reimbursing gas utility costs and applied in   accordance with the financing order.  The issuing financing entity   shall deliver the net proceeds, as provided in the applicable   financing order, to:                (1)  reimburse each gas utility the regulatory asset   amount determined to be reasonable for that gas utility in the   financing order;                (2)  pay the financing costs of issuing the bonds; and                (3)  provide bond reserves or fund any capitalized   interest, as applicable.          (c)  On full payment of the customer rate relief bonds and   any related financing costs, any customer rate relief charges or   other amounts held as security for the bonds shall be used to   provide credits to gas utility customers as provided in the   financing order.          Sec. 104.373.  REPAYMENT OF CUSTOMER RATE RELIEF BONDS. (a)   As long as any customer rate relief bonds or related financing costs   remain outstanding, uniform monthly volumetric customer rate   relief charges must be paid by all current and future customers that   receive service from a gas utility for which a regulatory asset   determination has been made under Section 104.365. A gas utility   and its successors, assignees, or replacements shall continue to   bill and collect customer rate relief charges from the gas   utility's current and future customers until all customer rate   relief bonds and financing costs are paid in full.          (b)  The authority shall report to the railroad commission   the amount of the outstanding customer rate relief bonds issued by   the issuing financing entity under this subchapter and the   estimated amount of annual bond administrative expenses.          (c)  All revenue collected from the customer rate relief   charges shall be remitted promptly by the applicable servicers to   the issuing financing entity or the bond trustee for the customer   rate relief bonds to pay bond obligations and ongoing financing   costs, including bond administrative expenses, to ensure timely   payment of bond obligations and financing costs.          (d)  Customer rate relief property, including customer rate   relief charges, may be applied only as provided by this subchapter.          (e)  Bond obligations are payable only from sources provided   for payment by this subchapter.          Sec. 104.374.  PLEDGE OF STATE. (a)  Customer rate relief   bonds issued under this subchapter and any related ancillary   agreements or credit agreements are not a debt or pledge of the   faith and credit of this state or a state agency or political   subdivision of this state. A customer rate relief bond, ancillary   agreement, or credit agreement is payable solely from customer rate   relief charges as provided by this subchapter.          (b)  Notwithstanding Subsection (a), this state, including   the railroad commission and the authority, pledges for the benefit   and protection of the financing parties and the gas utility that   this state will not take or permit any action that would impair the   value of customer rate relief property, or, except as permitted by   Section 104.370, reduce, alter, or impair the customer rate relief   charges to be imposed, collected, and remitted to financing parties   until the principal, interest and premium, and contracts to be   performed in connection with the related customer rate relief bonds   and financing costs have been paid and performed in full. Each   issuing financing entity shall include this pledge in any   documentation relating to customer rate relief bonds.          (c)  Before the date that is two years and one day after the   date that an issuing financing entity no longer has any payment   obligation with respect to customer rate relief bonds, the issuing   financing entity may not wind up or dissolve the financing entity's   operations, may not file a voluntary petition under federal   bankruptcy law, and neither the board of the issuing financing   entity nor any public official nor any organization, entity, or   other person may authorize the issuing financing entity to be or to   become a debtor under federal bankruptcy law during that period.     The state covenants that it will not limit or alter the denial of   authority under this subsection, and the provisions of this   subsection are hereby made a part of the contractual obligation   that is subject to the state pledge made in this section.          Sec. 104.375.  TAX EXEMPTION. (a)  The sale or purchase of   or revenue derived from services performed in the issuance or   transfer of customer rate relief bonds issued under this subchapter   is exempt from taxation by this state or a political subdivision of   this state.          (b)  A gas utility's receipt of customer rate relief charges   is exempt from state and local sales and use taxes and utility gross   receipts taxes and assessments, and is excluded from revenue for   purposes of franchise tax under Section 171.1011, Tax Code.          Sec. 104.376.  RECOVERABLE TAX EXPENSE. A tax obligation of   the gas utility arising from receipt of customer rate relief bond   proceeds or from the collection or remittance of customer rate   relief charges is an allowable expense under Section 104.055.          Sec. 104.377.  ISSUING FINANCING ENTITY OR FINANCING PARTY   NOT PUBLIC UTILITY. An issuing financing entity or financing party   may not be considered to be a public utility or person providing   natural gas service solely by virtue of the transactions described   by this subchapter.          Sec. 104.378.  NO PERSONAL LIABILITY. A commissioner of the   railroad commission, a railroad commission employee, a member of   the board of directors of the authority, an employee of the   authority, or a director, officer, or employee of any issuing   financing entity is not personally liable for a result of an   exercise of a duty or responsibility established under this   subchapter.          Sec. 104.379.  CATASTROPHIC WEATHER EVENT STUDY. (a)  The   railroad commission shall conduct a study on measures to mitigate   catastrophic weather events, including measures to:                (1)  establish natural gas storage capacity to ensure a   reliable gas supply, including location, ownership, and other   pertinent factors regarding gas storage capacity;                (2)  assess the advantages and disadvantages of   requiring local distribution companies to use hedging tactics to   avoid volatile customer rates; and                (3)  assess the advantages and disadvantages of   prohibiting spot market purchases during a catastrophic weather   event that contribute to volatile customer rates.          (b)  Not later than December 1, 2022, the railroad commission   shall report the railroad commission's findings to the governor,   the lieutenant governor, and the speaker of the house of   representatives.          (c)  This section expires August 31, 2023.          Sec. 104.380.  SEVERABILITY. After the date customer rate   relief bonds are issued under this subchapter, if any provision in   this title or portion of this title or related provisions in Title   9, Government Code, are held to be invalid or are invalidated,   superseded, replaced, repealed, or expire for any reason, that   occurrence does not affect the validity or continuation of this   subchapter or any other provision of this title or related   provisions in Title 9, Government Code, that are relevant to the   issuance, administration, payment, retirement, or refunding of   customer rate relief bonds or to any actions of a gas utility, its   successors, an assignee, a collection agent, or a financing party,   which shall remain in full force and effect.          SECTION 6.  This Act takes effect immediately if it receives   a vote of two-thirds of all the members elected to each house, as   provided by Section 39, Article III, Texas Constitution.  If this   Act does not receive the vote necessary for immediate effect, this   Act takes effect September 1, 2021.       ______________________________ ______________________________      President of the Senate Speaker of the House                   I certify that H.B. No. 1520 was passed by the House on April   20, 2021, by the following vote:  Yeas 139, Nays 5, 1 present, not   voting; and that the House concurred in Senate amendments to H.B.   No. 1520 on May 28, 2021, by the following vote:  Yeas 130, Nays 12,   1 present, not voting.     ______________________________   Chief Clerk of the House               I certify that H.B. No. 1520 was passed by the Senate, with   amendments, on May 26, 2021, by the following vote:  Yeas 29, Nays   2.     ______________________________   Secretary of the Senate      APPROVED: __________________                   Date                       __________________                 Governor