Hunton & Williams Advises on Consumers Energy Company: $378 Million Securitization Bonds Offering

Hunton & Williams LLP advised the joint book-running managers on an SEC-registered offering of $378,000,000 aggregate principal amount of senior secured securitization bonds by Consumers 2014 Securitization Funding LLC, issued pursuant to a securitization structure. The bond proceeds will be used by Consumers Energy Company (“Consumers”) to recover the remaining book value of certain coal-fired generating units. The bonds are a category of utility rate reduction bonds issued on behalf of public utilities. Approximately $50 billion of utility rate reduction bonds have been issued to date.

Consumers 2014 Securitization Funding LLC is a special purpose entity, wholly owned by Consumers, created solely for the purpose of issuing the bonds. The bonds were sold pursuant to a financing order of the Michigan Public Service Commission (“MPSC”), issued pursuant to enabling legislation. The bonds are secured by securitization property comprised of the rights and interests of Consumers under the financing order, which include the right to impose, collect and receive a special, irrevocable, nonbypassable charge, paid by retail electric customers of Consumers, or any successor, and the right to obtain annual and more frequent true-up adjustments to those charges. The securitization property was sold by Consumers to Consumers 2014 Securitization Funding LLC in connection with issuance of the bonds.

The Hunton & Williams LLP team included Michael Fitzpatrick, Adam O’Brian, Kevin Felz and Jason Harbour. Cary Tolley and Emily Winbigler provided tax advice.