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Evergreen Ledger

2SHB 1990

Signed

House

Utility disaster costs

Authorizing utility companies to securitize certain costs related to disasters or emergencies to lower costs to customers.

How does a bill become law?
  1. Introduced: The bill is filed and assigned a number.
  2. Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
  3. Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
  4. Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
  5. Governor: The Governor reviews the bill and decides whether to sign or veto it.
  6. Signed: The bill has been signed into law.
Introduced: February 26, 2025
Last Action: May 17, 2025
Status: C 310 L 25
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AI Analysis

This analysis was generated by AI and may contain errors. It is not legal advice. Always refer to the official bill text for authoritative information.
People & CommunitiesPeople-leaningCorporate & Wealthy Interests

This bill allows Washington utilities to recover certain disaster-related or conservation-related costs through securitization—issuing special bonds backed by customer charges—instead of traditional rate increases. The goal is to lower overall financing costs for customers. The bill creates new legal protections for these bonds and the charges used to repay them, and gives the Utilities and Transportation Commission explicit authority to approve and oversee the process.

  • Allows electrical, gas, and water utilities to seek approval from the Washington Utilities and Transportation Commission to recover certain disaster- or conservation-related costs through securitization—issuing special bonds backed by customer charges.
  • Defines new terms like 'bondable rate recovery expenditures', which include costs from federally or state-declared disasters (e.g., wildfires, floods, pandemics) and energy/water conservation measures, but excludes fines or penalties.
  • Creates 'rate recovery assets'—the legal right to collect special customer charges—and gives them strong legal protections, including irrevocability until bonds are paid in full.
  • Establishes strict rules for securitization financing, including requirements that the Commission find the approach is more favorable to customers than alternative recovery methods and that bonds likely receive investment-grade credit ratings.
  • Grants utilities and their assignees strong legal rights to collect charges, with protections against state or local interference, and ensures bondholders have priority claims on rate recovery proceeds—even in bankruptcy.
  • Clarifies that this process does not create a state debt or obligation, and that the state does not guarantee the bonds or related obligations.

Who is affected

  • Utility customers — Customers of electrical, gas, or water utilities may see changes in how disaster-related or conservation-related costs are recovered through their utility bills—potentially spreading costs over time via special charges rather than one-time rate increases.
  • Electrical, gas, and water utilities — Utility companies gain a new tool to recover certain disaster or conservation costs by issuing special bonds backed by customer charges, potentially lowering overall financing costs and reducing rate volatility.
  • Bond investors and financial intermediaries — Investors and financial institutions may gain new opportunities to buy rate recovery bonds—special debt instruments secured by utility customer charges—backed by state law protections.
  • Washington Utilities and Transportation Commission — The Washington Utilities and Transportation Commission gains explicit authority to approve securitization plans for disaster and conservation costs, including setting terms, approving bond issuance, and ensuring customer protections.
Effective: March 6, 2025Fiscal impact: The bill does not require new state spending or create a direct fiscal impact on the state budget; however, it may reduce utility rate increases for customers by lowering the cost of financing disaster or conservation-related expenses through securitization. The Utilities and Transportation Commission may incur modest administrative costs to oversee new securitization processes.
Model: Intel/Qwen3-Coder-Next-int4-AutoRoundGenerated: Mar 20, 2026 at 2:25 AM

Pro/Con Analysis

Stronger case for benefits

Potential Benefits (5)

  • The bill allows utilities to recover disaster- and conservation-related costs through securitization—issuing bonds backed by customer charges—potentially lowering overall financing costs and spreading rate increases over time. This could reduce the magnitude of rate spikes after disasters (e.g., wildfires), benefiting households and small businesses by avoiding large one-time rate hikes.

    FinancialPeopleRef: Sec. 4(2)(ii); Sec. 4(3)(i); Sec. 1

  • The bill ensures that rate recovery charges are irrevocable and may not be avoided by customers—even if they change classes, move out, or switch providers—until bonds are fully repaid. This strengthens the financial viability of securitization, enabling utilities to raise capital more cheaply and respond more quickly to disasters without waiting for full rate case proceedings.

    Public SafetyPeopleRef: Sec. 4(3)(b); Sec. 4(4); Sec. 6(2)(c)

  • The bill explicitly includes energy and water conservation measures as bondable expenditures, and requires the commission to find that securitization is more favorable to customers than alternatives. This creates a financial incentive for utilities to invest in efficiency programs (e.g., weatherization, appliance rebates), potentially lowering long-term energy burdens for low- and middle-income households.

    EnvironmentPeopleRef: Sec. 4(3)(l); Sec. 4(2)(iii); Sec. 1

  • The bill creates a clear, state-guaranteed legal framework for securitization—including true sale treatment, perfected security interests, and bankruptcy remoteness—that reduces investor risk and lowers borrowing costs. This may benefit small and medium-sized utilities (e.g., PUDs, cooperatives) that lack access to cheap capital, enabling them to finance disaster resilience or conservation upgrades without overburdening customers in rate cases.

    Business & EmploymentPeopleRef: Sec. 4(3)(f); Sec. 6(2)(a); Sec. 6(3)(a)-(e)

  • The bill allows utilities to recover lost revenue associated with disasters (e.g., customers displaced by wildfires), which could help stabilize utility finances and prevent broader service disruptions. If structured with affordability safeguards, this could prevent cascading disconnections and support housing stability in disaster-affected areas.

    HousingLean peopleRef: Sec. 4(2)(iv); Sec. 4(3)(c); Sec. 1
Potential Concerns (5)

  • The bill creates strong legal protections for rate recovery bonds and charges, including irrevocability until paid in full and priority claims in bankruptcy. This enhances investor confidence and lowers financing costs, but may reduce the commission’s ability to adjust rates in response to emergencies or changing conditions, potentially limiting its flexibility to protect vulnerable customers during crises.

    Public SafetyRef: Sec. 4(5)(a)-(e); Sec. 3(2)(b)(ii)

  • The bill requires the commission to find that securitization is *more favorable* to customers than alternative recovery methods, but does not mandate quantitative analysis or independent cost-benefit modeling. This creates a procedural safeguard, but the standard is subjective and may not reliably ensure net savings for customers, especially given utilities’ incentive to favor securitization for lower upfront rate impacts.

    FinancialRef: Sec. 4(2)(a); Sec. 4(3)(i)

  • The bill authorizes utilities to earn a return on capital advanced to fund reserves or capital accounts related to securitization, at the cost of capital from their most recent general rate case. This protects utility profitability but may increase overall customer costs if the utility’s authorized return exceeds the actual cost of capital for the securitized debt, especially if the utility is already earning above-cost returns in its base rate case.

    Business & EmploymentRef: Sec. 4(3)(e); Sec. 6(2)(a)

  • The bill allows utilities to allocate rate recovery charges among customer classes—including the option to allocate *none* to certain classes—subject to cost causation principles. While this provides flexibility, it may lead to regressive outcomes if utilities shift recovery of disaster/conservation costs disproportionately to low-income renters (who cannot opt out or influence service choices) while exempting high-income homeowners or commercial users.

    HousingRef: Sec. 4(3)(d); Sec. 4(4)

  • The bill prohibits the state, local governments, and agencies from impairing rate recovery assets, bonds, or charges—including by altering statutes or commission orders—until bonds are paid in full. This limits future legislatures and commissions from adjusting rate structures or implementing progressive rate designs (e.g., tiered rates for equity), potentially entrenching regressive cost-recovery mechanisms long after the original disaster or conservation program ends.

    Local GovernmentRef: Sec. 4(5)(a)-(e); Sec. 3(2)(b)(ii)

Who Is Most Affected

Low- and middle-income utility customersMixed Impact

Low- and middle-income households—especially renters—may face higher utility bills spread over longer periods, with limited ability to avoid or dispute charges. Regressive allocation of recovery costs could disproportionately burden these groups, even if overall rates are lower than alternative rate-case spikes.

Electrical, gas, and water utilities (investor-owned)Positive Impact

Largeinvestor-owned utilities stand to benefit from lower financing costs and enhanced ability to recover costs without full rate case scrutiny. The bill’s strong legal protections and return-on-capital provisions favor utilities with strong balance sheets and access to capital markets, potentially increasing their profitability and market power.

Bond investors and financial intermediariesPositive Impact

Bond investors and financial intermediaries gain a new, state-protected asset class with strong legal safeguards, priority in bankruptcy, and guaranteed repayment from customer charges. This reduces risk and increases demand for such bonds, but the benefit is concentrated among institutional and high-net-worth investors.

Washington Utilities and Transportation CommissionMixed Impact

The Washington Utilities and Transportation Commission gains new authority and responsibility to review and approve securitization plans, but its discretion is constrained by statutory mandates (e.g., irrevocability, priority claims) that limit its ability to protect customers in future emergencies or equity reviews.

Local governments and public agenciesMixed Impact

Local governments and public agencies (e.g., cities, counties, PUDs) may benefit from more resilient utility infrastructure and conservation programs, but lose flexibility to adjust rate structures or implement progressive affordability measures in response to future crises or equity concerns.