Financing orders: petition; findings required for issuance; scope and effect; allocation of qualified costs among customer classes; securitization bond provisions
Ind. Code § 8-1-40.5-10
in effectSec. 10. (a) An electric utility with qualified costs that are at least five percent (5%) of the electric utility's total jurisdictional electric rate base may file a petition with the commission for the authority to:
(1) issue securitization bonds;
(2) collect securitization charges; and
(3) encumber securitization property with a lien and security interest, as described in section 15 of this chapter.
An electric utility's qualified costs may be estimated at the time of filing a petition under this section.
(b) Not later than two hundred forty (240) days after the date a petition is filed by an electric utility under subsection (a), the commission shall conduct a hearing and issue an order on the petition. The commission shall approve the issuance of securitization bonds, the collection of securitization charges, and the encumbrance of securitization property with a lien and security interest under section 15 of this chapter if the commission:
(1) makes the findings set forth in subsection (d); and
(2) finds that the net present value of the total securitization charges to be collected under the commission's financing order under this section is less than the amount that would be recovered through traditional ratemaking if the electric utility's qualified costs were included in the electric utility's net original cost rate base and recovered over a period of not more than twenty (20) years.
Subject to subsection (c), qualified costs authorized in the commission's financing order under this section shall be allocated to the electric utility's customer classes using the same cost allocation methodology approved by the commission in the electric utility's most recent base rate proceeding.
(c) The commission may, in the financing order or in a separate docketed proceeding initiated separately from the electric utility's base rate proceedings, adjust allocations of qualified costs to avoid unreasonable rates to customers in customer classes that have experienced material changes in electric load or in the number of customers. As part of any base rate proceeding initiated during the period over which the securitization charges are to be collected, the commission shall, if the commission orders a change to cost allocation, adjust the allocation of qualified costs among the electric utility's customer classes to reflect the cost allocation approved in that base rate proceeding. An allocation adjustment made under this subsection:
(1) must ensure that the adjustment of the allocation of securitization charges:
(A) will preserve the rating of the securitization bonds; and
(B) will not impair or reduce the total securitization charges; and
(2) must be just and reasonable.
This subsection does not prohibit the commission from approving tariff language as part of a financing order that addresses the conditions upon which allocation adjustments are to be made, including the establishment of a process by which such allocation adjustments must be revised as necessary to preserve the rating of the securitization bonds.
(d) In issuing a financing order under this section, the commission must make the following findings and determinations:
(1) A determination of the amount of the electric utility's qualified costs.
(2) A finding that the proceeds of the authorized securitization bonds will be used solely for the purposes of reimbursing the electric utility for qualified costs, that the electric utility's books and records will reflect a reduction in rate base associated with the receipt of proceeds from the securitization bonds, and that such reduction will be reflected in retail rates when the securitization bonds are issued.
(3) A finding that the expected structuring and the expected pricing of the securitization bonds will result in reasonable terms consistent with market conditions and the terms of the financing order.
(4) A finding that the electric utility has demonstrated that it will make, subject to approval by the commission, capital investments in Indiana in an amount equal to or exceeding the amount of the electric utility's qualified costs, over a period of not more than seven (7) years immediately following the planned issuance date of the securitization bonds. Costs to purchase energy or capacity through a power purchase agreement do not constitute a capital investment for purposes of this subdivision. The commission may not impose any other requirement related to the use or distribution of the proceeds of the securitization bonds. However:
(A) the commission shall encourage the electric utility to use the proceeds from the securitization bonds for the construction and ownership of clean energy resources described in IC 8-1-37-4(a)(1) through IC 8-1-37-4(a)(15); and
(B) notwithstanding the issuance of the financing order, the proposed capital investments remain subject to commission approval to the extent otherwise required by this article.
(5) A finding that:
(A) the electric utility has proposed a reasonable mechanism to reflect a reduction in the electric utility's base rates and charges upon the assessment of securitization charges on customer bills, so as to remove any qualified costs from the electric utility's base rates; and
(B) the mechanism will provide timely rate savings for customers.
(6) A determination that the proposal is just and reasonable.
(e) A financing order issued under this section must set forth:
(1) the amount of qualified costs to be recovered by the electric utility; and
(2) the period over which securitization charges are to be collected, which may not exceed twenty (20) years.
(f) Securitization bonds are effective in accordance with their terms if both:
(1) the financing order under which the securitization bonds are issued; and
(2) the securitization charges authorized in that order;
are irrevocable and not subject to reduction, impairment, or adjustment by further action of the commission under IC 8-1-2-72 or any other statute or rule, except as provided in subsection (h) and section 12(c) of this chapter.
(g) Securitization bonds issued under a financing order of the commission under this section are binding in accordance with their terms, even if the financing order is later vacated, modified, or otherwise held to be invalid in whole or in part.
(h) Upon the request of an electric utility, the commission may adopt a financing order under this section authorizing the retirement and refunding of previously authorized securitization bonds if the commission finds that future securitization charges required to service new securitization bonds, including transaction costs, will be less than the future securitization charges required to service the securitization bonds to be refunded. Upon the retirement of the refunded securitization bonds, the commission shall adjust the related securitization charges accordingly.
(i) IC 8-1-2-76 through IC 8-1-2-83 do not apply to:
(1) the issuance of securitization bonds under this section; or
(2) the encumbrance of securitization property with a lien and security interest under section 15 of this chapter.
(j) A financing order is subject to appeal under IC 8-1-3.
(k) After the issuance of a financing order in response to the petition of an electric utility, the electric utility retains sole discretion regarding whether to assign, sell, or otherwise transfer securitization property or to cause securitization bonds to be issued, including the right to defer or postpone assignment, sale, transfer, or issuance. If the electric utility abandons issuance of securitization bonds under the financing order or does not cause securitization bonds to be issued not later than ninety (90) days after the date of a final, non-appealable financing order, the electric utility shall file with the commission a statement of abandonment containing the reasons for the abandonment. However, the commission may, upon petition by the electric utility, extend the ninety (90) day period set forth in this subsection for good cause shown.
(l) The commission may not refuse to allow an electric utility to recover qualified costs in a manner that is otherwise permissible, or refuse or condition authorization or approval of:
(1) the issuance and sale of securities by an electric utility; or
(2) the assumption by an electric utility of liabilities or obligations;
solely because of the potential availability of securitization bond financing.
As added by P.L.80-2021, SEC.1.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://iga.in.gov/laws/2026/ic/titles/8Fetched: 10/17/2026