Oklahoma § 74-9073 - Determination of extreme purchase or extraordinary costs

§ 74-9073. Determination of extreme purchase or extraordinary costs

A. The Oklahoma Corporation Commission may determine upon

receiving an application or in any proceeding where the issue is

properly brought before it that extreme purchase costs,

extraordinary costs or both, requested for recovery by a regulated

utility are subject to this act and may be mitigated through

securitization in order to reduce the utility bill impact on

customers. For the purposes set forth in this section, the utility

shall:

1. Provide the known extreme purchase and extraordinary costs,

and estimates of any extreme purchase or extraordinary costs not yet

finalized that are being requested for recovery through

securitization;

2. Demonstrate the utility bill impacts of securitization and

the degree of savings customers would experience related to issuing

ratepayer-backed bonds in comparison with traditional utility

financing; and

3. Facilitate a timely audit of all costs requested for

recovery prior to the utility being authorized to recover costs

through the issuance of a financing order.

B. The Commission may develop forms and procedures to receive

and review applications for the establishment of qualified costs;

provided, the application shall require but not be limited to the

amount of extreme purchase costs and extraordinary costs requested

for recovery and any other information or documentation required by

the Commission to effectuate this act.

Oklahoma Statutes - Title 74. State Government

C. The Commission shall consider the following factors when

determining whether extreme purchase costs or extraordinary costs

should be mitigated by the issuance of ratepayer-backed bonds:

1. Substantial revenue requirement savings that may be incurred

to the benefit of customers by relying on lower carrying charges

related to ratepayer-backed bonds rather than by conventional

financing obtained by the regulated utility;

2. Customer utility bill impact that may be mitigated by

mandating a longer amortization period for recovery than would

otherwise be practicable or feasible for the regulated utility; and

3. The issuance of ratepayer-backed bonds that may be completed

at a sufficiently low cost such that customer savings are not

exhausted or offset.

D. 1. The Commission may engage financial advisors or other

consultants as may be necessary to assist in the evaluation required

pursuant to subsection C of this section. Expenses incurred for

those purposes shall be recoverable as administrative expenses of

the Oklahoma Development Finance Authority through the issuance of

ratepayer-backed bonds pursuant to Section 8 of this act.

2. The provisions of the Oklahoma Central Purchasing Act,

Section 85.1 et seq. of Title 74 of the Oklahoma Statutes, shall not

be applicable to the engagement authorized by paragraph 1 of this

subsection but shall be subject to review by the Deputy Treasurer

for Policy and Debt Management.

E. In determining the amount of extreme purchase costs and

extraordinary costs to be mitigated through securitization, the

Commission shall determine that the amounts incurred would otherwise

be recoverable from customers as fair, just and reasonable expenses

and prudently incurred.

F. Extreme purchase costs and extraordinary costs determined by

the Commission to be subject to this act and to be mitigated by

issuing ratepayer-backed bonds shall include carrying costs at an

appropriate rate determined by the Commission as set forth in a

financing order. The carrying costs shall begin accruing at a time

determined by the Commission in the financing order and continue

until the date that ratepayer-backed bonds are issued, or the costs

are otherwise recovered.

G. To the extent the regulated utility receives insurance

proceeds, governmental grants or any other source of funding that

compensates it for extreme purchase costs or extraordinary costs

subject to securitization, or if actual amounts are determined to be

lower than estimated amounts, those amounts shall be used to reduce

the extreme purchase costs or extraordinary costs of the utility

recoverable from customers. The Commission shall direct whether the

funds shall be provided directly to the Authority to offset amounts

securitized or whether they shall be held as a separate regulatory

liability offsetting rate base or returned to customers through some

Oklahoma Statutes - Title 74. State Government

other appropriate regulatory mechanism. The amounts so received

shall accrue carrying charges at a rate equivalent to the rate

determined pursuant to subsection F of this section if they are

received before ratepayer-backed bonds are issued. If received

after the issuance of ratepayer-backed bonds, the amounts shall

accrue carrying charges at a rate determined by the Commission.

Added by Laws 2021, c. 204, § 4, emerg. eff. April 23, 2021.