{"data":{"id":"us-ky/krs-278.676","jurisdiction":"us-ky","citation":"KRS 278.676","heading":"Financing order -- Prior issuance of bonds -- Conditions on securitized","body":"property.\n(1) A financing order issued by the commission, after a hearing, to an electric utility\nshall include:\n(a) The amount of securitized costs to be financed using securitized bonds and a\nfinding that recovery of those costs is fair, just, and reasonable and in the\npublic interest;\n(b) A description and estimate of the amount of financing costs that may be\nrecovered through securitized surcharges and the period over which\nsecuritized costs and financing costs may be recovered;\n(c) A finding that the proposed issuance of securitized bonds and the imposition\nand collection of a securitized surcharge are fair, just, and reasonable, in the\npublic interest, and expected to provide quantifiable net present value benefits\nto customers as compared to recovery of the components of securitized costs\nthat would have been incurred absent the issuance of securitized bonds;\n(d) A finding that the proposed structuring and pricing of the securitized bonds\nare reasonably expected to result in the lowest securitized surcharges\nconsistent with market conditions at the time the securitized bonds are priced\nunder the terms of the financing order;\n(e) A requirement that, for so long as the s ecuritized bonds are outstanding and\nuntil all financing costs have been paid in full, the imposition and collection\nof securitized surcharges authorized under a financing order shall be\nnonbypassable and paid by all existing and future retail customers re ceiving\nelectric service from the electric utility, its successors, or assignees under\ncommission-approved rate schedules even if a retail customer elects to\npurchase electricity from an alternative electric supplier following a\nfundamental change in regulation of public utilities in the Commonwealth;\n(f) A formula-based true-up mechanism for making:\n1. At least annually, expeditious periodic adjustments in the securitized\nsurcharges that customers are required to pay pursuant to the financing\norder; and\n2. Any adjustments that are necessary to correct for any over collection or\nunder collection of the surcharges and to ensure the timely payment of\nsecuritized bonds and financing costs and other required amounts and\nsurcharges payable under the securitized bonds;\n(g) A requirement that the securitized property:\n1. Is created or shall be created in favor of an electric utility, its successors,\nor assignees; and\n2. Shall be used to pay or secure securitized bonds and approved financing\ncosts;\n(h) A statement regarding the degree of flexibility to be afforded to the electric\nutility in establishing:\n1. The terms and conditions of the securitized bonds, including but not\nlimited to repayment schedules, expected interest rates, and other\nfinancing costs;\n2. Subject to the issuance advice letter process, the terms and conditions\nfor the securitized bonds to accommodate changes in market conditions,\nincluding repayment schedules, interest rates, financing costs, collateral\nrequirements, required debt service, and other reserves; and\n3. At its option, the issuance or a series of issuances of securitized bonds\nand correlated assignments, sales, pledges, or other transfers of\nsecuritized property;\n(i) A requirement as to how securitized surcharges will be allocated amon g retail\ncustomer classes;\n(j) A requirement that, after the final terms of a proposed issuance of securitized\nbonds has been established but before the issuance of the securitized bonds,\nthe electric utility shall determine the initial securitized surchar ge in the\nmanner required by and consistent with the financing order. The initial\nsecuritized surcharge shall be final and effective upon the issuance of the\nsecuritized bonds, with the surcharge to be reflected on a compliance tariff\nand filing bearing the surcharge and the calculation thereof;\n(k) A method of:\n1. Tracing funds collected as securitized surcharges or other proceeds of\nsecuritized property and authorization to change the method of tracing\nfunds from time to time in accordance with the financ ing documents;\nand\n2. Determining that the method, as amended from time to time, shall be\nused for tracing the funds and the identifiable cash proceeds of any\nsecuritized property subject to a financing order under applicable law;\n(l) A statement specifyin g the details of a future ratemaking process used to\nreconcile any differences between the actual securitized costs financed by the\nelectric utility, its successor, or assignee provided that any reconciliation shall\nnot affect the amount of securitized bon ds or the associated securitized\nsurcharges paid by customers;\n(m) A procedure that shall allow the electric utility to earn a return at its weighted\naverage cost of capital authorized by the commission in the electric utility's\nrate proceedings, and subje ct to changes in interest rates, any moneys\nadvanced by the electric utility to fund reserves, if any, or capital accounts\nestablished under the terms of any indenture, ancillary agreement, or other\nfinancing documents pertaining to the securitized bonds;\n(n) An outside date, which shall not be earlier than one (1) year after the date the\nfinancing order is no longer subject to appeal, when the authority to issue\nsecuritized bonds granted in the financing order expires; and\n(o) A statement that accumulated deferred income taxes and regulatory liabilities\nfor excess deferred income taxes used in calculating retired generation costs\nshall be excluded from the rate base in future general rate cases and that no\namortization of those excess deferred income taxes shall be reflected in future\ngeneral rate cases.\n(2) Notwithstanding any provision of KRS 278.670 to 278.696 and 65.114 to the\ncontrary, in considering whether to find the proposed issuance of securitized bonds\nand the imposition and collection of a securi tized charge to be fair, just, and\nreasonable and in the public interest, the commission may consider previous\ninstances where the commission has issued a financing order to the applicant and\nthe applicant has previously issued securitized bonds.\n(3) A financing order issued to an electric utility may provide that the creation of the\nelectric utility's securitized property is conditioned upon, and simultaneous with,\nthe:\n(a) Sale or other transfer of the securitized property to an assignee; and\n(b) Pledge of the securitized property to secure securitized bonds.","path":["KRS Chapter 278"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53803","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:53:31Z","sha256":"8af4d4cc98b197346d6be7f7bd98fcf6bbadb0840d4ec58192b0224d72b9ef6d","source_id":"us-ky","stale":false,"prev":"us-ky/krs-278.674","next":"us-ky/krs-278.678"},"notice":"GroundRules: Original legal text. Not legal advice."}