California Assembly Bill AB1550 Introduced / Bill

 BILL NUMBER: AB 1550INTRODUCED BILL TEXT INTRODUCED BY Committee on Banking and Finance (Nava (Chair), Evans, Fong, Fuentes, Mendoza, Ruskin, Swanson, and Torres) MARCH 10, 2009 An act to amend Section 80130 of the Water Code, relating to electricity. LEGISLATIVE COUNSEL'S DIGEST AB 1550, as introduced, Committee on Banking and Finance. Department of Water Resources: refunding bonds. Existing law authorizes the Department of Water Resources to administer contracts entered into before January 1, 2003, for the purchase of electricity, and to sell electricity to retail end-use customers and, with certain exceptions, local publicly owned utilities, at not more than the department's acquisition costs. Existing law requires the department to recover those costs through the issuance of bonds, in an amount up to $13,423,000,000, or as otherwise specified, to be repaid by ratepayers. Existing law authorizes the department to refund those bonds and specifies that the refunding of bonds to obtain a lower interest rate is not subject to the aggregate amount of bonds authorized to be issued. This bill would grant additional authority to the department to refund those bonds, including the authority to refund bonds bearing a variable interest rate with bonds bearing interest at a fixed interest rate and to refund bonds if a national recognized rating agency reduces or withdraws, or proposes to reduce or withdraw, the rating assigned to specified indebtedness. The bill would specify that refunding bonds issued by the department pursuant to this program before January 1, 2010, are deemed to have been issued for one or more of these authorized purposes. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 80130 of the Water Code is amended to read: 80130.  (a)    The department may incur indebtedness and issue bonds as evidence thereof, provided that bonds may not be issued in an amount the debt service on which, to the extent payable from the fund, is estimated by the department to exceed the amounts estimated to be available in the fund for their payment.  The   (b)     The  department may authorize the issuance of bonds (excluding notes issued in anticipation of the issuance of bonds and retired from the proceeds of those bonds) in an aggregate amount up to the greater of thirteen billion four hundred twenty-three million dollars ($13,423,000,000) or the amount calculated by multiplying by a factor of four the annual revenues generated by the California Procurement Adjustment, as determined by the commission pursuant to Section 360.5 of the Public Utilities Code  ; provided, such   if the  aggregate amount shall   does  not exceed thirteen billion four hundred twenty-three million dollars ($13,423,000,000).  Nothing in this   (c)     This  section  shall   does not  prohibit the department from issuing bonds prior to the effective date of this bill based upon the authorization granted to the department by the provisions of Chapter 4 of the Statutes of 2001-02 First Extraordinary Session.  Refunding   (d)     (1)     Refunding  of bonds  to obtain a lower interest rate   for any of the following purposes  shall not be included in the calculation of the aggregate  amount. In   amount:   (A) Refunding bonds to obtain a lower interest rate.   (B) Refunding bonds bearing a variable interest rate with bonds bearing interest at a fixed interest rate.   (C) Refunding bonds if any nationally recognized rating agency reduces or withdraws, or proposes to reduce or withdraw, the rating assigned to indebtedness under this chapter that is secured by bond insurance policies, credit or liquidity facilities issued by the provider of a bond insurance policy, or a credit or liquidity facility securing the bonds being refunded.   (2) All refunding bonds issued by the department under this chapter before January 1, 2010, shall be deemed to have been issued for one or more purposes described in this subdivision and shall not be included in the calculation of the aggregate amount.   (e)     In  addition, before the issuance of bonds in a public offering, the department shall establish a mechanism to ensure that the bonds will be sold at investment grade ratings and repaid on a timely basis from pledged revenues. This mechanism may include, but is not limited to, an agreement between the department and the commission as described in Section 80110.