DENVER - On September 10, 2024, Colorado Governor Jared Polis took action with seven of his fellow Governors in calling on Securities and Exchange Commission (SEC) chair, Gary Gensler, to address the problematic reclassification of utility recovery bonds, which can significantly increase utility borrowing costs and raise costs for millions of Americans, and undermines the SEC's mission "to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.” 

These bonds, which are used to cover costs such as damage to the electric grid from wildfires, storms, and other utility-related expenses, are now facing higher borrowing costs as a result of reclassification by third parties. These increases are being passed on to millions of Americans through their utility bills. 

Governor Polis is joined on the letter by California Governor Gavin Newsom, Illinois Governor JB Pritzker, Massachusetts Governor Maura Healey, Michigan Governor Gretchen Whitmer, New Mexico Governor Michelle Lujan Grisham, New York Governor Kathy Hochul, and North Carolina Governor Roy Cooper. Collectively, these governors and states represent nearly a third of the US population. 

“Classification of utility recovery bonds as “asset-backed securities” defies common sense, harms millions of electricity consumers, and provides no clear investor protection benefit. Utility recovery bonds are in no way like asset-backed securities such as credit card bonds, collateralized debt obligations, or any asset-backed security such as those that were problematic during the financial crisis. Any similarity to asset-backed securities is superficial and not substantive for the purposes of the chosen SEC disclosure regime. Sometimes taking a little from a lot of people doesn't get noticed and therefore no one may seem to care. But governors and regulators do care,” the letter reads. 

“With billions of dollars more recovery bonds being issued in the near future, affecting many millions of Americans and their electricity bills, this issue is more important and pressing than ever. We believe that accurate classification and regulatory clarity are essential to serving the public interest,” the Governors continued. 

Read the full letter here.