(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.)