Opinion:In the Matter of Application of the Okla. Development Finance Authority, 2022 OK 41
Subject matter:Bonds
Date Decided:May 3, 2022
Trial Court:N/A
Route to this Court:Original Jurisdiction
Facts:Following the record cold temperatures of February 2021, OG&E incurred costs amounting to $739 million. Many consumers would not be able to pay in a one time payment, so the Legislature created the February 2021 Regulated Utility Consumer Protection Act. 74 O.S. 2021 §§ 9070-9081. The Act would allow consumers to pay a much smaller sum over a longer period of time via securitization, which creates a property right to revenues collected by a regulated utility from customers under an irrevocable and non-bypassable mechanism. The  property right is then sold and used as security for the repayment of the ratepayer-backed bonds.

The Act sets up a bifurcated process. First, regulated utilities file an application with the Commission to evaluate the “extreme purchase costs, extraordinary costs or both, requested for recovery which may be mitigated through securitization to reduce the utility bill impact on customers.” If the Commission determines the expenses recoverable from customers were fair, just, reasonable, and prudently incurred, the Act authorizes a financing order allowing utilities to recover their costs.  Second, the Act permits ODFA to issue ratepayer-backed bonds. Once issued, the bonds are repaid by the customers through a non-bypassable mechanism; in this case, a monthly charge on rate-payer’s bills that runs with the property. ODFA filed an application with the Supreme Court to approve the bonds. Fifteen Protestants challenged this application. 
Standard of Review:In reviewing bonds, the Court’s duty is to determine whether the bonds facially violate the law and to examine the legal authority presented by protestants. In re Application of Okla. Turnpike Auth., 2018 OK 88, ¶ 5. A heavy burden is placed on those challenging a legislative enactment, and every presumption is to be indulged in favor of the constitutionality of a statute. In re Application of Okla. Capitol Improvement Auth., 1998 OK 25, ¶ 8. When given two possible interpretations of a statute, the court is bound to choose the interpretation that will render the statute constitutional, unless constitutional infirmity is shown beyond a reasonable doubt.  Fent v. Okla. Capitol Improvement Auth., 1999 OK 64, ¶ 3.
Analysis:The authorization of the ratepayer-backed bonds properly followed the Act, and the bonds are self-liquidating and therefore constitutional.
Regarding the first question, the Court stated that the Act followed the law, the process laid out by the Act was followed, and the bonds appear facially valid. Because of this, the ratepayer-backed bonds were properly authorized under the Act.

Regarding the second question, the Court determined the bonds were constitutional. The Court’s job is to protect from indebtedness, and bonds have long been excepted from this. Oklahoma Constitution Article X, § 23 and § 25. Self-liquidating projects like the bonds are constitutional because they did not create a debt; the bonds issued were retired solely from revenues derived from the project itself. Further, the Act specifically provides that the ratepayer-backed bonds shall not at any time be deemed to constitute a debt of the State or ODFA. Because the bonds do not create indebtedness, they are constitutional.
Outcome:The bonds are approved. 
Vote:8-0 Per Curiam Opinion; Combs, J., concurs by separate writing; Rowe, J., concurs by separate writing; Kane, V.C.J., concurs with a statement. Keuhn, J., recused. 
Other: V.C.J. Kane concurs but emphasized that the Court is not authorized to delve into fiscal policy choices of the Legislature. 

J. Combs writes to express frustration with the Attorney General for lack of participation and to express frustration with the limits on the Court’s reviewing power in the Act. 

J. Rowe believes there is nothing unconstitutional about the bonds, but writes to express concern about the apparent foreclosure of future rights to challenge the bonds.