AN ACT Relating to authorizing utility companies to securitize certain costs related to disasters or emergencies to lower costs to customers;
Summary
HB1990 authorizes Washington utilities—specifically electrical, gas, and water companies—to use securitization financing to recover certain costs tied to declared disasters or emergencies, as well as certain conservation-related expenditures. The bill creates a framework for the Utilities and Transportation Commission (UTC) to issue financing orders that designate qualifying costs as “bondable rate recovery expenditures,” allowing utilities or their financing subsidiaries to issue rate recovery bonds and collect dedicated rate recovery charges from customers to repay those bonds.
The measure also establishes detailed statutory definitions and procedures governing rate recovery assets, financing parties, assignment and transfer of those assets, customer charge collection, true-up adjustments, and the rights of bondholders and secured parties. It includes provisions intended to make the revenue stream legally enforceable and insulated from later impairment, and it specifies that the state and local governments may not alter or impair the pledged assets or charges once a financing order is issued, except as allowed by the act.
Impact
HB1990 amends Washington utility law in chapters governing utility securitization and conservation financing, expanding the UTC’s authority to approve securitization for emergency-related costs and certain conservation investments. It creates new legal mechanisms for utilities to convert approved costs into rate recovery assets, issue bonds backed by those assets, and recover costs through customer charges, while also setting rules for security interests, transfers, bankruptcy treatment, and customer billing. The bill affects electric, gas, and water utilities, their customers, bondholders, financing subsidiaries, and the UTC, and it includes prospective-only application and savings clauses preserving previously issued conservation bonds.
Sentiment
The bill appears to have broad legislative support overall, passing House and Senate committee votes unanimously or near-unanimously and clearing final passage with comfortable margins in both chambers. The voting history suggests general agreement with the policy goal of lowering customer costs by spreading recovery of disaster-related utility expenses over time through securitization. The Senate amendments and the smaller but notable floor opposition indicate that some members had reservations, but the dominant sentiment was favorable.
Contention
The main points of contention are likely the shift of utility recovery costs into long-term bonds and the legal protections granted to bondholders and financing parties, which can limit future regulatory flexibility. The bill also raises policy questions about whether securitization is the best mechanism for recovering emergency and conservation costs, how customer charges are allocated among classes, and whether the UTC should have broad authority to approve these financings. Another potential concern is the bill’s strong non-impairment language, which restricts state and local governments from later changing the pledged revenue stream once bonds are issued.
AN ACT Relating to actions of the department of transportation to notify utility owners of projects and seek federal funding for utility relocation costs;