The power and utility industries have undergone tremendous change in the last several decades. In the past 10 years alone, the amount of coal-fired generation in the United States has decreased dramatically, both in absolute terms as well as in terms of a percentage of total generation.1 Electric utilities throughout the country have been forced to find ways to finance the costs of recovery from catastrophic storms. Investors, at the same time, have become more focused on the use of proceeds from a utility’s sale of securities. This article will address how the utility capital markets have adapted to these circumstances. First, we discuss dedicated utility rate securitization and the various types of utility costs that can be recovered. Second, we review the ongoing boom of “green bond” financing in the utility sector. Finally, we discuss a novel tax-exempt bond structure currently used to finance facilities to control stormwater pollution, whereby the holders of the bonds are eligible to receive incentive payments depending on the success of the underlying project.
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