XXII. Financing

Edison's application requests that the Commission confirm that Edison may use existing debt financing and equity.

Neither TURN nor ORA discussed financing issues in their post-hearing briefs. The Navajo Nation questions whether Edison's proposed PPA structure and guaranteed cost recovery under the Federal FRD are necessary to assure the financial community since an Edison witness conceded that the rating agencies would look at Edison's overall capitalization as opposed to the capitalization of an individual asset.

Again we reiterate: We would prefer that Edison pursue Mountainview through a CPCN as a utility owned project. However, if the PPA mechanism goes forward, we do confirm that Edison may use existing debt financing and equity at the utility level, as authorized in D.98-02-104 and D.00-10-063. We find that this financing mechanism, using existing cash on hand and/or through the issuance of new securities, is the most cost-effective for customers and is preferable to project-level financing. Edison's witness testified that MVL would not be able to achieve a lower cost of capital than Edison, so there would be no cost savings having MVL do the financing since the additional debt at the project level would be factored into Edison's overall capital structure and could result in damage to the utility's credit rating.¹³

We also find that this Commission will set the rate of return for Mountainview, not FERC, and we will be able to review MVL's separate internal financial statements and accounting.

We also find that it is reasonable for Edison to be permitted to provide guarantees on behalf of MVL pursuant to Pub. Util. Section 701.5.