Another round of ratepayer-backed bonds was approved in the past several days in connection with long-term increased customer payments designed to help utilities in Oklahoma recover 2021 Winter Storm costs.
Oklahoma Natural Gas Company announced Friday its securitization bonds were sold by the Oklahoma Development Finance authority. The sale totaled $1,354,200,000 as allowed under a 2021 bill (February 2021 Regulated Utility Consumer Protection Act) passed quickly by the legislature after the February Winter Storm Uri hit utilities with extreme natural gas prices.
The Bonds are limited and special revenue obligations of the ODFA, payable solely from the securitization bond collateral, created pursuant to the Securitization Law and an irrevocable financing order issued by the Oklahoma Corporation Commission on January 25, 2022. The Supreme Court of Oklahoma held that the Bonds were properly authorized and constitutional under Oklahoma law in an opinion issued on May 24, 2022. The Bonds are not an obligation of Oklahoma Natural Gas or any of its affiliates.
In connection with the transaction described above, the ODFA and Oklahoma Natural Gas entered into a Securitization Property
Purchase and Sale Agreement whereby the ODFA purchased, and Oklahoma Natural Gas sold, the securitization property created pursuant to the Securitization Law and the Financing Order.
Such securitization property includes the right to assess, impose, adjust, collect and receive revenues, in the form of the winter event securitization charge from Oklahoma Natural Gas’ existing and future Oklahoma customers in amounts intended to be sufficient to pay the principal and interest and financing charges on the Bonds over 25 years.
The proceeds received by Oklahoma Natural Gas for the sale of the securitization property were approximately $1.34 billion, which represents the amount of Bonds sold less issuance costs.
The Sale Agreement contains customary representations, warranties, agreements and indemnification obligations by Oklahoma Natural Gas. The foregoing description of the Sale Agreement is not complete and is in all respects subject to the actual provisions of the Sale Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein.