LIPA legislation Relating To The Fast Tracked New LIPA

June 17, 2013
Introduced by COMMITTEE ON RULES — (at request of the Governor) — read   twice  and  ordered  printed,  and when printed to be committed to the   Committee on Rules
AN ACT to amend the public service law, the public authorities law,  the   executive  law  and  the  education law, in relation to the powers and   duties of the department of public service and the Long  Island  power   authority;  to  repeal subdivision (u) of section 1020-f of the public   authorities law relating to  general  powers  of  the  authority;  and   providing for the repeal of certain provisions upon expiration thereof   (Part A); and in relation to the issuance of securitized restructuring   bonds  to  refinance  the  outstanding  debt  of the Long Island power   authority (Part B)
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM- BLY, DO ENACT AS FOLLOWS:
Section  1.   This act enacts into law major components of legislation relating to issues deemed necessary by the state.    Each  component  is wholly  contained  within  a  Part  identified as Parts A through B. The effective date for each particular provision contained within such  Part is  set  forth  in  the  last section of such Part. Any provision in any section contained within a Part, including the  effective  date  of  the Part,  which  makes  reference  to a section “of this act”, when used in connection with a particular component, shall  be  deemed  to  mean  and refer  to  the  corresponding  section of the Part in which it is found. Section three of this act sets forth the general effective date of  this act.                                  PART A   Section  1. Section 3 of the public service law, as amended by chapter 8 of the laws of 2012, is amended and a new section 3-b is added to read as follows:

S 3. Department of public service. [1.] There shall be  in  the  state government  a  department  of public service. The chairman of the public service commission shall be the chief executive officer of  the  depart- ment.  He  or  she  shall  appoint  and  shall have the power to remove, subject  to  the  provisions  of  the  civil  service law, all officers, clerks, inspectors, experts and employees  of  the  department,  and  to approve  all contracts for special service. The chairman shall designate one of the commissioners in the department or an officer of the  depart- ment  to  act as deputy chairman during the absence or disability of the chairman and during such times such deputy chairman  shall  possess  all the powers of the chairman as chief executive officer of the department.   [2.  The  department shall, upon notification to the Long Island power authority, undertake a comprehensive and regular  management  and  oper- ations  audit  of said authority pursuant to subdivision (bb) of section one thousand twenty-f of the  public  authorities  law.  The  department shall  have  discretion to have such an audit performed by its staff, or by an independent contractor.  In  every  case  in  which  an  audit  is required  pursuant  to subdivision (bb) of section one thousand twenty-f of the public authorities law performed by an independent  auditor,  the department  shall  have  the  authority  to  select  the auditor, and to require the Long Island power authority to enter into  a  contract  with the auditor that is consistent with the contracting-related requirements specified  in  subdivision nineteen of section sixty-six of this chapter and the requirements of subdivision (bb) of section one  thousand  twen- ty-f  of the public authorities law. Such contract shall provide further that the auditor shall work for and under the direction of  the  depart- ment  according to such terms as the department may determine are neces- sary and reasonable.]   S 3-B. LONG ISLAND OFFICE OF THE DEPARTMENT. 1. THERE IS HEREBY ESTAB- LISHED IN THE DEPARTMENT AN OFFICE TO REVIEW  AND  MAKE  RECOMMENDATIONS WITH  RESPECT  TO THE OPERATIONS AND TERMS AND CONDITIONS OF SERVICE OF, AND RATES AND BUDGETS ESTABLISHED BY, THE LONG  ISLAND  POWER  AUTHORITY AND/OR ITS SERVICE PROVIDER.   2. DEFINITIONS. AS USED OR REFERRED TO IN THIS SECTION:   (A) “AUTHORITY” MEANS THE LONG ISLAND POWER AUTHORITY.   (B)  “SERVICE  PROVIDER”  MEANS  THE  ENTITY  UNDER  CONTRACT WITH THE AUTHORITY TO PROVIDE MANAGEMENT AND OPERATION SERVICES  ASSOCIATED  WITH THE  AUTHORITY’S  ELECTRIC  TRANSMISSION AND DISTRIBUTION SYSTEM AND ANY SUBSIDIARY OF SUCH ENTITY THAT PROVIDES SUCH  SERVICES  UNDER  CONTRACT. HOWEVER,  THE SERVICE PROVIDER AND ANY AFFILIATE OF THE SERVICE PROVIDER WITH WHOM  THE  AUTHORITY  OR  SERVICE  PROVIDER  CONTRACTS  TO  PROVIDE SERVICES  ASSOCIATED  WITH  THE  AUTHORITY’S  ELECTRIC  TRANSMISSION AND DISTRIBUTION SYSTEM SHALL NOT  BE  CONSIDERED  AN  ELECTRIC  CORPORATION UNDER THIS CHAPTER.   (C)  “OPERATIONS SERVICES AGREEMENT” MEANS AN AGREEMENT AND ANY AMEND- MENTS THERETO BETWEEN THE LONG ISLAND LIGHTING COMPANY DBA LIPA  OR  THE LONG  ISLAND POWER AUTHORITY AND THE SERVICE PROVIDER TO PROVIDE MANAGE- MENT AND OPERATION SERVICES ASSOCIATED  WITH  THE  AUTHORITY’S  ELECTRIC TRANSMISSION AND DISTRIBUTION SYSTEM.   3.  GENERAL  POWERS.  IN UNDERTAKING THE REQUIREMENTS OF THIS SECTION, SUBJECT TO SUBDIVISIONS (U) AND (BB) THROUGH (HH) OF SECTION  ONE  THOU- SAND  TWENTY-F  OF  THE  PUBLIC AUTHORITIES LAW, THE DEPARTMENT SHALL BE EMPOWERED AND AUTHORIZED TO:   (A) REVIEW AND MAKE RECOMMENDATIONS TO THE BOARD OF  THE  LONG  ISLAND POWER AUTHORITY WITH RESPECT TO THE RATES AND CHARGES, INCLUDING CHARGES RELATED TO ENERGY EFFICIENCY AND RENEWABLE ENERGY PROGRAMS, TO BE ESTAB-

LISHED BY THE AUTHORITY AND BECOME APPLICABLE ON OR AFTER JANUARY FIRST, TWO THOUSAND SIXTEEN PURSUANT TO SUBDIVISION (U) OF SECTION ONE THOUSAND TWENTY-F OF THE PUBLIC AUTHORITIES LAW.   (I)  THE PURPOSE OF SUCH REVIEW IS TO MAKE RECOMMENDATIONS DESIGNED TO ENSURE THAT THE AUTHORITY AND THE  SERVICE  PROVIDER  PROVIDE  SAFE  AND ADEQUATE  TRANSMISSION  AND  DISTRIBUTION  SERVICE  AT  RATES SET AT THE LOWEST LEVEL CONSISTENT WITH SOUND FISCAL OPERATING PRACTICES.   (II) THE DEPARTMENT’S RECOMMENDATIONS SHALL BE DESIGNED TO BE CONSIST- ENT WITH ENSURING THAT THE REVENUE REQUIREMENTS  RELATED  TO  SUCH  RATE REVIEW  ARE  SUFFICIENT  TO  SATISFY  THE  AUTHORITY’S  OBLIGATIONS WITH RESPECT TO ITS BONDS, NOTES AND ALL OTHER CONTRACTS.   (III) IN THE CONTEXT OF SUCH REVIEW, THE DEPARTMENT MAY NOT  MAKE  ANY RECOMMENDATION  THAT  WOULD  MODIFY  THE  COMPENSATION  OR FEE STRUCTURE INCLUDED WITHIN THE OPERATIONS SERVICES AGREEMENT.   (IV) IN UNDERTAKING SUCH REVIEW AND IN MAKING RECOMMENDATIONS  RELATED TO THE PROPOSED RATES AND CHARGES, THE DEPARTMENT SHALL ESTABLISH STAND- ARDS,  POLICIES  AND  PROCEDURES  THAT, AT A MINIMUM, PROVIDE FOR PUBLIC STATEMENT AND EVIDENTIARY HEARINGS AND PARTICIPATION OF INTERVENORS  AND OTHER  PARTIES, AND ENSURE THAT ANY FINAL RECOMMENDATIONS RELATED TO THE PROPOSED RATES AND CHARGES ARE PROVIDED  TO  THE  AUTHORITY  WITHIN  TWO HUNDRED FORTY DAYS OF THE FILING WITH THE DEPARTMENT OF SUCH PLAN.   (V)  THE PARTIES TO ANY SUCH RATE REVIEW PROCEEDING SHALL INCLUDE, BUT NOT BE LIMITED TO, DEPARTMENT STAFF, THE AUTHORITY, THE SERVICE PROVIDER AND, TO THE EXTENT IT DEEMS NECESSARY OR APPROPRIATE, THE UTILITY INTER- VENTION UNIT.   (B) REVIEW THE ANNUAL CAPITAL EXPENDITURES  PROPOSED  BY  THE  SERVICE PROVIDER  AND  RECOMMEND SUCH IMPROVEMENT IN THE MANUFACTURE, CONVEYING, TRANSPORTATION, DISTRIBUTION OR SUPPLY OF ELECTRICITY, OR IN THE METHODS EMPLOYED BY THE THE SERVICE PROVIDER AS  IN  THE  DEPARTMENT’S  JUDGMENT ALLOWS FOR SAFE AND ADEQUATE SERVICE.   (C)  ANNUALLY  REVIEW THE EMERGENCY RESPONSE PLAN OF THE AUTHORITY AND THE SERVICE PROVIDER IN ACCORDANCE WITH THE FOLLOWING REQUIREMENTS:   (I) EXAMINE AND DETERMINE  WHETHER  THE  EMERGENCY  RESPONSE  PLAN  IS CONSISTENT  WITH  THE REQUIREMENTS OF PARAGRAPH (A) OF SUBDIVISION TWEN- TY-ONE OF SECTION SIXTY-SIX OF  THIS  CHAPTER  AND  ANY  REGULATIONS  OR ORDERS PROMULGATED THERETO, AND TO RECOMMEND AMENDMENTS OF SAME; AND   (II)  REVIEW AND MAKE RECOMMENDATIONS TO THE AUTHORITY WITH RESPECT TO THE PERFORMANCE OF THE SERVICE PROVIDER IN RESTORING SERVICE  OR  OTHER- WISE  MEETING  THE REQUIREMENTS OF THE EMERGENCY RESPONSE PLAN DURING AN EMERGENCY EVENT, DEFINED FOR PURPOSES OF THIS SECTION AS AN EVENT  WHERE WIDESPREAD  OUTAGES  HAVE  OCCURRED IN THE AUTHORITY’S SERVICE TERRITORY DUE TO A STORM OR OTHER CAUSES BEYOND THE CONTROL OF THE  AUTHORITY  AND ITS  SERVICE  PROVIDER,  INCLUDING MAKING DETERMINATIONS WITH RESPECT TO WHETHER THE SERVICE PROVIDER IS REASONABLY ABLE TO IMPLEMENT  THE  EMER- GENCY  RESPONSE  PLAN, WHETHER THE LENGTH OF ANY OUTAGES RELATED TO SUCH EMERGENCY WERE MATERIALLY LONGER THAN THEY  WOULD  OTHERWISE  HAVE  BEEN BECAUSE THE SERVICE PROVIDER FAILED TO REASONABLY IMPLEMENT THE EMERGEN- CY RESPONSE PLAN, THE REASONABLENESS OF COSTS ASSOCIATED WITH SUCH EMER- GENCY RESPONSE, THE COSTS, IF ANY, THAT WERE UNREASONABLY AND IMPRUDENT- LY  INCURRED  BY  THE SERVICE PROVIDER, AND WHETHER THE SERVICE PROVIDER WOULD BE LIABLE FOR ANY SUCH COSTS PURSUANT TO THE TERMS AND  CONDITIONS OF THE OPERATIONS SERVICES AGREEMENT.   (D)  UPON NOTIFICATION TO THE LONG ISLAND POWER AUTHORITY, UNDERTAKE A COMPREHENSIVE AND REGULAR MANAGEMENT AND OPERATIONS AUDIT OF THE AUTHOR- ITY AND SERVICE PROVIDER PURSUANT TO SUBDIVISION  (BB)  OF  SECTION  ONE THOUSAND  TWENTY-F  OF  THE PUBLIC AUTHORITIES LAW. THE DEPARTMENT SHALL

HAVE DISCRETION TO HAVE SUCH AN AUDIT PERFORMED BY ITS STAFF, OR  BY  AN INDEPENDENT  CONTRACTOR.  IN  EVERY  CASE  IN WHICH AN AUDIT IS REQUIRED PURSUANT TO SUBDIVISION (BB) OF SECTION ONE  THOUSAND  TWENTY-F  OF  THE PUBLIC  AUTHORITIES LAW PERFORMED BY AN INDEPENDENT AUDITOR, THE DEPART- MENT SHALL HAVE THE AUTHORITY TO SELECT THE AUDITOR, AND TO REQUIRE  THE AUTHORITY  TO  ENTER INTO A CONTRACT WITH THE AUDITOR THAT IS CONSISTENT WITH THE CONTRACTING-RELATED REQUIREMENTS SPECIFIED IN SUBDIVISION NINE- TEEN OF SECTION SIXTY-SIX OF THIS CHAPTER AND THE REQUIREMENTS OF SUBDI- VISION (BB) OF SECTION ONE THOUSAND TWENTY-F OF THE  PUBLIC  AUTHORITIES LAW. SUCH CONTRACT SHALL PROVIDE FURTHER THAT THE AUDITOR SHALL WORK FOR AND UNDER THE DIRECTION OF THE DEPARTMENT ACCORDING TO SUCH TERMS AS THE DEPARTMENT MAY DETERMINE ARE NECESSARY AND REASONABLE.   (E)  ACCEPT,  INVESTIGATE, MEDIATE TO RESOLVE AND MAKE RECOMMENDATIONS TO THE LONG ISLAND POWER AUTHORITY AND/OR THE SERVICE PROVIDER REGARDING THE RESOLUTION OF COMPLAINTS FROM CONSUMERS IN THE  AUTHORITY’S  SERVICE TERRITORY  RELATING  TO,  AMONG  OTHER THINGS, THE PROVISION OF ELECTRIC SERVICE PROVIDED BY THE SERVICE PROVIDER AND/OR THE AUTHORITY.   (F) REVIEW THE NET METERING PROGRAM IMPLEMENTED UNDER SUBDIVISION  (H) OF  SECTION ONE THOUSAND TWENTY-G OF THE PUBLIC AUTHORITIES LAW AND MAKE RECOMMENDATIONS DESIGNED TO ENSURE CONSISTENCY WITH THE REQUIREMENTS  OF SECTIONS  SIXTY-SIX-J  AND  SIXTY-SIX-L  OF  THIS CHAPTER, AND ANY REGU- LATIONS AND ORDERS ADOPTED THERETO.   (G) REVIEW AND MAKE RECOMMENDATIONS WITH RESPECT TO ANY PROPOSED  PLAN SUBMITTED BY THE LONG ISLAND POWER AUTHORITY AND/OR THE SERVICE PROVIDER RELATED  TO  IMPLEMENTATION  OF  ENERGY EFFICIENCY MEASURES, DISTRIBUTED GENERATION OR ADVANCED GRID TECHNOLOGY PROGRAMS HAVING  THE  PURPOSE  OF PROVIDING  CUSTOMERS  WITH  TOOLS  TO  MORE  EFFICIENTLY AND EFFECTIVELY MANAGE THEIR ENERGY USAGE AND UTILITY BILLS, AND IMPROVING SYSTEM  RELI- ABILITY AND POWER QUALITY.   (H)  REVIEW  THE  DATA,  INFORMATION AND REPORTS SUBMITTED PURSUANT TO SUBDIVISION (HH) OF SECTION ONE THOUSAND TWENTY-F OF THE PUBLIC AUTHORI- TIES LAW AND OTHER PERTINENT INFORMATION RELATED TO THE METRICS  IN  THE OPERATIONS  SERVICES AGREEMENT, THE LONG ISLAND POWER AUTHORITY’S EVALU- ATION OF SUCH DATA, INFORMATION AND REPORTS, AND MAKE RECOMMENDATIONS TO THE  AUTHORITY  WITH  RESPECT   TO   THE   SERVICE   PROVIDER’S   ANNUAL INCENTIVE-BASED COMPENSATION WITHIN THIRTY DAYS OF RECEIPT OF SUCH EVAL- UATION AND INFORMATION.   4. REVIEW AND INSPECTION. TO UNDERTAKE THE REQUIREMENTS OF SUBDIVISION TWO  OF  THIS SECTION, THE DEPARTMENT SHALL BE AUTHORIZED TO INSPECT ALL PREMISES AND FACILITIES OWNED OR  OPERATED  BY  THE  AUTHORITY  AND  THE SERVICE  PROVIDER, REVIEW ALL BOOKS AND RECORDS OF THE AUTHORITY AND THE SERVICE PROVIDER, INTERVIEW ALL APPROPRIATE PERSONNEL, AND REQUIRE ANNU- AL REPORTING CONSISTENT WITH THE  REQUIREMENTS  OF  SUBDIVISION  SIX  OF SECTION SIXTY-SIX OF THIS CHAPTER AND ANY REGULATIONS AND ORDERS ADOPTED THERETO;  PROVIDED,  HOWEVER,  THAT  THIS  AUTHORITY SHALL NOT EXTEND TO AFFILIATES OF THE SERVICE PROVIDER.   S 2. Subdivision 2 and paragraph (b) of subdivision 6 of section  18-a of the public service law, subdivision 2 as amended by section 2 of part NN  of chapter 59 of the laws of 2009 and paragraph (b) of subdivision 6 as amended by section 1 of part BB of chapter 59 of the  laws  of  2013, are amended and a new subdivision 1-a is added to read as follows:   1-A.  ALL  COSTS AND EXPENSES OF THE DEPARTMENT RELATED TO THE DEPART- MENT’S RESPONSIBILITIES UNDER SECTION THREE-B OF THIS CHAPTER  SHALL  BE PAID  PURSUANT  TO APPROPRIATION ON THE CERTIFICATION OF THE CHAIRMAN OF THE DEPARTMENT AND UPON THE AUDIT AND WARRANT OF  THE  COMPTROLLER.  FOR THE  STATE  FISCAL  YEAR BEGINNING ON APRIL FIRST, TWO THOUSAND FOURTEEN

AND EACH STATE FISCAL YEAR THEREAFTER, PAYMENTS ARE TO BE MADE FROM  ALL MONEYS  COLLECTED  FROM THE LONG ISLAND POWER AUTHORITY PURSUANT TO THIS SECTION. THE TOTAL OF SUCH COSTS AND EXPENSES SHALL BE ASSESSED ON  SUCH AUTHORITY  IN THE MANNER PROVIDED IN SUBDIVISIONS TWO, THREE AND FOUR OF THIS SECTION.   2. (a) The chairman of the department  shall  estimate  prior  to  the start  of each state fiscal year the total costs and expenses, including the compensation and expenses of  the  commission  and  the  department, their  officers, agents and employees, and including the cost of retire- ment contributions, social security, health and dental insurance, survi- vor’s benefits, workers’ compensation, unemployment insurance and  other fringe  benefits  required  to be paid by the state for the personnel of the commission and the department, and  including  all  other  items  of maintenance  and  operation  expenses, and all other direct and indirect costs. Based on such estimates, the chairman shall determine the  amount to  be  paid by each assessed public utility company AND THE LONG ISLAND POWER AUTHORITY and a bill shall be rendered to each such public utility company AND AUTHORITY.   (b) The bill for each public utility company AND THE LONG ISLAND POWER AUTHORITY shall be rendered on or before February first  preceding  each fiscal  year,  and  shall  be for the amount equal to the product of the aforesaid estimated costs and expenses of  conducting  the  department’s and commission’s total operations during the fiscal year for which bill- ing is being made multiplied by the proportion which compares:   (1) the gross operating revenues, over and above five hundred thousand dollars,  for  that utility company OR THE AUTHORITY derived from intra- state utility operations in the last preceding calendar year,  or  other twelve month period as determined by the chairman, to:   (2) the total of the gross operating revenues, derived from intrastate utility  operations  for  all utility companies AND THE AUTHORITY in the state which revenues are included under subparagraph one of  this  para- graph.   For  the  purposes  of calculating the commodity cost component of its gross operating revenue, where the utility delivers to end-use customers electricity and/or natural gas commodities that are sold to such custom- ers by a third party, such utility shall  include  in  its  revenues  an estimate  of  the  sales  revenue  for  the  electric and/or natural gas commodities that it delivers, including all  such  commodities  sold  to end-use customers by third parties, in such manner as to assure that all end-use  delivery  customers,  regardless  of the entity from which they purchase their electric and/or natural gas commodities, bear a fair  and proportionate  share of the assessment imposed herein, as the commission may determine.   (c) The minimum assessment for any utility company,  AS  WELL  AS  THE LONG ISLAND POWER AUTHORITY, whose gross revenues from intrastate utili- ty  operations  are  in  excess  of five hundred thousand dollars in the preceding calendar year shall be two hundred dollars.   (d) The amount of such bill for fiscal years  beginning  on  or  after April  first, nineteen hundred eighty-three so rendered shall be paid by such public utility company AND SUCH AUTHORITY to the department  on  or before April first; provided, however, that [a] ANY SUCH utility company OR  SUCH AUTHORITY may elect to make partial payments for such costs and expenses on March tenth of the preceding fiscal year  and  on  September tenth  of  such  fiscal  year.  Each such partial payment shall be a sum equal to fifty percentum of the estimate of costs  and  expenses  to  be

assessed  against such utility company OR AUTHORITY under the provisions of this subdivision and shall not be less than two hundred dollars.   (e)  During  the  course  of  any  state fiscal year, the chairman may increase or decrease the estimate of costs and expenses. In  such  case, revised  bills  shall  be  sent  to each public utility company AND SUCH AUTHORITY, and such increase or decrease shall  be  equally  apportioned against the remaining payments for such fiscal year.   (f)  On  or  before  October  tenth  of  each year, the chairman shall compute the actual costs and expenses of the department and the  commis- sion  and  adjustments  or other corrections as needed for the preceding state fiscal year and, after deducting the amounts recovered pursuant to subdivisions three and four of this section, shall, on or before October twentieth, send to each public  utility  company  AND/OR  THE  AUTHORITY affected  thereby  a  statement setting forth the amount due and payable by, or the amount standing to the credit of, such public utility company AND/OR THE AUTHORITY.  Any amount owing by any  public  utility  company AND/OR  THE AUTHORITY shall be paid not later than thirty days following the date such statement is received.  Any such amount  standing  to  the credit of any public utility company shall be refunded by the commission or,  at the option of such utility company, shall be applied as a credit against any succeeding payment due.   (g) The total amount which may be charged to any public utility compa- ny AND THE LONG ISLAND POWER AUTHORITY under authority of this  subdivi- sion  for  any state fiscal year shall not exceed one per centum of such public utility company’s OR AUTHORITY’S gross operating revenues derived from intrastate utility operations in the last preceding calendar  year, or  other  twelve  month period as determined by the chairman; provided, however, that no corporation or person that is subject to the  jurisdic- tion of the commission only with respect to safety, or the power author- ity of the state of New York, shall be subject to the general assessment provided for under this subdivision.   Notwithstanding the provisions of subdivision one of this section, for telephone  corporations  as  defined in subdivision seventeen of section two of this article, the total amount which may be charged  such  corpo- rations  for  department expenses under the authority of subdivision one of this section for any state fiscal year shall not exceed one-third  of one  percentum  of  such corporation’s gross operating revenue, over and above five hundred thousand dollars,  derived  from  intrastate  utility operations  in  the  last preceding calendar year, or other twelve month period as determined by the chairman.   (h) On-bill recovery charges billed pursuant to section sixty-six-m of this chapter shall be excluded from any  determination  of  an  entity’s gross  operating revenues derived from intrastate utility operations for purposes of this section.   (b) The  temporary  state  energy  and  utility  service  conservation assessment  shall  be  based upon the following percentum of the utility entity’s gross operating revenues derived from intrastate utility  oper- ations  in  the  last preceding calendar year, minus the amount, if any, that such utility entity is assessed pursuant to  subdivisions  one  and two of this section for the corresponding state fiscal year period:  (1) two percentum for the state fiscal year beginning April first, two thou- sand thirteen and the state fiscal year beginning April first, two thou- sand fourteen; (2) one and three-quarters percentum for the state fiscal year  beginning  April first, two thousand fifteen; and (3) one and one- half percentum for the state fiscal  year  beginning  April  first,  two thousand sixteen. With respect to the temporary state energy and utility

service  conservation  assessment  to  be paid for the state fiscal year beginning April first, two thousand seventeen and notwithstanding clause (i) of paragraph (d) of this subdivision, on or before March tenth,  two thousand  seventeen, utility entities shall make a payment equal to one- half of the assessment paid by such entities pursuant to this  paragraph for  the  state  fiscal  year  beginning  on  April  first, two thousand sixteen. With respect to the Long Island power authority, the  temporary state  energy and utility service conservation assessment shall be based upon the following percentum of such authority’s gross operating  reven- ues  derived  from  intrastate  utility operations in the last preceding calendar year, MINUS THE AMOUNT, IF ANY, THAT SUCH AUTHORITY IS ASSESSED PURSUANT TO SUBDIVISIONS ONE-A AND TWO OF THIS SECTION  FOR  THE  CORRE- SPONDING  STATE  FISCAL  YEAR  PERIOD:   (1) one percentum for the state fiscal year beginning April first, two thousand thirteen and  the  state fiscal  year  beginning  April  first, two thousand fourteen; (2) three- quarters of one percentum for the  state  fiscal  year  beginning  April first,  two  thousand  fifteen; and (3) one-half percentum for the state fiscal year beginning  April  first,  two  thousand  sixteen;  PROVIDED, HOWEVER, THAT SHOULD THE AMOUNT ASSESSED BY THE DEPARTMENT FOR COSTS AND EXPENSES  PURSUANT TO SUCH SUBDIVISIONS EQUAL OR EXCEED SUCH AUTHORITY’S TEMPORARY STATE ENERGY AND UTILITY SERVICE CONSERVATION ASSESSMENT FOR A PARTICULAR FISCAL YEAR, THE AMOUNT TO BE PAID UNDER THIS SUBDIVISION  BY SUCH AUTHORITY SHALL BE ZERO.  With respect to the temporary state ener- gy  and utility service conservation assessment to be paid for the state fiscal year beginning April first, two thousand seventeen  and  notwith- standing  clause  (i) of paragraph (d) of this subdivision, on or before March tenth, two thousand seventeen, the  Long  Island  power  authority shall make a payment equal to one-half of the assessment it paid for the state  fiscal  year  beginning  on April first, two thousand sixteen. No corporation or person subject to the jurisdiction of the commission only with respect to safety, or the power authority of the state of New York, shall be subject to the  temporary  state  energy  and  utility  service conservation  assessment  provided  for under this subdivision.  Utility entities whose gross operating revenues from  intrastate  utility  oper- ations are five hundred thousand dollars or less in the preceding calen- dar  year shall not be subject to the temporary state energy and utility service conservation assessment. The minimum temporary state energy  and utility  service  conservation  assessment  to  be billed to any utility entity whose gross revenues from intrastate utility  operations  are  in excess  of  five hundred thousand dollars in the preceding calendar year shall be two hundred dollars.   S 3. Section 1020-b of the public authorities law is amended by adding two new subdivisions 23 and 24 to read as follows:   23. “SERVICE PROVIDER”  MEANS  THE  ENTITY  UNDER  CONTRACT  WITH  THE AUTHORITY  TO  PROVIDE MANAGEMENT AND OPERATION SERVICES ASSOCIATED WITH THE AUTHORITY’S ELECTRIC TRANSMISSION AND DISTRIBUTION  SYSTEM  AND  ANY SUBSIDIARY OF SUCH ENTITY THAT PROVIDES SUCH SERVICES UNDER CONTRACT.   24.  “OPERATIONS SERVICES AGREEMENT” MEANS AN AGREEMENT AND ANY AMEND- MENTS THERETO BETWEEN THE LONG ISLAND LIGHTING COMPANY DBA LIPA  OR  THE AUTHORITY  AND  THE SERVICE PROVIDER TO PROVIDE MANAGEMENT AND OPERATION SERVICES ASSOCIATED  WITH  THE  AUTHORITY’S  ELECTRIC  TRANSMISSION  AND DISTRIBUTION SYSTEM.   S 4. Section 1020-d of the public authorities law, as added by chapter 506 of the laws of 1995, is amended to read as follows:   S  1020-d. [Trustees] BOARD OF TRUSTEES.  1. [The] STARTING ON JANUARY FIRST, TWO THOUSAND FOURTEEN,  THE  BOARD  OF  THE  authority  shall  BE

CONSTITUTED  AND consist of [fifteen] NINE trustees all of whom shall be residents of the service area, [nine] FIVE of whom shall be appointed by the governor, one of whom the governor  shall  designate  as  [chairman] CHAIR,  and  serve  at his OR HER pleasure, [three] TWO of whom shall be appointed by the temporary president of the senate, and [three]  TWO  of whom  shall  be  appointed by the speaker of the assembly.  [Two] ONE of the governor’s appointees shall serve an initial term of [one year]  TWO YEARS;  [two]  ONE  of  the governor’s appointees shall serve an initial term of [two] THREE years; [two] AND THREE of the governor’s  appointees shall  serve  an  initial  term of [three] FOUR years[; and three of the governor's appointees shall serve an initial term of four years].  [Two] ONE of the appointees of the temporary president of the senate and [two] ONE of the appointees of the speaker of the assembly shall serve initial terms of [one year] TWO YEARS; and one appointee of the temporary presi- dent  of  the  senate  and  one appointee of the speaker of the assembly shall serve initial terms of [two] THREE years.  Thereafter,  all  terms shall be for a period of four years. In the event of a vacancy occurring in the office of trustee by death, resignation or otherwise, the respec- tive  appointing officer shall appoint a successor who shall hold office for the unexpired portion of the term.   2. No trustee shall receive a salary, but each shall  be  entitled  to reimbursement  for  reasonable  expenses  in  the  performance of duties assigned hereunder.   3. Notwithstanding the provisions of any other law, no trustee,  offi- cer or employee of the state, any state agency or municipality appointed a  trustee shall be deemed to have forfeited or shall forfeit his or her office or employment by reason of his or her acceptance of a trusteeship on the authority, his or her service thereon or his  or  her  employment therewith.   4. ALL TRUSTEES APPOINTED UNDER THIS SECTION SHALL HAVE RELEVANT UTIL- ITY, CORPORATE BOARD OR FINANCIAL EXPERIENCE.   S  5. On or before December 1, 2013 the governor, the temporary presi- dent of the senate and the speaker of  the  assembly  shall  choose  and announce  their  appointments  to  the  board  of  the Long Island power authority to be made pursuant to section 1020-d of the  public  authori- ties  law,  as amended by section four of this act, giving due consider- ation to continuity of business. The  board  of  trustees  of  the  Long Island power authority in existence on December 31, 2013, shall be abol- ished  on  such  date  and be constituted on January 1, 2014 pursuant to section 1020-d of the public authorities law, as amended by section four of this act.   S 6.  Subdivision (u) of section 1020-f of the public authorities  law is REPEALED.   S 7. Subdivisions (c) and (bb) of section 1020-f of the public author- ities law, subdivision (c) as amended by chapter 506 of the laws of 2009 and  subdivision  (bb)  as  added  by chapter 8 of the laws of 2012, are amended and seven new subdivisions (u), (cc), (dd), (ee), (ff), (gg) and (hh) are added to read as follows:   (c) To appoint officers, agents and employees, without regard  to  any personnel  or  civil service law, rule or regulation of the state and in accordance with guidelines adopted by  the  authority,  prescribe  their duties and qualifications and fix and pay their compensation[, provided, however,  that  the  appointment of the chief executive officer shall be subject to confirmation by the senate in accordance with  section  twen- ty-eight  hundred  fifty-two  of  this  chapter;]. BY JANUARY FIRST, TWO THOUSAND FOURTEEN, THE  AUTHORITY,  THROUGH  ITS  GOVERNANCE  COMMITTEE,

SHALL AMEND SUCH GUIDELINES TO REQUIRE THAT STAFFING AT THE AUTHORITY IS KEPT  AT  LEVELS  ONLY NECESSARY TO ENSURE THAT THE AUTHORITY IS ABLE TO MEET OBLIGATIONS WITH RESPECT TO ITS BONDS AND NOTES AND ALL  APPLICABLE STATUTES  AND  CONTRACTS,  AND  OVERSEE  THE  ACTIVITIES  OF THE SERVICE PROVIDER;   (U) RATE PLANS.  SUBJECT TO SUBDIVISION SIX OF  SECTION  ONE  THOUSAND TWENTY-K  OF  THIS  TITLE TO FIX RATES AND CHARGES FOR THE FURNISHING OR RENDITION OF GAS OR ELECTRIC POWER OR OF  ANY  RELATED  SERVICE  AT  THE LOWEST LEVEL CONSISTENT WITH SOUND FISCAL AND OPERATING PRACTICES OF THE AUTHORITY AND WHICH PROVIDE FOR SAFE AND ADEQUATE SERVICE. IN IMPLEMENT- ING THIS POWER:   1. THE AUTHORITY AND THE SERVICE PROVIDER SHALL, ON OR BEFORE FEBRUARY FIRST,  TWO  THOUSAND  FIFTEEN,  SUBMIT  FOR REVIEW TO THE DEPARTMENT OF PUBLIC SERVICE A THREE-YEAR RATE PROPOSAL FOR RATES AND CHARGES TO  TAKE EFFECT ON OR AFTER JANUARY FIRST, TWO THOUSAND SIXTEEN.   2.  THE AUTHORITY AND THE SERVICE PROVIDER SHALL THEREAFTER SUBMIT FOR REVIEW TO THE DEPARTMENT OF PUBLIC SERVICE ANY RATE PROPOSAL THAT  WOULD INCREASE  THE RATES AND CHARGES AND THUS INCREASE THE AGGREGATE REVENUES OF THE AUTHORITY BY MORE THAN TWO AND ONE-HALF PERCENT TO BE MEASURED ON AN ANNUAL BASIS; PROVIDED, HOWEVER, THAT THE AUTHORITY  MAY  PLACE  SUCH RATES  AND  CHARGES INTO EFFECT ON AN INTERIM BASIS, SUBJECT TO PROSPEC- TIVE RATE ADJUSTMENT; PROVIDED, FURTHER, THAT A FINAL RATE  PLAN  ISSUED BY THE AUTHORITY THAT WOULD NOT SO INCREASE SUCH RATES AND CHARGES SHALL NOT BE SUBJECT TO THE REQUIREMENTS OF PARAGRAPH FOUR OF THIS SUBDIVISION AND  SHALL  BE CONSIDERED FINAL FOR THE PURPOSES OF REVIEW UNDER ARTICLE SEVENTY-EIGHT OF THE CIVIL PRACTICE LAW AND RULES. THE AUTHORITY  AND/OR THE  SERVICE PROVIDER MAY OTHERWISE SUBMIT FOR REVIEW TO SUCH DEPARTMENT ANY RATE PROPOSAL IRRESPECTIVE OF ITS EFFECT ON REVENUES.   3. THE AUTHORITY SHALL NOT FIX ANY FINAL RATES  AND  CHARGES  PROPOSED THAT  WOULD NOT BE SUBJECT TO REVIEW BY THE DEPARTMENT OF PUBLIC SERVICE PURSUANT TO PARAGRAPHS ONE AND TWO OF THIS SUBDIVISION UNTIL AFTER HOLD- ING PUBLIC HEARINGS THEREON UPON REASONABLE PUBLIC NOTICE, WITH AT LEAST ONE SUCH HEARING TO BE HELD EACH IN THE COUNTY OF SUFFOLK AND THE COUNTY OF NASSAU.   4. ANY RECOMMENDATIONS  ASSOCIATED  WITH  A  RATE  PROPOSAL  SUBMITTED PURSUANT TO PARAGRAPHS ONE AND TWO OF THIS SUBDIVISION SHALL BE PROVIDED BY  THE DEPARTMENT OF PUBLIC SERVICE TO THE BOARD OF THE AUTHORITY IMME- DIATELY UPON THEIR FINALIZATION BY THE DEPARTMENT. UNLESS THE  BOARD  OF THE  AUTHORITY  MAKES A PRELIMINARY DETERMINATION IN ITS DISCRETION THAT ANY PARTICULAR RECOMMENDATION IS INCONSISTENT WITH THE AUTHORITY’S SOUND FISCAL OPERATING PRACTICES, ANY EXISTING CONTRACTUAL OR OPERATING  OBLI- GATIONS,  OR THE PROVISION OF SAFE AND ADEQUATE SERVICE, THE BOARD SHALL IMPLEMENT SUCH RECOMMENDATIONS AS PART OF ITS FINAL RATE PLAN  AND  SUCH FINAL  DETERMINATION SHALL BE DEEMED TO SATISFY THE REQUIREMENTS OF THIS SUBDIVISION AND BE CONSIDERED FINAL FOR THE  PURPOSES  OF  REVIEW  UNDER ARTICLE  SEVENTY-EIGHT  OF  THE  CIVIL PRACTICE LAW AND RULES. THE BOARD SHALL MAKE ANY SUCH PRELIMINARY DETERMINATION  OF  INCONSISTENCY  WITHIN THIRTY  DAYS  OF  RECEIPT  OF  SUCH RECOMMENDATIONS, WITH NOTICE AND THE BASIS OF SUCH DETERMINATION BEING PROVIDED TO THE DEPARTMENT  OF  PUBLIC SERVICE,  AND  CONTEMPORANEOUSLY POSTED ON THE WEBSITES OF THE AUTHORITY AND ITS SERVICE PROVIDER. THE BOARD SHALL THEREAFTER, WITHIN THIRTY DAYS OF SUCH POSTING AND WITH DUE ADVANCE NOTICE TO THE PUBLIC, HOLD A PUBLIC HEARING WITH RESPECT TO ITS PRELIMINARY DETERMINATION OF  INCONSISTENCY. AT  SUCH  HEARING,  THE  DEPARTMENT  OF PUBLIC SERVICE SHALL PRESENT THE BASIS FOR ITS RECOMMENDATIONS, THE BOARD SHALL PRESENT THE BASIS FOR ITS DETERMINATION OF INCONSISTENCY AND THE SERVICE PROVIDER MAY PRESENT  ITS

POSITION.    THE AUTHORITY AND THE SERVICE PROVIDER MAY, DURING THE TIME PERIOD BEFORE SUCH PUBLIC HEARING REACH AGREEMENT WITH THE DEPARTMENT ON DISPUTED ISSUES.   WITHIN THIRTY DAYS AFTER  SUCH  PUBLIC  HEARING,  THE BOARD  OF  THE  AUTHORITY  SHALL  ANNOUNCE  ITS  FINAL DETERMINATION AND PLANNED IMPLEMENTATION WITH RESPECT TO ANY SUCH  RECOMMENDATIONS.    THE AUTHORITY’S FINAL DETERMINATION OF INCONSISTENCY SHALL BE SUBJECT TO ANY APPLICABLE  JUDICIAL REVIEW PROCEEDING, INCLUDING REVIEW AVAILABLE UNDER ARTICLE SEVENTY-EIGHT OF THE CIVIL PRACTICE LAW AND RULES.   (bb) Comprehensive and regular management and  operations  audits.  1. The  authority AND THE SERVICE PROVIDER shall cooperate in the undertak- ing and completion of a regular and comprehensive management  and  oper- ations  audit conducted pursuant to the requirements of this subdivision and [subdivision two of section  three]  PARAGRAPH  (D)  OF  SUBDIVISION THREE  OF  SECTION  THREE-B  of the public service law. Such audit shall review and evaluate the [authority's] overall operations and  management OF  THE AUTHORITY AND SERVICE PROVIDER, including [the authority's] SUCH operations and management in the context of [its] THE  AUTHORITY’S  duty to  set  rates  at the lowest level consistent with standards and proce- dures provided in subdivision (u) of this section, and include, but  not be limited to: (i) the [authority's] SERVICE PROVIDER’S construction and capital program planning in relation to the needs of [its] customers for reliable  service;  (ii)  the  overall efficiency of the authority’s AND SERVICE PROVIDER’S operations; (iii) the manner in which  the  authority is  meeting  its debt service obligations; (iv) the authority’s Fuel and Purchased Power Cost Adjustment clause and recovery of costs  associated with  such  clause;  (v)  the  authority’s AND SERVICE PROVIDER’S annual budgeting procedures and process; (VI) THE APPLICATION, IF ANY,  OF  THE PERFORMANCE  METRICS DESIGNATED IN THE OPERATIONS SERVICES AGREEMENT AND THE ACCURACY OF THE DATA RELIED UPON WITH RESPECT TO  SUCH  APPLICATION; and [(vi)] (VII) the authority’s compliance with debt covenants.   2.  The  department  of public service shall notify the authority that said department is in the process of initiating a comprehensive  manage- ment and operations audit as described in paragraph one of this subdivi- sion  in  a  manner  that  ensures  the timeliness of such audit, and in accordance with the following timeframe: the first comprehensive manage- ment and operations audit shall be initiated as of the effective date of [this subdivision] CHAPTER EIGHT OF THE LAWS OF TWO THOUSAND TWELVE  and undertaken  in  a  manner  and  to  an extent that is practicable in the context of the authority’s transition to a new management service struc- ture; the second comprehensive management and operations audit shall  be initiated  no  later  than  December  fifteenth,  two thousand [fifteen] SIXTEEN; and all  additional  comprehensive  management  and  operations audits  shall  be  initiated  at least once every five years thereafter. Within a reasonable time after such notification to the authority,  said department  or  the  independent  auditor  retained  by the authority to undertake such audit shall hold public statement hearings,  with  proper notice, in both Nassau and Suffolk counties for the purpose of receiving both  oral  and  written  comments from the public on matters related to such audit as described in paragraph one of this subdivision.   3. Each such audit shall be completed within eighteen months of initi- ation absent an extension for good cause  shown  by  the  department  of public  service  or  the  independent  auditor  under  contract with the authority with notice of such extension to the governor,  the  temporary president  of the senate, the speaker of the assembly, and the chairs of the authority and the department of public service. Such audit shall  be provided  to the board of the authority immediately upon its completion.

The department of public service shall provide notice of  completion  of such  audit  to the governor, the temporary president of the senate, the speaker of the assembly, and the minority  leaders  of  the  senate  and assembly,  and  the  authority, upon receipt of such audit, shall post a copy of such audit,  including  findings  and  recommendations,  on  its website AND THE WEBSITE OF THE SERVICE PROVIDER. Unless the board of the authority  makes a preliminary determination that any particular finding or recommendation contained in  such  audit  is  inconsistent  with  the authority’s  sound  fiscal operating practices, any existing contractual or operating obligation, or the provision for safe and adequate service, the board shall implement OR CAUSE ITS  SERVICE  PROVIDER  TO  IMPLEMENT such findings and recommendations in accordance with the timeframe spec- ified under such audit.   4. The board of the authority shall make any preliminary determination of  inconsistency  with  respect  to  any such finding or recommendation within thirty days of receipt of the audit, with notice and the basis of such determination being provided to the department of  public  service. Such  notice and basis shall be posted contemporaneously on the authori- ty’s website AND THE WEBSITE OF  THE  SERVICE  PROVIDER  and  the  board shall, within thirty days of such posting and with due advance notice to the public, hold a public hearing with respect to its preliminary deter- mination  of  inconsistency.  At  such  hearing the department of public service or the independent  auditor  responsible  for  undertaking  such audit  shall  present the basis for its findings and recommendations and the board shall present the basis for its determination of inconsistency AND THE SERVICE PROVIDER MAY PRESENT IS POSITION. The authority, SERVICE PROVIDER and auditor may during the time period  prior  to  such  public hearing  reach  agreement  on  disputed issues. Within thirty days after such public hearing, the board of the authority shall announce its final determination and planned implementations with respect to any such find- ings and/or recommendations. The [board's]  AUTHORITY’S  final  determi- nation  of  inconsistency  shall  be  subject to any applicable judicial review proceeding, including review  available  under  article  seventy- eight of the civil practice law and rules.   (CC)  TO  PREPARE AN EMERGENCY RESPONSE PLAN PURSUANT TO THIS SUBDIVI- SION. 1. THE SERVICE PROVIDER SHALL, IN CONSULTATION WITH THE AUTHORITY, PREPARE AND MAINTAIN AN  EMERGENCY  RESPONSE  PLAN  (I)  TO  ASSURE  THE REASONABLY  PROMPT  RESTORATION  OF  SERVICE IN THE CASE OF AN EMERGENCY EVENT, DEFINED FOR PURPOSES OF THIS SUBDIVISION AS AN EVENT WHERE  WIDE- SPREAD OUTAGES HAVE OCCURRED IN THE AUTHORITY’S SERVICE TERRITORY DUE TO A  STORM  OR  OTHER  CAUSES  BEYOND THE CONTROL OF THE AUTHORITY AND THE SERVICE PROVIDER, (II) CONSISTENT WITH THE REQUIREMENTS OF PARAGRAPH (A) OF SUBDIVISION TWENTY-ONE OF SECTION SIXTY-SIX OF THE PUBLIC SERVICE LAW AND ANY REGULATIONS AND ORDERS ADOPTED THERETO, AND  (III)  ESTABLISHING THE SEPARATE RESPONSIBILITIES OF THE AUTHORITY AND SERVICE PROVIDER.   2.  ON  OR BEFORE FEBRUARY THIRD, TWO THOUSAND FOURTEEN, THE AUTHORITY AND SERVICE PROVIDER SHALL SUBMIT AN  EMERGENCY  RESPONSE  PLAN  TO  THE DEPARTMENT  OF  PUBLIC  SERVICE FOR REVIEW.  CONTEMPORANEOUSLY WITH SUCH SUBMISSION, THE AUTHORITY SHALL PROVIDE NOTICE OF SUCH PROPOSED PLAN  TO THE  SECRETARY  OF  STATE  FOR  PUBLICATION  IN  THE STATE REGISTER, THE AUTHORITY AND SERVICE PROVIDER  EACH  SHALL  POST  SUCH  PLAN  ON  THEIR WEBSITES  AND  OTHERWISE  MAKE SUCH PLAN AVAILABLE FOR REVIEW IN-PERSON, AND AFFORD MEMBERS OF  THE  PUBLIC  AN  OPPORTUNITY  TO  SUBMIT  WRITTEN COMMENTS  AND  ORAL COMMENTS PURSUANT TO AT LEAST ONE HEARING TO BE HELD EACH IN THE COUNTY OF SUFFOLK AND THE COUNTY  OF  NASSAU.  SUCH  WRITTEN COMMENTS  MUST  BE SUBMITTED BY MARCH FOURTEENTH, TWO THOUSAND FOURTEEN.

THE AUTHORITY AND SERVICE PROVIDER SHALL PROVIDE A COPY OF  ALL  WRITTEN COMMENTS  THEY  RECEIVE  AND A TRANSCRIPT OF SUCH PUBLIC HEARINGS TO THE DEPARTMENT OF PUBLIC SERVICE FOR  ITS  CONSIDERATION  IN  REVIEWING  THE EMERGENCY  RESPONSE PLAN.   THE DEPARTMENT SHALL PROVIDE ANY RECOMMENDA- TIONS TO THE AUTHORITY AND SERVICE PROVIDER WITH RESPECT TO SUCH PLAN ON OR BEFORE APRIL FIFTEENTH, TWO THOUSAND FOURTEEN. SUCH PLAN MUST BE MADE FINAL BY JUNE SECOND, TWO THOUSAND FOURTEEN. FOR EACH  YEAR  THEREAFTER, THE  SERVICE  PROVIDER  SHALL  SUBMIT  AN EMERGENCY RESPONSE PLAN TO THE DEPARTMENT OF PUBLIC SERVICE, AND  SUCH  DEPARTMENT  SHALL  PROVIDE  ITS RECOMMENDATIONS, IN ACCORDANCE WITH A SCHEDULE TO BE ESTABLISHED BY SUCH DEPARTMENT AND THAT IS CONSISTENT WITH THE SCHEDULE ASSOCIATED WITH SUCH DEPARTMENT’S  REVIEW  OF  SIMILAR SUCH PLANS PROVIDED BY ELECTRIC CORPO- RATIONS PURSUANT TO SUBDIVISION TWENTY-ONE OF SECTION SIXTY-SIX  OF  THE PUBLIC SERVICE LAW.   3.  BY  JUNE SECOND, TWO THOUSAND FOURTEEN, AND BY JUNE FIRST ANNUALLY THEREAFTER, THE AUTHORITY AND SERVICE PROVIDER SHALL JOINTLY CERTIFY  TO THE  DEPARTMENT  OF  HOMELAND  SECURITY  AND EMERGENCY SERVICES THAT THE EMERGENCY RESPONSE PLAN ENSURES, TO THE GREATEST  EXTENT  FEASIBLE,  THE TIMELY  AND  SAFE  RESTORATION  OF  ENERGY  SERVICES  AFTER AN EMERGENCY CONSISTENT WITH THE REQUIREMENTS OF PARAGRAPH (A) OF  SUBDIVISION  TWEN- TY-ONE  OF  THE PUBLIC SERVICE LAW AND THE DEPARTMENT’S RECOMMENDATIONS. THE FILING OF SUCH EMERGENCY RESPONSE PLAN SHALL ALSO INCLUDE A COPY  OF ALL  WRITTEN MUTUAL ASSISTANCE AGREEMENTS AMONG UTILITIES. THE AUTHORITY AND SERVICE PROVIDER SHALL FILE WITH THE COUNTY EXECUTIVES OF NASSAU AND SUFFOLK COUNTY AND THE MAYOR OF THE CITY OF NEW  YORK  THE  MOST  RECENT VERSION  OF THE EMERGENCY RESPONSE PLAN, AND MAKE SURE THAT SUCH AMENDED VERSIONS ARE TIMELY FILED.   4. STARTING IN  CALENDAR  YEAR  TWO  THOUSAND  FOURTEEN,  THE  SERVICE PROVIDER ANNUALLY SHALL UNDERTAKE AT LEAST ONE DRILL TO IMPLEMENT PROCE- DURES  TO  PRACTICE  ITS  EMERGENCY  RESPONSE PLAN. THE SERVICE PROVIDER SHALL NOTIFY AND ALLOW PARTICIPATION IN SUCH DRILL  OF  ALL  APPROPRIATE MUNICIPAL EMERGENCY RESPONDERS AND OFFICIALS.   5.  IF, DURING AN EMERGENCY EVENT, ELECTRIC SERVICE IS NOT RESTORED IN THREE DAYS, THE SERVICE PROVIDER SHALL WITHIN SIXTY DAYS FROM  THE  DATE OF  FULL  RESTORATION  FILE  WITH THE DEPARTMENT A REPORT CONSTITUTING A REVIEW OF ALL ASPECTS OF THE PREPARATION AND SYSTEM RESTORATION PERFORM- ANCE DURING THE EVENT, AND SHALL THEREAFTER TAKE INTO CONSIDERATION  ANY RECOMMENDATIONS MADE BY THE DEPARTMENT ASSOCIATED WITH SUCH REVIEW.   (DD)  ON OR BEFORE JANUARY FIRST, TWO THOUSAND FIFTEEN, AND BY JANUARY FIRST OF EACH CALENDAR YEAR THEREAFTER, TO  SUBMIT  FOR  REVIEW  TO  THE DEPARTMENT  OF  PUBLIC SERVICE A REPORT DETAILING THE SERVICE PROVIDER’S PLANNED CAPITAL EXPENDITURES.   (EE) ON OR BEFORE JULY FIRST,  TWO  THOUSAND  FOURTEEN,  AND  ANNUALLY THEREAFTER, TO SUBMIT FOR REVIEW TO THE DEPARTMENT OF PUBLIC SERVICE ANY PROPOSED  PLAN  RELATED  TO  IMPLEMENTING  ENERGY  EFFICIENCY  MEASURES, DISTRIBUTED GENERATION OR ADVANCED  GRID  TECHNOLOGY  PROGRAMS  FOR  THE PURPOSE  PROVIDED  PURSUANT  TO  PARAGRAPH  (G)  OF SUBDIVISION THREE OF SECTION THREE-B OF THE PUBLIC SERVICE LAW.   (FF) TO ASSIST AND COOPERATE WITH THE  DEPARTMENT  OF  PUBLIC  SERVICE WITH RESPECT TO ANY REVIEW UNDERTAKEN PURSUANT TO SECTION THREE-B OF THE PUBLIC  SERVICE  LAW, INCLUDING PROVIDING THE DEPARTMENT WITH REASONABLE ACCESS TO ALL FACILITIES AND PREMISES OWNED OR OPERATED BY THE AUTHORITY OR ITS SERVICE PROVIDER, ALLOWING REVIEW OF ALL BOOKS AND RECORDS OF THE AUTHORITY AND ITS SERVICE PROVIDER, PROVIDING COPIES OF REQUESTED  DOCU- MENTS,  ALLOWING INTERVIEWS OF ALL APPROPRIATE PERSONNEL, AND RESPONDING IN A REASONABLE AND TIMELY MANNER TO ANY INQUIRIES OR REPORTING REQUESTS

MADE BY THE DEPARTMENT; PROVIDED,  HOWEVER,  THAT  THE  OBLIGATIONS  SET FORTH  IN THIS SUBDIVISION SHALL NOT EXTEND TO AFFILIATES OF THE SERVICE PROVIDER.   (GG)  RENEWABLE  GENERATION  AND  ENERGY EFFICIENCY PROGRAMS. 1.   THE AUTHORITY IN COORDINATION WITH THE SERVICE PROVIDER, THE POWER AUTHORITY OF THE STATE OF NEW YORK AND THE NEW  YORK  STATE  ENERGY  RESEARCH  AND DEVELOPMENT  AUTHORITY  SHALL,  TO  THE EXTENT THE AUTHORITY’S RATES ARE SUFFICIENT TO PROVIDE SAFE AND ADEQUATE  TRANSMISSION  AND  DISTRIBUTION SERVICE, AND THE MEASURES HEREIN, UNDERTAKE ACTIONS TO DESIGN AND ADMIN- ISTER  RENEWABLE  ENERGY  AND  ENERGY EFFICIENCY MEASURES IN THE SERVICE AREA, WITH THE GOAL OF  CONTINUING  AND  EXPANDING  SUCH  MEASURES  THAT COST-EFFECTIVELY REDUCE SYSTEM-WIDE PEAK DEMAND, MINIMIZE LONG-TERM FUEL PRICE RISK TO RATE PAYERS, LOWER EMISSIONS, IMPROVE ENVIRONMENTAL QUALI- TY,  AND  SEEK  TO  MEET NEW YORK STATE CLIMATE CHANGE AND ENVIRONMENTAL GOALS. SUCH ACTIONS SHALL ALSO INCLUDE IMPLEMENTATION OF  ANY  RENEWABLE ENERGY  COMPETITIVE  PROCUREMENT  OR  FEED-IN-TARIFF  PROGRAMS THAT WERE APPROVED BY THE AUTHORITY AS OF THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS OF TWO THOUSAND THIRTEEN WHICH ADDED THIS SUBDIVISION.   2. THE SERVICE PROVIDER SHALL CONSIDER,  CONSISTENT  WITH  MAINTAINING SYSTEM  RELIABILITY,  RENEWABLE GENERATION AND ENERGY EFFICIENCY PROGRAM RESULTS AND OPTIONS IN ESTABLISHING CAPITAL PLANS.   (HH) STARTING IN CALENDAR YEAR TWO THOUSAND FIFTEEN, THE AUTHORITY AND THE SERVICE PROVIDER SHALL SUBMIT TO THE DEPARTMENT  OF  PUBLIC  SERVICE FOR  REVIEW,  ANY  AND ALL DATA, INFORMATION AND REPORTS WHICH SET FORTH THE SERVICE PROVIDER’S ACTUAL PERFORMANCE RELATED TO THE METRICS IN  THE OPERATIONS  SERVICES  AGREEMENT,  INCLUDING  THE  AUTHORITY’S EVALUATION THEREOF, NO LESS THAN FORTY-FIVE DAYS PRIOR TO THE AUTHORITY’S  DETERMI- NATION OF THE SERVICE PROVIDER’S ANNUAL INCENTIVE COMPENSATION.   S 8. Section 1020-q of the public authorities law, as added by chapter 517  of  the  laws of 1986 and subdivision 2 as amended by section 19 of part Y of chapter 63 of the laws of 2000, is amended to read as follows:   S 1020-q. Payments in lieu of taxes. 1. Each year after property ther- etofore owned by LILCO is acquired by the authority by any means author- ized by this title and, as a consequence, is removed from the tax rolls, the authority shall make payments in lieu of taxes to municipalities and school districts equal to the taxes and  assessments  which  would  have been received from year to year by each such jurisdiction if such acqui- sition had not occurred, [except for such taxing jurisdictions which tax the  Shoreham  plant, in which case the in lieu of tax payments shall in the first year after the acquisition be equal to one hundred percent  of the  taxes and assessments which would have been received by such taxing jurisdictions. In each succeeding year such  in  lieu  of  tax  payments shall be decreased by ten percent until such time as such payments equal taxes  and  assessments  which would have been levied on such plant in a nonoperative state] PROVIDED, HOWEVER, THAT FOR THE CALENDAR YEAR START- ING ON JANUARY FIRST, TWO THOUSAND FIFTEEN, AND FOR EACH  CALENDAR  YEAR THEREAFTER,  SUCH PAYMENTS IN LIEU OF TAXES SHALL NOT EXCEED THE IN LIEU OF TAX PAYMENTS MADE TO SUCH MUNICIPALITIES AND SCHOOL DISTRICTS IN  THE IMMEDIATELY PRECEDING YEAR BY MORE THAN TWO PERCENT.   2.  The  authority shall also make payments in lieu of taxes for those taxes which would otherwise be imposed [upon LILCO,  if  LILCO  were  to continue  in  operation,]  pursuant to sections one hundred eighty-six-a and one hundred eighty-six-c of the tax law, and to former [sections one hundred eighty-six and] SECTION one hundred eighty-six-b of the tax  law as  such  [sections  one hundred eighty-six and one hundred eighty-six-b were] SECTION WAS in effect on December thirty-first,  nineteen  hundred

ninety-nine,  [paragraph  (b) of subdivision four of section one hundred seventy-four of the navigation law,] and any taxes  imposed  by  a  city pursuant to the authorization granted by section twenty-b of the general city law.   3.  No  municipality  or  governmental subdivision, including a school district or special district, shall be liable to the  authority  or  any other  entity for a refund of property taxes originally assessed against the Shoreham plant. Any judicial determination that the  Shoreham  plant assessment  was excessive, unequal or unlawful for any of the years from nineteen hundred seventy-six to the effective date of this  title  shall not  result  in  a refund by any taxing jurisdiction of taxes previously paid by LILCO pursuant to such Shoreham plant assessment. The  authority shall  discontinue and abandon all proceedings, brought by its predeces- sor in interest, which seek the repayment of all or part  of  the  taxes assessed against the Shoreham plant.   S 9. Subdivision 1 of section 1020-s of the public authorities law, as amended  by  chapter  388  of  the  laws  of 2011, is amended to read as follows:   1. The rates, services  and  practices  relating  to  the  electricity generated  by facilities owned or operated by the authority shall not be subject to the provisions of the public service law or to regulation by, or the jurisdiction of, the public service  commission,  except  to  the extent (a) article seven of the public service law applies to the siting and operation of a major utility transmission facility as defined there- in,  (b)  article  ten of such law applies to the siting of a generating facility as defined therein, [and] (c) section eighteen-a  of  such  law provides  for  assessment for certain costs, property or operations, AND (D) TO THE EXTENT THAT THE DEPARTMENT  OF  PUBLIC  SERVICE  REVIEWS  AND MAKES  RECOMMENDATIONS  WITH  RESPECT TO THE OPERATIONS AND PROVISION OF SERVICES OF, AND RATES AND BUDGETS ESTABLISHED BY, THE AUTHORITY  PURSU- ANT TO SECTION THREE-B OF SUCH LAW.   S  10. Section 1020-w of the public authorities law, as added by chap- ter 517 of the laws of 1986, is amended to read as follows:   S 1020-w. Audit and annual reports.  The  accounts  of  the  authority shall  be  subject  to  the  supervision of the state comptroller and an annual audit shall be performed by an independent  certified  accountant selected by the [state division of the budget] AUTHORITY, UPON RECOMMEN- DATION  OF  ITS FINANCE AND AUDIT COMMITTEE.  The authority shall submit annually to the governor, the state comptroller, the temporary president of the senate, the speaker of the assembly and the county executives and governing bodies of the counties  of  Suffolk  and  Nassau,  a  detailed report  pursuant to the provisions of section two thousand eight hundred of [title one of article nine of] this chapter, which  report  shall  be verified  by  the  chairman of the authority. The authority shall comply with the provisions of sections two  thousand  eight  hundred  one,  two thousand  eight  hundred  two  and  two  thousand eight hundred three of [title one of article nine of] this chapter.   S 11. Section 1020-cc of the public authorities  law,  as  amended  by chapter 413 of the laws of 2011, is amended to read as follows:   S  1020-cc.  Authority  subject to certain provisions contained in the state finance law, the public service law, the social services  law  and the  general  municipal  law. 1. All contracts of the authority shall be subject to the provisions of the state finance law relating to contracts made by the state. The authority shall also establish  rules  and  regu- lations  with  respect to providing to its residential gas, electric and steam utility customers those rights and protections provided in article

two and sections one hundred seventeen and one hundred eighteen  of  the public  service  law  and section one hundred thirty-one-s of the social services law. The  authority  shall  conform  to  any  safety  standards regarding  manual lockable disconnect switches for solar electric gener- ating equipment established by the public service commission pursuant to subparagraph (ii) of paragraph (a) of subdivision five and  subparagraph (ii)  of  paragraph  (a) of subdivision five-a of section sixty-six-j of the  public  service  law.  The  authority  shall  let   contracts   for construction  or  purchase of supplies, materials, or equipment pursuant to section one hundred three and paragraph (e) of  subdivision  four  of section one hundred twenty-w of the general municipal law.   2. THE AUTHORITY AND SERVICE PROVIDER SHALL PROVIDE TO THE STATE COMP- TROLLER  ON  MARCH  THIRTY-FIRST  AND SEPTEMBER THIRTIETH OF EACH YEAR A REPORT DOCUMENTING EACH CONTRACT IN EXCESS OF TWO HUNDRED FIFTY THOUSAND DOLLARS PER YEAR ENTERED INTO WITH A THIRD PARTY AND RELATED TO  MANAGE- MENT  AND  OPERATION  SERVICES  ASSOCIATED WITH THE AUTHORITY’S ELECTRIC TRANSMISSION AND DISTRIBUTION SYSTEM, INCLUDING THE NAME  OF  THE  THIRD PARTY,  THE  CONTRACT  TERM AND A DESCRIPTION OF SERVICES OR GOODS TO BE PROCURED, AND POST SUCH REPORT ON EACH OF THEIR WEBSITES. ALL  CONTRACTS ENTERED  INTO  BETWEEN  THE  SERVICE  PROVIDER AND THIRD PARTIES ARE NOT SUBJECT TO THE REQUIREMENTS OF SUBDIVISION ONE OF THIS SECTION.   S 12. Paragraph (b) of subdivision 4 of section 94-a of the  executive law,  as amended by chapter 8 of the laws of 2012, is amended to read as follows:   (b) The utility intervention unit shall have the power and duty to:   (i) on behalf of the secretary, initiate, intervene in, or participate in any proceedings before the public service commission OR  THE  DEPART- MENT  OF  PUBLIC  SERVICE, to the extent authorized by sections THREE-B, twenty-four-a, seventy-one, eighty-four  or  ninety-six  of  the  public service  law  or  any other applicable provision of law, where he or she deems such initiation, intervention or participation to be necessary  or appropriate;   (ii) represent the interests of consumers of the state before federal, state  and  local  administrative and regulatory agencies engaged in the regulation of energy services; [and]   (iii) accept and investigate complaints of any kind from  Long  Island power  authority  consumers,  attempt  to  mediate such complaints where appropriate directly with such authority and  refer  complaints  to  the appropriate  state or local agency authorized by law to take action with respect to such complaints[.]; AND   (IV) HOLD REGULAR FORUMS IN EACH OF THE  SERVICE  TERRITORIES  OF  THE COMBINATION  GAS AND ELECTRIC CORPORATIONS, AS DEFINED UNDER SECTION TWO OF THE PUBLIC SERVICE LAW,  AND  THE  LONG  ISLAND  POWER  AUTHORITY  TO EDUCATE CONSUMERS ABOUT UTILITY-RELATED MATTERS AND THE REGULATORY PROC- ESS, OPPORTUNITIES TO LOWER ENERGY COSTS, INCLUDING THROUGH ENERGY EFFI- CIENCY  AND  DISTRIBUTED GENERATION, AND OTHER MATTERS AFFECTING CONSUM- ERS.   S 13. Notwithstanding  section  112  of  the  state  finance  law  and notwithstanding  any  other  provision of law to the contrary, including but not limited to any provision of law related to rebidding, letting or amending contracts of any amount, the Long Island Lighting  Company  dba LIPA  is  authorized  to  amend the operations services agreement, dated December 28, 2011, entered into with PSEG  Long  Island  LLC,  including Amendment Nos. 1 and 2 thereto, approved on June 27, 2012, solely by the following:  (1)  upon  review  and  written  recommendations made by the department of public service to the board of trustees of the Long Island

power authority (“authority”), setting forth the reasons for  and  find- ings  underlying  such recommendations; and (2) adoption of a resolution by a majority of the authority’s board of trustees.   S 14. This act shall supersede the fifth project condition established in Resolution No. 97-LI-1 of the public authorities control board, dated July 16, 1997, related to the implementation of certain rate increases.   S  15.  Subdivision l of section 7208 of the education law, as amended by chapter 994 of the laws of 1971, is amended to read as follows:   l. The practice of engineering or land surveying, or using  the  title “engineer”  or “surveyor” (I) exclusively as an officer or employee of a public  service  corporation  by  rendering  to  such  corporation  such services  in connection with its lines and property which are subject to supervision with respect to the  safety  and  security  thereof  by  the public service commission of this state, the interstate commerce commis- sion or other federal regulatory body and so long as such person is thus actually  and exclusively employed and no longer, OR (II) EXCLUSIVELY AS AN OFFICER OR EMPLOYEE OF THE LONG ISLAND POWER AUTHORITY OR ITS SERVICE PROVIDER, AS DEFINED UNDER SECTION THREE-B OF THE PUBLIC SERVICE LAW, BY RENDERING TO SUCH AUTHORITY OR PROVIDER SUCH SERVICES IN CONNECTION WITH ITS LINES AND PROPERTY WHICH ARE LOCATED  IN  SUCH  AUTHORITY’S  SERVICE AREA  AND  SO  LONG  AS  SUCH  PERSON  IS  THUS ACTUALLY AND EXCLUSIVELY EMPLOYED AND NO LONGER;   S 16. Repowering. If after the Long Island  power  authority,  or  its successor,  determines,  in  accordance  with  the  terms and conditions contained in the amended  and  restated  power  supply  agreement  (“A&R PSA”),  dated  October  10, 2012, between the authority and the owner of the legacy LILCO power generating facilities, that repowering  any  such generating  facility is in the best interests of its ratepayers and will enhance the authority’s ability to provide a  more  efficient,  reliable and  economical  supply  of  electric  energy  in its service territory, consistent with the goal of improving environmental quality, the author- ity will exercise its rights under the A&R  PSA  related  to  repowering such  facility, and shall enter into an agreement related to payments in lieu-of-taxes for a term commensurate with any power purchase  agreement entered  into  related to such repowered facility, consistent with other such agreements related to generating facilities under contract  to  the authority in the service territory.   S  17.  This act shall take effect January 1, 2014; provided, however, that section twelve of  this  act  shall  take  effect  April  1,  2014, sections  five,  ten, eleven, thirteen, fourteen, fifteen and sixteen of this act shall take effect immediately; provided  further  that  section thirteen  of  this  act  shall  expire and be deemed repealed January 1, 2015; and provided further that  the  amendments  to  subdivision  6  of section  18-a  of the public service law made by section two of this act shall not affect the repeal of such  subdivision  and  shall  be  deemed repealed therewith.                                  PART B   Section  1.  Legislative  findings.  The  legislature hereby finds and determines:   1. On May 28,  1998,  Long  Island  Power  Authority  (the  authority) acquired  all  the capital stock and associated assets, including trans- mission and distribution (T&D) system assets  of  Long  Island  Lighting Company  (LILCO)  which  does business as the retail electric utility on Long Island, New York under the name of LIPA. In  connection  with  that

acquisition, the authority took over ultimate responsibility for provid- ing  electric  utility  service  to residential, commercial, industrial, nonprofit and governmental customers in  the  counties  of  Suffolk  and Nassau and a portion of the county of Queens (hereinafter referred to as the  “service area”).  Such acquisition effectively converted LILCO from an investor-owned utility that was comprehensively regulated by the  New York Public Service Commission (PSC) and the United States Federal Ener- gy  Regulatory  Commission  (FERC),  to  a municipal utility that is not comprehensively regulated either by the PSC or FERC.   2. Since May 28, 1998, neither the authority  nor  LIPA  has  directly operated  or maintained the T&D system assets, provided electric service or billed and collected T&D rates from LIPA’s  customers;  instead,  the authority and LIPA have contracted out virtually all of these activities to  other  companies.  Most of these operations and service responsibil- ities have been contracted out to affiliates of a company now  known  as National  Grid  plc  (National  Grid), a multi-national electric and gas utility company organized under the laws of England and  Wales  pursuant to a management services agreement. Thus, while the LIPA name appears on customer  bills as well as on service trucks and other equipment used in the service area, affiliates of National Grid have been  principally  in charge  of management and operation of the T&D system assets and provid- ing electricity to consumers in the service area.    The  authority  and LIPA  have  now  contracted with affiliates of Public Service Enterprise Group and Lockheed Martin Services Inc. (PSEG-Lockheed) to provide oper- ation and maintenance services for the T&D system assets for  ten  years starting January 1, 2014, when the National Grid contract expires.   3.  High  costs  of electric utility service poses a serious threat to the economic well-being, health and safety of the residents of  and  the commerce and industry in the service area.  High costs of electric util- ity  service  deter  commerce  and industry from locating in the service area and have caused existing commerce and industry to consider serious- ly moving out of the service area.   4. High debt and associated debt service contribute to the authority’s high electric rates.  The  authority  has  approximately  seven  billion dollars  in  outstanding debt, a substantial portion of which was issued to refinance debt associated with  construction  of  the  now  abandoned Shoreham  nuclear  power  plant. The annual debt service associated with such bonds puts pressure on the authority’s customer rates.   5. As of December 31, 2012, the three major rating agencies  generally rated  the authority’s debt in the single-A range, though Moody’s Inves- tors Services assigns approximately seven hundred million dollars of the authority’s debt slightly lower ratings of Baa1 and Baa2.   6. If securitized restructuring bonds were issued by a  bankruptcy-re- mote entity with a AAA or equivalent rating in current market conditions to  finance a portion of the costs of purchasing, redeeming or defeasing outstanding debt of the authority, and other associated costs, the  debt service  on the authority’s debt could be reduced and the costs of elec- tric utility service could be lowered.   7. Securitized restructuring bonds are likely to be most attractive to the investing public and result in the lowest possible  yields  if  they are  issued  by a newly organized, special purpose public benefit corpo- ration or other corporate municipal instrumentality of the state.   8. The purpose of this act is to provide a legislative foundation  for the issuance of securitized restructuring bonds to refinance outstanding debt of the authority, a significant portion of which relates to LILCO’s costs  of  constructing and financing the now abandoned Shoreham nuclear

power plant, including the creation of  restructuring  property  by  the authority  to  provide  for the redemption or defeasance of a portion of the outstanding debt of the authority.  It is the intent of the legisla- ture to authorize, for the purpose of reducing electric utility costs to consumers  in the service area, the following: (a) the organization of a restructuring bond issuer  as  a  special  purpose  corporate  municipal instrumentality of the state, created for the limited purpose of issuing securitized  restructuring  bonds  to purchase restructuring property to finance the cost of purchasing, redeeming or defeasing a portion of  the outstanding  debt  of  the authority and associated costs, which securi- tized restructuring bonds create no new financial obligations or liabil- ities for the authority or for the  state;  and  (b)  implementation  of contracts  with  owners of the securitized restructuring bonds through a statutory pledge and agreement that the state will not in any  way  take or  permit  any action to revoke, modify, impair, postpone, terminate or amend this act in any manner that is materially adverse to the owners of the restructuring bonds until those bonds are no longer outstanding  and all  amounts  due and owing under the related transaction documents have been paid in full.   9. Accordingly, the issuance of  securitized  restructuring  bonds  is expected  to  result  in  lower  aggregate distribution and transmission charges and transition charges, compared  to  other  available  alterna- tives.   S 2. Definitions. As used or referred to in this act, unless a differ- ing meaning clearly appears from the context:   1.  “Ancillary  agreement”  means any bond insurance policy, letter of credit, reserve account, surety bond, swap arrangement, hedging arrange- ment, liquidity or credit support arrangement or other similar agreement or arrangement entered into in connection with the issuance of  restruc- turing bonds that is designed to promote the credit quality and marketa- bility  of  such  restructuring  bonds  or  to  mitigate  the risk of an increase in interest rates.   2. “Approved restructuring costs” means, to  the  extent  approved  as such  under  a restructuring cost financing order, (a) costs of purchas- ing, redeeming or defeasing a portion of outstanding debt of the author- ity, including bonds and notes issued by the authority, debt  issued  by the  New  York  state  energy research and development authority for the benefit of the LILCO;  (b)  costs  of  terminating  interest  rate  swap contracts and other financial contracts entered into by or for the bene- fit  of  the authority and related to debt obligations of the authority; (c) rebate, yield reduction payments and any other  amounts  payable  to the  United  States  Treasury  or  to  the  Internal  Revenue Service to preserve or protect the federal tax-exempt status  of  outstanding  debt obligations of the authority; and (d) upfront financing costs associated with restructuring bonds.   3.  “Assignee”  means  any  individual, corporation, limited liability company, partnership or limited partnership, trust or other  legally-re- cognized  entity  to  which  an  interest  in  restructuring property is assigned, sold or transferred, other than  as  security,  including  any assignee of that party.   4.  “Authority” means Long Island Power Authority, a corporate munici- pal instrumentality and political subdivision of the state.   5. “Consumer” means any individual, governmental body, trust, business entity, nonprofit organization or other legally-recognized  entity  that takes  electric  delivery  service  within  the service area by means of electric transmission or distribution facilities, whether those electric

transmission or distribution facilities are owned by LIPA or  any  other entity.   6.  “Financing  cost”  means  the  costs  to  issue, service, or repay restructuring bonds, whether incurred upon issuance of such  restructur- ing  bonds or over the life of the restructuring bonds, and approved for recovery in a restructuring cost financing order.   Without  limitation, “financing cost” may include, as applicable, any of the following:   (a) principal, interest and redemption premiums payable on restructur- ing bonds;   (b)  any  payment required under an ancillary agreement and any amount required to fund or replenish a debt service reserve  account  or  other account  established  under  any indenture, ancillary agreement or other financing document relating to the restructuring bonds;   (c) any federal, state or local taxes,  payments  in  lieu  of  taxes, franchise  fees  or  license fees imposed on transition charge revenues; and   (d) any cost related to issuing restructuring bonds, administering the restructuring bond  issuer  and  servicing  restructuring  property  and restructuring  bonds,  or  related  to  the efforts to prepare or obtain approval of a restructuring cost  financing  order,  including,  without limitation,  costs  of  calculating  adjustments  of transition charges, servicing fees and expenses, trustee fees and expenses, legal  fees  and expenses,   accounting   fees  and  expenses,  administrative  fees  and expenses, placement fees, underwriting fees, fees and  expenses  of  the authority’s advisors and outside counsel, if any, rating agency fees and any  other related cost that is approved for recovery in the restructur- ing cost financing order.   7. “Financing entity” means the restructuring bond issuer, the author- ity or any servicer, trustee, collateral  agent,  and  other  person  or entity  acting for the benefit of owners of the restructuring bonds, the restructuring bond issuer or the authority that  may  own  restructuring property or have rights to receive proceeds of restructuring bonds or to receive proceeds from the sale of restructuring property.   8. “LIPA” means Long Island Lighting Company, currently doing business under the name of LIPA.   9.  “Ongoing  financing  costs”  means  financing  costs  that are not upfront financing costs. Ongoing financing costs include: (a) principal, interest and redemption premiums payable on restructuring bonds; (b) any payment required under an ancillary agreement and any amount required to replenish a debt service reserve account or  other  account  established under  any  indenture,  ancillary  agreement or other financing document relating to restructuring bonds; (c) any federal, state or local  taxes, payments  in  lieu  of  taxes, franchise fees or license fees imposed on transition charge revenues; and (d) any cost  related  to  administering the  restructuring  bond  issuer and servicing restructuring property or restructuring bonds, including, without limitation, costs of calculating adjustments of transition charges, servicing fees and expenses, adminis- trative fees and expenses, trustee fees and expenses, and legal fees and expenses, accounting fees and expenses, and rating agency fees, approved for recovery in the restructuring cost financing order. Ongoing  financ- ing  costs  shall  include  any excess of actual upfront financing costs over the estimate of upfront financing costs included in  the  principal amount of the restructuring bonds.   10.  “Restructuring bond issuer” means the corporate municipal instru- mentality of the state created under section four of this act.

11. “Restructuring bonds” means bonds or other  evidences  of  indebt- edness  that  are  issued pursuant to an indenture or other agreement of the restructuring bond issuer under a restructuring cost financing order (a) the proceeds of which are used, directly or indirectly, to  recover, finance, or refinance approved restructuring costs, (b) that are direct- ly  or  indirectly  secured by, or payable from, restructuring property, and (c) that have a term no longer than thirty years.   12. “Restructuring cost financing order” means an order by the author- ity, adopted in accordance with this act, which approves the  imposition and  collection  of  transition  charges,  and the financing of approved restructuring costs and upfront financing  costs  through  the  sale  of restructuring  property  and  the  issuance  of restructuring bonds, and which includes a procedure to require periodic adjustments to transition charges to ensure the collection of  transition  charges  sufficient  to provide for the timely payment of scheduled debt service on the restruc- turing  bonds  and all other ongoing financing costs contemplated by the restructuring cost financing order.   13. “Restructuring property” means the property rights  and  interests created  pursuant to this act, including, without limitation, the right, title, and interest: (a) in and to the  transition  charges  established pursuant  to a restructuring cost financing order, as adjusted from time to time in accordance with the restructuring cost financing  order;  (b) in  and  to  all  revenues,  collections,  claims,  payments,  money, or proceeds of or arising from the transition charges or constituting tran- sition charges that are the subject of a  restructuring  cost  financing order,   regardless  of  whether  such  revenues,  collections,  claims, payments, money, or proceeds are imposed, billed, received, collected or maintained together with or commingled with other revenues, collections, claims, payments, money or proceeds; and (c) in and  to  all  rights  to obtain  adjustments  to  the transition charges pursuant to the terms of the restructuring cost financing  order.  Restructuring  property  shall constitute  a  vested, presently existing property right notwithstanding the fact that the value of the property right  will  depend  on  further acts that have not yet occurred, including but not limited to, consumers remaining  or  becoming  connected  to  the T&D system assets and taking electric delivery service, the  imposition  and  billing  of  transition charges, or, in those instances where consumers are customers of LIPA or any  successor  owner  of  the  T&D system assets, such owner performing certain services.   14. “Service area” means  the  geographical  area  within  which  LIPA provided electric distribution services as of the implementation date of this act.   15. “Servicer” means an entity authorized and required, by contract or otherwise,  to  impose,  bill and collect transition charges, to prepare periodic reports regarding billings and collections of transition charg- es, to remit collections to the appropriate  financing  entity,  and  to provide  other services contemplated by the restructuring cost financing order, which may include calculation  of  periodic  adjustments  to  the transition  charges  or providing other services related to the restruc- turing property. Without limitation, LIPA or any successor owner of  the T&D system assets, their agents or subcontractors, or any entity author- ized to bill and collect T&D rates may be a servicer.   16. “Servicing fee” means, except to the extent otherwise specified in a  restructuring cost financing order, the periodic amount paid pursuant to a servicing agreement, indenture or other such document to a servicer of restructuring property which amount shall approximate  the  estimated

incremental cost of imposing, billing and collecting transition charges, preparing  servicing  reports  and  performing other customary servicing services required in connection with securitized bonds. A  restructuring cost  financing order may authorize a smaller fee payable to a successor servicer that is affiliated with a successor owner  of  the  T&D  system assets  if  the incremental cost of providing servicing services is less than LIPA’s incremental costs. A restructuring cost financing order  may authorize  a  larger  fee  payable  to  a successor servicer that is not affiliated with the owner of the T&D system assets or is not  performing similar  services with respect to the base rates of the owner of the T&D system assets if such larger fee is reasonably  necessary  to  employ  a reliable successor servicer.   17. “Successor regulator” means a regulatory department, commission or other  instrumentality  or subdivision of the state with jurisdiction to regulate the T&D rates of LIPA or its successor  as  owner  of  the  T&D system assets.   18.  “Third-party  biller”  means  any  person  or  entity authorized, required or entitled to bill or collect transition charges or T&D  rates other  than  the  authority, LIPA or a successor owner of the T&D system assets, or a servicer.   19. “T&D rates” means rates and charges for electric transmission  and distribution services in the service area. “T&D rates” shall not include charges  for  the  generation  or  resale  of electricity or any charges imposed to fund public purpose programs.   20. “T&D system assets” means  the  physically  integrated  system  of electric  transmission  and  distribution  facilities (and other general property and equipment used in connection therewith) owned by LIPA as of the effective date of this act or thereafter acquired for use by LIPA or its successors in providing retail electric utility service to consumers in the service area.   21. “Transition charges” means those rates and charges relating to the T&D system assets that are separate and apart from base rates of LIPA or any successor owner of the T&D system assets and that are authorized  in a restructuring cost financing order to recover from consumers the prin- cipal, interest and premium payable on restructuring bonds and the other ongoing  financing  costs  associated  with  the restructuring bonds. As provided in paragraph (c) of subdivision 5 of section five of this  act, transition charges shall be imposed on all consumers in the service area and  collected  by LIPA or any successor owner of the T&D system assets, their agents, subcontractors, assignees, collection agents or any  other entity designated under the restructuring cost financing order.   22.  “Upfront  financing  costs”  means the fees and expenses to issue restructuring bonds, including, without limitation, expenses  associated with  the  efforts to prepare or obtain approval of a restructuring cost financing order, as well as the fees and expenses  associated  with  the structuring,  marketing, and issuance of restructuring bonds, including, without limitation, counsel fees, structural advisory fees, underwriting fees and  original  issue  discount,  rating  agency  and  trustee  fees (including  fees  of  trustee’s  counsel), accounting and auditing fees, printing and marketing expenses, stock exchange listing fees and compli- ance fees, filing fees, any applicable taxes, payments in lieu of taxes, the amount required to fund a debt  service  reserve  account  or  other account  established  under  any indenture, ancillary agreement or other financing document relating to the restructuring  bonds,  and  fees  and expenses  of  the  authority’s  advisors  and  outside  counsel, if any. Upfront financing costs include reimbursement to any person  of  amounts

advanced  for  payment  of  such  costs.  Upfront financing costs do not include scheduled debt service or other ongoing financing costs, to  the extent  such  ongoing financing costs are payable from transition charge revenues. If any upfront financing costs cannot be reasonably determined before  the  principal  amount  of  restructuring  bonds  is fixed, such financing costs shall be estimated and the aggregate of  such  estimates shall be included as an upfront financing cost for purposes of determin- ing  the  principal  amount  of restructuring bonds to be issued. If the actual upfront financing costs are greater than  the  estimated  upfront financing costs, the difference shall be deemed to be an ongoing financ- ing  cost; if the actual upfront financing costs are less than the esti- mated upfront  financing  costs,  the  proceeds  corresponding  to  such difference shall be used to pay ongoing financing costs.   S  3.  Procedure;  judicial  review.    1. Standard. The authority may prepare a restructuring cost financing order for the purpose of  issuing restructuring bonds to refinance outstanding debt of the authority based on a finding that such bond issuance is expected to result in savings to consumers  of  electric  transmission  and  distribution services in the service area on a net present value basis.   2. Public hearings. Notwithstanding any other provision of law to  the contrary, at any time after the effective date of this act, after making such  finding,  the  authority shall schedule and hold one or more expe- dited public statement  hearings  on  the  proposed  restructuring  cost financing order. After the conclusion of such hearings and its review of any  comments  received,  the authority shall finalize the restructuring cost financing order for submission to the  board  of  trustees  of  the authority  and  to  the  public authorities control board (“PACB”).  The PACB shall have the power and it shall be its duty to, upon receiving an application for approval of a restructuring cost financing order, within thirty days after receipt of such  order,  either  approve,  absent  any conditions  of  approval,  or  disapprove such order based solely on the assumptions and conditions set forth in the restructuring cost financing order and whether such order complies with the standards  set  forth  in this  act.   If the public authorities control board fails to approve or disapprove such restructuring cost financing order  within  such  thirty day  period, the PACB shall be deemed to have approved the restructuring cost financing order. If the board of trustees of the authority approves such restructuring cost financing order and  the  PACB  approves  or  is deemed  to  have  approved  such restructuring cost financing order, the restructuring cost financing order shall become a final  rate  order  by the authority.   3.  Appeals.  Because delay in the final determination of the petition will delay the issuance  of  restructuring  bonds,  thereby  diminishing savings  to  consumers that might be achieved if the restructuring bonds were issued promptly  after  the  issuance  of  the  restructuring  cost financing  order,  notwithstanding  any  other  law to the contrary, any action, suit or proceeding to which the authority or  the  restructuring bond  issuer  may  be  a  party,  in which any question arises as to the validity of this act or any restructuring cost financing order, shall be preferred over all other civil causes in all courts of the state, except election matters, and shall be heard and determined in preference to all other civil business pending therein, except election matters, irrespec- tive of position on the calendar.  Such preference shall also be granted upon application of counsel to the authority in any action or proceeding questioning the validity of this act or any restructuring cost financing order in which such counsel may be allowed to intervene. Notwithstanding

any other provision of law to the contrary, the validity of this act may only be challenged by an aggrieved party pursuant to an action, suit  or proceeding  filed  within thirty days of the effective date of this act, and  the  validity of any restructuring cost financing order may only be challenged by an aggrieved party pursuant to an action, suit or proceed- ing filed within thirty days after  such  restructuring  cost  financing order  becomes  a  final rate order by the authority; provided, however, that any such action, suit or proceeding and all supporting papers shall be filed directly to the Supreme Court, Appellate Division, Second Judi- cial Department.   4. Expiration of appeals. The authority shall provide written  notifi- cation  to  the  restructuring bond issuer upon the authority’s determi- nation that any and all actions, suits and proceedings challenging  this act and the final restructuring cost financing order have been denied or dismissed  or  the  timing  associated  with the filing of such actions, suits and proceedings has lapsed or expired,  and  any  related  appeals have  been exhausted or the timing related to such appeals has lapsed or expired.   5. Agreement to sell restructuring bonds. Within the time specified in the restructuring cost financing order, after receiving notice from  the authority that the time for petitions and appeals has lapsed or expired, the  restructuring bond issuer shall enter into an agreement with one or more underwriters or purchasers satisfactory to the  authority  to  sell the  restructuring  bonds  in  compliance  with  the  restructuring cost financing order. No later than the third business day after the  pricing of  the  restructuring  bonds  in  accordance  with  such agreement, the initial servicer shall determine the initial transition charges and  the expected  savings to consumers in accordance with the restructuring cost financing order and shall  file  an  issuance  advice  letter  with  the authority  and the restructuring bond issuer setting forth the principal amount of restructuring  bonds  to  be  issued,  the  pricing,  the  net proceeds,  the  initial  transition  charges,  the  expected  savings to consumers and any other information required by the  restructuring  cost financing  order.  No later than the end of the third business day after the filing of such issuance advice letter, the authority  shall  confirm in  a notice to the restructuring bond issuer that such pricing complies with the restructuring cost financing order.   6. Issuance of restructuring bonds. Within ninety days after receiving notice of confirmation from the authority, the restructuring bond issuer shall issue the restructuring bonds, in one or more series  or  tranches and at one or more times, pursuant to the agreement to sell the restruc- turing  bonds. The restructuring bond issuer shall purchase the restruc- turing property from the authority for a purchase price equal to the net proceeds from the sale of the restructuring bonds less  any  amounts  of such proceeds required to fund or pay upfront financing costs.   7.  Irrevocability.  Upon the issuance of the restructuring bonds, the transition charges, including any adjustments thereof as provided in the restructuring cost financing order, shall be deemed established  by  the authority  as irrevocable, final and effective without further action by the authority, or any other entity. The state, including  the  authority or any successor regulator, thereafter may not in any way take or permit any  action  to  reduce,  impair,  postpone  or terminate the transition charges approved in the restructuring cost financing order, as the  same may  be  adjusted from time to time pursuant to subdivision 3 of section five of this act, or impair the restructuring property or the collection or recovery of transition charge revenues, including,  but  not  limited

to,  either  directly  or  indirectly  by taking transition charges into account when setting other rates for any owner of the T&D system assets; nor shall the amount of revenues arising with respect  to  restructuring property  be  subject in any way to reduction, impairment, postponement, or termination.   8. Application of proceeds. The restructuring bond issuer shall  cause the  proceeds  from its issuance of the restructuring bonds to be placed in one or more separate accounts and used only to pay  or  fund  upfront financing  costs  and  to  purchase  the restructuring property from the authority. The authority shall cause  the  proceeds  from  its  sale  of restructuring property to be placed in one or more separate accounts and used  only  to  pay approved restructuring costs, and if funds remain in those accounts after the payment of all approved restructuring costs, to make a refund or credit to consumers on the same basis  that  transition charges are then being imposed, to the extent such a refund or credit is practical.   S  4.  Creation of restructuring bond issuer.  1. Creation of restruc- turing bond  issuer.  For  the  purpose  of  effectuating  the  purposes declared  in  section one of this act, there is hereby created a special purpose corporate municipal instrumentality of the state to be known  as “utility debt securitization authority”, which shall be a body corporate and  politic, a political subdivision of the state, and a public benefit corporation, exercising essential governmental and public powers for the good of the public. The restructuring bond issuer shall not  be  created or organized, and its operations shall not be conducted, for the purpose of making a profit. No part of the revenues or assets of the restructur- ing bond issuer shall inure to the benefit of or be distributable to its trustees  or  officers  or  any  other private persons, except as herein provided for actual services rendered.   2. Activities limited  to  issuing  restructuring  bonds  and  related activities.   (a) The restructuring bond issuer is hereby authorized to:   (i) issue the restructuring bonds contemplated by a restructuring cost financing  order,  and  use the proceeds thereof to purchase or acquire, and to own, hold and use  restructuring  property  or  to  pay  or  fund upfront  financing  costs provided, however, that the restructuring bond issuer shall only issue and sell restructuring bonds once;   (ii) contract for servicing of restructuring property and  restructur- ing bonds and for administrative services; and   (iii)  pledge  the  restructuring property to secure the restructuring bonds and the payment  of  ongoing  financing  costs,  all  pursuant  to section seven of this act.   (b)  So  long  as  any  restructuring  bonds  remain  outstanding, the restructuring bond issuer shall not be authorized to  merge  or  consol- idate,  directly or indirectly, with any person or entity. Additionally, the restructuring bond issuer shall not have the power or  authority  to incur,  guarantee or otherwise become obligated to pay any debt or other obligations other than  the  restructuring  bonds  and  financing  costs unless  otherwise  permitted  by the restructuring cost financing order. The restructuring bond issuer shall  keep  its  assets  and  liabilities separate and distinct from those of any other entity.   (c)  The  restructuring bond issuer shall have no additional authority to engage in other  business  activities;  provided,  however,  that  in connection  with  the powers specified in paragraph (a) of subdivision 2 of this section, as a financing entity, the  restructuring  bond  issuer shall have the power to:

(i) sue and be sued;   (ii) have a seal and alter the same at pleasure;   (iii) make and alter by-laws for its organization and internal manage- ment and make rules and regulations governing the use of its property;   (iv) make and execute contracts and all other instruments necessary or convenient  for  the exercise of its powers and functions under this act and to commence any action to protect or  enforce  any  right  conferred upon  it  by  any  law,  contract or other agreement, including, without limitation, make and execute contracts with the authority, LIPA  or  any successor  owner  of the T&D system assets, any servicers, any financing entity or any other public or private entities to service  restructuring property  owned  by  restructuring bond issuer, to service restructuring bonds issued by restructuring bond issuer, and to  provide  services  in administering the restructuring bond issuer, and to pay compensation for such services;   (v) appoint officers, agents and employees, prescribe their duties and qualifications,  fix  their  compensation  and  engage  the  services of private consultants, accountants, counsel and others on a contract basis for rendering professional and technical assistance and advice;   (vi) pay  its  operating  expenses,  scheduled  debt  service  on  the restructuring bonds and other ongoing financing costs;   (vii)  issue  restructuring  bonds  and  provide for the rights of the holders thereof;   (viii) procure insurance against  any  loss  in  connection  with  its activities,  properties and assets in such amount and from such insurers as it deems desirable;   (ix) invest any funds or other moneys under its custody and control in investment securities or under any ancillary agreement;   (x) establish and maintain such reserves, special funds and  accounts, to  be held in trust or otherwise, as may be required by agreements made in connection with the restructuring bonds,  or  any  agreement  between itself and third parties;   (xi)  as  security for the payment of the principal of and interest on any restructuring bonds issued by it  pursuant  to  this  act,  and  any agreement  made  in  connection therewith, pledge all or any part of its revenues or assets, including, without limitation, restructuring proper- ty, unspent proceeds  of  its  restructuring  bonds,  transition  charge revenues,  and  earnings from the investment and reinvestment of unspent proceeds of its restructuring bonds and transition charge revenues; and   (xii) do any and all things necessary or convenient to carry  out  its purposes  and  exercise  the  powers expressly given and granted in this section.   3. No authority to file for bankruptcy protection.  The  restructuring bond  issuer  shall  not be authorized to be a debtor under chapter 9 of the United States Bankruptcy Code or any other provision of  the  United States  Bankruptcy  Code.  No  governmental  officer  or organization is empowered  to  authorize,  whether  by  executive  order  or  otherwise, restructuring  bond  issuer to be a debtor under chapter 9 of the United States Bankruptcy Code or any other provision of the United States Bank- ruptcy Code. Until at least one year and one day after all restructuring bonds issued by restructuring bond issuer have ceased to be  outstanding and all unpaid financing costs have been paid, the state hereby pledges, contracts  and  agrees  with  owners  of  restructuring  bonds issued by restructuring bond issuer that the state will not  limit  or  alter  the denial  of  authority  to  the  restructuring bond issuer to be a debtor

under chapter 9 of the  United  States  Bankruptcy  Code  or  any  other provision of the United States Bankruptcy Code.   4.  Governance.  The  restructuring bond issuer shall be governed by a board consisting of three trustees appointed by the governor. The  trus- tees  shall  not  be  trustees, directors, officers, or employees of the authority, LIPA or any successor owner of the T&D system assets.   (a) One of the trustees first appointed shall serve for a term  ending four  years  from  January first next succeeding his appointment; one of such trustees shall serve for a term ending five years from  such  date; and  one  of  such trustees shall serve for a term ending six years from such date. Their successors shall serve for terms  of  six  years  each. Trustees  shall  continue  in  office  until  their successors have been appointed and qualified and the provisions of section 39 of  the  public officers  law  shall  apply.  In the event of a vacancy occurring in the office of a trustee by death, removal,  resignation  or  otherwise,  the Governor shall appoint a successor to serve for the balance of the unex- pired term.   (b)  Trustees  shall  serve  without salary or other compensation, but each trustee shall be entitled to reimbursement for actual and necessary expenses incurred in the performance of his or her official duties.   (c) A majority of the trustees shall constitute a quorum for the tran- saction of any business or the exercise of  any  power  or  function  of restructuring bond issuer. Any one or more trustees may participate in a meeting  of  the  board  by  means  of a conference telephone or similar communications equipment allowing all persons participating in the meet- ing to hear each other at the same time.  Participation  by  such  means shall constitute presence in person at a meeting. The board may delegate to  one or more of its trustees, or officers, agents and employees, such powers and duties as the board may deem proper.   (d) Such trustees may engage in private employment, or in a profession or business.   Restructuring bond issuer,  its  trustees,  officers  and employees  shall  be  subject to the provisions of sections 73 and 74 of the public officers law.   (e) Notwithstanding any inconsistent provision of law to the contrary, general, special or local, no officer of the state or of any civil divi- sion thereof shall be deemed to have forfeited or shall forfeit  his  or her  office  or  employment  by  reason  of  his or her acceptance of an appointment as trustee of restructuring bond issuer.   (f) The governor may remove any trustee for inefficiency,  neglect  of duty  or  misconduct  in  office  after  giving him or her a copy of the charges against him or her and an opportunity to be heard, in person  or by  counsel,  in his or her defense, upon not less than ten days notice. If any trustee shall be so removed,  the  governor  shall  file  in  the office  of  the  department of state a complete statement of the charges made against such trustee and his or her findings thereon, together with a complete record of the proceedings.   (g) Each trustee shall have a fiduciary duty to act in the best inter- ests of the restructuring bond  issuer,  including  its  creditors,  the owners of the restructuring bonds, and such other duties as may be spec- ified  in  the  organizational  documents  or  other  agreements  of the restructuring bond issuer.   (h) The restructuring bond issuer and its  corporate  existence  shall continue  until  one  year and one day after all restructuring bonds and ongoing financing costs and other  indebtedness  of  restructuring  bond issuer  have  been actually paid and all its other liabilities and obli- gations have been paid, met or otherwise discharged. Upon termination of

the existence of restructuring bond issuer, all of its rights and  prop- erty shall pass to and be vested in the state.   S 5. Restructuring cost financing orders.  1. Content of restructuring cost  financing  orders.  The  restructuring  cost financing order shall include the following: (i) a description of the  approved  restructuring costs; (ii) the amount of approved restructuring costs that the authori- ty  proposes  to  pay through the sale of the restructuring property and the issuance of  the  restructuring  bonds;  (iii)  designation  of  the authority  as  the  entity  in  which initial ownership of restructuring property will vest; (iv) an estimate of the date on which  restructuring bonds  will be issued and the expected scheduled term to maturity of the restructuring bonds; (v) a description of the estimated debt service  on the  restructuring  bonds  and other ongoing financing costs that may be recovered through transition charges; as part of this  description,  the restructuring  cost financing order may include qualitative or quantita- tive limitations on financing costs approved to  be  recovered  provided that  no  such limitation on financing costs shall impair the ability of the restructuring bond issuer to pay and service the restructuring bonds in accordance with their terms; (vi) a proposed methodology for allocat- ing transition charges on  an  equal  percentage  basis  among  customer service  classifications  and  among  volumetric  (kWh)  and demand (kW) charges within those customer service  classifications,  along  with  an associated  bill  impact  analysis  of the proposed methodology; (vii) a description of the proposed adjustment  mechanism  to  reconcile  actual collections with forecasted collection on at least an annual basis and a finding  that  the adjustment mechanism is just and reasonable; (viii) a description of the benefits to consumers in the service  area  that  are expected  to  result from the sale of the restructuring property and the issuance of restructuring bonds as opposed  to  traditional  alternative financing  mechanisms;  (ix) specifying the entity that will contract to act as servicer with respect  to  the  restructuring  property  and  the restructuring  bonds on terms and conditions mutually acceptable to such servicer and the restructuring bond issuer; (x) specifying the entity or entities that will contract to provide administrative or other  services to the restructuring bond issuer; (xi) specifying when the restructuring property  will  be created and vest and addressing such other matters as may be necessary or desirable for the  marketing  or  servicing  of  the restructuring  bonds  or  the  servicing  of the restructuring property; (xii) authorizing the imposition, billing and collection  of  transition charges to pay debt service on the restructuring bonds and other ongoing financing costs; (xiii) a description of the restructuring property that will  be  created  and that may be used to pay and secure the payment of the restructuring bonds approved to be issued in the restructuring  cost financing  order;  (xiv)  a  requirement  that  the  amounts in the debt service reserve accounts or other accounts funded with the  proceeds  of restructuring  bonds  or transition charges be fully used, to the extent practical, to make the final payments of principal and interest  on  the restructuring bonds and other ongoing financing costs or to make refunds to  consumers  on  the same basis as such consumers would have then been obligated to pay transition costs; and  (xv)  the  finding  required  by subdivision 1 of section 3 of this act.   2.  Periodic  reports.  A  restructuring  cost  financing  order shall require the restructuring bond issuer or the servicer to file  at  least annually with the authority and the appropriate financing entity a peri- odic  report  showing  the billing and collection of transition charges, the application of transition charge revenues to  debt  service  on  the

restructuring  bonds and other ongoing financing costs, and the balances in any debt service reserve accounts or other accounts required  by  the restructuring cost financing order.   3. Adjustment mechanism.   (a)  Each restructuring cost financing order shall include a mathemat- ical formula for making periodic adjustments to the transition  charges. The mathematical formula shall apply the following principles:   (i)  The  transition  charges  will  be  adjusted at least annually to ensure that the collections of transition charges are  adequate  to  pay principal  and  interest  on the associated restructuring bonds when due pursuant to the expected amortization schedule, to fund all debt service reserve accounts to the required levels and to pay when  due  all  other expected ongoing financing costs.   (ii)  The  adjustments  of  transition  charges will take into account historical and reasonably foreseeable differences between amounts billed and amounts collected due to applicable  taxes,  consumer  defaults  and delays, billing lags, write-offs and other factors.   (iii)  The  adjustments  of  transition charges will take into account historical and reasonably foreseeable  variations  in  billings  due  to variations  in  electricity  consumption  associated  with  the seasons, storms and other weather conditions, outages, gain or loss of consumers, efficiencies, electric vehicles, economic conditions or other factors.   (iv) The adjustments of transition charges will take into account  any over-collection  or  under-collection  of transition charges so that, to the extent practical, the outstanding balance of restructuring bonds  is equal  to  the  scheduled balance on the expected amortization schedule, the amounts in the debt  service  reserve  accounts  are  equal  to  the required  reserve  level,  and all ongoing financing costs are paid when due.   (v) The adjustments of transition charges will be applied  ratably  to the transition charges for each customer service classification.   (b)  Once  restructuring  bonds have been issued, the adjustment mech- anism specified in the  restructuring  cost  financing  order  shall  be applied  to correct for any over-collection or under-collection of tran- sition charges and to provide for timely payment of scheduled  principal of  and interest on the restructuring bonds and the payment and recovery of other ongoing financing costs in accordance  with  the  restructuring cost  financing  order.  Application  of  the adjustment mechanism shall occur at least annually or more frequently as provided in  the  restruc- turing  cost  financing  order.  A notice of such periodic adjustment of transition charges shall be filed with the authority by or on behalf  of the  owner of restructuring property and a copy shall be provided to the owner of the T&D system assets at least sixty days before the adjustment is to take effect, provided  that  the  restructuring  bond  issuer  may request an earlier effective date.   (c) Each adjustment to the transition charge, in amounts as calculated by  or  on behalf of the owner of restructuring property, shall automat- ically become effective sixty days  following  the  date  on  which  the notice  of  periodic  adjustment  is filed with the authority unless the authority approves an earlier effective date requested by  the  restruc- turing bond issuer.   (d)  Notwithstanding  any  other provision of law to the contrary, the authority shall allow interested parties thirty days from  the  date  of filing  of the notice for adjustment within which to make comments. Such comments shall be limited to the mathematical  accuracy  of  the  calcu- lations  of  the  amount of the adjustments. If the authority determines

that the calculation of the transition charge adjustment in  the  notice was mathematically inaccurate, the transition charge adjustment shall be changed  as  soon  as it is reasonably practical to do so, but estimated overcollections  or  undercollections  resulting  from  the mathematical error shall be taken  into  account  in  the  next  succeeding  periodic adjustment.   (e) No adjustment pursuant to this section shall in any way affect the irrevocability of the restructuring cost financing order as specified in subdivision  4  of  section  five of this act. No adjustment pursuant to this section shall require any approvals or action under any  other  law or  shall be deemed to be the establishment of a new charge, fee or rate under any law.   4. Irrevocability of restructuring cost financing orders.   (a) A restructuring cost financing order shall be an irrevocable final rate order when the time for any actions, suits, proceedings and appeals challenging such final restructuring cost financing order has lapsed  or expired as provided in subdivision 3 of section three of this act.   (b)  A  restructuring  cost financing order may be amended on or after the date of issuance of restructuring bonds  approved  thereunder  only: (i)  at  the  request  of  the  authority;  (ii)  in accordance with any restrictions and limitations on amendment set forth in the restructuring cost financing order; (iii) subject to  the  limitations  set  forth  in subdivision  7  of  section three of this act; and (iv) upon approval by the PACB within thirty days of  receipt  of  such  amendment;  provided, however,  that  if  no approval or disapproval is made within such time, the amendment shall be deemed approved.   (c) This act, and any restructuring cost financing order made pursuant to this act, shall not be interpreted to alter or limit the rights vest- ed in the authority to establish sufficient T&D rates to pay and perform all of its obligations and contracts with  the  authority’s  bondholders and others when due.   5. Effect of restructuring cost financing order.   (a)  A  restructuring  cost financing order shall remain in effect and unabated until the restructuring bonds issued pursuant to  the  restruc- turing  cost  financing  order  have  been  paid in full and all ongoing financing and all amounts to be paid to an assignee or  financing  party under an ancillary agreement are paid or performed in full.   (b)  A  restructuring  cost financing order shall remain in effect and unabated notwithstanding the bankruptcy, reorganization or insolvency of the authority, the restructuring bond  issuer,  LIPA  or  any  successor owner  of the T&D system assets, or any affiliate of the aforementioned, or the commencement of any judicial or nonjudicial proceeding therefor.   (c) For so long as restructuring bonds issued pursuant to  a  restruc- turing  cost  financing  order are outstanding, and the related approved restructuring costs have not been paid in full, the  transition  charges authorized  in  the  restructuring cost financing order shall be non-by- passable and shall apply to all consumers connected to  the  T&D  system assets  and  taking electric delivery service located within the service area, whether or not the consumers  produce  their  own  electricity  or purchase electric generation services from a provider of electric gener- ation services other than the owner of the T&D system assets and whether or not the T&D system assets continue to be owned by LIPA.   S  6.  Restructuring bonds.  1. No recourse. Restructuring bonds shall be without recourse to the credit or any assets of the  authority,  LIPA and the restructuring bond issuer, other than the restructuring property

and  other assets and revenues of restructuring bond issuer as specified in the pertinent restructuring cost financing order.   2. Exemption from taxation.   (a)  It  is  hereby  found  and  declared  that  the activities of the restructuring bond issuer are primarily for the benefit of the people of the state of New York, for the improvement of their welfare and prosper- ity, and is a public purpose, and the restructuring bond issuer shall be regarded as performing an essential governmental  function  in  carrying out the provisions of this act.   (b)  The  restructuring bond issuer shall not be required to pay taxes or assessments upon any of the property acquired or controlled by it  or upon its activities in the use thereof or upon income derived therefrom.   (c)  Restructuring  bonds,  their  transfer  and  the income therefrom shall, at all times, be free from taxation by the state or  any  munici- pality, except for estate and gift taxes.   3.  Restructuring  bonds  not  debt  of the state. Restructuring bonds issued  pursuant  to  a  restructuring  cost  financing  order  and  the provisions  of  this act shall not constitute a debt, general obligation or a pledge of the faith and credit or taxing power of the state  or  of any  county,  municipality or any other political subdivision, agency or instrumentality of the state.  Holders of restructuring bonds shall  not be taxed by the legislature or the taxing authority of any county, muni- cipality  or  any other political subdivision, agency or instrumentality of this state for the payment of the principal thereof or interest ther- eon. The issuance of restructuring bonds does not obligate the state  or any  county,  municipality or any other political subdivision, agency or instrumentality of the state to levy any tax or make  any  appropriation for  payment of the principal of or interest on the restructuring bonds. All restructuring bonds  must  contain  a  statement  to  the  following effect:   “Neither the full faith and credit nor the taxing power of the state of New York is pledged to the payment  of  the  principal  of,  or interest on, this bond.”   4.  Restructuring  bonds as legal investments. Any restructuring bonds issued by the restructuring bond issuer are hereby  made  securities  in which  all  public  officers  and  bodies  of this state and all munici- palities, all insurance companies and  associations  and  other  persons carrying  on an insurance business, all banks, bankers, trust companies, savings banks and savings associations, including savings and loan asso- ciations, building and loan associations, investment companies and other persons carrying on a banking business, all trusts, estates and  guardi- anships  and  all other persons whatsoever, who are now or may hereafter be authorized to invest in bonds or other obligations of this state, may properly and legally invest funds, including capital in their control or belonging to them. The restructuring bonds are also hereby made  securi- ties  which  may  be  deposited with and shall be received by all public officers and bodies of the state and all municipalities for any  purpose for  which the deposit of bonds or other obligations of the state is now or may hereafter be authorized.   S 7. Restructuring property. 1. (a)  Restructuring  property  that  is created  pursuant  to a restructuring cost financing order shall consti- tute an existing, present property right, notwithstanding the fact  that the  imposition  and  collection  of  transition  charges will depend on further acts that have not yet occurred, including but not  limited  to: (i)  LIPA  or  any  successor  owner of the T&D system assets delivering electric energy or related services, (ii) a servicer performing  servic- ing functions relating to the collection of transition charges, or (iii)

the  level of future consumption of electric energy. Restructuring prop- erty shall exist whether or not transition charges  have  been  imposed, billed, accrued or collected and notwithstanding the fact that the value or  amount  of  the  restructuring  property  is dependent on the future provision of service to customers by LIPA or any successor owner of  the T&D system assets.   (b)  All  restructuring  property  created pursuant to a restructuring cost financing order shall continue to  exist  until  the  restructuring bonds  issued  pursuant  to  such restructuring cost financing order are paid in full and all ongoing financing costs relating to the restructur- ing bonds have been paid in full.   (c) The restructuring property may be transferred, sold,  conveyed  or assigned  to  the  restructuring  bond  issuer.  All  or  any portion of restructuring property may be pledged to secure the payment of  restruc- turing  bonds,  amounts payable to financing parties, amounts payable to holders of restructuring bonds,  amounts  payable  under  any  ancillary agreement  and other ongoing financing costs. So long as the restructur- ing property remains pledged to secure the restructuring bonds, revenues from the collection of transition charges shall be applied solely to the repayment of restructuring bonds  and  other  ongoing  financing  costs. After the occurrence of an event of default with respect to the restruc- turing bonds, all or any portion of restructuring property may be trans- ferred,  sold, conveyed or assigned to any person or entity.  Any trans- fer, sale, conveyance, assignment, grant of a security  interest  in  or pledge  of  restructuring  property  by the authority, the restructuring bond issuer,  or  other  financing  entity,  to  the  extent  previously approved  in  a restructuring cost financing order, does not require the prior consent and approval of any  other  person  or  entity  under  the public service law or any other law.   (d)  If  the  owner  of  the  T&D system assets, servicer, third-party biller, or any other person or entity authorized to  collect  transition charges, defaults on any required remittance of transition charge reven- ues, any court in the state, upon application by an interested party and without  limiting  any  other  remedies available to the applying party, shall order the sequestration  and  payment  of  the  transition  charge revenues  for  the  benefit  of  the owners or pledgees of restructuring property. The order shall remain in full force and effect  notwithstand- ing any bankruptcy, reorganization, or other insolvency proceedings with respect to a servicer, authority, LIPA or any successor owner of the T&D system assets or any affiliate thereof or of any other person or entity.   (e)  Restructuring  property,  transition  charges,  transition charge revenues, and the interests of an assignee, bondholder, financing  party or  any  other  person in restructuring property or in transition charge revenues, are not subject to setoff, counterclaim, surcharge or  defense by  a servicer, any consumer, the authority, LIPA or any successor owner of the T&D system assets or any other person or in connection  with  any default,  bankruptcy,  reorganization  or other insolvency proceeding of the authority, LIPA or any successor owner of the T&D system assets, any affiliate thereof or any other entity or otherwise.  To the extent  that any  consumer  makes a partial payment of a bill containing both transi- tion charges and any other charges, such payment shall be allocated  pro rata  between  the  transition  charges and the other charges unless the consumer specifies that a greater proportion of such payment  is  to  be allocated to the transition charges, except that the other charges shall be  reduced  by  the  amount  of  any  claims  of  setoff, counterclaim, surcharge or defense for purposes of such allocation.

(f) Any successor owner of the T&D system  assets  and  any  successor servicer  shall  be  bound  by  the  requirements  of this act and shall perform and satisfy all obligations of a servicer in the same manner and to the same extent under a restructuring cost  financing  order  as  did LIPA  and the initial servicer, including, without limitation, the obli- gation to impose, bill and collect the transition  charges  and  to  pay such collections to the person entitled to receive the transition charge revenues.   2.  Security  interests.  Any  pledge  of  restructuring  property  or proceeds thereof, including any moneys, revenues or  property  or  of  a revenue  producing  contract  or  contracts  constituting  part  of  the restructuring property, made by the  owner  of  restructuring  property, shall  be  perfected, valid and binding from the time when the pledge is made. The proceeds, moneys, revenues or proceeds so pledged  and  there- after  received by the owner of restructuring property shall immediately be subject to the lien of such pledge, and such lien shall be perfected, without any physical delivery thereof or further act. The  lien  of  any such pledge shall be perfected, valid and binding as against all parties having  claims  of  any  kind in tort, contract or otherwise against the owner of restructuring property irrespective  of  whether  such  parties have notice thereof and shall be superior to any judicial liens or other liens  obtained by such claimants or transferees. The description of the restructuring property in a pledge or security agreement and any financ- ing statement is sufficient if and only if  the  description  refers  to this  Act  and  the  restructuring  cost  financing  order creating such restructuring property. No instrument by  which  a  pledge  or  lien  is created  pursuant  to  this  subdivision  need  be  recorded in order to perfect such pledge or lien.  However,  the  restructuring  bond  issuer shall cause a financing statement describing the pledge and referring to the  restructuring  cost  financing order and the restructuring property described therein to be filed  for  informational  purposes  only  under article  9  of the uniform commercial code. The secretary of state shall maintain any financing statement filed under this section  in  the  same manner that the secretary maintains financing statements filed by trans- mitting  utilities  under  section  9-501 of the uniform commercial code until a termination statement is filed. A pledge of restructuring  prop- erty is a continuously perfected security interest and has priority over any  other  lien,  created  by  operation  of law or otherwise, that may subsequently attach to that restructuring property or  proceeds  thereof unless  the holder of any such lien has agreed in writing otherwise. Any pledgee of restructuring property shall have a perfected security inter- est in the amount  of  all  restructuring  property  revenues  or  other proceeds  that  are deposited in any deposit account or other account of the servicer or other entity in which restructuring property revenues or other proceeds have been commingled with other funds. Any other security interest that may apply to  restructuring  revenues  or  other  proceeds shall  be terminated when such revenues or proceeds are transferred to a segregated account for an assignee or a financing party. No  application of  the  adjustment  mechanism as described in this act shall affect the validity, perfection, or priority of a pledge of, security  interest  in or the sale or transfer of restructuring property.   3. Sales of restructuring property.   (a)  A transfer of all or any portion of restructuring property, which the parties in the governing documentation have expressly stated to be a sale or other absolute transfer, in a transaction approved in a restruc- turing cost financing order, shall be treated as an absolute transfer of

all of the transferor’s right, title, and interest (as in a true  sale), and  not  as a pledge or other financing, of the restructuring property, other than for  federal,  state  and  local  income  and  franchise  tax purposes.   (b)  Any  transfer  of  an interest in restructuring property shall be perfected, vested, valid and binding from the time when the transfer  is made.  Such  transfer  shall  be perfected, vested, valid and binding as against the transferor, all parties having claims of any kind  in  tort, contract  or otherwise against the transferor, and all other transferees of the transferor, irrespective of  whether  such  parties  have  notice thereof  and  shall  be  superior  to  any judicial liens or other liens obtained by such  claimants  or  transferees.  The  description  of  the restructuring property in a sale or transfer agreement and any financing statement  is  sufficient  if and only if the description refers to this act and the restructuring cost financing order creating such restructur- ing property. No instrument by which a transfer is created  pursuant  to this  section need be recorded in order to perfect such transfer. Howev- er, the restructuring bond issuer  shall  cause  a  financing  statement describing  the pledge and referring to the restructuring cost financing order and the restructuring property described therein to be  filed  for informational purposes only under article nine of the uniform commercial code.  The  secretary  of  state  shall maintain any financing statement filed under this section in the same manner that  such  secretary  main- tains financing statements filed by transmitting utilities under section 9-501  of  the  uniform commercial code until a termination statement is filed.   (c) The characterization of the sale, assignment  or  transfer  as  an absolute  transfer  and true sale and the corresponding characterization of the property interest  of  the  purchaser,  shall  not  adversely  be affected  or  impaired  by, among other things, the occurrence of any of the following factors: (i) commingling of  revenues  or  other  proceeds from  transition  charges  with other amounts; (ii) the retention by the seller of: (A) a partial  or  residual  interest,  including  an  equity interest,  in the restructuring property, whether direct or indirect, or whether subordinate or otherwise; or (B)  the  right  to  recover  costs associated  with  taxes,  payments  in  lieu of taxes, franchise fees or license fees imposed on the collection of transition charges; (iii)  any recourse that the purchaser may have against the seller; (iv) any indem- nification  rights, obligations or repurchase rights made or provided by the seller; (v) the obligation  of  the  seller  to  collect  transition charges  on  behalf  of  an  assignee, including but not limited to, any retention by the seller to bare legal title for the purpose of  collect- ing  transition  charges;  (vi) the treatment of the sale, assignment or transfer for tax, financial  reporting  or  other  purposes;  (vii)  any subsequent  order of the authority amending a restructuring cost financ- ing order pursuant to paragraph (b) of subdivision 4 of section five  of this  act;  or  (viii)  any  application  of the adjustment mechanism as provided in subdivision 3 of section five of this act.   (d) An assignee or financing party shall not be  considered  to  be  a public  utility or person providing electric service solely by virtue of the transactions described in this act.   S 8. Rights and duties while restructuring bonds are outstanding.   1. Responsibilities of the authority.  (a) For the purpose of investigating compliance  with  the provisions of this act and the applicable restruc- turing cost financing order, the authority shall have the right,  juris- diction, power and authority to examine the books and records of LIPA or

any  successor  owner  of  the T&D system assets, the restructuring bond issuer, any other financing entity, any servicer, any third-party biller and any other person or entity that owns restructuring property  or  has the  right  to  impose,  bill  or  collect  transition charges until the restructuring bonds issued pursuant to the restructuring cost  financing order  have  been  paid in full and all financing costs relating to such restructuring bonds have been paid in full.   (b) Neither the authority nor any successor regulator may, in exercis- ing its powers and carrying out  its  duties  regarding  regulation  and ratemaking, consider restructuring bonds issued pursuant to the restruc- turing  cost  financing  order  to  be  the debt of any owner of the T&D system assets, consider transition charges paid under the  restructuring cost  financing  order  to  be  revenue  of  any owner of the T&D system assets, or consider the approved restructuring costs or ongoing  financ- ing  costs  specified  in  the  restructuring cost financing order to be costs of any owner of the T&D system assets or any  affiliate,  nor  may the authority or any successor regulator determine that any action taken by  any  owner  of  the  T&D  system  assets that is consistent with the restructuring cost financing order is  unjust  or  unreasonable  from  a regulatory  or  ratemaking  perspective;  provided  that, subject to the limitations set forth in subdivision 4 of section five of this  act  and the  state  pledge in section nine of this act, nothing in this subdivi- sion shall (i) affect the authority to apply the adjustment mechanism as provided in subdivision 3 of section five of this act; (ii)  prevent  or preclude the authority from investigating the compliance of any owner of the  T&D  system  assets  and of any financing entity with the terms and conditions of a restructuring cost financing order and requiring compli- ance therewith; or (iii)  prevent  or  preclude  the  authority  or  any successor regulator from imposing regulatory sanctions against any owner of the T&D system assets for failure to comply with the terms and condi- tions  of  a  restructuring  cost financing order or the requirements of this act.  When setting other rates for any  owner  of  the  T&D  system assets, nothing in this act shall prevent the authority or any successor regulator  from  taking  into  account  the  collection by such owner of servicing fees in excess of incremental  costs  of  providing  servicing services,  or  the  collection  by  such owner of administration fees in excess  of  incremental  costs  of  providing  administration  services; provided  that this would not result in a recharacterization of the tax, accounting, and other intended characteristics of the financing, includ- ing, but not limited to, either of the following: (i) treating  restruc- turing  bonds  as debt for federal income tax purposes; or (ii) treating any transfer of the restructuring property  to  the  restructuring  bond issuer  or  to  any other financing entity as a true sale for bankruptcy purposes.   2. Duties of financing entities and any owner of T&D system assets.   (a) Any failure of any financing  entity  to  apply  the  proceeds  of restructuring  bonds, or proceeds from the sale of restructuring proper- ty, in a reasonable, prudent and appropriate manner or otherwise  comply with  any  provision  of this act shall not invalidate, impair or affect any restructuring cost financing order, restructuring property,  transi- tion charge, or restructuring bonds.   (b)  Any  owner  of  T&D  system assets, any servicer, any third-party biller and any other entity that  bills  or  collects  T&D  rates  shall simultaneously  impose, bill and collect any transition charges applica- ble to consumers in the service area, including all consumers  connected to  the  T&D  system assets and taking electric delivery service located

within the service area, shall allocate partial payments by consumers as provided in this act, shall terminate service to non-paying consumers on the same basis as termination of service is permitted for non-payment of T&D rates, shall exercise all enforcement rights of the owner or pledgee of  the restructuring property for the benefit of such owner or pledgee, and shall remit any transition charge revenue to the owner or pledgee of the restructuring property.   S 9. State pledge.  (a) The state pledges to and agrees with the hold- ers of restructuring bonds, any assignee and all financing entities that the state will not in any way take or permit  any  action  that  limits, alters  or  impairs  the  value  of restructuring property or, except as required by the adjustment mechanism described in the restructuring cost financing order, reduce, alter or impair  transition  charges  that  are imposed,  collected  and  remitted  for  the  benefit  of  the owners of restructuring bonds, any assignee, and all financing entities, until any principal, interest and redemption premium in respect  of  restructuring bonds,  all  ongoing  financing  costs  and all amounts to be paid to an assignee or financing party under an ancillary  agreement  are  paid  or performed in full.   (b)  Any person who issues restructuring bonds is permitted to include the pledge specified in subdivision (a) of this section in the  restruc- turing  bonds,  ancillary  agreements  and  documentation related to the issuance and marketing of the restructuring bonds.   S 10. Choice of law. The law governing, as applicable,  the  validity, enforceability,  attachment,  perfection, priority and exercise of reme- dies with respect to the transfer of an interest or right or creation of a security interest in any restructuring property, transition charge  or restructuring  cost  financing  order, shall be the laws of the state of New York.   S 11. Conflicts. In the event of conflict between  this  act  and  any other  law  regarding  the  attachment, assignment or perfection, or the effect of perfection, or priority of any pledge of, security interest in or transfer of restructuring property, this  act  shall  govern  to  the extent  of  the  conflict. In the event of conflict between this act and the public service law, the Long Island power authority act or any other law, this act shall govern to the extent of the conflict.  Notwithstand- ing any provisions of law to the  contrary,  no  approvals,  notices  or authorizations  other than those specified in this act shall be required with respect to any restructuring cost financing order, and  the  trans- actions  and  contracts authorized in or contemplated by this act or any restructuring cost financing order, including but  not  limited  to  the incurrence and payment of any financing costs, the incurrence or payment of  any  approved  restructuring  costs,  the  issuance of restructuring bonds, the sale or other transfer of  restructuring  property,  and  any contracts  and  expenses  incurred  to facilitate the preparation of any restructuring cost financing order.   S 12. Effect of invalidity on actions.  Effective  on  the  date  that restructuring bonds are first issued under this act, if any provision of this  act is held to be invalid or is invalidated, superseded, replaced, repealed or expires for any reason, that occurrence shall not affect any action allowed under this act that is taken by the authority, LIPA,  the restructuring  bond issuer, any owner of T&D system assets, an assignee, a collection agent, a financing party, a holder of  restructuring  bonds or a party to an ancillary agreement and any such action shall remain in full force and effect.

S  13. Effectiveness of the act. The authority may not adopt its first restructuring cost financing order after the five year period after  the effective date of this act.   S 14. Severability. If any section, subdivision, paragraph or subpara- graph of this act or the application thereof to any person, circumstance or transaction is held by a court of competent jurisdiction to be uncon- stitutional  or invalid, the unconstitutionality or invalidity shall not affect the constitutionality or validity of any other section,  subdivi- sion, paragraph or subparagraph of this act or its application or valid- ity to any person, circumstance or transaction, including, without limi- tation,  the  irrevocability  of  a  restructuring  cost financing order issued pursuant to this act, the validity of the issuance of restructur- ing bonds, the imposition of transition charges, the transfer or assign- ment of restructuring property or the collection and recovery of  reven- ues  from  transition  charges.  To  these  ends, the legislature hereby declares that the provisions of this act are intended  to  be  severable and  that  the  legislature  would  have  enacted  this  act even if any section, subdivision, paragraph or subparagraph of this act held  to  be unconstitutional or invalid had not been included in this act.   S 15. Standing.  (a) The owner of restructuring property, or the trus- tee  representing  holders  of  restructuring  bonds, shall be expressly permitted hereby to bring actions against any owner of  the  T&D  system assets,  any  third-party biller, or any other entity authorized to bill or collect T&D rates, any consumers in the service  area  or  any  other person or entity for failure to impose, bill, pay or collect any transi- tion  charges  constituting part of the restructuring property then held pledged as security for such restructuring bonds or for  enforcement  of any  other  provision  of  this act or the applicable restructuring cost financing order.   (b) Except as provided in section three of this act, any court and the authority shall have  jurisdiction  over  any  actions  for  failure  to impose,  bill,  pay or collect any transition charges or for enforcement of other provision of this  act  or  any  restructuring  cost  financing order.   S 16. Third-party billing. If and to the extent that third parties are allowed  to  bill  and/or collect any transition charges, the authority, any successor regulator, and any owner of the  T&D  system  assets  will take  steps  to  ensure non-bypassability and minimize the likelihood of default by third-party billers, which generally would include (i) opera- tional standards and minimum credit requirements for any such third-par- ty biller, or require a cash deposit, letter of credit or  other  credit mitigant  in lieu thereof, to minimize the likelihood that defaults by a third-party biller would result in an  increase  in  transition  charges thereafter  billed  to consumers, (ii) a finding that, regardless of who is responsible for billing, consumers shall continue to  be  responsible for  transition charges, (iii) if a third party meters and bills for the transition charges, that the owner of the  T&D  system  assets  and  any servicer must have access to information on billing and usage by consum- ers to provide for proper reporting to the restructuring bond issuer and to perform its obligations as servicer, (iv) in the case of a default by a  third-party  biller, billing responsibilities must be promptly trans- ferred to another party to minimize potential losses, and (v) the  fail- ure  of  consumers  to pay transition charges shall allow service termi- nation by  the  owner  of  the  T&D  system  assets  on  behalf  of  the restructuring  bond  issuer  of  the consumers failing to pay transition charges in accordance with service termination rules and orders applica-

ble to T&D rates. Any costs associated  with  such  third-party  billing and/or  collection  shall be included as part of the recoverable ongoing financing costs or other rates or charges, as appropriate. Further,  the authority and any successor regulator shall not permit implementation of any  third-party  billing or collection that would result in a reduction or withdrawal of the then current ratings on any tranche  or  series  of the  restructuring bonds by any nationally recognized statistical rating organization designated by the restructuring bond issuer.   S 17. This act shall take effect immediately.   S 2. Severability clause. If any clause, sentence, paragraph, subdivi- sion, section or part of this act shall be  adjudged  by  any  court  of competent  jurisdiction  to  be  invalid,  such  judgment shall not take affect, impair, or  invalidate  the  remainder  thereof,  but  shall  be confined  in  its operation to the clause, sentence, paragraph, subdivi- sion, section or part thereof directly involved in  the  controversy  in which  such  judgment shall have been rendered. It is hereby declared to be the intent of the legislature that this act would have  been  enacted even if such invalid provisions had not been included herein.   S  3.  This act shall take effect immediately; provided, however, that the applicable effective date of Parts A through B of this act shall  be as specifically set forth in the last section of such Parts.