Colorado may have found an interesting solution to the stranded assets that are relics of the transition to clean energy. Two Democratic lawmakers have proposed measures that would create ratepayer-backed, AAA rated, commercial bonds. These securities would be used by utilities to refinance retiring coal plants, of which there are many. The savings would be run down into the community.

The savings would manifest positively for these utilities – the lowered debt service would allow former coal communities to be provided assistance, both via re-training those who have been laid-off, and through other means.

The proposal, also known as the Colorado Energy Impact Assistance Act, would give utilities a new way to raise capital and invest funds into renewable resources.

The struggle to find use for the abandoned assets from the formerly booming coal industry has proved problematic for Colorado – ratepayers are still footing the bill for power plants that have long since closed. Obviously, someone needs to pay these costs, but the lawmakers see the bond market as a solution to reduce the cost and assist communities that would otherwise be left in the dust.

The bill was originally proposed by two Democrat Representatives: Chris Hansen and Daneya Esgar.

Hansen, in a statement, voiced that he believes private investment is a means to keep money in ratepayers’ pockets, while simultaneously helping workers and communities impacted by what is essentially creative destruction. At the same time, utilities are kept at operating efficiency. All without adding to the state budget.

These bonds are unique in that they are not municipal bonds – the credit of the state of Colorado would not be needed to back to securities. Rather, they are considered ratepayer-backed commercial bonds. And in accordance with a state statute, the bonds would meet specific Wall Street financial criteria, which would afford them a AAA bond rating. This would allow the bonds to be sold at very low interest rates.

The bill also would create the Colorado Energy Impact Assistance Authority (CEIAA), which would be tasked with alleviating the troubles of displaced workers and help subsidize a portion of the tax obligations the community “owes” for the deserted facilities. When the bonds are used to help retire these facilities, 15% of the refinancing savings would be added to the bond issues – these funds would be used by the CEIAA for assistance purposes. The CEIAA would include a board of seven members, each appointed by the state governor, as well as a local advisory committee from the communities most affected by the displacement.

This plan would help get rural communities the support they need, while also providing utilities with new sources of financing. The representatives also hope that this measure will spur investment into renewable technology. More than 80% of Colorado’s energy comes from coal-fired facilities as it stands, which is why renewables growth is also in the minds of policymakers.

A solution to the financial problems posed by the transition to renewable technology may be the most impactful result of this legislation. One of the biggest obstacles to divesting from fossil-fuel technology is the cost-aspect. Alleviating those costs with this model may prove applicable to other areas in the country, which would get us over a major hurdle in the fight to reduce emissions.