H-1499.1H-1423.1 SUBSTITUTE HOUSE BILL 1990 State of Washington 69th Legislature 2025 Regular Session By House Environment & Energy (originally sponsored by Representatives Abbarno, Doglio, and Parshley)Parshley READRead FIRSTfirst TIMEtime 02/21/25.02/17/25.
Referred to Committee on Environment & Energy.
1 SHBHB 1990 plenary authority and jurisdiction over rates and services offered by electrical, gas, or water companies.
2 SHBHB 1990 reasonable, and that financing under this chapter is more favorable to the customer than other reasonably available alternatives;
3 SHBHB 1990 (6) "Financing costs" includes the following costs related to rate recovery bonds, whether incurred and paid upon issuance or over the life of rate recovery bonds:
4 SHBHB 1990 (c) The issuance of rate recovery bonds;
5 SHBHB 1990 NEW SECTION.
6 SHBHB 1990 80.28.306, and 80.28.309 or by a financing order, including reducing the amount of or impairing the collection of rate recovery charges until all principal, interest, premium, if any, and other amounts due on the rate recovery bonds and financing costs have been paid in full and except as provided under section 4 of this act;
(1)(a) An electrical, gas, or water company may petitionapply to the commission for a financing order designating all or part of rate recovery expenditures as bondable rate recovery expenditures, for the purpose of financing or refinancing the designated expenditures under RCW 80.28.306(1).
(b) AAfter petitionnotice filedand underan (a)opportunity offor this subsection must include a narrativehearing, description of purpose for which the electrical,commission gas,may orapprove wateran companyapplication seeksif approvalthe ofcommission afinds financingthat: order.
(i) The narrativebondable descriptionrate must:recovery expenditures included in the application are reasonable and prudent;
(i) Explain the event that is the subject of a federal or state declaration of disaster or emergency that gave rise to the costs and expenses that the company seeks to recover through a financing order, including those costs and expenses owed by an electrical, gas, or water company to such company's customers or other persons as a result of the event;
and (ii) In the case such costs and expenses accrued to the electrical, gas, or water company through a legal settlement, provide the total:
(A) Legal fees and costs paid by the company;
(B) Estimated legal fees and costs the company would have incurred had it elected not to settle the matter;
(C) Amount of initial claims that had been sought against the company;
and (D) Amount of the settlement.
(c) After notice and an opportunity for a hearing, the commission may approve a petition if the commission finds that:
p.
7 SHB 1990 (i) The bondable rate recovery expenditures included in the petition are reasonable and prudent;
(d)(c) The commission shall issue an order within 180 days of aan petitionapplication approving or denying the petition.application.
If the commission approves the petition,application, the commission shall issue a financing order.
(b)p. In specifying the amount for bondable rate recovery expenditures associated with an event described in RCW 80.28.005(3)(a), net of appropriate adjustments as determined by the commission to be reasonable, the commission may include, but is not limited to including, the following rate recovery expenditures:
7 HB 1990 (b) In specifying the amount for bondable rate recovery expenditures associated with an event described in RCW 80.28.005(3)(a), net of appropriate adjustments as determined by the commission to be reasonable, the commission may include, but is not limited to including, the following rate recovery expenditures:
(ii) CostsLost andrevenue expensesassociated that may be recovered at a later time from third parties or insurers and returned to electrical, gas, or water company customers through a separate rate proceeding consistent with costthe causationevent; and rate design principles and statutory or regulatory requirements;
(iii) Costs and (iii)expenses Carryingthat costsmay be recovered at a later time from third parties or charges.insurers and returned to electrical, gas, or water company customers through a separate rate proceeding consistent with cost causation and rate design principles and statutory or regulatory requirements;
and (iv) Carrying costs or charges.
(b) Authorization for the creation of rate recovery assets and imposition of rate recovery charges that allow for the recovery of p.rate recovery expenditures, as determined by the commission, and associated financing costs;
8 SHB 1990 rate recovery expenditures and associated financing costs, as determined by the commission;
and (ii) Adjusting rate recovery charges as necessary to ensure timely payment on, and payment in full of, the rate recovery bonds andp. associated financing costs or in response to changes to applicable customers, service territories, or collection rates;
8 HB 1990 and associated financing costs or in response to changes to applicable customers, service territories, or collection rates;
p.(i) A finding that the proposed issuance of rate recovery bonds and the imposition of rate recovery charges is expected to provide the lowest possible, reasonable, and prudent cost on a net present value basis to electrical, gas, or water company customers for recovery of the bondable rate recovery expenditures as compared to other methods of financing and recovery;
9 SHB 1990 (i) A finding that the proposed issuance of rate recovery bonds and the imposition of rate recovery charges is expected to provide the lowest possible, reasonable, and prudent cost on a net present value basis to electrical, gas, or water company customers for recovery of the bondable rate recovery expenditures as compared to other methods of financing and recovery;
(4) Rate recovery charges authorized by a financing order shall be collected through the chargesrates or incorporatedcharges into rates paid by, and may not be avoided by, the electrical, gas, or water company customers located within such company's service territory, if applicable, as the territory existed on thep. date of the financing order or, if the financing order provides, as such service territory, if applicable, may be expanded, even if:
9 HB 1990 the date of the financing order or, if the financing order provides, as such service territory may be expanded, even if:
(b) Until all principal, interest, premium, if any, and other amounts due on the rate recovery bonds and financing costs are paid in full, the commission, except as provided in the financing order, p.the state of Washington, and all agencies, instrumentalities, political subdivisions, and local governments thereof may not:
10 SHB 1990 the state of Washington, and all agencies, instrumentalities, political subdivisions, and local governments thereof may not:
(a)p. Apply to the commission for a financing order designating all or part of rate recovery expenditures as bondable rate recovery expenditures;
10 HB 1990 (a) Apply to the commission for a financing order designating all or part of rate recovery expenditures as bondable rate recovery expenditures;
(2) The commission has the same authority with respect to a proposed conservation service tariff as it has with regard to any other schedule or classification the effect of which is to change any rate or charge, including, without limitation, the power granted by RCW 80.04.130 to conduct a hearing concerning a proposed conservation service tariff and the reasonableness and justness thereof, and p.pending such hearing and the decision thereon the commission may suspend the operation of the tariff for a period not exceeding ten months from the time the tariff would otherwise go into effect.
11 SHB 1990 pending such hearing and the decision thereon the commission may suspend the operation of the tariff for a period not exceeding ten months from the time the tariff would otherwise go into effect.
The commission shall approve rates for service by electrical, gas, and water companies at levels sufficient to recover all of the expenditures of the bondable conservation investment included in rate base and the costs of equity and debt capitalp. associated therewith, including, without limitation, the payment of principal, premium, if any, and interest on conservation bonds.)) The rates so determined may be included in general rate schedules or may be expressed in one or more separate rate schedules.
11 HB 1990 capital associated therewith, including, without limitation, the payment of principal, premium, if any, and interest on conservation bonds.)) The rates so determined may be included in general rate schedules or may be expressed in one or more separate rate schedules.
This chapter is not intended to be an exclusive or mandatory approach to conservation programs for electrical, gas, and water companies, and no such company is obligated to file conservation service tariffs under this chapter, to apply to the commission for a determination that conservation costs constitute bondable p.((conservation investment)) rate recovery expenditures within the meaning of this chapter, or to issue ((conservation)) rate recovery bonds.
12 SHB 1990 ((conservation investment)) rate recovery expenditures within the meaning of this chapter, or to issue ((conservation)) rate recovery bonds.
or (ii)p. ((The)) Such company sells its property used to serve such customer and the customer ceases to be a customer of the company as a result of such action.
12 HB 1990 (ii) ((The)) Such company sells its property used to serve such customer and the customer ceases to be a customer of the company as a result of such action.
(2) ((Electrical)) (a) An electrical, gas, ((and)) or water ((companies, or)) company, finance ((subsidiaries)) subsidiary, or assignee may ((pledge conservation investment)) grant a security interest in rate recovery assets as collateral for ((conservation)) p.rate recovery bonds ((by obtaining an order of the commission approving an issue of conservation bonds and providing for a security interest in conservation investment assets)).
13 SHB 1990 rate recovery bonds ((by obtaining an order of the commission approving an issue of conservation bonds and providing for a security interest in conservation investment assets)).
(b)p. A security interest in rate recovery assets attaches if ((value has been)):
13 HB 1990 (b) A security interest in rate recovery assets attaches if ((value has been)):
Conservation investment)) related rate recovery p.charges have been charged, billed, or collected.
14 SHB 1990 charges have been charged, billed, or collected.
Thep. holders of conservation bonds shall have a perfected security interest in all cash and deposit accounts of the debtor in which revenues arising with respect to conservation investment assets pledged to such holders have been commingled with other funds, but such perfected security interest is limited to an amount not greater than the amount of such revenues received by the debtor within twelve months before (a) any default under the conservation bonds held by the holders or (b) the institution of insolvency proceedings by or against the debtor, less payments from such revenues to the holders during such twelve-month period.
14 HB 1990 The holders of conservation bonds shall have a perfected security interest in all cash and deposit accounts of the debtor in which revenues arising with respect to conservation investment assets pledged to such holders have been commingled with other funds, but such perfected security interest is limited to an amount not greater than the amount of such revenues received by the debtor within twelve months before (a) any default under the conservation bonds held by the holders or (b) the institution of insolvency proceedings by or against the debtor, less payments from such revenues to the holders during such twelve-month period.
p.(iii) Identifies the transferor as "debtor," the assignee as "secured party," and the rate recovery asset as "collateral";
15 SHB 1990 (iii) Identifies the transferor as "debtor," the assignee as "secured party," and the rate recovery asset as "collateral";
(d) A transfer of rate recovery assets to a financing subsidiary that is perfected under this subsection is free and clear of all claims, security interests, liens, and encumbrances of the transferringp. electrical, gas, or water company, except for any prior security interest perfected under subsection (2) of this section.
15 HB 1990 transferring electrical, gas, or water company, except for any prior security interest perfected under subsection (2) of this section.
(b) If an electrical, gas, or water company or finance subsidiary defaults on a required payment with respect to rate recovery bonds, a p.secured party or secured party's representatives may apply to the commission for relief.
16 SHB 1990 secured party or secured party's representatives may apply to the commission for relief.
((Any such)) (c) The interest of an assignee or financing party in rate recovery assets is not subject to setoff, counterclaim, surcharge, or defense by the electrical, gas, or water company or any other person in connection with a bankruptcy, reorganization, or insolvency proceeding.p.
However,16 anyHB surplus1990 inproceeding. excess of amounts necessary to pay principal, premium, if any, interest, and other amounts due with respect to the rate recovery bonds and associated financing costs, including enforcement costs, with respect to the security agreement shall be remitted to the debtor electrical, gas, or water company for the return of such surplus as customer refunds.
AHowever, companyany maysurplus requestin authorizationexcess forof amounts necessary to pay principal, premium, if any, interest, and other amounts due with respect to the returnrate ofrecovery surplusbonds fundsand byassociated financing costs, including enforcement costs, with respect to the commissionsecurity inagreement separateshall proceedingsbe forremitted thisto purpose.the debtor electrical, gas, or water company;
Thedebtor commissionfinance shallsubsidiary; issue an order approving or denying the petition for return of surplus funds within 90 days.
or other debtor assignee.
p.(((5))) (7) A transfer of ((conservation investment)) rate recovery assets by an electrical, gas, or water company to a finance subsidiary or other assignee, which such parties have in the governing documentation expressly stated to be a sale or other absolute transfer, in a transaction approved in ((an)) a financing order ((issued by the commission and in connection with the issuance by such finance subsidiary of conservation bonds)), shall be treated as a true sale, and not as a pledge or other financing, of such ((conservation investment)) rate recovery assets.
17 SHB 1990 (((5))) (7) A transfer of ((conservation investment)) rate recovery assets by an electrical, gas, or water company to a finance subsidiary or other assignee, which such parties have in the governing documentation expressly stated to be a sale or other absolute transfer, in a transaction approved in ((an)) a financing order ((issued by the commission and in connection with the issuance by such finance subsidiary of conservation bonds)), shall be treated as a true sale, and not as a pledge or other financing, of such ((conservation investment)) rate recovery assets.
(((6))) (8) Any successor to an electrical, gas, or water company pursuant to any bankruptcy, reorganization, or other insolvency proceeding shall perform and satisfy all obligations of the company under an approved contract governing ((conservation)) rate recovery bonds,p. in the same manner and to the same extent as was required of such company before any such proceeding, including, without limitation, billing, collecting, and paying to the bondholders or their representatives revenues arising with respect to the ((conservation investment)) rate recovery assets pledged to secure the ((conservation)) rate recovery bonds.
17 HB 1990 bonds, in the same manner and to the same extent as was required of such company before any such proceeding, including, without limitation, billing, collecting, and paying to the bondholders or their representatives revenues arising with respect to the ((conservation investment)) rate recovery assets pledged to secure the ((conservation)) rate recovery bonds.
p.(a) The commission has previously issued a rate order authorizing the inclusion of such costs in rate base;
18 SHB 1990 (a) The commission has previously issued a rate order authorizing the inclusion of such costs in rate base;
Sec.p.
18 HB 1990 Sec.
If any provision of sections 1, 3, 4, and 9 of this act or the amendments to RCW 80.08.140, 80.28.005, 80.28.303, 80.28.306, and 80.28.309 by sections 2, 5, 6, 7, and 8 of this act is determined to be invalid, or is invalidated, superseded, replaced, repealed, or expired, such determination or occurrence does not affect the validity of any action allowed under sections 1, 3, 4, and 9 of this p.act or the amendments to RCW 80.08.140, 80.28.005, 80.28.303, 80.28.306, and 80.28.309 by sections 2, 5, 6, 7, and 8 of this act and taken in good faith and pursuant to a financing order issued prior to such determination or occurrence.
19 SHB 1990 act or the amendments to RCW 80.08.140, 80.28.005, 80.28.303, 80.28.306, and 80.28.309 by sections 2, 5, 6, 7, and 8 of this act and taken in good faith and pursuant to a financing order issued prior to such determination or occurrence.
This act is necessary for the immediate preservation of the public peace, health, or safety, or support of thep. state government and its existing public institutions, and takes effect immediately.
19 HB 1990 the state government and its existing public institutions, and takes effect immediately.
20 SHBHB 1990