I read with interest your editorial regarding securitization in the April 15 edition of PUBLIC UTILITIES FORTNIGHTLY. As the chairman of the New York State Standing Committee on Energy & Telecommunications, I must take issue with your inclusion of statements from opponents to such legislation without providing its sponsors with the opportunity to press their case.
The Senate, on March 19, 1997, passed legislation that I sponsored at the request of Gov. George E. Pataki, to authorize utilities to submit an application to the Public Service Commission for the securitization of certain intangible assets (S. 3486).* The Commission would be required to review, modify, approve or deny such application. The bill further requires that the savings accruing to the utilities would be passed along to ratepayers. Last month, I introduced a chapter amendment to this bill to specify that such savings would be targeted at residential and small commercial ratepayers (S. 5097).
As an example of such savings, I note that Niagara Mohawk Power Corp. estimates that utilization of securitization, as proposed in S. 3486, would result in a savings of $224 million over the next seven years. This translates into a 2.5 percent rate reduction to all residential customers of Niagara Mohawk.
Securitization will allow utilities to refinance already existing debt for intangible assets, such as independent power contracts, and replace it with lower cost debt at no cost to state taxpayers. This measure has been successfully adopted, in various forms, in other states and has passed the New York State Senate three times since June 1996.
Your failure to mention these facts in your editorial could lead readers to believe, erroneously, that the entire Legislature opposes a plan which would bring immediate rate relief to customers of utilities employing this financing measure.
James L. Seward, New York State Senator
*Editor's Note: For more detail on the New York legislation, see "Stranded Costs: Qualified Financing for Intangible Assets," by Anastasia M. Song and Hugu M. Dougan, Oct. 1, 1996, p. 44.
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