5. Analysis of Protest

Staff's analysis shows that Del Oro's adjusted capital ratios after giving effect to the proposed financing will amount to 74% debt and 26% equity. Staff further finds that Del Oro's estimated cash requirements forecast indicates that the utility's internally generated funds will provide 48.4% of Del Oro's cash requirements for 2001, 100% for 2002, and 100% for 2003.

We are cognizant of protestant's concerns about Del Oro's liquidity and financial condition. Del Oro's Paradise Pines District is one of many small water utilities facing financial and operational problems. Overall, however, Del Oro is currently operating at a net income; it is not 100% leveraged; and it has the ability to borrow funds. At the same time, Del Oro has a public utility responsibility to maintain its quality of service and provide necessary repairs and replacements of its water system. It requires a broad complement of options to address its financing requirements.

We find that protestant has not shown by a preponderance of evidence that Del Oro's application is financially flawed. Refinancing of existing debt at lower interest rates will save the company close to $70,000 a year, and the additional borrowing is necessary to meet capital needs in the Paradise Pines District. Protestant's allegations of error in Del Oro's books are unfounded. The Water Division staff has reviewed the financial information submitted and has found the data to be in order and mathematically correct. Accordingly, we find that protestant has failed to show that the application should be denied.