Substitute House Bill 1656 creates a new statutory framework and amends existing law in chapter 80.28 RCW (and amends RCW 80.28.303, 80.28.306, 80.28.309, and RCW 80.08.140) to authorize electrical, gas, and water companies, subject to a Utilities and Transportation Commission (UTC) financing order, to finance or refinance certain “bondable rate recovery expenditures” through rate recovery bonds (securitization). The bill adds definitions (for example, rate recovery assets, rate recovery bonds, rate recovery charges, assignees, finance subsidiaries, bondholders, secured parties) and a statutory policy that the state and its subdivisions will not reduce, alter, or impair specified rate recovery rights while bonds remain outstanding. The bill establishes a petition-and-decision procedure before the commission: a company may petition for a financing order describing the purpose and triggering event (including federal or state declared disasters or specified conservation measures), the commission must approve or deny within 180 days, and may approve only if expenditures are reasonable and prudent, securitization is likely more favorable to customers than alternatives, and the issuance is reasonably likely to obtain at least an investment grade rating. A financing order may authorize creation and sale or assignment of rate recovery assets, imposition of ongoing nonbypassable rate recovery charges until bonds and financing costs are paid in full, issuance of one or more series of rate recovery bonds, assignment to finance subsidiaries, and grant and perfection of security interests. The bill also sets UCC-style perfection and priority rules (referencing chapter 62A.9A RCW with certain controlling provisions), treats approved transfers to finance subsidiaries as true sales, and provides remedies for secured parties including commission-ordered sequestration and payment of proceeds, protections in bankruptcy or insolvency (no setoff or counterclaim), and remittance of any surplus to the debtor company with a 90-day commission review for return to customers. Legally, this is a new financing mechanism and property-rights regime (securitization) with substantive and procedural changes: it creates new authorized instruments (rate recovery bonds), new duties and timelines for the commission, rules for perfection, priority, and enforcement of security interests, and an anti-impairment pledge limiting state or commission action while bonds are outstanding. The act is prospective except as provided in section 7, takes effect immediately, and contains transitional rules for certain pre-effective-date costs. Important details are missing from the provided text: the complete list of prohibited government actions, the exact new section numbers, the full text of the amendments to the cited RCWs, the precise effective date referenced for pre-effective-date costs, and any additional procedural or definitional provisions that may appear elsewhere in the bill.

If enacted, electric, gas, and water companies would have a new option to convert approved disaster-related costs and certain conservation expenditures into securitized "rate recovery bonds" that are repaid by a dedicated customer charge in the company’s service territory. That charge would continue until the bonds and financing costs are fully paid, and the Utilities and Transportation Commission would have 180 days to approve or deny a petition and must find the financing likely to be cheaper for customers and able to achieve investment-grade debt. Companies could sell or assign the right to collect those charges to finance subsidiaries or investors, who would get strong, contract-like protections and bankruptcy relief; any surplus after bond payments would be returned to the company for customer refund subject to a 90-day commission review. The parties most affected are the utilities (new financing option that can lower borrowing costs but locks in a dedicated customer charge), customers (who would pay a separate non-avoidable charge for those specific costs), and investors/secured parties (who receive prioritized, enforceable claims and reduced risk). The state and its agencies would be restricted from taking actions that impair those charges or related assets while bonds are outstanding. Important details are missing from the provided text — for example the full list of prohibited state actions, some cross-referenced amendments, and the exact handling of pre-existing costs — so how broadly and quickly the tool would be used in practice is uncertain.