[§269-192]  Step-in agreements.  (a)  Within ninety days of receiving notice of the filing of an application to the public utilities commission for approval of a power purchase agreement, or if an application has already been filed as of July 1, 2025, within ninety days of receiving notice of the pending application, the department shall execute a step-in agreement related to the power purchase agreement with the obligee; provided that, before the expiration of the ninety-day period, the department completes a due diligence investigation of the obligee and the proposed step-in agreement and finds the obligee and proposed step-in agreement to be satisfactory; and further provided that if the public utilities commission denies the application, the step-in agreement shall be deemed void.  The step-in agreement shall require the department to make payments for power purchase costs owed by an electric utility to the obligee in the event of a default under the related covered power purchase agreement.  Pursuant to the step-in agreement and upon a default by the electric utility under the covered power purchase agreement related to the step-in agreement, the department shall make payments to the obligee for power purchase costs with revenues received from power purchase charges from covered power purchase agreements and reserve fees that are on deposit in the fund as and when due by the electric utility under the related covered power purchase agreement; provided that any step-in agreement entered into by the department shall provide that the department's payment obligation thereunder shall be limited to the revenues received from power purchase charges from covered power purchase agreements and reserve fees that are on deposit in the fund.  Each step-in agreement shall include a clause stating that neither the full faith and credit of the State nor any other moneys of the State will be pledged for any obligations pursuant to the terms of the step-in agreement and that in any action concerning a failure by the department to comply with the terms of a step-in agreement, the sole and exclusive remedy available to an obligee and the electric utility under the step-in agreement against the department shall be a court order directing specific performance by the department of the step-in agreement, and that under no circumstances shall the department be liable for any costs, expenses, or other monetary relief or compensatory damages.  An obligee of a covered power purchase agreement shall have no claim or lien on any moneys of the State.  An obligee of a covered power purchase agreement shall only have a claim or lien on those revenues from power purchase charges and reserve fees that are transferred by the electric utility and on deposit in the fund.  An obligee shall remain entitled to all payments for power purchase costs owed under its covered power purchase agreement, whether or not the revenues from power purchase charges attributable to its covered power purchase agreement are timely collected.  Notwithstanding anything to the contrary in this part, a step-in agreement shall also obligate the department to pay claims of an obligee from revenues received from power purchase charges and reserve fees on deposit in the fund arising out of a termination of the covered power purchase agreement by the electric utility under bankruptcy law.  In determining any amounts owed, the department shall have a right, but not an obligation, to rely on an invoice from an obligee describing amounts owed to make that determination.  The department shall not be deemed in breach of the step-in agreement by sole reason of having relied or failed to rely on the invoice.  Notwithstanding any law to the contrary, the department shall not be bound to make any independent calculation, verification, or investigation into the invoice from an obligee.

     (b)  The department shall enter into a step-in agreement only if the power purchase agreement that is subject to the step-in agreement arises from the Stage 3 request for proposals under docket number 2017-0352 before the public utilities commission or the first Integrated Grid Planning request for proposals issued under docket number 2024-0258 before the public utilities commission.  The department shall enter into a step-in agreement related to a power purchase agreement subject to the department completing its due diligence review and finding both the obligee and the contract to be satisfactory as provided in subsection (a).

     (c)  The payment obligation of the department under a step-in agreement shall commence not later than two days after the date of a notice given by the department to the electric utility pursuant to section 269-193(a).

     (d)  A step-in agreement shall terminate when the credit rating of the electric utility or its successor achieves investment grade status for at least thirty days, or may be terminated by express agreement of the obligee, department, and electric utility.  Following the termination of a step-in agreement, the department shall have no obligation to the electric utility or the obligee upon a continuing or future default by the electric utility under the related power purchase agreement.

     (e)  Following a default of a covered power purchase agreement and any payment by the department from revenues in the fund, the electric utility, through explicit agreement with the respective obligee of its covered power purchase agreement, may elect to resume payments owed by the electric utility for power purchase costs related to the covered power purchase agreement in default, regardless of the credit rating of the electric utility at that time, in which case the electric utility shall cease to transfer revenues received from power purchase charges in connection with the covered power purchase agreement in default to the department for deposit into the fund as described in section 269-193(a), and may use the revenues received from power purchase charges related to the covered power purchase agreement in default through the vesting of title in the electric utility as described in subsection (h); provided that any election by the electric utility to continue making payments shall not terminate the step-in agreement that is related to the covered power purchase agreement in default, the related step-in agreement shall remain in effect until terminated pursuant to subsection (d), and the department shall remain obligated to pay the obligee of the covered power purchase agreement in default upon a subsequent default by the electric utility solely from revenues on deposit in the fund; provided further that no election by the electric utility shall be permitted if the department has made payment for any power purchase costs with revenues from the reserve account.

     (f)  The department may impose other conditions, and may include other terms, in a step-in agreement that the department deems necessary to implement the requirements of this part; provided that the conditions and terms shall not adversely affect the obligation of the department as set forth in this part, including but not limited to the obligation to make payments under the step-in agreement, but only to the extent that there are moneys in the fund, for power purchase costs owed by an electric utility to an obligee under a covered power purchase agreement related to the step-in agreement as and when due in the event of a default as required under subsection (a) or otherwise be inconsistent with the related covered power purchase agreement.

     (g)  As consideration for the department entering into a step-in agreement, the electric utility or its successor shall enter into an agreement to assign and transfer title to the revenues from power purchase charges and reserve fees attributable to the covered power purchase agreement to the department to be held in trust for the benefit of the obligees under the covered power purchase agreements to the extent of the amounts owed to the obligees.  The assignment and transfer of title to the revenues from the power purchase charges by the electric utility shall be made and remain for the term of the step-in agreement free and clear of any prior lien, pledge, security interest, or encumbrance of any kind, and shall be exempt from section 269-19.  The revenues from power purchase charges and reserve fees shall not be subject to appropriation for any other purpose.  The revenues shall be exempt from the requirements of chapters 36 and 38.  The electric utility or its successor shall be and remain at all times, even upon the occurrence and during the continuance of a default by the electric utility or its successor, obligated to bill and collect the power purchase charges and reserve fees as an agent for the department to effectuate the purposes of this part.

     (h)  Before default or an entry of an order of relief with respect to the electric utility pursuant to title 11 of the United States Code, if any payment obligation of the electric utility under a covered power purchase agreement for power purchase costs becomes owed and due, any title held in trust by the department to the revenues from power purchase charges for the payment obligation owed and due shall divest from the department and vest in the electric utility or its successor at the time the payment by the electric utility or its successor is made to the obligee.  Any vesting of revenues from power purchase charges to the electric utility at the time of payment may be made without appropriation by the legislature or allotment.  The department, except as permitted pursuant to section 269-193(a), shall not otherwise assign, sell, or transfer any title to, or any claim or right to, the revenues from power purchase charges or reserve fees.

     (i)  To meet the requirements of the State and the public utilities commission as they pertain to electric reliability, energy security, and energy diversification under this chapter and any rules adopted pursuant thereto, the electric utility shall ensure that it maintains sufficient availability of electric energy and related products, to the extent provided by an obligee in accordance with a covered power purchase agreement.  The public utilities commission shall exercise its regulatory powers to ensure that the electric utility complies with its obligations under a covered power purchase agreement.

     (j)  Notwithstanding any other law to the contrary, the electric utility shall file with the public utilities commission, and the public utilities commission shall allow to become effective, monthly rate adjustments provided under the energy cost recovery clause and purchased power adjustment clause to establish or adjust power purchase charges in a manner designed to:

     (1)  Generate sufficient revenues from power purchase charges to timely and fully pay amounts when owed and due under covered power purchase agreements;

     (2)  Ensure that in no event shall revenues from power purchase charges fall below the amounts owed and due under covered power purchase agreements by a sum that exceeds the amounts in the reserve account established under section 269-195; and

     (3)  Recover any applicable taxes and government fees and any incremental administrative costs of the electric utility or the department incurred to implement the requirements of this part.

To achieve the objectives established pursuant to this subsection, unless the public utilities commission otherwise directs, before a default, the electric utility may retain revenues collected from power purchase charges in excess of amounts owed and due under the covered power purchase agreements.  Any moneys in the reserve account established under the fund shall remain with the department at all times, subject to section 269-193(a).  The obligations of the electric utility and of the public utilities commission under this section shall survive any default by the electric utility and shall terminate only upon the termination of the step-in agreement as provided in subsection (d). [L 2025, c 191, pt of §2]