Securitization Can Lower Electricity Bills

When an investor-owned utility, like National Grid or Eversource, builds an electric substation or makes some other infrastructure investment, it takes on debt to do so and then pays off that debt over time through revenue raised from ratepayers' bills. Before it is paid off, utilities use a mix of low-interest bonds and more expensive equity funding from their shareholders to finance their debt. This use of high-cost equity financing sends money to utility shareholders (which encourages people to invest in the utilities) but burdens ratepayers with higher bills.