The Oklahoma Development Finance Authority, or OFDA, is preparing to issue a $81.5 million in ratepayer-backed bonds, to recover costs from storm damage incurred during Winter Storm Uri in February 2021.
The OFDA Ratepayer-Backed Bonds, Series 2022, will issue the securities, which themselves will be secured by the irrevocable right to impose, bill and collect a winter-event securitization charge collected from Oklahoma customers of Summit Utilities Oklahoma, Inc., according to Fitch Ratings. The entity is a wholly owns subsidiary of Summit Utilities, based in Centennial, CO.
Summit Utilities Oklahoma will allocate the monthly winter-event securitization charge among four customer classes, based on their natural gas consumption during Winter Storm Uri. Like other ratepayer-backed bond securitization deal, the stability of the cashflow underpinning the issued notes will rely on the number of customers in the service territory.
Citigroup Global Markets is lead underwriter on the transaction, which will issue just one class of notes.
The repayment, and ultimately the credit, of the notes will benefit from the irrevocable right to impose, bill and collect a winter-event securitization charge from customers in Summit's Oklahoma service territory. That right to impose the winter-event charge stems from the February 2021 Regulated Utility Consumer Protection Act, which the Oklahoma Legislature enacted in April 23, 2021. The Oklahoma Corporation Commission issued the financing order in February 2022, which became final and non-appealable. Also, it cannot be rescinded.
Aside from the stable expected cashflow and the legal and regulatory framework that underpins the financing order, Fitch cited another benefit to the notes, a true-up mechanism to support consistent cashflows. OFDA will have mandatory semiannual true-up filings, to ensure that winter-event charges are sufficient to fund all scheduled payments of principal and interest to the noteholders, plus related fees and expenses, and to replenish the capital subaccount over 12 months. The capital subaccount is 0.50% of the initial issuance amount.
Fitch expects to assign a 'AAA' rating to the only class of notes, the A-1, which have a legal final maturity date of August 2042.
