§ 8-1-40.5-10 — Financing orders: petition; findings required for issuance; scope and effect; allocation of qualified costs among customer classes; securitization bond provisions

Indiana § 8-1-40.5-10

• Jurisdiction: Indiana
• Art. 1: UTILITIES GENERALLY
• Ch. 40.5: Pilot Program for Cost Securitization for Retired

Text

(a) An electric utility with qualified costs
that are at least five percent (5%) of the electric utility's total
jurisdictional electric rate base may file a petition with the commission
for the authority to:
(1) issue securitization bonds;
(2) collect securitization charges; and
(3) encumber securitization property with a lien and security
interest, as described in section 15 of this chapter.
An electric utility's qualified costs may be estimated at the time of
filing a petition under this section.
(b) Not later than two hundred forty (240) days after the date a
petition is filed by an electric utility under subsection (a), the
commission shall conduct a hearing and issue an order on the petition.
The commission shall approve the issuance of securitization bonds, the
collection of securitization charges, and the encumbrance of
securitization property with a lien and security interest under section
15 of this chapter if the commission:
(1) makes the findings set forth in subsection (d); and
(2) finds that the net present value of the total securitization
charges to be collected under the commission's financing order
under this section is less than the amount that would be recovered
through traditional ratemaking if the electric utility's qualified
costs were included in the electric utility's net original cost rate
base and recovered over a period of not more than twenty (20)
years.
Subject to subsection (c), qualified costs authorized in the
commission's financing order under this section shall be allocated to
the electric utility's customer classes using the same cost allocation
methodology approved by the commission in the electric utility's most
recent base rate proceeding.
(c) The commission may, in the financing order or in a separate
docketed proceeding initiated separately from the electric utility's base
rate proceedings, adjust allocations of qualified costs to avoid
unreasonable rates to customers in customer classes that have
experienced material changes in electric load or in the number of
customers. As part of any base rate proceeding initiated during the
period over which the securitization charges are to be collected, the
commission shall, if the commission orders a change to cost allocation,
adjust the allocation of qualified costs among the electric utility's
customer classes to reflect the cost allocation approved in that base rate
proceeding. An allocation adjustment made under this subsection:
(1) must ensure that the adjustment of the allocation of
securitization charges:
(A) will preserve the rating of the securitization bonds; and
(B) will not impair or reduce the total securitization charges;
and
(2) must be just and reasonable.
This subsection does not prohibit the commission from approving tariff
language as part of a financing order that addresses the conditions upon
which allocation adjustments are to be made, including the
establishment of a process by which such allocation adjustments must
be revised as necessary to preserve the rating of the securitization
bonds.
(d) In issuing a financing order under this section, the commission
must make the following findings and determinations:
(1) A determination of the amount of the electric utility's qualified
costs.
(2) A finding that the proceeds of the authorized securitization
bonds will be used solely for the purposes of reimbursing the
electric utility for qualified costs, that the electric utility's books
and records will reflect a reduction in rate base associated with
the receipt of proceeds from the securitization bonds, and that
such reduction will be reflected in retail rates when the
securitization bonds are issued.
(3) A finding that the expected structuring and the expected
pricing of the securitization bonds will result in reasonable terms
consistent with market conditions and the terms of the financing
order.
(4) A finding that the electric utility has demonstrated that it will
make, subject to approval by the commission, capital investments
in Indiana in an amount equal to or exceeding the amount of the
electric utility's qualified costs, over a period of not more than
seven (7) years immediately following the planned issuance date
of the securitization bonds. Costs to purchase energy or capacity
through a power purchase agreement do not constitute a capital
investment for purposes of this subdivision. The commission may
not impose any other requirement related to the use or distribution
of the proceeds of the securitization bonds. However:
(A) the commission shall encourage the electric utility to use
the proceeds from the securitization bonds for the construction
and ownership of clean energy resources described in IC 8-1-37-4(a)(1) through IC 8-1-37-4(a)(15); and
(B) notwithstanding the issuance of the financing order, the
proposed capital investments remain subject to commission
approval to the extent otherwise required by this article.
(5) A finding that:
(A) the electric utility has proposed a reasonable mechanism to
reflect a reduction in the electric utility's base rates and charges
upon the assessment of securitization charges on customer bills,
so as to remove any qualified costs from the electric utility's
base rates; and
(B) the mechanism will provide timely rate savings for
customers.
(6) A determination that the proposal is just and reasonable.
(e) A financing order issued under this section must set forth:
(1) the amount of qualified costs to be recovered by the electric
utility; and
(2) the period over which securitization charges are to be
collected, which may not exceed twenty (20) years.
(f) Securitization bonds are effective in accordance with their terms
if both:
(1) the financing order under which the securitization bonds are
issued; and
(2) the securitization charges authorized in that order;
are irrevocable and not subject to reduction, impairment, or adjustment
by further action of the commission under IC 8-1-2-72 or any other
statute or rule, except as provided in subsection (h) and section 12(c)
of this chapter.
(g) Securitization bonds issued under a financing order of the
commission under this section are binding in accordance with their
terms, even if the financing order is later vacated, modified, or
otherwise held to be invalid in whole or in part.
(h) Upon the request of an electric utility, the commission may
adopt a financing order under this section authorizing the retirement
and refunding of previously authorized securitization bonds if the
commission finds that future securitization charges required to service
new securitization bonds, including transaction costs, will be less than
the future securitization charges required to service the securitization
bonds to be refunded. Upon the retirement of the refunded
securitization bonds, the commission shall adjust the related
securitization charges accordingly.
(i) IC 8-1-2-76 through IC 8-1-2-83 do not apply to:
(1) the issuance of securitization bonds under this section; or
(2) the encumbrance of securitization property with a lien and
security interest under section 15 of this chapter.
(j) A financing order is subject to appeal under IC 8-1-3.
(k) After the issuance of a financing order in response to the petition
of an electric utility, the electric utility retains sole discretion regarding
whether to assign, sell, or otherwise transfer securitization property or
to cause securitization bonds to be issued, including the right to defer
or postpone assignment, sale, transfer, or issuance. If the electric utility
abandons issuance of securitization bonds under the financing order or
does not cause securitization bonds to be issued not later than ninety
(90) days after the date of a final, non-appealable financing order, the
electric utility shall file with the commission a statement of
abandonment containing the reasons for the abandonment. However,
the commission may, upon petition by the electric utility, extend the
ninety (90) day period set forth in this subsection for good cause
shown.
(l) The commission may not refuse to allow an electric utility to
recover qualified costs in a manner that is otherwise permissible, or
refuse or condition authorization or approval of:
(1) the issuance and sale of securities by an electric utility; or
(2) the assumption by an electric utility of liabilities or
obligations;
solely because of the potential availability of securitization bond
financing.

Legislative History

As added by P.L.80-2021, SEC.1.