Vermont § 209a - Qualified cost mitigation charge orders

§ 209a. Qualified cost mitigation charge orders

• (a) Definitions. As used in this section: (1) “Electric utility” means any entity engaged in the distribution of electricity directly
  to the consumers within the State of Vermont. (2) “Issuer” means any entity approved in a qualified cost mitigation charge order to
  issue mitigation bonds; “issuer” may include the Vermont qualifying facility contract
  mitigation authority or the Vermont Public Power Supply Authority. (3) “Mitigation bond” means a note, bond, debenture, or any other evidence of indebtedness
  or certificate evidencing an interest in any evidence of indebtedness authorized by
  a qualified cost mitigation charge order. (4) “Mitigation charge” means any volumetric charge imposed by the Commission pursuant
  to a qualified cost mitigation charge order. (5) “Participating qualifying facility” means any facility described in subdivision 209(a)(8) of this title. (6) “Power purchase arrangement” means a contract for sale of electricity between a participating
  qualifying facility with a capacity of 900 kilowatts or greater and a Rule 4.100 purchasing
  agent, approved by the Public Service Board on or before January 1, 1995. (7) “Qualified cost mitigation charge order” means an order of the Commission that complies
  with the requirements of this section. (8) “Rule 4.100” means Public Utility Commission Rule 4.100 or any amended or successor
  rule regarding small power production or cogeneration. (9) “Rule 4.100 purchasing agent” means an entity designated by the Commission to perform
  the power and financial accounting requirements of Rule 4.100. (10) “Savings” means the total benefit to electric ratepayers resulting from a qualified
  cost mitigation charge order, including specifically those benefits resulting from
  modifications of purchase power arrangements and benefits attributable to the availability
  of a qualified cost mitigation charge order to pay for those modifications, offset
  by the costs incurred to obtain the qualified cost mitigation charge order and purchase
  power arrangement modifications. (b) General. Upon an application submitted by the Rule 4.100 purchasing agent or other person or
  entity, and subject to the terms and conditions of this section, the Commission may
  issue within five years following July 1, 2002 one or more qualified cost mitigation
  charge orders. A qualified cost mitigation charge order shall impose mitigation charges
  payable to the issuer of mitigation bonds in order to finance the costs associated
  with mitigating one or more power purchase arrangements. (c) Qualified cost mitigation charge order provisions. A qualified cost mitigation order shall contain, at a minimum, all of the following: (1) A finding that a qualified cost mitigation charge order will promote the general good
  within the State of Vermont. (2) A uniform mitigation charge imposed for the benefit of the issuer on the consumption
  of all electricity within the State of Vermont to the extent such electricity is conveyed
  to consumers by electric utilities, and a requirement that such charge be reflected
  on ratepayer bills in a manner that clearly reflects both the amount of the charge
  and the reduction in power costs resulting from the charge. (3) A specific mechanism for automatic adjustment of the mitigation charge, at least annually,
  in accordance with electricity consumption forecasts prepared by the Rule 4.100 purchasing
  agent or other entity approved by the Commission, so that the mitigation charge is
  imposed at all levels designed to provide revenues sufficient to make timely payments
  of accrued interest and scheduled principal on all mitigation bonds, as well as ongoing
  administrative expenses, credit enhancement fees, and scheduled overcollateralization
  amounts with respect to such mitigation bonds. This automatic adjustment may implement
  a system in which the mitigation charge is initially paid in full by the electric
  utilities, and uncollectable amounts plus reasonable carrying costs are reimbursed
  to the utilities as part of the adjustment. (4) The covenant and pledge of the State of Vermont set forth in subsection (h) of this
  section. (d) Approval by the Commission. The Commission may approve within five years following July 1, 2002 a qualified cost
  mitigation charge order for buydowns or other appropriate modifications, except buyouts,
  of power purchase arrangements upon finding that such an order will promote the general
  good within the State of Vermont. To determine that such an order will promote the
  general good, the Commission shall find that: (1) significant, quantifiable savings are substantially likely to result from the buydowns
  and other appropriate modification of purchase power arrangements and the amount of
  such savings; (2) such savings will be passed on to electric ratepayers pursuant to subsection (m) of
  this section; (3) facilities whose power purchase arrangements are the subject of the buydowns or other
  appropriate modifications will be reasonably assured to continue to operate for the
  life of their power purchase arrangements. (e) Additional factors. The Commission shall also give consideration to the following factors: (1) the feasibility of any prospective alternative methods of achieving ratepayer savings; (2) any impact of the transaction on existing or prospective opportunities for electric
  consumers to exercise retail choice; (3) the impact of the transaction on renewable energy resources; (4) the specific regulatory and accounting treatment that will be required of the purchasing
  agent, the issuer, the participating qualifying facilities, and the participating
  electric utilities; and (5) such other related factors as the Commission deems appropriate. (f) Collections and remittances. Mitigation charges and the right to receive mitigation charges shall be property of
  the issuer. The right to receive mitigation charges shall constitute a present interest
  in property. If requested by the issuer or any successor that is entitled to receive
  mitigation charges, mitigation charges shall be collected by each participating electric
  utility for the benefit of the issuer or the issuer’s transferee. Mitigation charges
  collected by an electric utility shall be remitted by such electric utility to the
  issuer or its designee within one month after receipt thereof by such electric utility,
  or such shorter period as shall be designated by the Commission. Upon 30 days’ written
  notice to an electric utility, the issuer or any successor entitled to receive mitigation
  charges at any time and for any reason may direct that the electric utility shall
  cease to collect mitigation charges. Any electric utility in possession of mitigation
  charges shall have no right, title, or interest in such collections, but rather shall
  hold such collections in trust for the benefit of the issuer. (g) Nonbypassable. Mitigation charges shall be separately stated on consumers’ retail electric bills
  and shall be payable regardless of any change in structure or identity of the electric
  utility and regardless of any change in ownership or operation of any electric generation,
  transmission, or distribution facilities. If a consumer pays only part of its electric
  bill for any period, a pro rata portion of the payment may be applied to payment of
  the mitigation charge for the period. (h) State pledge. The State of Vermont covenants and pledges for the benefit of the issuer, any assignee
  of the issuer, and the owners of mitigation bonds that neither the mitigation charge
  nor the automatic adjustment mechanism set forth in subsection (e) of this section
  shall be altered, revoked, amended, postponed, impaired, limited, or terminated by
  the State of Vermont, by the Commission, or by any other agency or instrumentality
  of the State, absent adequate provision for the protection of the issuer, any designee
  of the issuer, and the owners of the mitigation bonds. The Commission, as agent of
  the State of Vermont, is authorized and directed to deliver written confirmation of
  this covenant and pledge in connection with the issuance of all mitigation bonds. (i) Bankruptcy. A qualified cost mitigation charge order shall remain in full force and effect, notwithstanding
  any bankruptcy, reorganization, or other insolvency proceeding with respect to: (1) any electric utility or successor or assign of any electric utility; or (2) the Rule 4.100 purchasing agent or any successor or assign of the Rule 4.100 purchasing
  agent. (j) Assignment of mitigation charge revenues. The issuer may grant a security interest in, or otherwise assign mitigation charges
  and the right to receive mitigation charges in connection with, the issuance of mitigation
  bonds. Such grant or assignment shall be valid and enforceable without delivery or
  filing. (k) Hearing procedure. A qualified cost mitigation charge order shall be issued only upon hearing, following
  due notice to all electric utilities, the owners of all participating qualifying facilities,
  the Department, and the Rule 4.100 purchasing agent. A qualified cost mitigation charge
  order issued under this section shall involve all of the State’s electric utilities,
  absent a showing of good cause by any such utility as to why the requirements and
  customer benefits resulting from a qualified cost mitigation charge order should not
  be applicable to it. (l) Pass-through of savings. A qualified cost mitigation charge order shall contain measures to ensure that savings
  resulting from that order are passed through to the benefit of electric ratepayers.
  Such measures may include reduction in utility regulatory assets or creation of regulatory
  liabilities, adjustments to depreciation or amortization schedules, or the filing
  of revised tariffs reflecting such savings, which tariffs may be ordered by the Commission
  without regard to the remaining provisions of this title. (m) In establishing the appraisal value for the assessment of property taxes on the facilities
  whose power purchase arrangements are the subject of the buydowns or other appropriate
  modifications, the municipality may include the amount of any cost mitigation payments
  made under the authority of this section. For municipalities using an income-based
  valuation method, the value of any lump sum mitigation payment shall be amortized
  or prorated over the period of the cost mitigation contract. (n) Report to General Assembly. Upon approval of a cost mitigation order, the Commission shall submit a report to
  the General Assembly containing the order and detailed information on the findings
  of the Commission, including the risks, savings, and costs likely to result from the
  buydowns and other appropriate modifications of purchase power arrangements contained
  in the order. (Added 2001, No. 145 (Adj. Sess.), § 3; amended 2023, No. 85 (Adj. Sess.), § 365, eff. July 1, 2024.)