6. Secured Debt

Edison was first authorized in D.01-01-021 to secure its debt to finance balancing accounts. The decision granted authority under § 851² to issue debt secured by (i) debt securities secured by a mortgage on Edison's real property, and (ii) debt securities secured by a pledge of Edison's accounts receivable. Edison stated at the time that any debt secured by its accounts receivable would be structured as a true sale for bankruptcy purposes, a sale for financial reporting, and debt for tax purposes. (Footnote 8, D.01-01-021.) The Commission found that authorizing Edison to issue secured debt securities would reduce Edison's cost of debt and provide it with needed flexibility to finance its huge energy procurement undercollection. (Finding of Fact 9.)

Edison proposes no change to the authority to secure its debt. We know of no need to change or rescind this authority. Therefore, we affirm that the authority granted herein allows Edison to secure its debt pursuant to § 851 by (1) a mortgage on Edison's real property, or (2) a pledge of Edison's accounts receivable. We will continue the requirement adopted in D.01-01-021 that if Edison issues any debt securities secured by its accounts receivable it will be structured as a true sale for bankruptcy purposes, a sale for financial reporting, and debt for tax purposes.

² No public utility ... shall sell, lease, assign, mortgage, or otherwise dispose of or encumber the whole or any part of its railroad, street railroad, line, plant, system, or other property necessary or useful in the performance of its duties to the public, or any franchise or permit or any right thereunder, nor by any means whatsoever, directly or indirectly, merge or consolidate ... with any other public utility, without first having either secured an order from the commission authorizing it to do so ...