Wildfire costs/securitizing

AN ACT Relating to authorizing electrical companies to securitize 1
certain wildfire-related costs to lower costs to customers; amending 2
RCW 80.28.005, 80.28.303, 80.28.306, 80.28.309, and 80.08.140; adding 3
new sections to chapter 80.28 RCW; creating new sections; and 4
declaring an emergency. 5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:6
NEW SECTION. Sec. 1. The purpose of this act is to allow an 7
electrical, gas, or water company, if authorized by an order issued 8
by the utilities and transportation commission, to use securitization 9
financing for certain types of costs related to emergency events and 10
approved for recovery in rates. The legislature finds that:11
(1) Securitized debt may lower the total rates in comparison with 12
other methods of recovery and may benefit the citizens of this state 13
who are electrical, gas, or water company customers;14
(2) Rate recovery bonds are not a public debt or pledge of the 15
full faith and credit of the state but require the state to provide 16
clear and exclusive methods to create, transfer, and encumber the 17
rate recovery assets and prohibit future impairment; and18
(3) This act allowing electrical, gas, or water companies to use 19
securitization financing for emergency-related costs does not limit, 20
impair, or affect the utilities and transportation commission's 21
S-0733.1
SENATE BILL 5465
State of Washington 69th Legislature 2025 Regular Session
By Senators Shewmake, Boehnke, and Chapman
Read first time 01/23/25. Referred to Committee on Environment,
Energy & Technology.
p. 1 SB 5465
plenary authority and jurisdiction over rates and services offered by 1
electrical, gas, or water companies. 2
Sec. 2. RCW 80.28.005 and 1994 c 268 s 1 are each amended to 3
read as follows: 4
Unless the context clearly requires otherwise, the definitions in 5
this section apply throughout this chapter. 6
(1) "Assignee" means a person, and any subsequent assignee, to 7
which an electrical, gas, or water company assigns, sells, or 8
transfers all or part of the electrical, gas, or water company's 9
interest in or right to rate recovery assets, except as security.10
(2) "Bond" includes bonds, notes, certificates of beneficial 11
interests in a trust, or other evidences of indebtedness.12
(3) "Bondable ((conservation investment )) rate recovery 13
expenditures" means all costs and expenditures ((made)) incurred or 14
to be incurred through the date of issuance of a financing order by 15
an electrical, gas, or water ((companies)) company associated with 16
((respect to energy)):17
(a) An event that is the subject of a federal or state 18
declaration of disaster or emergency, such as severe weather, 19
catastrophic wildfire, earthquake, pandemic, or other event that 20
causes or threatens to cause widespread loss of life, injury to 21
person or property, human suffering, or financial loss, including 22
those costs and expenses owed by an electrical, gas, or water company 23
to such company's customers or others as a result of the event, but 24
not including fines or penalties imposed as a result of criminal or 25
civil enforcement actions; or26
(b) Energy or water conservation measures and services intended 27
to improve the efficiency of electricity, gas, or water end use, 28
including related carrying costs if: 29
(((a))) (i) The conservation measures and services do not produce 30
assets that would be bondable utility property under the general 31
utility mortgage of the electrical, gas, or water company;32
(((b))) (ii) The commission has determined that the expenditures 33
were incurred in conformance with the terms and conditions of a 34
conservation service tariff in effect with the commission at the time 35
the costs were incurred, and at the time of such determination the 36
commission finds that the company has proven that the costs were 37
prudent, that the terms and conditions of the financing are 38
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reasonable, and that financing under this chapter is more favorable 1
to the customer than other reasonably available alternatives;2
(((c))) (iii) The commission has approved inclusion of the 3
expenditures in rate base and has not ordered that they be currently 4
expensed; and 5
(((d))) (iv) The commission has not required that the measures 6
demonstrate that energy or water savings have persisted at a certain 7
level for a certain period before approving the cost of these 8
investments as bondable ((conservation investment )) rate recovery 9
expenditures. 10
(((2) "Conservation bonds" means bonds, notes, certificates of 11
beneficial interests in trusts, or other evidences of indebtedness or 12
ownership that:13
(a) The commission determines at or before the time of issuance 14
are issued to finance or refinance bondable conservation investment 15
by an electrical, gas or water company; and16
(b) Rely partly or wholly for repayment on conservation 17
investment assets and revenues arising with respect thereto.18
(3) "Conservation investment assets" means the statutory right of 19
an electrical, gas, or water company:20
(a) To have included in rate base all of its bondable 21
conservation investment and related carrying costs; and22
(b) To receive through rates revenues sufficient to recover the 23
bondable conservation investment and the costs of equity and debt 24
capital associated with it, including, without limitation, the 25
payment of principal, premium, if any, and interest on conservation 26
bonds.))27
(4) "Bondholder" means a holder or owner of a rate recovery bond.28
(5) "Finance subsidiary" means any corporation, limited liability 29
company, company, association, joint stock association, ((or)) trust, 30
or other entity that is beneficially owned, directly or indirectly, 31
by an electrical, gas, or water company, or in the case of a trust 32
issuing ((conservation)) rate recovery bonds consisting of beneficial 33
interests, for which an electrical, gas, or water company or a 34
subsidiary thereof is the grantor, or an unaffiliated entity formed 35
for the purpose of financing or refinancing approved ((conservation 36
investment)) bondable rate recovery expenditures , and that acquires 37
((conservation investment )) rate recovery assets directly or 38
indirectly from such company in a transaction approved by the 39
commission. 40
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(6) "Financing costs" includes the following costs related to 1
rate recovery bonds, whether incurred and paid upon issuance or over 2
the life of rate recovery bonds:3
(a) The costs of issuing, serving, managing, repaying, or 4
refinancing rate recovery bonds, including any fees, expenses, or 5
charges incurred and the costs of any activities performed in 6
connection with the rate recovery bonds, including:7
(i) Information technology programming;8
(ii) Obtaining a financing order;9
(iii) Serving, accounting, or auditing;10
(iv) Services related to trustees;11
(v) Legal services;12
(vi) Consulting;13
(vii) Services related to financial and structuring advisors;14
(viii) Administration;15
(ix) Placement and underwriting;16
(x) Services related to independent directors and managers;17
(xi) Services related to rating agencies;18
(xii) Stock exchange listing and compliance;19
(xiii) Securities registration and filing; and20
(xiv) Services necessary to ensure a timely payment of rate 21
recovery bonds or other amounts or charges payable in connection with 22
rate recovery bonds;23
(b) Principal, interest and acquisition, defeasance, and 24
redemption premiums payable on rate recovery bonds;25
(c) Payments required under an ancillary agreement and any 26
amounts required to fund or replenish a reserve or account 27
established under the terms of an indenture, ancillary agreement, or 28
financing document related to rate recovery bonds;29
(d) Applicable federal, state, and local taxes, franchise fees, 30
license fees, gross receipts, or other taxes or charges, whether 31
paid, payable, or accrued; and32
(e) The commission's costs in performing the commission's duties 33
related to rate recovery bonds that are recoverable by the commission 34
under RCW 80.24.010.35
(7) "Financing order" means an order issued by the commission 36
that authorizes one or more of the following:37
(a) The recovery of bondable rate recovery expenditures and 38
financing costs;39
(b) The creation of rate recovery assets;40
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(c) The issuance of rate recovery bonds;1
(d) The imposition, collection, and periodic adjustment of rate 2
recovery charges; or3
(e) The sale, assignment, or transfer of rate recovery assets to 4
an assignee.5
(8) "Financing party" includes:6
(a) Bondholders, trustees, agents, and secured parties related to 7
rate recovery bonds;8
(b) A person acting for the benefit of bondholders, trustees, 9
agents, or secured parties; and10
(c) A party to rate recovery bond documents or an ancillary 11
agreement.12
(9) "Rate recovery asset" means the right of an electrical, gas, 13
or water company t o recover from customers bondable rate recovery 14
expenditures and related costs and expenses approved in a financing 15
order, including the right to:16
(a) Impose, charge, bill, collect, receive, hold, and apply rate 17
recovery charges authorized under a financing order or obtain, to the 18
extent authorized, periodic adjustments of rate recovery charges; and19
(b) All claims, accounts, revenues, payments, collections, 20
moneys, or proceeds arising from the rights and interest specified in 21
a financing order, regardless of whether the claims, accounts, 22
revenues, payments, collections, moneys, or proceeds arising from the 23
rights and interest specified in the financing order are commingled 24
with other claims, accounts, revenues, payments, collections, moneys, 25
or proceeds.26
(10) "Rate recovery bonds" means bonds, notes, certificates of 27
beneficial interests in trusts, or other evidences of indebtedness or 28
ownership that:29
(a) The commission determines at or before the time of issuance 30
are issued to finance or refinance bondable rate recovery 31
expenditures by an electrical, gas, or water company; and32
(b) Rely partly or wholly for repayment on rate recovery assets 33
and revenues arising with respect thereto.34
(11) "Rate recovery charge" means charges to electrical, gas, or 35
water company customers authorized by the commission to recover 36
bondable rate recovery expenditures and financing costs and to be 37
used to pay, repay, or refinance rate recovery bonds.38
(12) "Secured party" means a financing party that has been 39
granted a security interest in rate recovery assets.40
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NEW SECTION. Sec. 3. A new section is added to chapter 80.28 1
RCW to read as follows: 2
(1) It is the policy of the state of Washington to encourage the 3
financing of certain costs and expenses by electrical, gas, and water 4
companies at the lowest, reasonable, and prudent cost to customers of 5
such companies including, but not limited to, bondable rate recovery 6
expenditures. 7
(2) To carry out the policy described in subsection (1) of this 8
section, the state of Washington and all agencies, instrumentalities, 9
political subdivisions, and local governments thereof:10
(a) Acknowledge that owners of rate recovery assets, bondholders, 11
and financing parties require certainty with respect to the owners, 12
bondholders, and financing parties' rights to enter into financing 13
transactions that offer the lowest, reasonable, and prudent cost; and14
(b) Pledge and agree with electrical, gas, and water companies; 15
assignees; bondholders; and financing parties not to reduce, alter, 16
or impair, in a manner that is adverse to the electrical, gas, and 17
water companies; assignees; bondholders; or financing parties:18
(i) Rate recovery assets; 19
(ii) Rate recovery bonds or the security for rate recovery bonds; 20
or 21
(iii) Rate recovery charges or the collection of rate recovery 22
charges. 23
(3) The pledge and agreement described under subsection (2)(b) of 24
this section includes the pledge and agreement not to reduce, alter, 25
or impair rate recovery assets, rate recovery bonds or the security 26
for rate recovery bonds, or rate recovery charges or the collection 27
of rate recovery charges by taking any of the following actions:28
(a) Altering the provisions of this section or RCW 80.28.005, 29
80.28.303, 80.28.306, or 80.28.309 to the extent that those 30
provisions authorize the commission to issue financing orders that:31
(i) Create rate recovery assets; 32
(ii) Establish rate recovery charges that may not be avoided by 33
electrical, gas, or water company customers, as described under 34
section 4(4) of this act; or 35
(iii) Provide rights and remedies to electrical, gas, and water 36
companies; assignees; bondholders; and financing parties;37
(b) Impairing the rights or remedies of electrical, gas, and 38
water companies; assignees; bondholders; or financing parties that 39
are created under this section and RCW 80.28.005, 80.28.303, 40
p. 6 SB 5465
80.28.306, and 80.28.309 or by a financing order, including reducing 1
the amount of or impairing the collection of rate recovery charges 2
until all principal, interest, premium, if any, and other amounts due 3
on the rate recovery bonds and financing costs have been paid in full 4
and except as provided under section 4 of this act; or5
(c) Taking any action listed under section 4(5)(b) of this act.6
(4) An electrical, gas, or water company or financing subsidiary 7
that issues rate recovery bonds may include the pledge and provisions 8
of this section in the bonds and related documentation.9
NEW SECTION. Sec. 4. A new section is added to chapter 80.28 10
RCW to read as follows: 11
(1)(a) An electrical, gas, or water company may apply to the 12
commission for a financing order designating all or part of rate 13
recovery expenditures as bondable rate recovery expenditures, for the 14
purpose of financing or refinancing the designated expenditures under 15
RCW 80.28.306(1). A company may request this designation by the 16
commission in separate proceedings for this purpose or in connection 17
with a general rate case. 18
(b) After notice and an opportunity for a hearing, the commission 19
may approve an application if the commission finds that:20
(i) The bondable rate recovery expenditures included in the 21
application are reasonable and prudent; 22
(ii) Financing or refinancing the bondable rate recovery 23
expenditures through the issuance of rate recovery bonds is likely to 24
be more favorable to electrical, gas, or water company customers for 25
the recovery of the bondable rate recovery expenditures than other 26
methods of rate recovery; and 27
(iii) Bonds, notes, certificates of beneficial interests in a 28
trust, and other evidences of indebtedness or ownership issued 29
pursuant to the approval are reasonably likely to receive a 30
determination of, at a minimum, investment grade by credit rating 31
agencies. 32
(c) The commission shall issue an order within 180 days of an 33
application approving or denying the application. If the commission 34
approves the application, the commission shall issue a financing 35
order. 36
(2)(a) A financing order issued under this section shall specify 37
the highest amount of rate recovery expenditures that qualify as 38
bondable rate recovery expenditures. 39
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(b) In specifying the amount for bondable rate recovery 1
expenditures associated with an event described in RCW 2
80.28.005(3)(a), net of appropriate adjustments as determined by the 3
commission to be reasonable, the commission may include, but is not 4
limited to including, the following rate recovery expenditures:5
(i) Capital and operating costs incurred or to be incurred as a 6
result of the event; 7
(ii) Lost revenue associated with the event; 8
(iii) Costs and expenses that may be recovered at a later time 9
from third parties or insurers and returned to electrical, gas, or 10
water company customers through a separate rate proceeding consistent 11
with cost causation and rate design principles and statutory or 12
regulatory requirements; and 13
(iv) Carrying costs or charges. 14
(3) A financing order issued under this section must include the 15
following provisions: 16
(a) Confirmation of the existence of recoverable bondable rate 17
recovery expenditures and authorization to recover bondable rate 18
recovery expenditures and associated financing costs, including the 19
maximum principal amount of bondable rate recovery expenditures and 20
financing costs that may be recovered through securitization;21
(b) Authorization for the creation of rate recovery assets and 22
imposition of rate recovery charges that allow for the recovery of 23
rate recovery expenditures, as determined by the commission, and 24
associated financing costs; 25
(c) A requirement that the rate recovery charges authorized by 26
the financing order are ongoing and may not be avoided by an 27
electrical, gas, or water company customer, as described under 28
subsection (4) of this section, until all principal, interest, 29
premium, if any, and other amounts due on the rate recovery bonds and 30
financing costs have been paid in full; 31
(d) A methodology for: 32
(i) Allocating rate recovery charges between the different 33
classes of electrical, gas, or water company customers, which may 34
include not allocating rate recovery charges to one or more classes 35
of such company's customers, that is consistent with cost causation 36
and rate design principles and statutory or regulatory requirements; 37
and 38
(ii) Adjusting rate recovery charges as necessary to ensure 39
timely payment on, and payment in full of, the rate recovery bonds 40
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and associated financing costs or in response to changes to 1
applicable customers, service territories, or collection rates;2
(e) Authorization for the electrical, gas, or water company to 3
issue one or more series of rate recovery bonds with flexibility for 4
such company to establish the terms and conditions of the rate 5
recovery bonds, including repayment schedules, initial interest 6
rates, and initial financing costs; 7
(f) Authorization to assign rate recovery assets to a financing 8
subsidiary and grant security interests in the rate recovery assets 9
to secured parties without limiting the rights of subsequent 10
assignees; 11
(g) Authorization for the bond documentation and ancillary 12
documents related to the rate recovery bonds, including servicing 13
arrangements for the rate recovery charges, without requiring the 14
authorization to be on the final forms of the documents;15
(h) Authorization for the electrical, gas, or water company to 16
earn a return, at the cost of capital authorized in such company's 17
most recent general rate case prior to the date of the financing 18
order, on any moneys advanced by such company to fund advances, 19
reserves, or capital accounts established under the terms of any 20
indenture, ancillary agreement, or financing documents related to the 21
rate recovery bonds; 22
(i) A finding that the proposed issuance of rate recovery bonds 23
and the imposition of rate recovery charges is expected to provide 24
the lowest possible, reasonable, and prudent cost on a net present 25
value basis to electrical, gas, or water company customers for 26
recovery of the bondable rate recovery expenditures as compared to 27
other methods of financing and recovery; 28
(j) A date, not earlier than one year from the date that the 29
financing order becomes final, on which the authority to issue rate 30
recovery bonds granted in the financing order expires;31
(k) A requirement that the electrical, gas, or water company 32
notify the commission if such company recovers costs and expenses 33
from a third party or insurer; and 34
(l) Any other conditions that the commission finds appropriate 35
and that are consistent with this section. 36
(4) Rate recovery charges authorized by a financing order shall 37
be collected through the rates or charges paid by, and may not be 38
avoided by, the electrical, gas, or water company customers located 39
within such company's service territory, as the territory existed on 40
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the date of the financing order or, if the financing order provides, 1
as such service territory may be expanded, even if:2
(a) Such company's customer receives electricity, natural gas, or 3
water; electricity, natural gas, or water services; or ancillary 4
services from a successor or assignee of such company;5
(b) Such company's customer elects to receive electricity, 6
natural gas, or water; electricity, natural gas, or water services; 7
or ancillary services from another electrical, gas, or water company 8
or service provider in the service territory; or 9
(c) After the date of issuance of the financing order, such 10
company's customer changes customer class. 11
(5)(a) Rate recovery assets, including rate recovery charges, and 12
the rights of electrical, gas, and water companies; assignees; 13
bondholders; and financing parties, established by a financing order 14
issued under this section, are irrevocable and unchangeable, except 15
as provided in the financing order, until all principal, interest, 16
premium, if any, and other amounts due on the rate recovery bonds and 17
financing costs are paid in full. 18
(b) Until all principal, interest, premium, if any, and other 19
amounts due on the rate recovery bonds and financing costs are paid 20
in full, the commission, except as provided in the financing order, 21
the state of Washington, and all agencies, instrumentalities, 22
political subdivisions, and local governments thereof may not:23
(i) Revalue the bondable rate recovery expenditures or financing 24
costs for rate-making purposes; 25
(ii) Determine that the rates or revenues authorized under the 26
financing order are unjust or unreasonable; 27
(iii) Reduce, alter, or impair the rate recovery assets, rate 28
recovery charges or the collection of the rate recovery charges, or 29
rate recovery bonds or the security for the rate recovery bonds;30
(iv) Rescind, suspend, amend, or impair the financing order; or31
(v) When setting other rates or charges for the electrical, gas, 32
or water company or taking other actions pursuant to the commission's 33
authority, consider the rate recovery bonds as debt of such company, 34
the rate recovery assets to be revenue for such company, or the 35
bondable rate recovery expenditures to be costs of such company.36
(6) The commission may not require an electrical, gas, or water 37
company to: 38
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(a) Apply to the commission for a financing order designating all 1
or part of rate recovery expenditures as bondable rate recovery 2
expenditures; or 3
(b) Finance or refinance rate recovery expenditures that the 4
commission has designated bondable rate recovery expenditures.5
Sec. 5. RCW 80.28.303 and 1994 c 268 s 2 are each amended to 6
read as follows: 7
(1) An electrical, gas, or water company may file a conservation 8
service tariff with the commission. The tariff shall provide:9
(a) The terms and conditions upon which the company will offer 10
the conservation measures and services specified in the tariff;11
(b) The period of time during which the conservation measures and 12
services will be offered; and 13
(c) The maximum amount of expenditures to be made during a 14
specified time period by the company on conservation measures and 15
services specified in the tariff. 16
(2) The commission has the same authority with respect to a 17
proposed conservation service tariff as it has with regard to any 18
other schedule or classification the effect of which is to change any 19
rate or charge, including, without limitation, the power granted by 20
RCW 80.04.130 to conduct a hearing concerning a proposed conservation 21
service tariff and the reasonableness and justness thereof, and 22
pending such hearing and the decision thereon the commission may 23
suspend the operation of the tariff for a period not exceeding ten 24
months from the time the tariff would otherwise go into effect.25
(3) ((An electrical, gas, or water company may from time to time 26
apply to the commission for a determination that specific 27
expenditures may under its tariff constitute bondable conservation 28
investment. A company may request this determination by the 29
commission in separate proceedings for this purpose or in connection 30
with a general rate case. The commission may designate the 31
expenditures as bondable conservation investment as defined in RCW 32
80.28.005(1) if it finds that such designation is in the public 33
interest.34
(4) The commission shall include in rate base all bondable 35
conservation investment. The commission shall approve rates for 36
service by electrical, gas, and water companies at levels sufficient 37
to recover all of the expenditures of the bondable conservation 38
investment included in rate base and the costs of equity and debt 39
p. 11 SB 5465
capital associated therewith, including, without limitation, the 1
payment of principal, premium, if any, and interest on conservation 2
bonds.)) The rates so determined may be included in general rate 3
schedules or may be expressed in one or more separate rate schedules. 4
((The commission shall not revalue bondable conservation investment 5
for rate-making purposes, to determine that revenues required to 6
recover bondable conservation investment and associated equity and 7
debt capital costs are unjust, unreasonable, or in any way impair or 8
reduce the value of conservation investment assets or that would 9
impair the timing or the amount of revenues arising with respect to 10
conservation investment assets that have been pledged to secure 11
conservation bonds.12
(5))) (4) Nothing in this chapter precludes the commission from 13
adopting or continuing other conservation policies and programs 14
intended to provide incentives for and to encourage ((utility)) 15
electrical, gas, or water company investment in improving the 16
efficiency of energy or water end use. However, the policies or 17
programs shall not impair ((conservation investment )) rate recovery 18
assets. This chapter is not intended to be an exclusive or mandatory 19
approach to conservation programs for electrical, gas, and water 20
companies, and no such company is obligated to file conservation 21
service tariffs under this chapter, to apply to the commission for a 22
determination that conservation costs constitute bondable 23
((conservation investment )) rate recovery expenditures within the 24
meaning of this chapter, or to issue ((conservation)) rate recovery 25
bonds. 26
(((6))) (5)(a) If a customer of an electrical, gas, or water 27
company for whose benefit the company made expenditures for 28
conservation measures or services ceases to be a customer of such 29
company for one or more of the following reasons, the commission may 30
require that the portion of such ((conservation)) expenditures that 31
had been included in rate base but not theretofore recovered in the 32
rates of such company be removed from the rate base of the company:33
(i) The customer ceases to be a customer of the ((supplier of 34
energy or water)) electrical, gas, or water company , and the customer 35
repays to the company the portion of the ((conservation)) 36
expenditures made for the benefit of such customer that has not 37
theretofore been recovered in rates of ((the)) such company; or38
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(ii) ((The)) Such company sells its property used to serve such 1
customer and the customer ceases to be a customer of the company as a 2
result of such action. 3
(b) An electrical, gas, or water company may include in a 4
contract for a conservation measure or service, and the commission 5
may by rule or order require to be included in such contracts, a 6
provision requiring that, if the customer ceases to be a customer of 7
that ((supplier of energy or water )) such company, the customer shall 8
repay to the company the portion of the conservation expenditures 9
made for the benefit of such customer that has not theretofore been 10
recovered in rates of the company. 11
Sec. 6. RCW 80.28.306 and 1994 c 268 s 3 are each amended to 12
read as follows: 13
(1) Electrical, gas, and water companies, or finance 14
subsidiaries, may ((issue conservation bonds )), upon approval by the 15
commission, finance or refinance bondable rate recovery expenditures 16
as described in RCW 80.28.303. Bonds, notes, certificates of 17
beneficial interests in a trust, and other evidences of indebtedness 18
or ownership issued for this purpose are rate recovery bonds for the 19
purposes of this section. 20
(2) ((Electrical)) (a) An electrical , gas, ((and)) or water 21
((companies, or )) company, finance ((subsidiaries)) subsidiary, or 22
assignee may ((pledge conservation investment )) grant a security 23
interest in rate recovery assets as collateral for ((conservation)) 24
rate recovery bonds ((by obtaining an order of the commission 25
approving an issue of conservation bonds and providing for a security 26
interest in conservation investment assets )). A security interest in 27
((conservation investment )) rate recovery assets is ((created and 28
perfected only upon entry of an order by the commission approving a 29
contract governing the granting of the security interest and the 30
filing with the department of licensing of a UCC-1 financing 31
statement, showing such pledgor as "debtor" and identifying such 32
conservation investment assets and the bondable conservation 33
investment associated therewith. The security interest is )) valid and 34
enforceable against the debtor and ((all)) third parties, subject 35
only to the rights of any third parties holding security interests in 36
the ((conservation investment )) rate recovery assets attached and 37
perfected in the manner described in this ((section,)) subsection.38
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(b) A security interest in rate recovery assets attaches if 1
((value has been)):2
(i) The secured party, or a financing party that the secured 3
party represents, has given ((by the purchasers of conservation 4
bonds. An approved)) value; and5
(ii) The debtor has signed a security agreement granting the 6
secured party a security interest in ((conservation investment)) the 7
rate recovery assets.8
(c) A valid and enforceable security interest in rate recovery 9
assets is perfected if: (i) The security interest has attached in the 10
manner described in (b) of this subsection; and (ii) a financing 11
statement has been filed in accordance with the requirements of 12
chapter 62A.9A RCW that identifies the debtor as "debtor," the 13
secured party as "secured party," and the rate recovery assets 14
granted as security as the "collateral," and contains a description 15
in the financing statement that refers to the commission's financing 16
order creating the rate recovery assets. The financing statement is 17
deemed sufficient under chapter 62A.9A RCW and all other relevant law 18
for identifying the rate recovery assets granted as security.19
(d) A perfected security interest in rate recovery assets is a 20
continuously perfected security interest ((in all revenues and 21
proceeds arising with respect to the associated bondable conservation 22
investment)), whether or not ((such)) the related revenues have 23
accrued((. Upon such approval, the priority of such security interest 24
shall be as set forth in )) or the ((contract governing the 25
conservation bonds. Conservation investment )) related rate recovery 26
charges have been charged, billed, or collected. Rate recovery assets 27
constitute a presently existing, fully vested property right for the 28
purposes of contracts securing ((conservation)) the rate recovery 29
bonds whether or not the related revenues have accrued or the related 30
rate recovery charges have been charged, billed, or collected. 31
Multiple security interests in the same rate recovery assets shall 32
rank according to priority in time of perfection. 33
(((3) The)) (e) Subject to the terms of the security agreement 34
covering the rate recovery assets, the relative priority of a 35
security interest created or perfected under this section is not 36
((defeated or)) adversely affected by : (i) Any later modification of 37
the financing order or rate recovery assets; or (ii) the commingling 38
of ((revenues arising with respect to conservation investment )) 39
proceeds of rate recovery assets with other ((funds of the debtor. 40
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The holders of conservation bonds shall have a perfected security 1
interest in all cash and deposit accounts of the debtor in which 2
revenues arising with respect to conservation investment assets 3
pledged to such holders have been commingled with other funds, but 4
such perfected security interest is limited to an amount not greater 5
than the amount of such revenues received by the debtor within twelve 6
months before (a) any default under the conservation bonds held by 7
the holders or (b) the institution of insolvency proceedings by or 8
against the debtor, less payments from such revenues to the holders 9
during such twelve-month period. If an event of default occurs under 10
an approved contract governing conservation bonds, the holders of 11
conservation bonds or their authorized representatives, as secured 12
parties, may foreclose or otherwise enforce the security interest in 13
the conservation investment assets securing the conservation bonds, 14
subject to the rights of any third parties holding prior security 15
interests in the conservation investment assets perfected in the 16
manner provided in this section.)) moneys.17
(3)(a) A transfer of rate recovery assets to an assignee is 18
perfected against all third parties if a notice of the transfer, by 19
means of a financial statement:20
(i) Is filed in accordance with the requirements of chapter 21
62A.9A RCW;22
(ii) Specifies that the notice of transfer is filed to provide 23
notice of the transfer of the rate recovery assets from the 24
transferor to the assignee;25
(iii) Identifies the transferor as "debtor," the assignee as 26
"secured party," and the rate recovery asset as "collateral"; and27
(iv) Contains a description that refers to the commission's 28
financing order that created the rate recovery assets.29
(b) A notice of transfer that is filed in accordance with the 30
requirements under (a) of this subsection shall be deemed sufficient 31
under chapter 62A.9A RCW and all other relevant laws for identifying 32
the rate recovery assets and for providing notice that the rate 33
recovery assets have been transferred to the assignee.34
(c) A transfer is perfected against third parties on the date a 35
notice of transfer is filed.36
(d) A transfer of rate recovery assets to a financing subsidiary 37
that is perfected under this subsection is free and clear of all 38
claims, security interests, liens, and encumbrances of the 39
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transferring electrical, gas, or water company, except for any prior 1
security interest perfected under subsection (2) of this section.2
(e) The priority of a transfer that is perfected under this 3
subsection is not adversely affected by:4
(i) Any later modification of the financing order or rate 5
recovery assets; or6
(ii) The commingling of proceeds of rate recovery assets.7
(4)(a) When proceeds of rate recovery assets are transferred to a 8
segregated account for an assignee or secured party, any lien or 9
security interest that may apply to those proceeds, other than a 10
security interest perfected under subsection (2) of this section, is 11
automatically terminated, without the need for further notice, act, 12
or evidence.13
(b) Proceeds from rate recovery assets shall be held in trust for 14
an assignee or secured party until the proceeds have been transferred 15
to the assignee or secured party.16
(c) Any adjustment in rate recovery charges does not affect the 17
validity, perfection, or priority of a security interest in or the 18
transfer of rate recovery assets.19
(5)(a) The rights and remedies of a secured party in enforcing a 20
security interest in rate recovery assets do not include and are 21
without recourse to any electrical, gas, or water company asset 22
except for the rate recovery assets, even if the rate recovery assets 23
are commingled with other assets.24
(b) If an electrical, gas, or water company or finance subsidiary 25
defaults on a required payment with respect to rate recovery bonds, a 26
secured party or secured party's representatives may apply to the 27
commission for relief. Upon application by ((the holders of [or] 28
their)) a secured party or secured party's representatives, the 29
commission shall order, without limiting ((their)) other remedies of 30
the secured party or secured party's representatives , ((the 31
commission shall order )) the sequestration and payment to the 32
((holders or their)) secured party or secured party's representatives 33
of ((revenues arising with respect to )) the ((conservation 34
investment)) proceeds of the rate recovery assets ((pledged to such 35
holders)). ((Any such))36
(c) The interest of an assignee or financing party in rate 37
recovery assets is not subject to setoff, counterclaim, surcharge, or 38
defense by the electrical, gas, or water company or any other person 39
in connection with a bankruptcy, reorganization, or insolvency 40
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proceeding. However, any surplus in excess of amounts necessary to 1
pay principal, premium, if any, interest, and other amounts due with 2
respect to the rate recovery bonds and associated financing costs, 3
including enforcement costs, with respect to the security agreement 4
shall be remitted to the debtor electrical, gas, or water company; 5
debtor finance subsidiary; or other debtor assignee.6
(d) The commission's financing order and any order issued under 7
(b) of this subsection shall remain in full force and effect 8
notwithstanding any bankruptcy, reorganization, or other insolvency 9
proceedings with respect to ((the)) an electrical, gas, or water 10
company debtor, or transferor with respect to rate recovery assets . 11
((Any surplus in excess of amounts necessary to pay principal, 12
premium, if any, interest, and expenses arising under the contract 13
governing the conservation bonds shall be remitted to the debtor 14
electrical, gas, or water company or the debtor finance subsidiary.15
(4))) (6) The granting, perfection, and enforcement of security 16
interests in ((conservation investment )) rate recovery assets to 17
secure ((conservation)) rate recovery bonds is ((governed by this 18
chapter rather than by )) subject to chapter 62A.9A RCW, except that 19
when a provision in chapter 62A.9A RCW comes in conflict with a 20
provision in this section, the provision in this section shall 21
control. 22
(((5))) (7) A transfer of ((conservation investment )) rate 23
recovery assets by an electrical, gas, or water company to a finance 24
subsidiary or other assignee , which such parties have in the 25
governing documentation expressly stated to be a sale or other 26
absolute transfer, in a transaction approved in ((an)) a financing 27
order ((issued by the commission and in connection with the issuance 28
by such finance subsidiary of conservation bonds )), shall be treated 29
as a true sale, and not as a pledge or other financing, of such 30
((conservation investment )) rate recovery assets. According the 31
holders of ((conservation)) rate recovery bonds a preferred right to 32
revenues of the electrical, gas, or water company, or the provision 33
by such company of other credit enhancement with respect to 34
((conservation)) rate recovery bonds, does not impair or negate the 35
characterization of any such transfer as a true sale.36
(((6))) (8) Any successor to an electrical, gas, or water company 37
pursuant to any bankruptcy, reorganization, or other insolvency 38
proceeding shall perform and satisfy all obligations of the company 39
under an approved contract governing ((conservation)) rate recovery 40
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bonds, in the same manner and to the same extent as was required of 1
such company before any such proceeding, including, without 2
limitation, billing, collecting, and paying to the bondholders or 3
their representatives revenues arising with respect to the 4
((conservation investment )) rate recovery assets pledged to secure 5
the ((conservation)) rate recovery bonds. 6
(9) Except for enforcement permitted under the laws of another 7
state, the laws of this state shall govern the creation, validity, 8
enforceability, attachment, perfection, priority, and exercise of 9
remedies with respect to the creation or transfer of a security 10
interest in a rate recovery asset.11
Sec. 7. RCW 80.28.309 and 1994 c 268 s 4 are each amended to 12
read as follows: 13
(1) Costs incurred before ((June 9, 1994,)) the effective date of 14
this section by electrical, gas, or water companies with respect to 15
events described in RCW 80.28.005(3)(a) or energy or water 16
conservation measures and services ((intended to improve the 17
efficiency of energy or water end use )) described in RCW 18
80.28.005(3)(b) shall constitute bondable ((conservation investment)) 19
rate recovery expenditures for purposes of RCW 80.28.005, 80.28.303, 20
80.28.306, and this section, if: 21
(a) The commission has previously issued a rate order authorizing 22
the inclusion of such costs in rate base; and 23
(b) The commission authorizes the issuance of ((conservation)) 24
rate recovery bonds secured by ((conservation investment )) rate 25
recovery assets associated with such costs. 26
(2) If costs incurred before ((June 9, 1994,)) the effective date 27
of this section by electrical, gas, or water companies with respect 28
to events described in RCW 80.28.005(3)(a) or energy or water 29
conservation measures ((intended to improve the efficiency of energy 30
or water end use )) described in RCW 80.28.005(3)(b) have not 31
previously been considered by the commission for inclusion in rate 32
base, an electrical, gas, or water company may apply to the 33
commission for approval of such costs. If the commission finds that 34
the expenditures are ((a)) bondable ((conservation investment )) rate 35
recovery expenditures , the commission shall by order designate such 36
expenditures as bondable ((conservation investment )) rate recovery 37
expenditures, which shall be subject to RCW 80.28.005, 80.28.303, 38
80.28.306, sections 3 and 4 of this act, and this section.39
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Sec. 8. RCW 80.08.140 and 1961 c 14 s 80.08.140 are each amended 1
to read as follows: 2
No provision of this chapter, RCW 80.28.005, 80.28.303, 3
80.28.306, 80.28.309, or section 3 or 4 of this act, and no deed or 4
act done or performed under or in connection therewith, shall be held 5
or construed to obligate the state of Washington or any agency, 6
instrumentality, political subdivision, or local government thereof 7
to pay or guarantee, in any manner whatsoever, any stock or stock 8
certificate or other evidence of interest or ownership, or bond, note 9
or other evidence of indebtedness, authorized, issued or executed 10
under the provisions of this chapter , RCW 80.28.005, 80.28.303, 11
80.28.306, 80.28.309, or section 3 or 4 of this act.12
NEW SECTION. Sec. 9. A new section is added to chapter 80.28 13
RCW to read as follows: 14
If any provision of sections 1, 3, 4, and 9 of this act or the 15
amendments to RCW 80.08.140, 80.28.005, 80.28.303, 80.28.306, and 16
80.28.309 by sections 2, 5, 6, 7, and 8 of this act is determined to 17
be invalid, or is invalidated, superseded, replaced, repealed, or 18
expired, such determination or occurrence does not affect the 19
validity of any action allowed under sections 1, 3, 4, and 9 of this 20
act or the amendments to RCW 80.08.140, 80.28.005, 80.28.303, 21
80.28.306, and 80.28.309 by sections 2, 5, 6, 7, and 8 of this act 22
and taken in good faith and pursuant to a financing order issued 23
prior to such determination or occurrence. 24
NEW SECTION. Sec. 10. Except to the extent required by section 25
7 of this act, this act applies prospectively only and not 26
retroactively. Nothing in this act shall impair or affect the 27
validity of any conservation bonds issued under RCW 80.28.303, 28
80.28.306, and 80.28.309 as those sections existed prior to the 29
effective date of this section. Conservation bonds issued under those 30
sections prior to the effective date of this section shall continue 31
to be governed by the provisions of such sections as they existed at 32
the time such conservation bonds were issued.33
NEW SECTION. Sec. 11. This act is necessary for the immediate 34
preservation of the public peace, health, or safety, or support of 35
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the state government and its existing public institutions, and takes 1
effect immediately. 2
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