ARS § 30-1003

30-1003 - Securitization transactions; public meeting; notice; securitization proposal; financing resolution adoption 30-1003. Securitization transactions; public meeting; notice; securitization proposal; financing resolution adoption A. A public power entity may initiate a securitization transaction by providing public notice of the public power entity's intent to adopt a financing resolution. The public notice shall identify the date, time and location of the public meeting of the governing body, which shall occur not less than thirty days and not more than sixty days after the notice is published. After the public notice is published, the public power entity shall make the securitization proposal available at the public power entity's main office and on its publicly accessible website. B. The public power entity shall provide the public notice prescribed in subsection A of this section by completing all of the following: 1. Issuing one publication in one or more newspapers of general circulation within the public power entity's electric service area. 2. Sending notice by United States mail to the public power entity's standard electric rate schedule customers of record. 3. Sending notice to the governing body of each city, town or county where a public power entity is located in whole or in part. C. The securitization proposal shall: 1. Identify, as applicable, any transition assets, transition asset retirement costs and significant event recovery costs. For the purposes of this paragraph, transition assets must currently be or have previously been in operation providing service for the public power entity's customers as of September 26, 2025, except for transition assets that are placed into service after September 26, 2025 that become destroyed, damaged or rendered inoperable, in whole or in part, by forces or action outside of the applicant's reasonable control, as provided in section 30-1001, paragraph 16, subdivision (c). 2. Estimate the transition costs and financing costs including an estimate of recovering such costs on a net present value basis. 3. Describe the expected characteristics of the transition bonds. 4. Provide the projected financing charges and explain how the financing charges will result in the collection of financing revenues in amounts sufficient but not greater than necessary to enable the timely and complete recovery and payment of all ongoing financing costs. For the purposes of this paragraph, "financing charges" includes any costs and fees that are associated with hiring expert consultants who are necessary to aid the governing body in reviewing and approving of a securitization proposal. 5. Estimate the financing charges and unit financing charges before the first application of the true-up mechanism. The unit financing charges may differ between customers and groups of customers, but if that occurs, each customer group and how the group is defined shall be described in the securitization proposal. Unit financing charges are determined and imposed without regard to whether, or to what extent, a customer uses the services of any public power entity during the period in which a particular unit financing charge will apply. 6. Describe the proposed true-up mechanism and how the true-up mechanism will adjust the financing charges and unit financing charges over time to correct for any overcollection or undercollection of financing revenues. 7. Identify the qualified special purpose entity. 8. Provide a report that concludes that the transition bonds are expected to satisfy the current published criteria for an AAA rating or the equivalent that is prepared by a securities firm experienced in underwriting and bond issuance. 9. Identify any anticipated ancillary agreements, individually or by description. 10. Describe how the public power entity proposes to permanently reduce or offset the value of either: (a) Any undepreciated transition assets and any associated regulatory assets or recorded liabilities with respect to an offering of transition bonds to recover transition asset retirement costs. (b) Any regulatory asset or recorded liability that is associated with transition bonds to recover significant event recovery costs in exchange for the net proceeds of the transition bonds. 11. Include a proposed transition billing services tariff if the proposed initial servicer is a public power entity. 12. Describe the process to notify the public of the final structure and pricing of the transition bonds. 13. Commit to providing a statement of actual up-front financing costs. 14. Commit to providing an updated calculation of the estimated financing charges and unit financing charges over the life of the transition bonds. 15. Provide a proposed form of financing resolution. 16. Include an analysis that shows the securitization transaction will result in lower costs to the public power entity's customers on a net present value basis as compared to financing options that are otherwise available to the public power entity. D. Interested persons may file written comments with the public power entity's governing body at any time during or before the public meeting of the governing body prescribed by subsection A of this section.  At the public meeting, the board of directors shall provide: 1. The representatives of the public power entity's management with an opportunity to explain the securitization proposal and answer questions. 2. Any consultants that were retained by the public power entity with an opportunity to comment on the securitization proposal. 3. Any interested persons with a reasonable opportunity to submit written comments or make oral presentations of views, questions and comments on the securitization proposal. E. On review of the information and comments gathered in compliance with this section, the governing body of a public power entity shall adopt a financing resolution that approves, rejects or approves with conditions the initiation of the proposed transaction. The governing body may approve or approve with conditions the initiation of the proposed transaction only if the governing body finds that all of the following apply: 1. The securitization proposal complies with subsection C of this section. 2. The securitization transaction will result in lower costs to the public power entity's customers on a net present value basis as compared to other financing options that are otherwise available to the public power entity, which shall be determined based on whether the transition benefit test has been satisfied. The transition benefit test is satisfied on a showing that the proposed structure and projected pricing of the transition bonds are reasonably expected to result, on a net present value basis over the life of the transition bonds, in the lowest financing charges that are commercially available consistent with market conditions at the time the transition bonds are priced and with the terms of the financing resolution. 3. Any proposed transition billing services tariff, including any true-up mechanism that is designed to address overcollection or undercollection from the public power entity's customers, supports affordability and reliability, is in the public interest and should be placed into effect. 4. For a securitization proposal that involves a transition asset that is an electric power generation facility that will be or has been retired, sold, abandoned, disposed of or otherwise removed from service of the applicant's customers, in whole or in part, as provided in section 30-1001, paragraph 16, subdivisions (a) and (b), the replacement means of satisfying the customer load served by the electric power generation facility that will be or has been removed from service is more cost-effective for the applicant's customers than continued reliance on or operation of the electric power generation facility that will be or has been removed from service. Cost-effectiveness shall be determined by comparing the sum of the net present value of all the costs and expenses of reliable replacement generation of equal or greater contribution toward the utility's resource adequacy than the electric power generation facility that will be or has been removed from service over the replacement generation's expected useful life combined with the projected net present value to ratepayers of the total expected cost of the transition bonds over the term of such bonds, as compared to the net present value to ratepayers of the cost, including any unrecovered costs associated with undepreciated value or unrecovered balances of the transition asset if such costs were to be financed directly by the public power entity, of continuing to operate the electric power generation facility that will be or has been removed from service over an equivalent time frame regardless of the fuel source of the power generation. The cost-effective evaluation shall include a description of a portfolio that contains new and existing resources that will provide reliable replacement generation of equivalent resource adequacy as the electric power generation that will be or has been removed from service. 5. The securitization proposal is just and reasonable, is in the public interest and should be placed into effect. F. For the purposes of reviewing and approving a securitization proposal, the governing body may retain the use of outside expert consultants and charge the qualified special purpose entity for reimbursement of any costs and fees that are associated with hiring the expert consultants.