A. An applicant may request permission to initiate a securitization transaction from the commission by submitting an application for a financing order. The application shall:
1. Identify, as applicable, any transition assets, transition asset retirement costs or significant event recovery costs. For the purposes of this paragraph, transition assets must currently be or have previously been in operation providing service for the applicant's customers as of September 26, 2025, except for transition assets that are placed into service after September 26, 2025 that become destroyed, damaged or rendered inoperable, in whole or in part, by forces or action outside of the applicant's reasonable control, as provided in section 40-601, paragraph 17, subdivision (c).
2. Estimate the transition costs and financing costs including an estimate of recovering such costs on a net present value basis.
3. Describe the expected characteristics of the transition bonds.
4. Project the financing charges and explain how the financing charges will result in the collection of financing revenues in amounts sufficient but not greater than necessary to enable the timely and complete recovery and payment of all ongoing financing costs. For the purposes of this paragraph, "financing charges" includes any costs and fees that are associated with hiring expert consultants that are necessary to aid the commission in reviewing and approving of an application for a financing order.
5. Estimate the financing charges and unit financing charges before the first application of the true-up mechanism.
6. Describe the proposed true-up mechanism and how the true-up mechanism will adjust the financing charges and unit financing charges over time to correct for any overcollection or undercollection of financing revenues.
7. Identify the qualified special purpose entity.
8. Include a report that is prepared by a securities firm experienced in underwriting and bond issuance and that concludes the transition bonds are expected to satisfy the current published criteria for an AAA rating or the equivalent.
9. Identify any anticipated ancillary agreements, individually or by description.
10. Describe how the applicant proposes to permanently reduce or offset the value of either:
(a) Undepreciated transition assets in rate base or recovered through rates and any associated regulatory assets or recorded liabilities with respect to an offering of transition bonds to recover transition asset retirement costs.
(b) Any regulatory asset or recorded liability that is associated with transition bonds to recover significant event recovery costs in exchange for the net proceeds of the transition bonds.
11. Include a proposed transition billing services tariff if the proposed initial servicer is a public service corporation.
12. Commit to making a filing with the commission that will describe the final structure and pricing of the transition bonds, a statement of actual up-front financing costs and an updated calculation of the estimated financing charges and unit financing charges over the life of the transition bonds.
13. Provide a proposed financing order.
14. For a combined cooperative securitization, describe the allocation of financing costs or financing charges and unit financing charges to each cooperative applicant's customers, as well as how the true-up mechanism will allocate or reallocate financing costs to the cooperative applicant's customers over time.
15. Include an analysis that shows the securitization transaction will result in lower costs to the applicant's customers on a net present value basis as compared to financing options that are otherwise available to the applicant.
B. The commission shall issue a financing order that approves, rejects or approves with conditions the initiation of the proposed transaction. The commission may approve or approve with conditions the proposed transaction only if the commission finds that:
1. The application complies with all of the requirements prescribed in subsection A of this section.
2. The securitization transaction will result in lower costs to the applicant's customers on a net present value basis as compared to other financing options that are available to the applicant, which shall be determined based on whether the transition benefit test is satisfied. The transition benefit test is satisfied on a showing of all of the following:
(a) The projected net present value over the term of the transition bonds of the financing charges minus, to the extent applicable, the revenue requirement credits that arise from any deferred income tax balances associated with the transition cost will be smaller in absolute value than the projected net present value that is calculated at the same discount rate of the portion of the annual revenue requirements of the applicant that is associated with the transition cost, if the cost were to be financed directly by the applicant.
(b) The proposed structure and projected pricing of the transition bonds are reasonably expected to result, on a net present value basis over the life of the transition bonds, in the lowest financing charges that are commercially available consistent with market conditions at the time the transition bonds are priced and with the terms of the financing order.
(c) For a financing application that involves a transition asset that is an electric power generation facility that will be or has been retired, sold, abandoned, disposed of or otherwise removed from service of the applicant's customers, in whole or in part, as provided in section 40-601, paragraph 17, subdivisions (a) and (b), the replacement means of satisfying the customer load served by the electric power generation facility that will be or has been removed from service is more cost-effective for the applicant's customers than continued reliance on or operation of the electric power generation facility that will be or has been removed from service. Cost-effectiveness shall be determined by comparing the sum of the net present value of all the costs and expenses of reliable replacement generation of equal or greater contribution toward the utility's resource adequacy than the electric power generation facility that will be or has been removed from service over the replacement generation's expected useful life combined with the projected net present value to ratepayers of the total expected cost of the transition bonds over the term of such bonds, as compared to the net present value to ratepayers of the cost, including any unrecovered costs associated with undepreciated value or unrecovered balances of the transition asset if such costs were to be financed directly by the applicant, of continuing to operate the electric power generation facility that will be or has been removed from service over an equivalent time frame regardless of the fuel source of the power generation. The cost-effective evaluation shall include a description of a portfolio that contains new and existing resources that will provide reliable replacement generation of equivalent resource adequacy as the electric power generation that will be or has been removed from service.
3. The proposed transition billing services tariff, including any true-up mechanism that is designed to address overcollection or undercollection from the applicant's customers, is just and reasonable, is in the public interest and should be in effect.
4. The proposed transaction, as described in the application for a financing order, is just and reasonable, is in the public interest and should be put into effect.
C. The commission shall issue a final decision regarding the application for a financing order within one hundred twenty days after the date the application for the financing order was filed. The commission may extend the time for an additional ninety days for good cause shown.
D. The parent, holding or other direct beneficial owner of an applicant that is also a public service company may not purchase transition bonds.
E. For the purposes of reviewing and approving an application for a financing order, the commission may use expert consultants and charge the qualified special purpose entity a fee for hiring the expert consultants.