The Washington state Senate on April 8 passed a bill sponsored by state Rep. Peter Abbarno, R-Centralia, that would give privately-owned utility companies more options to fund repairs to their systems after natural disasters.
The bill was already passed by the House in March.
Second Substitute House Bill 1990 gives utility companies like Puget Sound Electric, which provides natural gas to the Centralia and Chehalis area, the ability to “securitize” certain costs related to disasters or emergencies.
That means the utilities would be able to sell bonds to cover the costs of vital repairs instead of immediately raising their customers' utility rates. In order to issue the bonds, the companies would first have to petition the Washington state Utilities and Transportation Commission, which would review their case. Bonds could only be issued to recover the costs in certain situations; for example, in response to an event declared a federal or state disaster or emergency and threatens widespread harm to people and property.
Abbarno appeared in multiple committee hearings endorsing the bill and urging committee members to push it forward as an act of prudence. The representative cited recent increases in the severity and frequency of wildfires in the state, potential for earthquakes, tsunamis and volcano eruptions along with his personal experience with catastrophic flooding in the Chehalis River Basin as evidence for the necessity of the new law.
“A catastrophe is imminent and hopefully we will never have to use the policy that’s in this bill,” Abbarno said.
“But when a catastrophic event happens and folks lose power, folks don't have water, we need to provide as many options for utilities and UTC to get power to those folks to get clean water to those folks without the impact to the rate payer happening all at once.”
Puget Sound Electric and Avista, two private utility companies in the state, along with the Association of Washington Business, appeared frequently to support the bill during its many public hearings.
During testimony, Puget Sound Electric and Avista characterized the new law as a sort of “break glass in case of emergency” protection that would rarely be used and may also increase market confidence in these utility companies.
“For context, the bomb cyclone wouldn’t have qualified for this. The minimum tranche for these kinds of bonds is in the $200 to $300 million range,” Matt Miller, a representative for Puget Sound Energy, said. “The hope is that we would never use it.”
During committee appearance, the bill received no testimony in opposition; however, the Washington State Attorney General’s Office advocated for an amendment to the bill that would add language that prevents utility companies from recovering costs related to disasters they may have caused.
“Our office agrees with the importance and the necessity of this bill, and we are requesting an amendment reflecting that the utility and transportation commission may consider whether the utility was negligent or grossly negligent in causing the disaster that gives rise to the recoverable bonded amount,” Tad O’Neill, of the attorney general’s office, said. “We believe this would ensure that utilities that are found negligent are not able to recover costs associated with their negligence at the expense of ratepayers.”
An amendment meeting that request was added on the floor of the Senate before the bill was passed.
The bill now must return to the House for a vote to approve the changes made in the Senate.
After approval, the bill will be free for signature by the speaker of the House and Senate president before being sent to Gov. Bob Ferguson’s desk.
For additional information on this bill or others, visit the Washington state Legislature’s website at https://leg.wa.gov and use the Bill Finder.
