Securing lower costs for the present and future

Journal Article · Wed Oct 01 04:00:00 EDT 1997 · Electricity Journal

DOI:https://doi.org/10.1016/S1040-6190(97)80188-1· OSTI ID:569344

Smith, W L; Durham, J W

The very newness of securitization is a major barrier to its acceptance that will eventually be overcome. In a few years, securitization will be a common cost-saving tool. When it is, will people look back on their lost opportunities and ask themselves, `What was all the fuss about?` In January 1997, PECO Energy Co. became the first investor-owned electric utility to request approval to issue securitized debt to recover its stranded investment. In May 1997, it became the first utility to receive approval for securitization, when the Pennsylvania Public Utility Commission authorized the issuance of {open_quotes}transition bonds{close_quotes} for recovery of $1.1 billion of PECO Energy`s stranded investment. The authors experience in the administrative litigation that led to that authorization, as well as with the media reports about that litigation, suggests that the role of securitization in the transition to competition is not well understood. That`s unfortunate, because securitization is an important method of lowering costs during the industry`s transition to competition. It can also be an important financial tool in the future to reduce the costs that customers will have to pay for the construction, operation, and maintenance of transmission and distribution grids, and for other utility functions that will remain regulated by state utility commissions.

• OSTI ID: 569344
• Journal Information: Electricity Journal, Journal Name: Electricity Journal Journal Issue: 8 Vol. 10; ISSN ELEJE4; ISSN 1040-6190
• Country of Publication: United States
• Language: English

Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
CAPITALIZED COST
COMPETITION
DEREGULATION
ELECTRIC POWER INDUSTRY
ELECTRIC UTILITIES
FINANCING