On Feb. 25, 2013, we revised our outlook on Panoche Energy Center LLC (Panoche) to negative from stable, reflecting the potential for debt service coverage ratios to fall below 1.35x through the term of the debt as a result of carbon emissions costs. Panoche is currently in a dispute resolution process with its power purchaser, Pacific Gas&Electric Co. (PG&E; BBB/Stable/A-2) on the pass through of the project's greenhouse gas (GHG) emissions costs associated with the statewide cap-and-trade program. We also affirmed our 'BBB-' rating on Panoche's $321 million senior secured bonds due in 2029. Inability to fully pass through GHG emission costs will likely lead to lower cash flow generation and, as a result, the debt service coverage
