Spreads in utility rate reductions bonds (RRBs) widened on the news that California is considering introducing legislation to "re-regulate" its utility industry. The proposed legislation will likely introduce some kind of "price" controls of energy from power suppliers, and not target or undo the legislation that authorized the levying of a "transition charge" to utility consumers and issuance of RRBs in 1997. The firm believes the proposed legislation should have no impact on RRBs and recommends their purchase at wider levels once negative headlines dissipate.
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