SESSION OF 2021
SUPPLEMENTAL NOTE ON SENATE SUBSTITUTE FOR
HOUSE BILL NO. 2072
As Recommended by Senate Committee on
Financial Institutions and Insurance

Brief*
Senate Sub. for HB 2072 would create the Utility
Financing and Securitization Act (UFSA), which would allow
for the securitization of utility assets to recover energy
transition costs for electric public utilities whose retail rates
are subject to the Kansas Corporation Commission (KCC).
The UFSA would also allow electric and natural gas public
utilities whose retail rates are subject to the KCC to pursue
securitization to help finance qualified extraordinary
expenses, such as fuel costs incurred during extreme
weather events. The bill would also amend provisions of the
Kansas Energy Security Act and the Uniform Commercial
Code to conform to the new provisions created in the UFSA.
The bill would be in effect upon publication in the
Kansas Register.

Utility Financing and Securitization Act
(New Sections 1-14)
Definitions (New Section 1)
The bill would define various terms used throughout the
UFSA, including these key terms.
“Electric public utility” would mean the same as
defined in KSA 66-101a and include a for-profit electric utility
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org
whose retail rates are subject to the jurisdiction of the KCC.
The definition would not include a cooperative that has opted
to deregulate or an electric public utility owned by one or
more such cooperatives.
“Energy transition costs” would include, at the option
of and upon application by an electric public utility, and as
approved by the KCC, any of the pretax costs that the electric
public utility has incurred or will incur that are caused by,
associated with, or remain as a result of a retired,
abandoned, to be retired, or to-be-abandoned electric
generating facility that is the subject of an application for a
financing order filed under the UFSA where such early
retirement or abandonment is deemed reasonable and
prudent by the KCC through a final order issued by the KCC.
As used in this definition, pretax costs, if determined
reasonable by the KCC and not inconsistent with a KCC
order granting predetermination regarding retirement or
abandonment of the subject generating facility, would include,
but not be limited to, the undepreciated investment in the
retired or abandoned electric generating facility and any
facilities ancillary thereto or used in conjunction therewith,
costs of decommissioning and restoring the site of the electric
generating facility, other applicable capital and operating
costs, accrued carrying charges, and deferred expenses.
Such pretax costs would be reduced by applicable tax
benefits of accumulated and excess deferred income taxes,
insurance, and scrap and salvage proceeds, and would
include the cost of retiring any existing indebtedness, fees,
costs, and expenses to modify existing debt agreements or
for waivers or consents related to existing debt agreements.
Energy transition costs would also include pretax costs
that an electric public utility has previously incurred related to
the retirement of such an electric generating facility occurring
before the effective date of the UFSA.


2- 2072
 “Financing order” would mean an order from the KCC
pursuant to the UFSA that authorizes:
● The issuance of securitized utility tariff bonds in
one or more series;
● The imposition, collection, and periodic
adjustments of a securitized utility tariff charge;
● The creation of securitized utility tariff property; and
● The sale, assignment, or transfer of securitized
utility tariff property to an assignee.
“Public utility” would mean an electric or natural gas
public utility whose rates are subject to the jurisdiction of the
KCC.
“Qualified extraordinary costs” would include, at the
option of and upon application by a public utility and as
approved by the KCC, costs of an extraordinary nature that
the public utility has incurred before, on, or after the effective
date of the UFSA that would cause extreme customer rate
impacts if recovered through customary rate-making,
including, but not limited to, purchases of gas supplies,
transportation costs, and fuel and power costs including
carrying charges incurred during anomalous weather events.
“Securitized utility tariff bonds” would mean bonds,
debentures, notes, certificates of participation, certificates of
beneficial interest, certificates of ownership or other
evidences of indebtedness or ownership that have a
scheduled maturity date as determined reasonable by the
KCC, but not later than 32 years from the issue date, that are
issued by an electric public utility or an assignee pursuant to
a financing order, the proceeds of which are used directly or
indirectly to recover, finance, or refinance KCC-approved
energy transition costs and financing costs, and that are
secured by or payable from securitized utility tariff property; or
an electric or natural gas public utility or assignee pursuant to

3- 2072
a financing order, the proceeds of which are used directly or
indirectly to recover, finance, or refinance KCC-approved
qualified extraordinary costs and financing costs that are
secured by or payable from securitized utility tariff property.
“Securitized utility tariff charge” would mean the
amounts authorized by the KCC to provide a source of
revenue solely to repay, finance, or refinance securitized
utility tariff bonds and financing costs and that are
nonbypassable charges imposed on and part of all retail
customer bills, including bills to special contract customers
collected by an electric or natural gas public utility or its
successors or assignees, or a collection agent, in full,
separate and apart from the electric or natural gas public
utility’s base rates.
Such charges would be paid by all existing or future
retail customers receiving electrical or natural gas service
from the public utility or its successors or assignees under
KCC-approved rate schedules or special contracts, even if a
retail customer elects to purchase electricity or natural gas
from an alternative electricity or natural gas supplier following
a fundamental change in regulation of public utilities in
Kansas.
“Securitized utility tariff costs” would mean either
energy transition costs or qualified extraordinary costs.
“Securitized utility tariff property” would include all
rights and interests of a public utility, its successor, or
assignee under a financing order, including the right to
impose, bill, charge, collect, and receive securitized utility
tariff charges authorized under the financing order and to
obtain periodic adjustments to such charges authorized under
the bill and as provided in the financing order.
The definition would also include all revenues,
collections, claims, rights to payments, payments, money, or
proceeds arising from the rights and interests specified in the
financing order, regardless of whether such revenues,
4- 2072
collections, claims, rights to payment, payments, money, or
proceeds are imposed, billed, received, collected, or
maintained together with or commingled with other revenues,
collections, rights to payment, payments, money, or
proceeds.
“Special contract” would mean the terms of a contract
governing the supply of electricity that has been approved by
the KCC that is not included in generally applicable rate
schedules.
Financing Order (New Section 2)
Application schedule for recovery of energy
transition costs. The bill would allow an electric public utility,
in its sole discretion, to apply to the KCC for a financing order
for the recovery of energy transition costs. In applying for the
financing order, the electric public utility could file an
application to issue securitized utility tariff bonds in one or
more series; impose, charge, and collect securitized utility
tariff charges; and create securitized utility tariff property
related to the recovery of energy transition costs.
Within 25 days after a complete application is filed, the
bill would require the KCC to establish a procedural schedule
that requires the KCC to issue a decision on the application
no later than 135 days from the date a completed application
was filed.
The KCC would be required to take final action to
approve, approve subject to conditions the KCC considers
appropriate and authorized by the bill, or deny any application
for a financing order in a final order, within 135 days of
receiving a complete application as authorized by the UFSA.
Such final order would be subject to judicial review and
deemed as arising from a rate hearing.
As a prerequisite of filing an application, the bill would
require an electric public utility to obtain an order from the

5- 2072
KCC under the KCC process for predetermination under KSA
66-1239 finding retirement or abandonment of the subject
generating facility to be reasonable.
Application schedule for recovery of qualified
extraordinary costs. The bill would allow a public utility, in its
sole discretion, to apply to the KCC for a financing order for
the recovery of qualified extraordinary costs.
In applying for the financing order, the public utility could
file an application to issue securitized utility tariff bonds in one
or more series, charge and collect securitized utility tariff
charges, and create utility tariff property related to the
recovery of qualified extraordinary costs.
Within 25 days after a complete application is filed, the
bill would require the KCC to establish a procedural schedule
that requires the KCC to issue a decision on the application
no later than 180 days from the date a complete application
was filed.
The KCC would be required to take final action to
approve, approve subject to conditions the KCC considers
appropriate and that are authorized by the bill, or deny any
application for the recovery of qualified extraordinary costs
and a financing order in a final order within 180 days of
receiving a complete application as authorized by this UFSA.
The final order would be subject to judicial review and
deemed as arising from a rate hearing.
Contents of financing order application. The bill
would outline the requirements of the application, including
these key elements:
● A description:
○ Of the electric generating facility or facilities
that the electric public utility has retired or
abandoned, or proposes to retire or abandon,
prior to the date that all undepreciated

6- 2072
 investment relating thereto has been
recovered through rates and the reasons for
undertaking such early retirement or
abandonment. If the electric public utility is
subject to a separate KCC order or
proceeding relating to such retirement or
abandonment (predetermination under KSA
66-1239), the bill would require that
application to include a description of the
order or other proceeding; or
○ Of the qualified extraordinary costs that the
public utility proposes to recover and how
customary rate-making treatment of such
costs would result in extreme customer rate
impacts;
● A description of the securitized utility tariff costs the
applicant proposes to recover with the proceeds of
the securitized utility tariff bonds;
● An indicator of whether the public utility proposes
to finance all or a portion of the securitized utility
tariff costs using securitized utility tariff bonds. If
the public utility proposes to finance a portion of
the securitized utility tariff costs, the public utility
would be required to identify the specific portion in
the application;
○ By electing not to finance all or any portion of
such securitized utility tariff costs using
securitized utility tariff bonds, a public utility
would not be deemed to waive its right to
recover or request recovery of such costs
pursuant to a separate proceeding with the
KCC;
● An estimate of the financing costs related to the
securitized utility tariff bonds;
● An estimate of the securitized utility tariff charges
necessary to recover the securitized utility tariff
7- 2072
 costs and all financing costs, the period for
recovery of such costs, and a description of the
proposed financing structure, including the
proposed scheduled final payment dates and final
maturity of the securitized utility tariff bonds; and
● A comparison between the net present value of the
costs to customers that are estimated to result from
the issuance of securitized utility tariff bonds and
the costs that would result from the application of
the traditional method of financing and recovering
the undepreciated investment of facilities that may
become energy transition costs from customers.
The comparison would be required to demonstrate
that the issuance of securitized utility tariff bonds
and the imposition of securitized utility tariff
charges are expected to provide net quantifiable
rate benefits to customers or would avoid or
mitigate rate impacts on customers.
Review and findings by the KCC. After notice and
hearing on an application for a financing order, the KCC
would be authorized to issue a financing order if the KCC
finds:
● Securitized utility tariff costs described in the
application are just and reasonable; and
● Proposed issuance of securitized utility tariff bonds
and the imposition and collection of securitized
utility tariff charges are expected to provide net
quantifiable rate benefits to customers when
compared to the costs that would result from the
application of the traditional method of financing
and recovering the securitized utility tariff costs with
respect to energy transition costs or would avoid or
mitigate rate impacts on customers.
The bill would detail the elements that must be
contained in a financing order issued by the KCC in response

8- 2072
to an application filed by a public utility, including these key
elements:
● An approved customer billing mechanism for
securitized utility tariff charges, including a specific
methodology for allocating the necessary
securitized utility tariff charges among the different
customer classes, including special contract
customers, and a finding that the resulting
securitized utility tariff charges will be just and
reasonable; provided, however that the amount of
securitized utility tariff charges allocated to special
contract customers in connection with the
securitization of energy transition costs not exceed
the benefits from the retirement or abandonment of
the subject electric utility generating assets that are
assigned or allocated to special contract
customers. The bill would require the securitized
utility charges allocated to special contract
customers as a result of a financing order
regarding a retirement or abandonment be offset
by net quantifiable rate benefits of at least the
same amount. The initial allocation of securitized
utility tariff charges would remain in effect until the
public utility files a general rate base proceeding;
○ Once the KCC’s order regarding the general
base rate proceeding becomes final, the bill
would require all subsequent applications of
an adjustment mechanism regarding
securitized utility tariff charges to incorporate
changes in the allocation of costs to
customers, as detailed in the KCC’s order
from the public utility’s most recent general
base rate proceeding;
● A finding the proposed issuance of securitized
utility tariff bonds and the imposition and collection
of a securitized utility tariff charge are expected to
provide net quantifiable rate benefits to customers
as compared to the traditional methods of financing
9- 2072
 and recovering securitized utility tariff costs from
customers or would avoid or mitigate rate impacts
to customers;
● An approved plan for the public utility, by means
other than on the monthly bill, to provide
information regarding the benefits of securitization
obtained for customers through the financing order;
● A finding that the structuring, pricing, and financing
costs of the securitized utility tariff bonds are
expected to result in the lowest securitized utility
tariff charges, consistent with market conditions at
the time the securitized tariff bonds are priced and