Ohio became the twentieth state to pass legislation allowing utility debt securitization.
According to an Ohio Times-Gazette report, the state's Governor John Kasich together with state senators David Daniels (R-Greenfield) and Troy Balderson (R-Zanesville) signed bipartisan legislation allowing electric utilities to use bonds to securitize debt that has been previously approved by Public Utilities Commission of Ohio (PUCO).
The legislation called House Bill 364 permits utilities to securitize only certain types of costs called deferred assets.
These assets include fuel and infrastructure costs as well as environmental clean-up expenses that the PUCO has allowed a utility to defer and collect from customers at a later date.
Before proceeding with the securitization, utilities should apply with the PUCO for a financing order. There is a defined, deliberate process where interested parties can weigh in that must be adhered so a securitization application can move forward and be approved. The PUCO has 135 days to approve, modify, suspend, or reject a utility’s application.
“HB 364 provides the PUCO a new tool to save utility customers money on their electric bills," PUCO chairman Todd Snitchler said in press release. "Securitization leads to lower interest rates over a longer financing term. The lower interest rates reduce a customer’s rate obligation by millions of dollars, translating into lower electric bills.”
House Bill 364 was introduced in November and unanimously passed by the Ohio House of Representatives and the Ohio Senate earlier this month. The bill becomes law on March 20, 2012.