Ending Rate of Return on Premature Closures Act

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Policy Status

  • Type: Model Policy
  • Status: Draft
  • Date Introduced: July 18, 2025

Issues

  • Energy

    • Task Forces

  • Energy, Environment and Agriculture

    • Tags

  • 2025 Annual Meeting

    • Summary

    An ACT to require an electric utility regulatory agency to formulate guidelines and protocols that foster a cost-effective, dependable, and robust electric grid and that forbid a guaranteed capital rate of return on early retired electricity generation units. It also includes a provision for a continued rate of return on assets that exceed their expected service life. 
    Draft

    Ending Rate of Return on Premature Closures Act

    Section 1. Definitions 

    • “Early Retired” means an electric plant that has ceased operations ahead of its originally planned, expected, or economically useful life span. 
    • “Stranded bond” means bonds or other financing, or unrealized amortized capital investment from an early retired electric plant. 
    • “Fully depreciated asset” means generation assets that continue to operate after they have been fully depreciated for rate of return purposes. 

    Section 2. Requirements; 

    1. The electric utility regulatory agency shall develop rules and procedures to ensure that the owners of an electric generation facility shall not receive guaranteed rate of return on capital investments of stranded bonds or capital costs for the early retirement of such facility. 
    2. Utilities shall continue to earn a rate of return on fully depreciated assets by extending their depreciation schedule to include operation in excess of their estimated useful life. 

    Section 3.Severability 

    Each section, paragraph, and portion of each paragraph of this Act is severable. If one or more sections, paragraphs, or portions of one or more paragraphs of this Act are held invalid on their face or as applied to particular facts, then the remaining portions and applications of the Act shall be given full effect to the greatest extent practicable. 

    Section 4. Application and Effective Date; 

    This Act is in effect from the date this becomes law. [DATE].