MPRWA Attachment B

Monterey Peninsula Water Supply Project A.
12-04-019
Evaluation of Capital Financing Alternatives For a 5.4 MGD Desalination Plant
Prepared by Monterey Peninsula Water Management District September 2012 (DRAFT Version 1.0)
Introduction
CaliforniaAmericanWaterCompany(CalAm)hasfiledanapplicationfortheMontereyPeninsula WaterSupplyProject,A.1204019.Intheapplication,fouralternativeprojectscenariosareexamined: (i)9.0MGDplantwithnoGroundwaterReplenishment(GWR)andnoStateRevolving Fundloans(SRF) (ii)9.0MGDplantwithnoGWRandusingSRF (iii)5.4MGDplantwithGWRandnoSRF (iv)5.4MGDplantwithGWRandusingSRF InthetwoalternativesthatincludeSRFloans,theproposedcapitalfinancingstructureisasfollows:
Surcharge2(PayasYouGo) LongTermDebt Equity 9.0MGDplantw/oGWR w/ SRF $99.1million $79.9 million $90.4 million 5.4MGDplantw/GWR w/ SRF $99.1million $56.2million $63.6million
Bothscenariosutilize$20millionoflowcostcommercialpaperforadditionalfundingintheearly phasesofconstruction,whichisultimatelytakenoutbypermanentlongtermfunding. Thepurposeofthisreportisto: IdentifymechanismsandapproachesthatcanimproveupontheproposedCalAmfinancing plantothebenefitofratepayers,withoutjeopardizingtheprojectschedule. Twokeymeasuresareusedtocomparescenarios:(i)thetotal40yearlifecyclecost,and(ii)the discountednetpresentvalueoffuturecostsin2012dollars.
EvaluationofCapitalFinancingAlternativesfora5.4MGDDesalinationPlant MontereyPeninsulaWaterSupplyProject(A.1204019) DRAFTVer1.0

Page 1
Recommendations
In the event the project is not publicly-owned, the District will offer to be the Public Partner for financial issues. This means that the District will make the following commitments and request that the CPUC final order direct Cal-Am to accept the Districts decision regarding these financing alternatives at the time of the permanent project financing if doing so saves ratepayers money. This includes six basic considerations: 1) If available, State Revolving Fund (SRF) loans should be maximized and considered for up to 100% of the project funding to reduce costs to Peninsula ratepayers; 2) If SRF loans are not available for the entire project, then require Cal-Am to examine tax-exempt private activity debt as a funding source for both the debt component, but preferably additionally in lieu of equity. 3) Consider a public agency (i.e. MPWMD) contribution in lieu of Cal-Am debt or equity to reduce costs to Peninsula ratepayers. The contribution would be made via public debt and the source of repayment either a surcharge on the Cal-Am bill or direct fees and charges to property owners in the District established with a Proposition 218 process; 4) Even in the event of a Cal-Am borrowing, the District should offer and the CPUC should accept the Districts potential public credit backstop to enhance the Cal-Am borrowing credit rating and reduce costs to Peninsula ratepayers. The District offers to substitute its public credit as a backstop to Cal-Ams creditworthiness in order to reduce the cost of Cal-Ams debt. It is anticipated that Cal-Ams parent obligation carries a credit rating of Baa2, but the District could raise that to perhaps A1. This might require the use of a stand-by water purchase agreement, a rate covenant, and other standing commitments; 5) In all cases, the CPUC should require at that point in the future when permanent financing is considered that the then-current market conditions be considered and, if warranted, the public participation in financing as outlined above be required. 6) If it turns out that State Revolving Funds require a public partner, as it normally would in most cases, the District offers to serve in that role;
Evaluation of Capital Financing Alternatives for a 5.4 MGD Desalination Plant Monterey Peninsula Water Supply Project (A.12-04-019) DRAFT Ver 1.0
Page 2
Key Conclusions
Calibration of District Model to Cal-Am Model The District model was calibrated against the four Cal-Am scenarios and it was determined that the District model and the Cal-Am model produce sufficiently identical results to allow the District model to be used for analysis of alternative scenarios and assessment of variations to Cal-Ams assumptions. Making Cal-Ams Financing Plan Better If SRF loans are not available, then in todays market the use of Cal-Am tax-exempt debt instead of taxable corporate debt would reduce the cost to ratepayers. This advantage will improve in the future if the tax-exempt marketplace returns to a more traditional relationship to the taxable marketplace (see discussion below.) Hence, based on market conditions at the time, Cal-Am should consider the benefits of tax-exempt debt. Providing a public credit backstop to Cal-Ams credit rating would further reduce the cost to ratepayers, for either taxable or tax-exempt debt. The most significant savings to ratepayers occurs when debt is used in lieu of Cal-Am equity, either through a public contribution, Cal-Am debt (tax-exempt or corporate), or additional SRF loans. A comparison of results is included beginning page 7. The conclusions would remain the same if a 9.0 MGD plant were evaluated. Discussion: Debt to Equity Ratio The concept of financing the desalination project entirely with debt, SRF loans or tax-exempt public agency debt, clearly reduces the cost to the ratepayer. However, Cal-Am may be concerned about their debt to equity ratio statewide being impacted solely by the Monterey County District. We do not believe that this is a significant concern for three reasons: First, the debt to equity ratio is already undergoing a significant swing as a result of A.11-05-003, which signifies that shifts in the ratio due to exogenous factors are already familiar and acceptable to Cal-Am. The current debt to equity ratio is 58% - 42%, but A.11-05-003 would change that to 47% - 53%, a large inversion. Second, Cal-Am intends to invest more than $400 million in infrastructure over the next five years (Testimony of Bente Villadsen in A.11-05-003). According to Table A2 of the proposed decision in A.1007-007 Cal-Ams adopted rate base is$374.4 million. If it is assumed that existing rate base was financed as 58% - 42% debt to equity, the current authorized structure, and new investment will be 47% - 53%, then in the case of the 5.4 MGD plant where a full $119.8 million could be debt financed it would result in a 60% - 40% debt to equity ratio for Cal-Am overall, which is less than 5% different than the current debt to equity structure of Cal-Am. And third, when there is an equity portion coupled with SRF loans or outside contributions, an amount equal to the contributions is removed from the rate base resulting in 100% of the undepreciated rate
Page 3
base that remains earning an authorized equity rate of return, rather than a return based on the debt to equity ratio. The contribution repayment is done via a surcharge and the interest component is not adjusted for taxes in the revenue requirement calculation, as traditional debt would. It is unclear if the SRF loan or contribution can even be considered a debt or how the treatment is consistent with maintaining company-wide debt to equity ratios. There may also be ways to isolate the financing of the desalination plant from the rest of Cal-Am through accounting methods, special purpose corporation, or a financing subsidiary. Uncertainties in Cal-Ams Proposed Financing Plan By 2016 the market conditions for the permanent take-out financing will be different than today or even a year from now when the CPUC renders its decision. For example, the charts below underscore how the relationship between tax-exempt municipal debt and taxable corporate and US Treasury debt is much different today than traditionally, represented by the year 2007. If the tax-exempt marketplace returns to a more traditional relationship to the taxable marketplace, the advantages of public debt presented herein would increase significantly. Therefore, financing decisions should be made in the context of the then-prevailing market conditions. 2012 Yield Curve Relationships 2007 Yield Curve Relationships
Public Ownership v. Private Ownership A public owned project using traditional public financing that borrows all interest during construction (capitalized interest), even without the advantages of pay-as-you-go capital during the construction period such as a Surcharge 2, still competes favorably with Cal-Ams financing proposal. This scenario has not been included in this report. If pay-as-you-go monies can be provided to a public owned project, either through direct collections from constituents (ratepayers) through a Proposition 218 process, or the CPUC allows direct contributions from ratepayers through a Surcharge 2 mechanism, then the publicly-financed project is even more advantageous to ratepayers.
Page 4
Assumptions
Cal-Am Debt: 47% debt ratio per A.11-05-003 (Stephenson A.11, A.51) 5.00% interest rate for Cal-Ams model and initial testimony (Linam A.13) 6.63% interest rate for Cal-Ams authorized debt cost (Stephenson A.11, A.51) 4.70% interest rate if using tax-exempt debt backed by AWW Capital Corp 3.70% interest rate if using tax-exempt debt with public credit backstop Baa2 credit rating for American Water Works Capital Corp backed debt (per Moodys 8/15/12 Credit Opinion) Cal-Ams stand-alone credit rating would be below investment grade. On a stand-alone basis, several key metrics are below those expected for an investment grade rating from Moodys (Testimony of Bente Villadsen in A.1105-003) Cal-Am Equity: 53% equity ratio per A.11-05-003 (Stephenson A.11, A.51) 9.99% equity rate of return (Stephenson A.11, A.51) State Revolving Funds: 2.50% interest rate (Linam A.13) 20 year term It should be noted that typically the SRF moneys are limited by the State to $50 million annually to a recipient. Recipients may receive funds in multiple years. This limitation may affect the ability to use SRF monies as proposed. Public Debt: 3.70% (Based on actual market data 8/16/12) 30 year term Effective Tax Rate: 40.75% (Linam A.12) 35% Federal tax rate (Linam A.12) 8.84% California tax rate (Linam A.12) Ad Valorem Tax Rate: Uncollectibles: 1.05% (Stephenson A.57; Linam A.12) 0.2643% (Stephenson A.36; Linam A.12)
Page 5
Depreciation:
40 year plant life / 2.50% (Linam A.12) 25 year tax life / 4.00% (Linam A.12)
AFUDC Rate:
1.00% thru 2015 (approximation based on Stephenson Attachment 5) 3.20% - 3.60% in 2016 for 5.4 MGD (approximation based on Stephenson Attachment 5)
O&M: Purchased Water: Surcharge 2:
Excluded Only capital costs of 5.4 MGD plant evaluated Excluded Only capital costs of 5.4 MGD plant evaluated Year 2013 2014 2015 2016 Amount $7,500,000 $27,040,000 $31,830,000 $32,780,000 9.0 MGD Amount $13,110,000 $32,940,000 $61,470,000 $152,480,000 $260,000,000 5.4 MGD Amount $11,920,000 $27,460,000 $50,010,000 $123,610,000 $213,000,000
Construction Draws: Year 2013 2014 2015 2016
Costs of Issuance:
Where public debt is assumed, additional costs of debt equal to 1.0% of borrowed amount
Tax Treatment on Contributions: Contributions such as SRF loans or tax-exempt debt are treated as repaid through a surcharge, and that portion is removed from rate base and not subject to a return. This model does not subject the interest component to gross-up for taxes and does not treat the interest expense as a deductible expense item. The debt is included in the revenue requirement for analytical purposes, but in the case of a contribution repaid directly from public entity revenues, rather than a surcharge, it would not actually be part of the Cal-Am revenue requirement for ratemaking purposes. Rather, is included here to gather the overall cost to ratepayers.
Page 6
Summary of Financing Capital Costs Monterey Peninsula Water Supply Project 5.4 MGD Plant Size including Surcharge 2 Financing
Scenario Title A Traditional Utility Financing B Traditional Equity, SRF Loans in Lieu of Debt C 100% SRF Loans in Lieu of Debt and Equity D Traditional Equity, Cal-Am TaxExempt Debt (Baa2 Rating) $56,859,000 4.70% Surcharge 30 Year $64,117,000 9.99% $423,184,000 $236,591,000 D-2 Traditional Equity, Cal-Am TaxExempt Debt (Baa2 Rating) $56,859,000 4.70% ROR Depreciable Life $64,117,000 9.99% $434,579,000 $244,473,000 E 100% Cal-Am Tax-Exempt Debt (Baa2 Rating) $121,636,000 4.70% Surcharge 30 Year $0 N/A $328,472,000 $182,807,000
Debt Amount (see note 1) Debt Interest Rate How Debt Paid (see note 2) Debt Amortization Period (note 3) Equity Amount Post-Tax Equity Return Total 40-Yr Capital Cost Recovery Net Present Value of Capital Costs
$56,587,000 5.00% ROR Depreciable Life $63,810,000 9.99% $435,618,000 $245,057,000
$56,587,000 2.50% Surcharge 20 Year $63,810,000 9.99% $387,426,000 $228,063,000
$120,397,000 2.50% Surcharge 20 Year $0 N/A $253,612,000 $165,316,000
Notes: (1) Where tax exempt debt is assumed, issuance costs of 1% are added (2) Debt can be repaid either as part of the rate of return on undepreciated rate base (ROR) or through the pass-thru of a surcharge (Surcharge) (3) SRF loans are 20 year; Bonded debt is 30 year; In the rate of return is the tax-adjusted depreciable life (4) AFUDC is the same in all scenarios, a simplification which does not alter relative results; Not all AFUDC is recoverable when SRF loans and Public Contributions are used to finance.
Page 7
Summary of Financing Capital Costs Monterey Peninsula Water Supply Project 5.4 MGD Plant Size including Surcharge 2 Financing
Scenario Title E-2 100% Cal-Am Tax-Exempt Debt (Baa2 Rating) F Traditional Equity, Cal-Am TaxExempt Debt w/ Public Backstop (A1 Rating) or Public Contribution $56,859,000 3.70% Surcharge 30 Year $64,117,000 9.99% $411,070,000 $231,484,000 F-2 Traditional Equity, Cal-Am TaxExempt Debt w/ Public Backstop (A1 Rating) G 100% Cal-Am TaxExempt Debt w/ Public Backstop (A1 Rating) or Public Contribution G-2 100%, Cal-Am TaxExempt Debt w/ Public Backstop (A1 Rating) H Public Contribution in Lieu of Equity, SRF Loans in Lieu of Debt
Debt Amount (see note 1) Debt Interest Rate How Debt Paid (see note 2) Debt Amortization Period (note 3) Equity Amount Post-Tax Equity Return Total 40-Yr Capital Cost Recovery Net Present Value of Capital Costs
$121,636,000 4.70% ROR Depreciable Life $0 N/A $311,433,000 $182,223,000
$56,859,000 3.70% ROR Depreciable Life $64,117,000 9.99% $425,512,000 $239,895,000
$121,636,000 3.70% Surcharge 30 Year $0 N/A $302,557,000 $171,882,000
$121,636,000 3.70% ROR Depreciable Life $0 N/A $292,032,000 $172,426,000
$56,894,000 2.50% Surcharge 20 Year SRF 30 Year Contrib. $64,157,000 3.70% Debt Cost $279,428,000 $168,779,000
Notes: (1) Where tax exempt debt is assumed, issuance costs of 1% are added (2) Debt can be repaid either as part of the rate of return on undepreciated rate base (ROR) or through the pass-thru of a surcharge (Surcharge) (3) SRF loans are 20 year; Bonded debt is 30 year; In the rate of return is the tax-adjusted depreciable life (4) AFUDC is the same in all scenarios, a simplification which does not alter relative results; Not all AFUDC is recoverable when SRF loans and Public Contributions are used to finance.
Page 8
Monterey Peninsula Water Supply Project Screening Model - 5.4 MGD Plant
Scenario A: Traditional Financing / No SRF Financing / With Surcharge 2 Capital Cost Recovery Only
Prepared by David J. Stoldt for MPWMD
Revenue Requirements Calculation
Capital Costs Surcharge #1 AFUDC Amount AFUDC Excluded from ROR Plant(Transfer to CWIP) Accumulated AFUDC Excluded from ROR Accumulated Depreciation Cumulative Surcharge 2 Cumulative Outside Contributions Cumulative Deferred Taxes Rate Base & Return Average Rate Base Equity Return Necessary Debt Return Necessary Return Necessary, Gross-Up for Taxes Interest Income Tax Savings, Gross-Up for Taxes Total Return Required (Pre-Tax) Expenses O&M Expense Purchased Water Cost Ad Valorem Taxes Depreciation & Amortization Total Expense Revenues from Expenses, Gross-Up for Uncollectibles SRF Loan Repayment Public Agency Contribution Repayment Total Revenue Requirement (Lifecycle) NPV of Revenue Requirement (2012 $) Cost of Water ($/A-F) Assumptions: Purchase Water Annual Cost Reduction After Yr 30 Purchased Water in AF Annual O&M Expense (2017) O & M Cost Inflation Index Annual Surcharge 2 Contribution Outside Contribution for Debt? Contribution Principal Due Contribution Interest Due Contribution Length of Loan Contribution Interest Cost Outside Contribution for Equity? Contribution 2 Principal Due Contribution 2 Interest Due Contribution 2 Length of Loan Contribution 2 Interest Cost AFUDC Rate - 2016 AFUDC Rate thru 2015 Equity Ratio Equity Rate of Return Debt Ratio Debt Interest Cost Effective Tax Rate Gross-Up Factor Ad Valorem Tax Rate Gross-Up for Uncollectibles Discount Rate for NPV Total Acre-Feet Production Depreciation Summary: Remaining Years of Book Depreciation Composite Depreciation Rate Cumulative Book Depreciation Remaining Years of Tax Depreciation Tax Depreciation Rate Cumulative Tax Depreciation Excess of tax over book Deferred Taxes $435,618,140 $245,057,294
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $123,610,000 5,578,298 1,479,303 219,546,873 2,185,318 99,150,000 0
2017
219,546,873 2,185,318 2,955,289 99,150,000 0 758,189 115,730,196 117,344,650 6,213,047 2,757,599 15,100,361 -1,891,570 13,208,791
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
118,959,105 71,195,242
23,445
49,251
148,821
747,550
0 0 1,232,119 2,955,289 4,187,408 4,198,492 0 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
17,407,283 13,639,062 $1,934
$0 $0 3,500 $0 3.0%
(per AF and escalation at 1/2 the O&M rate) (assumes $76,288,000 at 3.70% for 30 years) (GWR included or not) (Capital Cost Recovery Only) (combination of labor @ 2.0% and non-labor @ 3.23%) $0 $7,500,000 N Amount ---> $0 $0
$27,040,000 $0
$31,830,000 $0
$32,780,000 $0 $0 $0
20 years 2.50% (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt) N Amount ---> $0 $0
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 53% 9.99% 47% 5.00% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
years (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt) (approximation based on Stephenson testimony, Attachement 5) (approximation based on Stephenson testimony, Attachement 5) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Linam testimony A.13; Future capital structure per A.11-05-003 would be 6.63%) (Linam testimony A.12) (based uncollectibles rate and state and federal tax rates as shown) (Stephenson testimony A.57; Linam testimony A.12) ( 0.2643% uncollectible revenues)
2.50% (based on 40 year life; Linam testimony A.12))
4.00% (based on 25 year tax life)
40 2,955,289 2,955,289 25 4,815,875 4,815,875 1,860,586 758,189
Page 9
Scenario A: Traditional Financing / No SRF Financing / With Surcharge 2 Capital Cost Recovery Only
20,000,000
AdValoremTaxes PurchasedWaterCost
18,000,000
O&MExpense TotalReturnRequired(PreTax) Depreciation&Amortization
16,000,000
SRFLoanRepayment PublicAgencyContributionRepayment
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 10
Scenario B: Traditional Equity Portion with SRF Financing for Debt Portion / With Surcharge 2 Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $123,610,000 5,578,298 4,032,952 219,546,873 4,738,967 99,150,000 56,586,530
2017
219,546,873 4,738,967 1,476,784 99,150,000 56,586,530 438,319 57,771,986 58,639,393 5,858,075 0 9,860,945 0 9,860,945
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
59,506,801 41,469,090
23,445
49,251
148,821
435,425
0 0 615,714 1,476,784 2,092,498 2,098,037 3,629,863 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
15,588,846 12,214,268 $1,732
$0 $0 3,500 $0 3.0%
(per AF and escalation at 1/2 the O&M rate) (assumes $76,288,000 at 3.70% for 30 years) (GWR included or not) (Capital Cost Recovery Only) (combination of labor @ 2.0% and non-labor @ 3.23%) $0 $7,500,000 Y Amount ---> $0 $0
$27,040,000 $0
$31,830,000 $0
$32,780,000 $56,586,530 $2,215,200 $1,414,663
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 53% 9.99% 47% 5.00% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
40 1,476,784 1,476,784 25 2,552,414 2,552,414 1,075,629 438,319
Page 11
Scenario B: Traditional Equity Portion with SRF Financing for Debt Portion / With Surcharge 2 Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 12
Scenario C: 100% with SRF Financing / With Surcharge 2 Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $123,610,000 5,578,298 6,912,598 219,546,873 7,618,614 99,150,000 120,396,873
2017
219,546,873 7,618,614 0 99,150,000 120,396,873 0 0 0 0 0 0 0 0
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
0 11,715,690
23,445
49,251
148,821
123,015
0 0 0 0 0 0 7,723,114 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
7,723,114 6,051,262 $858
$0 $0 3,500 $0 3.0%
$27,040,000 $0
$31,830,000 $0
$32,780,000 $120,396,873 $4,713,192 $3,009,922
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 0% 9.99% 100% 5.00% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
years (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt) (approximation based on Stephenson testimony, Attachement 5) (approximation based on Stephenson testimony, Attachement 5) (Assumes no equity) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Assumes 100% SRF Loans for debt component) (Linam testimony A.13; Future capital structure per A.11-05-003 would be 6.63%) (Linam testimony A.12) (based uncollectibles rate and state and federal tax rates as shown) (Stephenson testimony A.57; Linam testimony A.12) ( 0.2643% uncollectible revenues)
40 0 0 25 0 0 0 0
Page 13
Scenario C: 100% with SRF Financing / With Surcharge 2 Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 14
Scenario D: Traditional Equity Portion with Cal-Am Tax-Exempt Financing for Debt Portion (Repaid thru Surcharge) / With Surcharge 2 Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $124,178,587 5,588,720 4,034,234 220,125,882 4,740,249 99,150,000 56,858,664
2017
220,125,882 4,740,249 1,484,424 99,150,000 56,858,664 440,208 58,071,234 58,942,620 5,888,368 0 9,911,937 0 9,911,937
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
59,814,006 41,622,693
23,445
49,251
148,821
437,038
0 0 618,898 1,484,424 2,103,322 2,108,889 3,573,222 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
15,594,048 12,218,344 $1,733
$0 $0 3,500 $0 3.0%
$27,040,000 $0
$31,830,000 $0
$32,780,000 $56,858,664 $900,865 $2,672,357
30 years 4.70% (AWW tax-exempt debt rate assumed 4.7%) N Amount ---> $0
$0
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 53% 9.99% 47% 5.00% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
40 1,484,424 1,484,424 25 2,564,689 2,564,689 1,080,264 440,208
Page 15
Scenario D: Traditional Equity Portion with Cal-Am Tax-Exempt Financing for Debt Portion (Repaid thru Surcharge) / With Surcharge 2 Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 16
Scenario D-2: Traditional Equity Portion with Cal-Am Tax-Exempt Financing for Debt Portion / With Surcharge 2 Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $124,178,587 5,588,720 1,475,281 220,125,882 2,181,296 99,150,000 0
2017
220,125,882 2,181,296 2,969,865 99,150,000 0 761,687 116,301,228 117,923,221 6,243,681 2,604,924 14,894,927 -1,786,842 13,108,085
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
119,545,213 71,488,296
23,445
49,251
148,821
750,627
0 0 1,238,194 2,969,865 4,208,058 4,219,197 0 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
17,327,282 13,576,379 $1,925
$0 $0 3,500 $0 3.0%
$27,040,000 $0
$31,830,000 $0
$32,780,000 $0 $0 $0
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 53% 9.99% 47% 4.70% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
years (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt) (approximation based on Stephenson testimony, Attachement 5) (approximation based on Stephenson testimony, Attachement 5) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (AWW Capital Corp Baa2 credit rating) (Linam testimony A.12) (based uncollectibles rate and state and federal tax rates as shown) (Stephenson testimony A.57; Linam testimony A.12) ( 0.2643% uncollectible revenues)
40 2,969,865 2,969,865 25 4,839,035 4,839,035 1,869,171 761,687
Page 17
Scenario D-2: Traditional Equity Portion with Cal-Am Tax-Exempt Financing for Debt Portion / With Surcharge 2 Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 18
Scenario E: 100% with Cal-Am Tax-Exempt Debt Financing (repaid thru Surcharge) Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $124,826,355 5,600,594 6,928,173 220,785,524 7,634,189 99,150,000 121,635,524
2017
220,785,524 7,634,189 0 99,150,000 121,635,524 0 0 0 0 0 0 0 0
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
0 11,715,690
23,445
49,251
148,821
123,015
0 0 0 0 0 0 7,644,054 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
7,644,054 5,989,316 $849
$0 $0 3,500 $0 3.0%
$27,040,000 $0
$31,830,000 $0
$32,780,000 $121,635,524 $1,927,185 $5,716,870
30 years 4.70% (AWW tax-exempt debt rate assumed 4.7%) N Amount ---> $0
$0
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 0% 9.99% 100% 5.00% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
years (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt) (approximation based on Stephenson testimony, Attachement 5) (approximation based on Stephenson testimony, Attachement 5) (assume 100% debt financed) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (assume 100% debt financed) (Linam testimony A.13; Future capital structure per A.11-05-003 would be 6.63%) (Linam testimony A.12) (based uncollectibles rate and state and federal tax rates as shown) (Stephenson testimony A.57; Linam testimony A.12) ( 0.2643% uncollectible revenues)
40 0 0 25 0 0 0 0
Page 19
Scenario E: 100% with Cal-Am Tax-Exempt Debt Financing (repaid thru Surcharge) Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 20
Scenario E-2: 100% with Cal-Am Tax-Exempt Debt Financing / With Surcharge 2 Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $124,826,355 5,600,594 1,470,743 220,785,524 2,176,758 99,150,000 0
2017
220,785,524 2,176,758 2,986,469 99,150,000 0 765,673 116,951,738 118,582,318 0 5,573,369 9,381,697 -3,823,041 5,558,655
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
120,212,898 71,822,139
23,445
49,251
148,821
754,132
0 0 1,245,114 2,986,469 4,231,583 4,242,784 0 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
9,801,440 7,679,684 $1,089
$0 $0 3,500 $0 3.0%
$27,040,000 $0
$31,830,000 $0
$32,780,000 $0 $0 $0
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 0% 9.99% 100% 4.70% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
years (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt) (approximation based on Stephenson testimony, Attachement 5) (approximation based on Stephenson testimony, Attachement 5) (assume 100% debt financed) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (assume 100% debt financed) (AWW Capital Corp Baa2 credit rating) (Linam testimony A.12) (based uncollectibles rate and state and federal tax rates as shown) (Stephenson testimony A.57; Linam testimony A.12) ( 0.2643% uncollectible revenues)
40 2,986,469 2,986,469 25 4,865,421 4,865,421 1,878,952 765,673
Page 21
Scenario E-2: 100% with Cal-Am Tax-Exempt Debt Financing / With Surcharge 2 Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 22
Scenario F: Traditional Equity Portion with Cal-Am Tax-Exempt Financing w/ Public Backstop for Debt Portion (Repaid thru Surcharge) / With Surcharge 2 Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $124,178,587 5,588,720 4,034,234 220,125,882 4,740,249 99,150,000 56,858,664
2017
220,125,882 4,740,249 1,484,424 99,150,000 56,858,664 440,208 58,071,234 58,942,620 5,888,368 0 9,911,937 0 9,911,937
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
59,814,006 41,622,693
23,445
49,251
148,821
437,038
0 0 618,898 1,484,424 2,103,322 2,108,889 3,169,430 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
15,190,256 11,901,963 $1,688
$0 $0 3,500 $0 3.0%
$27,040,000 $0
$31,830,000 $0
$32,780,000 $56,858,664 $1,065,660 $2,103,771
30 years 3.70% (assumes MPWMD public credit rated A1/A+) N Amount ---> $0
$0
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 53% 9.99% 47% 5.00% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
40 1,484,424 1,484,424 25 2,564,689 2,564,689 1,080,264 440,208
Page 23
Scenario F: Traditional Equity Portion with Cal-Am Tax-Exempt Financing w/ Public Backstop for Debt Portion (Repaid thru Surcharge) / With Surcharge 2 Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 24
Scenario F-2: Traditional Equity Portion with Cal-Am Tax-Exempt Financing w/ Public Backstop for Debt Portion / With Surcharge 2 Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $124,178,587 5,588,720 1,475,281 220,125,882 2,181,296 99,150,000 0
2017
220,125,882 2,181,296 2,969,865 99,150,000 0 761,687 116,301,228 117,923,221 6,243,681 2,050,685 13,961,972 -1,406,663 12,555,309
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
119,545,213 71,488,296
23,445
49,251
148,821
750,627
0 0 1,238,194 2,969,865 4,208,058 4,219,197 0 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
16,774,506 13,143,264 $1,864
$0 $0 3,500 $0 3.0%
$27,040,000 $0
$31,830,000 $0
$32,780,000 $0 $0 $0
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 53% 9.99% 47% 3.70% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
years (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt) (approximation based on Stephenson testimony, Attachement 5) (approximation based on Stephenson testimony, Attachement 5) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (assumes MPWMD public credit rated A1/A+) (Linam testimony A.12) (based uncollectibles rate and state and federal tax rates as shown) (Stephenson testimony A.57; Linam testimony A.12) ( 0.2643% uncollectible revenues)
40 2,969,865 2,969,865 25 4,839,035 4,839,035 1,869,171 761,687
Page 25
Scenario F-2: Traditional Equity Portion with Cal-Am Tax-Exempt Financing w/ Public Backstop for Debt Portion / With Surcharge 2 Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 26
Scenario G: 100% with Cal-Am Tax-Exempt Debt Financing w/ Public Backstop (repaid thru Surcharge) Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $124,826,355 5,600,594 6,928,173 220,785,524 7,634,189 99,150,000 121,635,524
2017
220,785,524 7,634,189 0 99,150,000 121,635,524 0 0 0 0 0 0 0 0
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
0 11,715,690
23,445
49,251
148,821
123,015
0 0 0 0 0 0 6,780,238 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
6,780,238 5,312,494 $753
$0 $0 3,500 $0 3.0%
$27,040,000 $0
$31,830,000 $0
$32,780,000 $121,635,524 $2,279,724 $4,500,514
30 years 3.70% (assumes MPWMD public credit rated A1/A+) N Amount ---> $0
$0
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 0% 9.99% 100% 5.00% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
years (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt) (approximation based on Stephenson testimony, Attachement 5) (approximation based on Stephenson testimony, Attachement 5) (assume 100% debt financed) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (assume 100% debt financed) (Linam testimony A.13; Future capital structure per A.11-05-003 would be 6.63%) (Linam testimony A.12) (based uncollectibles rate and state and federal tax rates as shown) (Stephenson testimony A.57; Linam testimony A.12) ( 0.2643% uncollectible revenues)
40 0 0 25 0 0 0 0
Page 27
Scenario G: 100% with Cal-Am Tax-Exempt Debt Financing w/ Public Backstop (repaid thru Surcharge) Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 28
Scenario G-2: 100% with Cal-Am Tax-Exempt Debt Financing w/ Public Backstop / With Surcharge 2 Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $124,826,355 5,600,594 1,470,743 220,785,524 2,176,758 99,150,000 0
2017
220,785,524 2,176,758 2,986,469 99,150,000 0 765,673 116,951,738 118,582,318 0 4,387,546 7,385,591 -3,009,628 4,375,963
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
120,212,898 71,822,139
23,445
49,251
148,821
754,132
0 0 1,245,114 2,986,469 4,231,583 4,242,784 0 0
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
8,618,747 6,753,014 $958
$0 $0 3,500 $0 3.0%
$27,040,000 $0
$31,830,000 $0
$32,780,000 $0 $0 $0
$0
$0
$0 $0 $0
30 3.70% 3.60% 1.00% 0% 9.99% 100% 3.70% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
years (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt) (approximation based on Stephenson testimony, Attachement 5) (approximation based on Stephenson testimony, Attachement 5) (assume 100% debt financed) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (assume 100% debt financed) (assumes MPWMD public credit rated A1/A+) (Linam testimony A.12) (based uncollectibles rate and state and federal tax rates as shown) (Stephenson testimony A.57; Linam testimony A.12) ( 0.2643% uncollectible revenues)
40 2,986,469 2,986,469 25 4,865,421 4,865,421 1,878,952 765,673
Page 29
Scenario G-2: 100% with Cal-Am Tax-Exempt Debt Financing w/ Public Backstop / With Surcharge 2 Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 30
Scenario H: Public Contribution for Equity Portion with SRF Financing for Debt Portion / With Surcharge 2 Capital Cost Recovery Only
2012 $0 0 0 0 0 0 0
2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0
2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0
2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0
2016 $124,251,566 5,590,058 4,034,401 220,200,199 4,740,416 99,150,000 121,050,199
2017
220,200,199 4,740,416 0 99,150,000 121,050,199 0 0 0 0 0 0 0 0
0 0
4,465,656 2,232,828
4,915,414 4,690,535
23,431,380 14,173,397
0 11,715,690
23,445
49,251
148,821
123,015
0 0 0 0 0 0 3,649,561 3,576,234
0 0
7,500,000 7,142,857
27,040,000 24,526,077
31,830,000 27,495,951
32,780,000 26,968,187
7,225,795 5,661,599 $803
$0 $0 3,500 $0 3.0%
$27,040,000 $0
$31,830,000 $0
$32,780,000 $56,893,593 $2,227,221 $1,422,340
20 years 2.50% (SRF at 2.5% per Linam testimony A.13; 3.70% for municipal debt) Y Amount ---> $0 $0
$0
$0
$64,156,605 $1,202,439 $2,373,794
30 3.70% 3.60% 1.00% 53% 9.99% 47% 5.00% 40.750% 1.683 1.050% 99.736% 5.00% 9,000
years (assume MPWMD public credit rated A1/A+) (approximation based on Stephenson testimony, Attachement 5) (approximation based on Stephenson testimony, Attachement 5) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Stephenson testimony A.11, A.51; Assumes future capital structure per A.11-05-003) (Linam testimony A.13; Future capital structure per A.11-05-003 would be 6.63%) (Linam testimony A.12) (based uncollectibles rate and state and federal tax rates as shown) (Stephenson testimony A.57; Linam testimony A.12) ( 0.2643% uncollectible revenues)
40 0 0 25 0 0 0 0
Page 31
Scenario H: Public Contribution for Equity Portion with SRF Financing for Debt Portion / With Surcharge 2 Capital Cost Recovery Only
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
Page 31

MPRWA Attachment B

Transféré par

Informations du document

Description originale:

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

MPRWA Attachment B

Transféré par

Droits d'auteur :

Formats disponibles

Monterey Peninsula Water Supply Project A.

Evaluation of Capital Financing Alternatives For a 5.4 MGD Desalination Plant

EvaluationofCapitalFinancingAlternativesfora5.4MGDDesalinationPlant MontereyPeninsulaWaterSupplyProject(A.1204019) DRAFTVer1.0

O&M: Purchased Water: Surcharge 2:

Construction Draws: Year 2013 2014 2015 2016

$56,587,000 5.00% ROR Depreciable Life $63,810,000 9.99% $435,618,000 $245,057,000

$56,587,000 2.50% Surcharge 20 Year $63,810,000 9.99% $387,426,000 $228,063,000

$120,397,000 2.50% Surcharge 20 Year $0 N/A $253,612,000 $165,316,000

$121,636,000 4.70% ROR Depreciable Life $0 N/A $311,433,000 $182,223,000

$56,859,000 3.70% ROR Depreciable Life $64,117,000 9.99% $425,512,000 $239,895,000

$121,636,000 3.70% Surcharge 30 Year $0 N/A $302,557,000 $171,882,000

$121,636,000 3.70% ROR Depreciable Life $0 N/A $292,032,000 $172,426,000

Revenue Requirements Calculation

2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0

2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0

2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0

2016 $123,610,000 5,578,298 1,479,303 219,546,873 2,185,318 99,150,000 0

0 0 1,232,119 2,955,289 4,187,408 4,198,492 0 0

17,407,283 13,639,062 $1,934

2.50% (based on 40 year life; Linam testimony A.12))

4.00% (based on 25 year tax life)

40 2,955,289 2,955,289 25 4,815,875 4,815,875 1,860,586 758,189

O&MExpense TotalReturnRequired(PreTax) Depreciation&Amortization

Revenue Requirements Calculation

2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0

2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0

2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0

2016 $123,610,000 5,578,298 4,032,952 219,546,873 4,738,967 99,150,000 56,586,530

0 0 615,714 1,476,784 2,092,498 2,098,037 3,629,863 0

15,588,846 12,214,268 $1,732

$32,780,000 $56,586,530 $2,215,200 $1,414,663

2.50% (based on 40 year life; Linam testimony A.12))

4.00% (based on 25 year tax life)

40 1,476,784 1,476,784 25 2,552,414 2,552,414 1,075,629 438,319

O&MExpense TotalReturnRequired(PreTax) Depreciation&Amortization

Revenue Requirements Calculation

2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0

2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0

2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0

2016 $123,610,000 5,578,298 6,912,598 219,546,873 7,618,614 99,150,000 120,396,873

219,546,873 7,618,614 0 99,150,000 120,396,873 0 0 0 0 0 0 0 0

7,723,114 6,051,262 $858

$32,780,000 $120,396,873 $4,713,192 $3,009,922

2.50% (based on 40 year life; Linam testimony A.12))

4.00% (based on 25 year tax life)

O&MExpense TotalReturnRequired(PreTax) Depreciation&Amortization

Revenue Requirements Calculation

2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0

2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0

2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0

2016 $124,178,587 5,588,720 4,034,234 220,125,882 4,740,249 99,150,000 56,858,664

0 0 618,898 1,484,424 2,103,322 2,108,889 3,573,222 0

15,594,048 12,218,344 $1,733

$32,780,000 $56,858,664 $900,865 $2,672,357

2.50% (based on 40 year life; Linam testimony A.12))

4.00% (based on 25 year tax life)

40 1,484,424 1,484,424 25 2,564,689 2,564,689 1,080,264 440,208

O&MExpense TotalReturnRequired(PreTax) Depreciation&Amortization

Revenue Requirements Calculation

2013 $11,920,000 59,899 37,688 11,979,899 37,688 7,500,000 0

2014 $27,460,000 258,391 254,439 39,698,290 292,127 34,540,000 0

2015 $50,010,000 650,284 413,888 90,358,575 706,016 66,370,000 0

2016 $124,178,587 5,588,720 1,475,281 220,125,882 2,181,296 99,150,000 0