HB 1375 - AS INTRODUCED
2000 SESSION
HOUSE BILL 1375
AN ACT establishing financial assurance for guaranteed promise of customer repayment of rate reduction bonds.
SPONSORS: Rep. J. Phinizy, Sull 7; Rep. Tuthill, Sull 5; Rep. Gilmore, Straf 11; Rep. Mirski, Graf 12; Sen. Cohen, Dist 24
COMMITTEE: Science, Technology and Energy
This bill requires that public utilities agree to pay an annual fee for guaranteed promise of customer repayment of rate reduction bonds. This bill also establishes an investment fee payable upon the sale of assets or the sale or merger of the utility. The state is required to disburse the fees to the customers of the public utility.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
00-2090
03/01
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand
AN ACT establishing financial assurance for guaranteed promise of customer repayment of rate reduction bonds.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Section; Public Utilities; Electric Rate Reduction Financing; Financial Assurance for Guaranteed Promise of Customer Repayment. Amend RSA 369-A by inserting after section 1 the following new section:
369-A:2 Financial Assurance for Guaranteed Promise of Customer Repayment.
I. The state shall not authorize, endorse, sanction, guarantee, or cause any securitization of stranded costs through rate reduction bonds (RRBs) unless the state and the public utility have entered into a binding agreement consistent with the provisions of this section. The agreement shall include both an annual assurance fee payable by the public utility, its successors, or assigns to the state and an investment fee payable by the public utility, its successors, or assigns to the state.
II. In this section:
(a) "Special purpose securitization entity" or "SPSE" means any special purpose trust, limited liability company, or other entity that is authorized in accordance with the terms of a finance order to issue RRBs, acquire RRB property, or both.
(b) "RRB property" means any asset of the public utility assigned a value by the utility in the agreement enabling the issuance of the RRBs.
III. The annual assurance fee shall be determined by establishing the industry average of fees which would be charged to the public utility if stranded costs were to be privately guaranteed, and applying the industry average to the amount of stranded costs to be securitized. The assurance fee shall be paid annually by the public utility, its successors, or assigns, on the anniversary of the date the RRBs were issued. Payment shall be made to the state for the benefit of the ratepayers.
IV.(a) The public utility or its successors or assigns shall pay the investment fee to the state treasurer within 30 days of the first occurrence of any one of the following transactions:
(1) The sale of any RRB property.
(2) The sale of the public utility, in whole or in part.
(3) The merger of the public utility, in whole or in part, with another entity.
(4) The transfer of ownership of the SPSE.
(b) The investment fee to be paid shall be the compounded rate of return calculated to the date of the transaction. The investment fee shall be determined by establishing a basis of value of the securitization. The basis of value of securitization shall be the difference between the fully amortized value of the RRBs and the fully amortized value of comparable, non-securitized debt. To the basis of value shall be added a fair market rate of return, to be calculated by applying the simple rate of interest on judgments established pursuant to RSA 336:1, II, to be compounded from the date that the RRBs are issued through the date of the transaction. The calculated time shall be the period from date of issuance of the RRBs to the date of the transaction, or, if an investment fee has previously been paid because of a prior sale of the RRB property, from the date of the prior sale of that RRB property to the date of the current transaction. In the case of a transaction involving part of the total RRB property, the prorated value upon which the investment fee shall be based shall be the value assigned that part divided by the value assigned the total RRB property. RRB property values shall be assigned by the utility in the agreement enabling the issuance of the RRBs; the total of all assigned RRB property values shall be equal to the face value of the RRBs.
V. Upon payment of the investment fee pursuant to paragraph IV, the public utility shall have no further obligation to the state under this section with respect to the applicable asset. Further obligation to the state under this section shall be transferred to the transferee of the RRB property or to the successors or assigns of the public utility, as applicable.
VI. The public utility, its successors, or assigns shall not be permitted to recover the assurance fees or investment fees through rates or charges to customers.
VII. If the securitized debt is fully paid and the RRBs are retired accordingly without invoking paragraph IV, the investment fee shall be waived by the state upon the presentation to the treasurer of proof of full payment.
VIII. Payments received by the treasurer pursuant to paragraphs III and IV shall be placed in a special account, which shall not lapse to the general fund. All interest earned by the special account shall accrue to the special account. All money in the special account shall be considered the property of the ratepayers in this state of the public utility. Within one year of the retirement of the RRBs, the general court shall determine the method for calculating disbursements, and shall provide for payments from the special account to ratepayers in this state of the public utility, their heirs, or assigns. The disbursements shall assure that every person who was a customer in this state of the public utility during the period of securitization receives a pro rata share of all proceeds in the special account based on that customer's share of total RRB charges paid to the public utility by all customers in this state during the period of securitization.
2 Effective Date. This act shall take effect 60 days after its passage.