Resolution on Limited Applicability of Securitization in Electric Industry Restructuring Exposed

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The Resolution on Limited Applicability of Securitization in Electric Industry Restructuring does not include adoption or approval information. ALEC has attempted to distance itself from this piece of legislation after the launch of in 2011, but it has done nothing to get it repealed in the states where it previously pushed for it to be made into law.

ALEC Resolution Text

WHEREAS, the (INSERT STATE) recognizes that the resolution of the “stranded cost” issue is a significant impediment to competition in the electric industry:

WHEREAS, each state legislature has the responsibility to determine the just and reasonable recovery mechanisms to determine net stranded costs and investments, including mitigation incentives. It should provide for a public process that applies to investments and costs stranded by competition:

WHEREAS, the state (INSERT APPROPRIATE REGULATORY BODY) shall be responsible for the final determination of permissible stranded cost recovery charges for each electric utility and for the approval of the recovery plan subject to the determination in a rate case proceeding that such charges and such plan are equitable, appropriate, balanced and promote customer choice:

WHEREAS, utilities have a duty to prudently, thoroughly and aggressively mitigate their stranded costs:

WHEREAS, utilities should not be allowed to securitize generation or other tangible costs stranded after the implementation of competition;

WHEREAS, securitization is one of several options that allows a utility to refinance its debt on certain Intangible assets that all net savings resulting from this process should be passed on to the ratepayer:

WHEREAS, securitization should, in no way, interfere with or foreclose other mechanisms that could be used to refinance debt associated with stranded costs;

WHEREAS, securitization is not a solution to stranded cost recovery, but is a method to reduce the burden of such costs on shareholders and will maintain reasonable financial health of the affected utilities:

WHEREAS, securitization funds shall not be employed to directly or indirectly underwrite new or ongoing regulated or unregulated business ventures;

WHEREAS, stranded costs associated with tangible utility assets, such as fossil generating plants, are already secured by the asset and should not be securitized, in part or in whole, by a qualified rate order issued by the [INSERT APPROPRIATE REGULATORY BODY): now

THEREFORE BE IT RESOLVED, that the (INSERT STATE) authorizes the (INSERT APPROPRIATE REGULATORY Body to issue a rate order that allows utilities to recover stranded costs incurred as a result of certain intangible assets and liabilities and that the rate order is irrevocable in so far as it provides net savings to the ratepayers of the (INSERT STATE) and will aid in expediting the transition to a competitive market in the electric industry.