ORS 757.461: Financing of rate recovery expenditures through rate recovery bonds; application and hearing process; financing order; collection of rate recovery charges.

(1)(a) A public utility may apply to the Public Utility Commission for a financing order designating all or part of rate recovery expenditures as bondable rate recovery expenditures, for the purpose of financing or refinancing the designated expenditures under ORS 757.415 (1)(f). (b) After notice and an opportunity for a hearing, the commission may approve an application if the commission finds that: (A) The rate recovery expenditures included in the application are reasonable and prudent; (B) Financing or refinancing the rate recovery expenditures through the issuance of rate recovery bonds is likely to be more favorable to public utility customers for the recovery of rate recovery expenditures as compared to other methods; and (C) Bonds, notes, certificates of beneficial interests in a trust and other evidences of indebtedness or ownership issued pursuant to the approval are reasonably likely to receive a determination of, at a minimum, investment grade by credit rating agencies. (c) The commission shall issue an order within 180 days of an application approving or denying the application. If the commission approves the application, the commission shall issue a financing order. (2)(a) A financing order issued under this section shall specify the highest amount of rate recovery expenditures that qualify as bondable rate recovery expenditures. (b) In specifying the amount for rate recovery expenditures associated with an event described in ORS 757.457 (11)(a), net of appropriate adjustments as determined by the commission to be reasonable, the commission may include, but is not limited to including, the following rate recovery expenditures: (A) Capital and operating costs incurred or to be incurred as a result of the event; (B) Lost revenue associated with the event; (C) Costs and expenses that may be recovered at a later time from third parties or insurers and returned to public utility customers through a separate rate proceeding consistent with cost causation and rate design principles and statutory or regulatory requirements; and (D) Carrying costs or charges. (3) A financing order issued under this section must include the following provisions: (a) Confirmation of the existence of recoverable rate recovery expenditures and authorization to recover rate recovery expenditures and associated financing costs, including the maximum principal amount of bondable rate recovery expenditures and financing costs that may be recovered through securitization; (b) Authorization for the creation of rate recovery assets and imposition of rate recovery charges that allow for the recovery of rate recovery expenditures, as determined by the commission, and associated financing costs; (c) A requirement that the rate recovery charges authorized by the financing order are ongoing and may not be avoided by a public utility customer, as described under subsection (4) of this section, until all principal, interest, premium and other amounts due on the rate recovery bonds and financing costs have been paid in full; (d) A methodology for: (A) Allocating rate recovery charges between the different classes of public utility customers, which may include not allocating rate recovery charges to one or more classes of public utility customers, that is consistent with cost causation and rate design principles and statutory or regulatory requirements; and (B) Adjusting rate recovery charges as necessary to ensure timely payment on, and payment in full of, the rate recovery bonds and associated financing costs or in response to changes to applicable customers, service territories or collection rates; (e) Authorization for the public utility to issue one or more series of rate recovery bonds with flexibility for the public utility to establish the terms and conditions of the rate recovery bonds, including repayment schedules, initial interest rates and initial financing costs; (f) Authorization to assign rate recovery assets to a financing subsidiary and grant security interests in the rate recovery assets to secured parties without limiting the rights of subsequent assignees; (g) Authorization for the bond documentation and ancillary documents related to the rate recovery bonds, including servicing arrangements for the rate recovery charges, without requiring the authorization to be on the final forms of the documents; (h) Authorization for the reasonable opportunity for the public utility to earn a return, at the cost of capital authorized in the public utility’s most recent general rate case prior to the date of the financing order, on any moneys advanced by the public utility to fund advances, reserves or capital accounts established under the terms of any indenture, ancillary agreement or financing documents related to the rate recovery bonds; (i) A finding that the proposed issuance of rate recovery bonds and the imposition of rate recovery charges is expected to provide the lowest possible reasonable and prudent cost on a net present value basis to public utility customers for recovery of the rate recovery expenditures as compared to the public utility’s weighted average cost of capital or other methods of financing and recovery; (j) A date, not earlier than one year from the date that the financing order becomes final, on which the authority to issue rate recovery bonds granted in the financing order expires; (k) A requirement that the public utility notify the commission if the public utility recovers costs and expenses from a third party or insurer; and (L) Any other conditions that the commission finds appropriate and that are consistent with this section. (4) Rate recovery charges authorized by a financing order shall be collected through the rates or charges paid by, and may not be avoided by, the public utility customers located within the public utility’s allocated service territory, as the territory existed on the date of the financing order or, if the financing order provides, as such service territory may be expanded, even if: (a) The public utility customer receives electricity or natural gas, electricity or natural gas services or ancillary services from a successor or assignee of the public utility; (b) The public utility customer elects to receive electricity or natural gas, electricity or natural gas services or ancillary services from another public utility, utility provider or service provider in the service territory; or (c) After the date of issuance of the financing order, the public utility customer changes customer class. (5)(a) Rate recovery assets, including rate recovery charges, and the rights of public utilities, assignees, bondholders and financing parties, established by a financing order issued under this section, are irrevocable and unchangeable, except as provided in the financing order, until all principal, interest, premium, interest and amounts due on the rate recovery bonds and financing costs are paid in full. (b) Until all principal, interest, premium, interest and amounts due on the rate recovery bonds and financing costs are paid in full, the commission, except as provided in the financing order, the State of Oregon and a public body, as defined in ORS 174.109, may not: (A) Revalue the rate recovery expenditures or financing costs for ratemaking purposes; (B) Determine that the rates or revenues authorized under the financing order are unjust or unreasonable; (C) Reduce, alter or impair the rate recovery assets, rate recovery charges or the collection of the rate recovery charges, or rate recovery bonds or the security for the rate recovery bonds; (D) Rescind, suspend, amend or impair the financing order; or (E) When setting other rates or charges for the public utility or taking other actions pursuant to the commission’s authority, consider the rate recovery bonds as debt of the public utility, the rate recovery assets to be revenue for the public utility or the rate recovery expenditures to be costs of the public utility. (6) If the commission determines that financing certain rate recovery expenditures through the issuance of rate recovery bonds would potentially result in benefits to public utility customers, the commission may identify those rate recovery expenditures and direct a public utility to investigate and report to the commission on the costs, benefits and risks of financing those rate recovery expenditures. The report may include an analysis of the following: (a) Any future need for the use of rate recovery bonds; (b) The ability of the public utility to raise capital; (c) Intergenerational equity; (d) The percentage of customers’ utility bills that are currently dedicated to rate recovery bond payments; and (e) The percentage of customers’ utility bills that would need to be dedicated to rate recovery bond payments to finance the rate recovery expenditures analyzed in the report. (7) The commission may not require a public utility to: (a) Apply to the commission for a financing order designating all or part of rate recovery expenditures as bondable rate recovery expenditures; or (b) Finance or refinance rate recovery expenditures that the commission has designated as bondable rate recovery expenditures. (8) Jurisdiction for review of a financing order issued under this section shall be as provided for orders in contested cases pursuant to ORS 183.482, except that a petition for rehearing or reconsideration is not allowed. If a petition is not filed with the Court of Appeals within 60 days following the date of issuance of a financing order, the order becomes a final and irrevocable action of the commission and the State of Oregon and is not subject to administrative or judicial challenge. (9) In determining whether an event as described under ORS 757.457 (11)(f) qualifies as a rate recovery expenditure, the commission shall take into consideration the following factors: (a) The cost and availability of wholesale power or natural gas during the event; (b) The applicability of any regional reliability assistance programs; and (c) Any issuance of a declaration related to energy reliability by a regional balancing authority. [2023 c.529 §4 (enacted in lieu of 757.455); 2025 c.503 §10]