| (3) Security agreement--an agreement between the borrower
and the commission that will authorize the commission, as lender,
to take control of and transfer all material project assets in the
event of a default on the credit agreement, subject to the applicable
procedures and approvals identified in PURA §34.0108.
(4) Pledge agreement--an agreement between the borrower
and the commission that will create a security interest in the equity
interests of the project in favor of the commission as the senior
secured party.
(5) Deposit agreement--an agreement between the borrower
and the commission in which the borrower will agree to a deposit described
in subsection (i) of this section.
(6) Events of default--the borrower must agree to specified
events of default, which include:
(A) Failure to pay principal, interest, or other amounts
due;
(B) Breach of a covenant in any agreement that has
not been remedied within the time prescribed by the loan agreement;
(C) Inaccuracy of representations in any agreement;
(D) Bankruptcy or insolvency of the borrower; and
(E) Abandonment.
(7) Remedies for events of default--the borrower must
agree to the remedies described in PURA §34.0108 following an
event of default.
(8) Subordination and other agreements--to the extent
that the project is to be financed by debt other than a loan under
this section, each other creditor must agree that a loan under this
section will be the senior debt secured by the facility. The borrower
will be responsible for the preparation and costs associated with
any agreement necessary to maintain the senior position of the loan
under this section.
(9) With respect to a borrower that is an MOU or river
authority, the forms by which the requirements of paragraph (1) through
(8) of this subsection are accomplished can be substituted by documentation
satisfactory to the commission that is customarily used in connection
with the issuance of public securities that are subject to approval
by the Office of the Texas Attorney General or satisfied by reference
to applicable Texas law. An MOU or river authority that presents documentation
in accordance with this paragraph will be responsible for the preparation
and costs of that documentation.
(i) Deposits.
(1) The borrower must deposit in an escrow account
held by the Texas Comptroller of Public Accounts or provide in a standby
letter of credit an amount equal to three percent of the estimated
cost of the project for which the loan is provided. The terms of a
standby letter of credit must permit a draw in full upon a commission
determination that withdrawal of a borrower's deposit is not authorized
under paragraph (4) of this subsection. The borrower must deposit
the required funds or provide the standby letter of credit before
the initial loan amount is disbursed.
(A) Standby letters of credit provided under paragraph
(1) of this subsection must use the standard form standby letter of
credit template approved by the commission. The original document
of the standby letter of credit must be provided in a manner established
by the commission.
(B) The standby letter of credit must be issued by
a financial institution that is supervised by the Board of Governors
of the Federal Reserve system, the Office of the Comptroller of the
Currency, or a state banking department and is a:
(i) U.S. domestic bank with an investment-grade credit
rating; or
(ii) U.S. domestic office of a foreign bank with an
investment-grade credit rating.
(2) The borrower may not withdraw the deposit from
the escrow account or terminate its standby letter of credit unless
authorized by the commission.
(A) For deposits related to the construction of new
facilities, the commission will authorize the borrower's withdrawal
of its deposit funds or the release of the borrower's standby letter
of credit, as applicable, if the facility for which the loan was provided
is interconnected in the ERCOT region:
(i) before the fourth anniversary of the date the initial
loan funds were disbursed; or
(ii) after the fourth anniversary but before the fifth
anniversary of the date the initial loan funds were disbursed, if
the commission finds that extenuating circumstances caused the delay.
(B) For deposits related to upgrades to existing facilities,
the commission will authorize the borrower's withdrawal of its deposit
funds or the release of the borrower's standby letter of credit, as
applicable, if the facility for which the loan was provided is completed:
(i) before the third anniversary of the date the initial
loan funds were disbursed; or
(ii) after the third anniversary but before the fourth
anniversary of the date the initial loan funds were disbursed, if
the commission finds that extenuating circumstances caused a delay
in the completion of the project.
(C) For the purpose of this subsection, interconnection
occurs when the last generation resource that is part of an electric
generating facility financed by a loan under this section is issued
a resource commissioning date, as defined in the ERCOT protocols.
(3) Upon the occurrence of an event that entitles the
borrower to withdraw its deposit or request termination of its standby
letter of credit--interconnection or completion of its project--the
borrower will file a notice of satisfaction with the commission stating
that the borrower requests the return of the deposit. The notice must
state:
(A) A description of the event that the borrower asserts
as justification for withdrawal of the deposit or termination of the
standby letter of credit, including the date on which the event occurred
and any relevant evidence required to support the assertion;
(B) The date of initial loan disbursement; and
(C) A detailed statement of extenuating circumstances,
if any, that support the borrower's request for a late withdrawal
of the deposit resulting from a delayed interconnection or completion
of the project, as described in paragraph (2)(A)(ii) or (B)(ii) of
this subsection.
(4) The commission will evaluate each notice of satisfaction
to determine whether the borrower is entitled to withdrawal of its
deposit or release of its standby letter of credit. If the borrower
demonstrates that it has satisfied the requirements for withdrawal,
then the commission will instruct the comptroller to return the deposit
to the borrower or will release the borrower's standby letter of credit.
If the commission determines that withdrawal is not authorized, including
if the borrower fails to file a timely notice of satisfaction, then
it will instruct the comptroller to transfer the deposit to the Texas
Energy Fund or will direct a draw on the borrower's standby letter
of credit and deposit the funds in the Texas Energy Fund.
(j) No Contested Case or Appeal. None of an application
for a loan, a request for withdrawal of a deposit, or a request for
approval of a change of ownership is a contested case. Commission
decisions on a loan application or request for withdrawal of deposit
are not subject to motions for rehearing or appeal under the commission's
procedural rules.
(k) Expiration. This section expires September 1, 2050.
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