Governor signs CMUA-sponsored bill on rate reduction bonds
Friday, September 24, 2021
Section: CMUA News

Governor Newsom announced on Thursday, September 23, that he signed AB 758 (Nazarian), legislation CMUA sponsored that allows POUs to issue rate reduction bonds for utility projects through 2036.

Rate reduction bonds typically offer lower interest rates than traditional revenue bonds, and they could be a valuable financial tool for POUs when making major investments in clean energy projects and other infrastructure. In turn, the savings could help alleviate pressure on retail electric rates.

In one example of the potential savings, the Los Angeles Department of Water and Power commissioned a study of its water system that found that when borrowing $772 million, rate reduction bonds could save between $357 million-$390 million over the 30-year life of the bonds.

Existing statute already enables water and wastewater utilities, and investor owned utilities, to utilize rate reduction bonds.

“It was honor to work with Assemblymember Nazarian and his very capable staff to open up the rate reduction bond law to POUs,” said Patrick Welch, CMUA Senior Director of Energy Policy and Strategy. “By doing so, AB 758 puts a new tool in the toolbelt of POUs to help achieve what are often big and audacious goals at lower costs to their customers.”

The bill takes effect on January 1, 2022.