2019 Connecticut General Statutes
Title 16 - Public Service Companies
Chapter 283 - Telephone, Gas, Power and Water Companies
Section 16-245j - *(See end of section for amended version of subparagraph (A) of subdivision (4) of subsection (c) and effective date.) Rate reduction bonds and economic recovery revenue bonds; terms.
(a)(1) Except as provided in subdivision (2) of this subsection, a financing entity may issue rate reduction bonds upon approval by the authority in the pertinent financing order. Rate reduction bonds shall be nonrecourse to the credit or any assets of the electric distribution company or the finance authority, other than the transition property as specified in the pertinent financing order.
(2) Notwithstanding the provisions of subdivision (1) of this subsection, on and after June 21, 2011, no financing entity has the power or is authorized to issue economic recovery revenue bonds. No competitive transition assessment shall be assessed to secure and pay economic recovery revenue bonds.
(b) Except as otherwise provided in this subsection, the state of Connecticut does hereby pledge and agree with the owners of transition property and holders of rate reduction bonds that the state shall neither limit nor alter the competitive transition assessment, transition property, financing orders, and all rights thereunder until the obligations, together with the interest thereon, are fully met and discharged, provided nothing contained in this subsection shall preclude the limitation or alteration if and when adequate provision shall be made by law for the protection of the owners and holders. The finance authority as agent for the state is authorized to include this pledge and undertaking for the state in these obligations.
(c) (1) Financing orders and rate reduction bonds shall not be deemed to constitute a debt or liability of the state or of any political subdivision thereof, other than the financing entity, shall not constitute a pledge of the full faith and credit of the state or any of its political subdivisions, other than the financing entity, but shall be payable solely from the funds provided under sections 16-245e to 16-245k, inclusive, and shall not constitute an indebtedness of the state within the meaning of any constitutional or statutory debt limitation or restriction and, accordingly, shall not be subject to any statutory limitation on the indebtedness of the state and shall not be included in computing the aggregate indebtedness of the state in respect to and to the extent of any such limitation. This subsection shall in no way preclude bond guarantees or enhancements pursuant to sections 16-245e to 16-245k, inclusive. All rate reduction bonds shall contain on the face thereof a statement to the following effect: “Neither the full faith and credit nor the taxing power of the State of Connecticut is pledged to the payment of the principal of, or interest on, this bond.”
(2) The issuance of rate reduction bonds under sections 16-245e to 16-245k, inclusive, shall not directly, indirectly, or contingently obligate the state or any political subdivision thereof to levy or to pledge any form of taxation therefor or to make any appropriation for their payment.
(3) The exercise of the powers granted by sections 16-245e to 16-245k, inclusive, shall be in all respects for the benefit of the people of this state, for the increase of their commerce, welfare, and prosperity, and as the exercise of such powers shall constitute the performance of an essential public function, neither the finance authority, any electric distribution company, any affiliate of any electric distribution company, any financing entity, or any collection or other agent of any of the foregoing shall be required to pay any taxes or assessments upon or in respect of any revenues or property received, acquired, transferred, or used by the finance authority, any electric distribution company, any affiliate of any electric distribution company, any financing entity, or any collection or other agent of any of the foregoing under the provisions of sections 16-245e to 16-245k, inclusive, or upon or in respect of the income therefrom, and any rate reduction bonds shall be treated as issued by or on behalf of a public instrumentality created under the laws of the state for purposes of chapter 229.
*(4) (A) The proceeds of any rate reduction bonds, other than economic recovery revenue bonds, shall be used for the purposes approved by the authority in the financing order, including, but not limited to, disbursements to the General Fund in substitution for such disbursements from the Energy Conservation and Load Management Fund established by section 16-245m and from the Clean Energy Fund established by section 16-245n, the costs of refinancing or retiring of debt of the electric distribution company, and associated federal and state tax liabilities; provided such proceeds shall not be applied to purchase generation assets or to purchase or redeem stock or to pay dividends to shareholders or operating expenses other than taxes resulting from the receipt of such proceeds.
(B) The proceeds of any economic recovery revenue bonds shall be used for the purposes approved by the authority in the financing order, including, but not limited to, funding the economic recovery transfer, provided such proceeds shall not be applied to purchase generation assets or to purchase or redeem stock or to pay dividends to shareholders or operating expenses other than taxes resulting from the receipt of such proceeds.
(5) Rate reduction bonds are made and declared (A) securities in which all public officers and public bodies of the state and its political subdivisions, all insurance companies, state banks and trust companies, national banking associations, savings banks, savings and loan associations, investment companies, executors, administrators, trustees and other fiduciaries may properly and legally invest funds, including capital in their control or belonging to them, and (B) securities which may properly and legally be deposited with and received by any state or municipal officer or any agency or political subdivision of the state for any purpose for which the deposit of bonds or obligations of the state is now or may be authorized.
(6) Rate reduction bonds, other than economic recovery revenue bonds, shall mature at such time or times approved by the authority in the financing order; provided that such maturity shall not be later than December 31, 2011. Economic recovery revenue bonds shall mature at such time or times approved by the authority in the financing order, provided such maturity shall not be later than eight years after the date of issuance, provided such maturity may be extended for economic reasons, upon the advice of the financing entity.
(7) Rate reduction bonds issued and at any time outstanding may, if and to the extent permitted under the indenture or other agreement pursuant to which they are issued, be refunded by other rate reduction bonds.
(d) Any rate reduction bonds issued or sold pursuant to or in reliance on and in accordance with any financing order issued by the authority pursuant to sections 16-245e to 16-245k, inclusive, shall be valid and binding in accordance with their terms notwithstanding such financing order is later vacated, modified, or otherwise held to be wholly or partly invalid, unless operation of such financing order has been enjoined, stayed, or suspended by the authority or a court of competent jurisdiction prior to such issuance.
(e) In conjunction with the issuance of economic recovery revenue bonds or state rate reduction bonds: (1) The Treasurer may enter into a trust indenture for the benefit of holders of the rate reduction bonds with a corporate trustee, which may be any trust company or commercial bank qualified to do business within or without the state; such trust indenture shall be consistent with the financing order and may contain such other provisions as may be appropriate including those regulating the investment of funds and the remedies of bondholders; (2) the Treasurer may make representations and agreements for the benefit of the holders of rate reduction bonds to make secondary market disclosures; (3) the Treasurer may enter into interest rate swap agreements and other agreements for the purpose of moderating interest rate risk on rate reduction bonds as permitted elsewhere within sections 16-245e to 16-245k, inclusive, provided the obligations under such agreements are payable from the transition property; (4) the Treasurer may enter into such other agreements and instruments to secure the rate reduction bonds as provided in sections 16-245f to 16-245k, inclusive; and (5) the Treasurer may take such other actions as necessary or appropriate for the issuance and distribution of the rate reduction bonds pursuant to the financing order and the Treasurer and the Secretary of the Office of Policy and Management may make representations and agreements for the benefit of the holders of the rate reduction bonds which are necessary or appropriate to ensure exclusion of the interest payable on the rate reduction bonds from gross income under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended.
(P.A. 98-28, S. 13, 117; June 30 Sp. Sess. P.A. 03-6, S. 48; Sept. 8 Sp. Sess. P.A. 03-1, S. 6; P.A. 04-180, S. 3; P.A. 10-179, S. 130–132; P.A. 11-61, S. 49; 11-80, S. 1; P.A. 14-134, S. 89.)
*Note: On and after January 1, 2020, subparagraph (A) of subdivision (4) of subsection (c) of this section, as amended by section 20 of public act 18-50, is to read as follows:
“(4) (A) The proceeds of any rate reduction bonds, other than economic recovery revenue bonds, shall be used for the purposes approved by the authority in the financing order, including, but not limited to, disbursements to the General Fund in substitution for such disbursements in furtherance of the Conservation and Load Management Plan established by section 16-245m and from the Clean Energy Fund established by section 16-245n, the costs of refinancing or retiring of debt of the electric distribution company, and associated federal and state tax liabilities; provided such proceeds shall not be applied to purchase generation assets or to purchase or redeem stock or to pay dividends to shareholders or operating expenses other than taxes resulting from the receipt of such proceeds.”
(P.A. 98-28, S. 13, 117; June 30 Sp. Sess. P.A. 03-6, S. 48; Sept. 8 Sp. Sess. P.A. 03-1, S. 6; P.A. 04-180, S. 3; P.A. 10-179, S. 130–132; P.A. 11-61, S. 49; 11-80, S. 1; P.A. 14-134, S. 89; P.A. 18-50, S. 20.)
History: P.A. 98-28 effective July 1, 1998; June 30 Sp. Sess. P.A. 03-6 amended Subsec. (c) to provide consistency with a plan to avoid disbursements from the Energy Conservation and Load Management and Renewable Energy Investment funds to the General Fund in the implementation of the budget for the biennium ending June 30, 2005, effective August 20, 2003; Sept. 8 Sp. Sess. P.A. 03-1 added Subsec. (e) re powers of Treasurer and Secretary of Office of Policy and Management when the state is the authorized financing entity, effective September 10, 2003; P.A. 04-180 amended Subsec. (e) to make technical changes, effective June 1, 2004; P.A. 10-179 amended Subsec. (a) by adding “or the finance authority”, amended Subsec. (c) by designating existing Subdiv. (4) as Subdiv. (4)(A), inserting reference to economic recovery revenue bonds therein, adding Subdiv. (4)(B) re use of proceeds of economic recovery revenue bonds and adding provisions re economic recovery revenue bonds in Subdiv. (6), and amended Subsec. (e) by replacing provision re authorized financing entity with provision re issuance of economic recovery revenue bonds or state rate reduction bonds, effective May 7, 2010; P.A. 11-61 amended Subsec. (a) by designating existing provisions as Subdiv. (1) and amending same to add exception re Subdiv. (2), and by adding Subdiv. (2) withdrawing authority to issue economic recovery revenue bonds or to charge competitive transition assessment for such bonds, effective June 21, 2011; pursuant to P.A. 11-80, “department” and “Renewable Energy Investment Fund” were changed editorially by the Revisors to “authority” and “Clean Energy Fund”, respectively, effective July 1, 2011; P.A. 14-134 amended Subsecs. (a)(1) and (c) by deleting references to electric company, effective June 6, 2014; P.A. 18-50 amended Subsec. (c)(4)(A) by changing “Energy Conservation and Load Management Fund” to “Conservation and Load Management Plan” and making a conforming change, effective January 1, 2020.
