KRS § 278.670 — KY Code / Title XXIV / Chapter 278 / Section 278.670
278.670 Definitions for KRS 278.670 to 278.696 and 65.114
Status: in_force

278.670 Definitions for KRS 278.670 to 278.696 and 65.114.

In addition to the definitions in KRS 278.010, except KRS 278.010(3)(a), which shall

apply unless they conflict with or the context otherwise requires, as used in KRS 278.670

to 278.696 and 65.114:

(1) "Ancillary agreement" means a bond, insurance policy, letter of credit, reserve

account, surety bond, interest rate lock or swap arrangement, hedging arrangement,

liquidity or credit support arrangement, or other financial arrangement entered into

in connection with securitized bonds;

(2) "Assignee" means a legally recognized entity to which an electric utility assigns,

sells, or transfers, other than as security, all or a portion of its interest in or right to

securitized property. The term "assignee" includes a corporation, limited liability

company, general or limited partnership, public authority, trust, and financing entity

to which an assignee assigns, sells or transfers, other than as security, its interest in

or right to securitized property;

(3) "Bondholder" means a person who holds a securitized bond;

(4) "Code" means the Uniform Commercial Code, KRS Chapter 355;

(5) "Deferred costs" means costs that have occurred but will be accounted for as part of

a regulatory asset;

(6) "Financing costs" include the following:

(a) Interest and acquisition, defeasance, or redemption premiums payable on

securitized bonds;

(b) Any payment required under an ancillary agreement and any amount required

to fund or replenish a reserve account or other accounts established under the

terms of any indenture, ancillary agreement, or other financing document

pertaining to securitized bonds;

(c) Any other cost related to issuing, supporting, repaying, refunding, or servicing

securitized bonds, including the following fees and costs without limitation:

1. Servicing fees, accounting and auditing fees, trustee fees, consulting

fees, structuring adviser fees, financial advisor fees, administrative fees,

placement and underwriting fees, independent director and manager

fees, rating agency fees, stock exchange listing and compliance fees,

security registration fees, and filing fees;

2. Capitalized interest and information technology programming costs; and

3. Any other costs necessary to otherwise ensure the timely payment of

securitized bonds or other amounts or charges payable in connection

with the bonds, including costs related to obtaining the financing order;

(d) Any taxes and license fees or other fees imposed on the revenues generated

from the collection of the securitized surcharge or otherwise resulting from

the collection of securitized surcharges, in any such case whether paid,

payable, or accrued;

(e) Any state or local taxes, franchise taxes, gross receipts, and other taxes or

similar charges, including commission assessment fees, whether paid,

payable, or accrued; and

(f) Any costs associated with performance of the commission's responsibilities

under KRS 278.670 to 278.696 and 65.114 in connection with:

1. Approving, approving subject to conditions, or rejecting an application

for a financing order; and

2. Retaining counsel, one (1) or more financial advisors, or other

consultants as deemed appropriate by the commission and paid pursuant

to KRS 278.670 to 278.696 and 65.114, for the issuance advice letter

process;

(7) "Financing order" means an order issued by the commission that authorizes the:

(a) Issuance of securitization bonds;

(b) Imposition, collection, and periodic adjustment of a securitized surcharge;

(c) Creation of securitized property; and

(d) Sale, assignment, or transfer of securitized property to an assignee;

(8) "Financing party" means bondholders and trustees, collateral agents, any party

under an ancillary agreement, or any other person acting for the benefit of

bondholders;

(9) "Financing statement" has the same meaning as in KRS 355.9-102;

(10) "Formula-based true-up mechanism" means a reconciliation or true-up process that

is used to identify over collection or under collection of the securitized surcharge;

(11) "Issuance advice letter" means a letter from the utility to the commission that

describes the final terms and conditions for the bond issuance, including but not

limited to the actual structure of the bond issue, pricing, and other bond features

such as coupon rates, redemption, and call provisions, and current market

conditions affecting the bond issuance;

(12) "Nonbypassable" means the payment of a securitized utility charge may not be

avoided by any existing or future retail customer including special contract

customers;

(13) "Pledgee" means a financing party to which an electric utility or its successors or

assignees mortgages, negotiates, pledges, or creates a security interest or lien on all

or any portion of its interest in or right to securitized property;

(14) "Regulatory asset" means, under the standardized financial accounting standards

adopted by the commission, expenses that have been authorized by the commission

to be capitalized for consideration of recovery in future rates that would otherwise

be treated as an expense in a current accounting period;

(15) "Retired generation costs" means:

(a) Pretax costs with respect to retired or abandoned facilities that are included as

deferred costs subject to an application for a financing order and include but

are not limited to:

1. The undepreciated investment in the retired or abandoned electric

generating facility and in any facilities ancillary thereto or used in

conjunction therewith;

2. Costs of decommissioning and restoring the site of the electric

generating facility;

3. Other applicable capital and operating costs; and

4. Accrued carrying charges and deferred costs;

(b) Reduced by:

1. Insurance, scrap, and salvage proceeds;

2. Applicable unamortized regulatory liabilities for excess deferred income

taxes; and

3. The present value of return on all accumulated deferred income taxes

related to pretax costs with respect to a retired or abandoned facility and

related facilities, including those due to bonus and accelerated tax

depreciation and abandonment losses; and

(c) Added to pretax costs the electric utility has previously incurred related to the

retirement or abandonment of an electric generating facility and related

facilities offering before June 29, 2023, including costs associated with:

1. The decommissioning and restoration of the site; and

2. Environmental compliance related to the operation and retirement of the

electric generating facility;

(16) "Securitization" means a structured process where interests in debt instruments or

other receivable income are packaged, underwritten, and sold as asset-backed

marketable securities such as bonds;

(17) "Securitized bonds" means bonds, debentures, notes, certificates of participation,

certificates of beneficial interest, certificates of ownership, or other evidences of

indebtedness or ownership that have a maturity date as determined reasonable by

the commission, but not later than thirty (30) years from the issue date, that are

issued by an electric utility or assignee pursuant to a financing order, the proceeds

of which are used directly or indirectly to recover, finance, or refinance capitalized

cost assets and financing costs that are secured by or payable from securitized

utility property;

(18) "Securitized costs" include retired generation costs, as well as the unamortized book

value of extraordinary storm costs or other deferred costs associated with prior

incurrences, but does not include ongoing utility investments or operating costs;

(19) "Securitized property" means:

(a) All rights and interests of a utility, its successor, or assignee under a financing

order, including the right to impose, bill, charge, collect, and receive

securitized surcharges authorized under the financing order and to obtain

periodic adjustments to those charges authorized under KRS 278.670 to

278.696 and 65.114 and as provided in the financing order; and

(b) All revenues, collections, claims, rights to payments, payments, moneys, or

proceeds arising from the rights and interests specified in the financing order,

regardless of whether those revenues, collections, claims, rights to payment,

payments, moneys, or proceeds are imposed, billed, received, collected, or

maintained together with or commingled with other revenues, collections,

rights to payment, payments, moneys, or proceeds;

(20) "Securitized surcharge" means the amounts authorized by the commission to repay,

finance, or refinance securitized costs and financing costs that are, except as

otherwise provided for in KRS 278.670 to 278.696 and 65.114:

(a) Nonbypassable and imposed on, and are a part of, all retail customer bills;

(b) Collected, in full and separate from the utility's tariffed rates, special contract

rates, or other mechanisms by an electric utility or by its successors,

assignees, or collection agents; and

(c) Paid by all existing or future retail customers receiving electrical service from

the electric utility or its successors or assignees under commission-approved

rate schedules even if a retail customer elects to purchase electricity from an

alternative electricity supplier following a fundamental change in regulation

of public utilities in the Commonwealth; and

(21) "Utility" has the same meaning as in KRS 278.010(3)(a) but shall not include any

utility organized under KRS Chapter 279.