SENATE BILL 156

55th legislature - STATE OF NEW MEXICO - first session, 2021

INTRODUCED BY

William P. Soules

 

 

 

 

 

AN ACT

RELATING TO PUBLIC UTILITIES; ENACTING THE RATEPAYER RELIEF ACT; PROVIDING FOR THE USE OF SECURITIZATION FINANCING UPON THE ABANDONMENT OF GENERATION FACILITIES OPERATED OR LEASED BY AN ELECTRICAL UTILITY; AUTHORIZING A CHARGE TO PAY INTEREST AND PRINCIPAL ON SECURITIZATION BONDS; PROVIDING A PLEDGE THAT THE STATE WILL NOT IMPAIR CHARGES OR THE RIGHTS OF BONDHOLDERS; PROVIDING DUTIES AND POWERS OF THE PUBLIC REGULATION COMMISSION REGARDING SECURITIZATION FINANCING; REPEALING THE ENERGY TRANSITION ACT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

         SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "Ratepayer Relief Act".

         SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Ratepayer Relief Act:

                   A. "ancillary agreement" means a bond, insurance policy, letter of credit, reserve account, surety bond, interest rate lock or swap arrangement, hedging arrangement, liquidity or credit support arrangement or other financial arrangement entered into in connection with securitization bonds that is designed to promote the credit quality and marketability of the securitization bonds or to mitigate the risk of an increase in interest rates;

                   B. "assignee" means a person who receives an interest in property when the property is sold, assigned, transferred or conveyed, other than as security, and any successor to the person;

                   C. "bondholder" means the holder or owner of securitization bonds;

                   D. "charge" means a non-bypassable charge, separate and apart from a qualifying utility's base rates, that is paid by all customers of the qualifying utility for the recovery of securitization costs;  

                   E. "commission" means the public regulation commission;

                   F. "customer" means a person that takes electric distribution or electric transmission service from a qualifying utility, or its successor, for consumption of electricity in the state;

                   G. "financing costs" means the reasonable and prudent costs incurred to issue and administer securitization bonds as approved by the commission in a financing order;

                   H. "financing order" means an order of the commission that authorizes the issuance of securitization bonds, authorizes the charge and creates property;

                   I. "financing party" means a holder of securitization bonds and a trustee, a collateral agent, a party under an ancillary agreement or any other person acting for the benefit of holders of securitization bonds;

                   J. "non-bypassable" means that the payment of charges by any existing or future customer located within a qualifying utility's certificated service territory may not be avoided;

                   K. "property" means the rights and interests of an assignee under a financing order:

                               (1) for full payment and recovery of all securitization costs identified in the financing order, including all revenue or other proceeds arising from those rights and interests; and

                               (2) to impose, bill, collect and receive revenue;

                   L. "qualifying generating facility" means an electric generating facility composed of one or more generating units that:

                               (1) has been granted a certificate of public convenience and for which abandonment authority is granted by the commission after December 31, 2019; and

                               (2) is owned or leased, in whole or in part, by a qualifying utility;

                   M. "qualifying utility" means a public utility, as defined in Section 62-3-3 NMSA 1978, that owns, operates, leases or controls any plant, property or facility for the generation, transmission or distribution of electricity to or for the public in the state;

                   N. "securitization bonds" means corporate securities, including senior secured bonds, debentures, notes, certificates of participation, certificates of beneficial interest, certificates of ownership or other evidences of indebtedness or ownership, that are issued by a qualifying utility or an assignee under a financing order, the proceeds of which are used to recover, finance or refinance commission- approved securitization costs and financing costs;

                   O. "securitization costs":

                               (1) include:

                                         (a) the undepreciated investment in a qualifying generating facility that is being abandoned, as of the date of abandonment, deemed by the commission to be the financial obligation of the utility's ratepayers;

                                         (b) other costs associated with the abandonment of a qualifying generating facility that are deemed reasonable and prudent by the commission;

                                         (c) reasonable and prudent preliminary and continuing costs associated with and required for the issuance of a financing order and subsequent financing; and

                                         (d) financing costs; and

                               (2) do not include any monetary penalty, fine or forfeiture assessed against a qualifying utility by a government agency or court under a federal or state environmental statute, rule or regulation;

                   P. "securitization revenue" means all revenue collected by a qualifying utility through a charge;

                   Q. "stranded asset" means the portion of the undepreciated investment in a qualifying generating facility that is being abandoned, deemed by the commission to be the financial obligation of the utility's ratepayers who will not be provided electricity for that obligation; and

                   R. "successor" means a legal entity that succeeds by operation of law to the rights and obligations of another legal entity under a bankruptcy, reorganization, restructuring, other insolvency proceeding, merger, acquisition, consolidation or sale or transfer of assets.

         SECTION 3. [NEW MATERIAL] ABANDONMENT.--

                   A. A qualifying utility may apply to the commission to abandon a generating facility in accordance with the provisions of Section 62-9-5 NMSA 1978. In its application, the utility may also apply for a financing order under the Ratepayer Relief Act to recover securitization costs.

                   B. Regardless of whether the utility applies for a financing order upon application for abandonment, the commission, on its own motion, may require the use of securitization bonds and thereby issue a financing order.

                   C. The commission may issue a financing order if it determines that the:

                               (1) abandonment should be granted;

                               (2) abandonment creates a stranded asset; and

                               (3) use of securitization bonds results in lower costs for ratepayers while allowing the qualifying utility to recover approved securitization costs.

                   D. If an application for approval to abandon a qualifying generating facility is pending before the commission on the effective date of the Ratepayer Relief Act, the qualifying utility may file a separate application for a financing order and the commission shall consolidate the application for a financing order with the pending application for abandonment. The commission may also, on its own motion, consolidate the requirement for a financing order with the pending application for abandonment. If consolidation as described in this subsection occurs, the time periods prescribed by the Ratepayer Relief Act shall apply to the consolidated case as of the date of the consolidation.

         SECTION 4. [NEW MATERIAL] FINANCING ORDER--APPLICATION--CONTENTS.--

                   A. A qualifying utility may apply to the commission for a financing order. In its application, the qualifying utility shall seek commission approval to issue securitization bonds in one or more series; to impose, charge and collect charges; and to create property related to the abandonment of a qualifying generating facility that was previously approved by the commission. The commission shall take final action to approve, deny or modify an application for a financing order within one hundred twenty days from the date the application was submitted or within one hundred twenty days from the date of final approval of the related abandonment application, whichever is later.

                   B. In addition to any other information required by the commission, an application for a financing order shall include the following:

                               (1) an estimated schedule for the abandonment of any facility for which the costs are to be financed by the securitization bond financing;  

                               (2) an estimate of the net present value of the qualifying utility's customer savings expected to result if the financing order is issued as determined by a net present value comparison between the costs to customers that are expected to result from the financing with securitization bonds and the costs that would result from the application of traditional utility rate financing mechanisms for the same purposes;

                               (3) one or more alternative financing scenarios in addition to the preferred scenario contained in the application;

                               (4) a description of the non-bypassable charges required to be paid by customers within the qualifying utility's certificated service territory for recovery of securitization costs; and

                               (5) a proposed methodology for allocating the revenue requirement for the charges among customer classes.

         SECTION 5. [NEW MATERIAL] FINANCING ORDER--ISSUANCE--TERMS OF BONDS--NOTICE AND HEARING--STANDARD OF REVIEW--MANDATORY FINDINGS--RATE REDUCTION--IRREVOCABILITY--REFINANCING--NONIMPAIRMENT.--

                   A. After a hearing on an application for a financing order and upon notice, if the hearing and notice are required by the commission, the commission may issue a financing order if the commission finds that:

                               (1) the securitization costs described in the application are reasonable;

                               (2) the proposed issuance of securitization bonds and the imposition and collection of charges:

                                         (a) are just and reasonable;

                                         (b) are consistent with the public interest; and

                                         (c) constitute a reasonable and prudent mechanism for the financing of the securitization costs described in the application; and

                               (3) the proposed structuring, marketing and pricing of the securitization bonds are reasonably expected to lower net present value costs to customers and mitigate rate impacts to customers relative to traditional utility rate financing mechanisms.

                   B. The financing order shall:

                               (1) determine the maximum amount of securitization costs that may be financed from proceeds of securitization bonds authorized by the financing order;

                               (2) describe the proposed customer billing mechanism for charges and include a finding that the mechanism is just and reasonable;

                               (3) describe the financing costs that may be recovered through charges and the period over which the costs may be recovered, which period shall end no earlier than the date of final legal maturity of the securitization bonds;

                               (4) describe the property that is created and that may be used to pay, and secure the payment of, the securitization bonds and financing costs authorized in the financing order;

                               (5) authorize the qualifying utility to finance securitization costs through the issuance of one or more series of securitization bonds; provided that a qualifying utility shall not be required to secure a separate financing order for each issuance of securitization bonds or for each scheduled phase of the previously approved abandonment of qualifying generating facility approved in the financing order;<