Hanley Reb Ex 19 Sch5 - p2.doc

United Water Idaho, Inc.
Analysis of the reasonableness of the Implicit Equity Risk Premium Based upon
United Water Idaho, Inc.’s requested Return on Common Equity of 11.30%

Notes:

Return on common equity authorized for Avista Utilities in Order No. 28097 issued July 29, 1999.

Average yield on Moody’s A rated public utility bonds for the month of July 1999 (from Schedule 4 of this Exhibit). Avista Utilities / Washington Water Power long-term debt is rated A by Standard & Poor’s and A3 by Moody’s.

Line No. 1 – Line No. 1.

Average forecast based upon six quarterly estimates of Aaa corporate bond yields per the consensus of nearly 50 economists reported in the Blue Chip Financial Forecasts dated June 1, 2000 (see page 2 of Schedule 3). The estimates are detailed below:

Treasury Bond Yield
30-Year
Second Quarter 2000 7.8%
Third Quarter 2000 7.9
Fourth Quarter 2000 7.9
First Quarter 2001 7.8
Second Quarter 2001 7.7
Third Quarter 2001 7.7
Average 7.8%

The yield on Moody’s A rated public utility bonds over Moody’s Aaa rated corporate bonds of 0.75% on June 9, 2000. Calculated as the difference between the June 9, 2000 Moody’s A rated public utility bond yield of 8.33% less the June 9, 2000 Moody’s Aaa rated corporate bond yield of 7.58%.

Line No. 4 + Line No. 5.

Line No. 3 + Line No. 6.

From page 1, Schedule 1 of Exhibit No. ___(FJH-1).

From Line No. 6 above.

Line No. 8 – Line No. 9.