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

This briefing by RMI examines how several US states are using securitization—a financing tool that replaces high-cost utility capital with low-interest ratepayer-backed bonds—to facilitate the equitable retirement of coal-fired power plants. The document details how this mechanism can lower electricity rates for consumers, enable utility investment in clean energy, and provide funding for displaced workers and affected communities.

• Securitization functions as a refinancing tool for coal plant retirements, replacing the typical 8–10 percent effective "interest rate" of utility capital (a mix of debt and equity) with low-interest-rate bonds typically ranging from 2–4 percent. This process creates immediate and long-term savings for ratepayers, which can then be used to fund transition assistance and clean energy assets.
• In Wisconsin, We Energies reached a November 2020 settlement to securitize $100 million of unrecovered costs from the 2018 retirement of the Pleasant Prairie coal plant, resulting in $40 million in savings for customers over 15 years. However, current state law limits securitization to pollution-control investments rather than the full cost of a plant.
• Michigan's use of securitization for the D. E. Karn coal plant involved $688 million in bonds to save customers $124 million. While the state's statute lacks specific transition assistance measures, Consumers Energy committed to a 90 percent carbon emission reduction by 2040 and 6 GW of new solar energy by 2030, including 1.2 GW by the end of 2021.
• New Mexico's 2019 Energy Transition Act (ETA) enabled Public Service of New Mexico (PNM) to issue $360 million in bonds for the San Juan Generating Station (SJGS) retirement. This is projected to save customers nearly $80 million in 2023 alone. The ETA mandates that a portion of proceeds fund transition; the SJGS bond provides $20 million for job training and severance, and $19.8 million for worker assistance, economic development, and tribal communities.
• Colorado's 2019 legislation is presented as a model for a "three-part approach" to coal retirement. It includes a mandate for the Colorado Public Utilities Commission to maximize ratepayer benefits, requires utilities to fund approved local government or school district projects, and allows utilities to own up to 50 percent of the clean energy resources they procure.

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} }