BP BHEAD INT S

AN ACT Relating to financing conservation investment by electrical, gas, and water companies; amending RCW 80.08.010; and adding new sections to chapter 80.08 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 80.08.010 and 1961 c 14 s 80.08.010 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Conservation bonds" means bonds, notes, or other evidences of indebtedness which:

(a) The commission determines at the time of issuance are issued to finance or refinance conservation investment by an electrical, gas, or water company; and

(b) Rely partly or wholly for credit support on conservation investment assets and conservation investment revenues.

(2) "Conservation investment" means all costs expended by electrical, gas, or water companies on energy or water efficiency measures intended to improve end use energy or water efficiency if:

(a) The efficiency measures are not owned by the electrical, gas, or water company which incurs the costs; and

(b) The costs are incurred in accordance with applicable conservation tariff schedules in effect with the commission at the time of the expenditures.

(3) "Conservation investment assets" means the statutory right of an electrical, gas, or water company to conservation investment revenues sufficient to recover all of the costs of its conservation investment and the costs of capital associated with conservation investment. "Conservation investment assets" include the payment of principal, premium, if any, and interest on conservation bonds.

(4) "Conservation investment revenues" means the revenues of an electrical, gas, or water company derived from rates expressed in a separate conservation tariff schedule.

(5) ((~~The term~~)) "Public service company"((~~, as used in this chapter, shall~~)) means every company now or hereafter engaged in business in this state as a public utility and subject to regulation as to rates and service by the utilities and transportation commission under the provisions of this title.

NEW SECTION. Sec. 2. A new section is added to chapter 80.08 RCW to read as follows:

(1) Electrical, gas, and water companies may issue conservation bonds upon approval of an application for authorization under RCW 80.08.040.

(2) The commission shall fix rates for service by electrical, gas, and water companies at levels sufficient for those companies to recover all of the costs of their conservation investment assets. Rates at levels to create conservation investment revenues sufficient to recover all of the costs of conservation investment assets shall be maintained in effect until all of the investment is recovered in rates.

NEW SECTION. Sec. 3. A new section is added to chapter 80.08 RCW to read as follows:

(1) Electrical, gas, and water companies may pledge conservation investment assets as collateral for conservation bonds by obtaining an order of the commission approving an issue of conservation bonds and providing for a security interest in conservation investment assets. A security interest in conservation investment assets is created and perfected upon entry of an order by the commission approving a contract governing the granting of the security interest and is enforceable against the debtor and all third parties when value has been given by the purchasers of conservation bonds. An approved security interest in conservation investment assets is a continuously perfected security interest in all conservation investment revenues and their proceeds arising under the applicable conservation tariff schedule, whether or not conservation investment revenues have accrued.

(2) The priority of a security interest created under this section is not defeated or adversely affected by the commingling of conservation investment revenues with other funds of the debtor. When an event of default occurs under an approved contract governing conservation bonds, the holders of the conservation bonds or their authorized representatives, as secured parties, are entitled to foreclose or otherwise enforce the security interest in the conservation investment assets securing the conservation bonds. Upon application by the holders or their representatives, the commission shall order the defaulting company to sequester and pay conservation investment revenues to the holders or their representatives. Any surplus in excess of amounts necessary to pay principal, premium, if any, interest, and expenses arising under the contract governing the conservation bonds shall be remitted to the debtor electrical, gas, or water company.

(3) The granting, perfection, and enforcement of security interests in conservation investment assets to secure conservation bonds is governed by this chapter rather than by chapter 62A.9 RCW.