Subd. 1. General.

1. (a) Extraordinary event property is an existing present property right or interest in a property right, even though the imposition and collection of extraordinary event charges depend on the utility collecting extraordinary event charges and on future natural gas consumption. The property right or interest exists regardless of whether the revenues or proceeds arising from the extraordinary event property have been billed, have accrued, or have been collected.
2. (b) Extraordinary event property exists until all extraordinary event bonds issued under a financing order are paid in full and all financing costs and other extraordinary event bonds costs have been recovered in full.
3. (c) All or any portion of extraordinary event property described in a financing order issued to a utility may be transferred, sold, conveyed, or assigned to a successor or assignee that is wholly owned, directly or indirectly, by the utility and created for the limited purpose of acquiring, owning, or administering extraordinary event property or issuing extraordinary event bonds authorized by the financing order. All or any portion of extraordinary event property may be pledged to secure extraordinary event bonds issued under a financing order, amounts payable to financing parties and to counterparties under any ancillary agreements, and other financing costs. Each transfer, sale, conveyance, assignment, or pledge by a utility or an affiliate of extraordinary event property is a transaction in the ordinary course of business.
4. (d) If a utility defaults on any required payment of charges arising from extraordinary event property described in a financing order, a court, upon petition by an interested party and without limiting any other remedies available to the petitioner, must order the sequestration and payment of the revenues arising from the extraordinary event property to the financing parties.
5. (e) The interest of a transferee, purchaser, acquirer, assignee, or pledgee in extraordinary event property specified in a financing order issued to a utility, and in the revenue and collections arising from the property, is not subject to setoff, counterclaim, surcharge, or defense by the utility or any other person, or in connection with the reorganization, bankruptcy, or other insolvency of the utility or any other entity.
6. (f) A successor to a utility, whether resulting from a reorganization, bankruptcy, or other insolvency proceeding, merger or acquisition, sale, other business combination, transfer by operation of law, utility restructuring, or otherwise: (1) must perform and satisfy all obligations of, and has the same duties and rights under, a financing order as the utility to which the financing order applies; and (2) must perform the duties and exercise the rights in the same manner and to the same extent as the utility, including (i) collecting extraordinary event bonds revenues, collections, payments, or proceeds, and (ii) paying a person entitled to receive extraordinary event bonds revenues, collections, payments, or proceeds.

Subd. 2. Security interests in extraordinary event property.

1. (a) The creation, perfection, and enforcement of any security interest in extraordinary event property to secure the repayment of the principal and interest on extraordinary event bonds, amounts payable under any ancillary agreement, and other financing costs are governed by this section only.

2. (b) A security interest in extraordinary event property is created, valid, and binding when:

   1. (1) the financing order that describes the extraordinary event property is issued;
   2. (2) a security agreement is executed and delivered; and
   3. (3) value is received for the extraordinary event bonds.
3. (c) Once a security interest in extraordinary event property is created, the security interest attaches without any physical delivery of collateral or any other act. The lien of the security interest is valid, binding, and perfected against all parties having claims of any kind in tort, in contract, or otherwise against the person granting the security interest, regardless of whether the parties have notice of the lien, upon the filing of a financing statement with the secretary of state.
4. (d) The description or indication of extraordinary event property in a transfer or security agreement and a financing statement is sufficient only if the description or indication refers to this section and the financing order creating the extraordinary event property.
5. (e) A security interest in extraordinary event property 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 the extraordinary event property unless the person that holds the security interest has agreed otherwise in writing.
6. (f) The priority of a security interest in extraordinary event property is not affected by the commingling of extraordinary event property or extraordinary event revenue with other money. An assignee, bondholder, or financing party has a perfected security interest in the amount of all extraordinary event property or extraordinary event revenue that is pledged to pay extraordinary event bonds even if the extraordinary event property or extraordinary event revenue is deposited in a cash or deposit account owned by the utility in which the extraordinary event revenue is commingled with other money. Any other security interest that applies to the other money does not apply to the extraordinary event revenue.
7. (g) A subsequent commission order amending a financing order under section 216B.492, subdivision 4, or the application of an adjustment mechanism authorized by a financing order under section 216B.492, subdivision 3, does not affect the validity, perfection, or priority of a security interest in or transfer of extraordinary event property.

Subd. 3. Sales of extraordinary event property.

1. (a) A sale, assignment, or transfer of extraordinary event property is an absolute transfer and true sale of, and not a pledge of or secured transaction relating to, the seller's right, title, and interest in, to, and under the extraordinary event property if the documents governing the transaction expressly state that the transaction is a sale or other absolute transfer. A transfer of an interest in extraordinary event property may be created when:

   1. (1) the financing order creating and describing the extraordinary event property is effective;
   2. (2) the documents evidencing the transfer of the extraordinary event property are executed and delivered to the assignee; and
   3. (3) value is received.

2. (b) The characterization of a sale, assignment, or transfer as an absolute transfer and true sale, and the corresponding characterization of the property interest of the assignee, is not affected or impaired by:

   1. (1) commingling extraordinary event revenue with other money;

   2. (2) the seller retaining:

      1. (i) a partial or residual interest, including an equity interest, in the extraordinary event property, whether (A) direct or indirect, or (B) subordinate or otherwise; or
      2. (ii) the right to recover costs associated with taxes, franchise fees, or license fees imposed on the collection of extraordinary event revenue;
   3. (3) any recourse that the extraordinary event property purchaser may have against the seller;
   4. (4) any indemnification rights, obligations, or repurchase rights made or provided by the extraordinary event property seller;
   5. (5) the extraordinary event property seller's obligation to collect extraordinary event revenues on behalf of an assignee;
   6. (6) the treatment of the sale, assignment, or transfer for tax, financial reporting, or other purposes;
   7. (7) any subsequent financing order amending a financing order under section 216B.492, subdivision 4, paragraph (d); or
   8. (8) any application of an adjustment mechanism under section 216B.492, subdivision 3, paragraph (a), clause (6).