Securitization in Action: How US States Are Shaping an Equitable Coal Transition

The briefing discusses the application of securitization in US states to mitigate the financial and social risks of coal plant retirements. By replacing high-cost utility capital with low-interest bonds, states like Wisconsin, Michigan, and New Mexico have reduced ratepayer costs and provided funding for clean energy and community transition. The document highlights Colorado's legislation as a model for integrating consumer protections, worker assistance, and renewable energy reinvestment.

• Securitization functions as a refinancing tool that replaces the 8–10 percent effective interest rate of utility capital (debt and equity) with low-interest-rate bonds typically ranging from 2–4 percent, creating savings for ratepayers.
• In Wisconsin, We Energies agreed to securitize $100 million in unrecovered costs from the 2018 retirement of the Pleasant Prairie coal plant, resulting in $40 million in savings for customers over 15 years.
• Michigan's use of securitization for the D. E. Karn coal plant involved $688 million in bonds to save customers $124 million, a result of intervention by consumer and environmental groups. Additionally, Consumers Energy committed to 6 GW of new solar energy by 2030 and a 90 percent carbon emissions reduction by 2040.
• New Mexico's Energy Transition Act (ETA) utilized $360 million in bonds for the San Juan Generating Station (SJGS) retirement, saving residential customers an average of $6.87 per month in 2023. The process funded $20 million for plant employee severance and training, and $19.8 million for tribal communities and economic development.
• Colorado's 2019 legislation is presented as a template for an equitable transition because it mandates the Colorado Public Utilities Commission to maximize ratepayer benefits, requires funding for local government or school district projects, and allows utilities to own up to 50 percent of procured clean energy resources.

APA

RMI (2021). Securitization in Action: How US States Are Shaping an Equitable Coal Transition. https://rmi.org/resources/securitization-in-action-how-us-states-are-shaping-an-equitable-coal-transition/

Chicago

RMI. Securitization in Action: How US States Are Shaping an Equitable Coal Transition. 2021. https://rmi.org/resources/securitization-in-action-how-us-states-are-shaping-an-equitable-coal-transition/.

Wikipedia

{{cite report |author=RMI |title=Securitization in Action: How US States Are Shaping an Equitable Coal Transition |date=4 March 2021 |url=https://rmi.org/resources/securitization-in-action-how-us-states-are-shaping-an-equitable-coal-transition/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2021securitization, author = {{RMI}}, title = {{Securitization in Action: How US States Are Shaping an Equitable Coal Transition}}, institution = {RMI}, year = {2021}, month = mar, url = {https://rmi.org/resources/securitization-in-action-how-us-states-are-shaping-an-equitable-coal-transition/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }