KRS 278.680: Issuance of securitized bonds by electric utility -- Subsequent financing

order -- Limits on commission -- Discretion of electric utility.

(1) Subsequent to the issuance advice letter, and unless an earlier date is specified in

the financing order, the electric utility may proceed with the issuance of the

securitized bonds unless, prior to noon on the fourth business day after the pricing

of the securitized bonds, the commission issues a disapproval order:

(a) Directing that the securitized bonds, as proposed, not be issued; and

(b) Stating the basis for the disapproval.

(2) At the request of an electric utility, the commission may open a proceeding and

issue a subsequent financing order that provides for refinancing, retiring, or

refunding sec uritized bonds issued pursuant to the original financing order if the

commission finds that the subsequent financing order satisfies all the criteria

specified in KRS 278.670 to 278.696 and 65.114. Effective upon retirement of the

refunded securitized bond s and the issuance of new securitized bonds, the electric

utility shall adjust and the commission shall approve the related securitized

surcharges accordingly.

(3) A financing order remains in effect and securitized property under the financing

order continues to exist until:

(a) Securitized bonds issued pursuant to the financing order have been paid in full

or defeased; and

(b) In each case, all commission -approved financing costs of the securitized

bonds have been recovered in full.

(4) A financing order issued to an electric utility remains in effect and unabated

notwithstanding the reorganization, bankruptcy, or other insolvency proceedings,

merger, or sale of the electric utility or its successors or assignees.

(5) The commission shall not, in exercisin g its powers and carrying out its duties

regarding any matter within its authority:

(a) Consider the securitized bonds issued pursuant to a financing order to be the

debt of the electric utility other than for federal and state income tax purposes;

(b) Consider the securitized surcharges paid under the financing order to be the

revenue of the electric utility for any purpose;

(c) Consider the securitized costs or financing costs specified in the financing

order to be the costs of the electric utility;

(d) Consider the presence of securitized assets as impacting the relative risk of the

utility as it relates to determining an appropriate return on equity for

ratemaking purposes; or

(e) Determine any action taken by an electric utility which is consistent w ith the

financing order to be unjust or unreasonable.

(6) No electric utility shall be:

(a) Required to apply for a financing order; or

(b) If not under or applying for a financing order, otherwise be required to utilize

any of the provisions under KRS 278.670 to 278.696 and 65.114.

(7) An electric utility's decision not to apply for a financing order shall not be

admissible, utilized, or relied on by the commission in any commission proceeding

respecting the electric utility's rates or its accounting. The commission shall not

directly or indirectly:

(a) Order or require an electric utility to use securitized bonds to recover deferred

costs for a regulatory asset;

(b) Consider the debt reflected by the securitized bonds in establishing the

electric utility's capital structure used to determine any regulatory matter,

including the electric utility's revenue requirement used to set its rates; and

(c) Consider the existence of securitized bonds or the potential use of securitized

bond financing proceeds in determining the electric utility's authorized rate of

return used to determine the electric utility's revenue requirement used to

establish its rates.

(8) After the issuance of a financing order, the electric utility retains sole discretion

regarding the issuan ce of the securitized bonds, including the right to defer or

postpone the sale, assignment, transfer, or issuance. Nothing shall prevent the

electric utility from abandoning the issuance of securitized bonds under the

financing order by filing with the com mission a statement of abandonment and the

reasons therefor.