Appearing on CAPITOL CALL Powered by Phillips 66 on Friday, State Senator Julie Daniels, State Representative Judd Strom and State Representative Wendi Stearman, a number of topics were touched on but the one that will likely resonate with most revolved around two pieces of legislation that will authorize utilities, municipal power authorities, hospitals, school districts and other entities to securitize their gas-bill debts related to the historic February winter storm.

 

Securitization refers to the financial practice of pooling contractual debt and selling it on a secondary market. In this instance, the process will play out as follows:

 

 

Our panel agreed that utilizing the ODFA bonding authority will allow indebted entities to receive a lower interest rate on their loans, which will save ratepayers a significant amount of money.

 

The total amount of debt that could be securitized is more than $4.5 billion and that two pieces of legislation will be revealed, one authorizing regulated power and gas utilities to securitize their debt and another authorizing unregulated municipal power authorities, some nonprofit hospitals and even some school districts to do so.

 

In a typical February, residential natural gas customers would pay about $100, or about $3.37 per unit. If the February storm’s historic spike in wholesale gas prices were passed “through traditional regulatory treatment” under a “fuel adjustment clause,” ratepayers would have seen an average bill of $1,967, or $92 per unit. Bills of that nature would go on for up to seven months.

 

Under the securitization proposal announced Monday, the average ratepayer bill would climb to about $158, or $5.92 per unit.

 

The impact on many local power authorities would be even more significant if securitization were not allowed.

 

If the bills are ultimately passed by the Legislature and signed into law by Gov. Kevin Stitt, bonds could be issued before the end of the fiscal year.