20230308Walker Rebuttal Exhibits.PDF

Case No. VEO-W-22-02
Exhibit No. 15
Schedules 1 to 6
H. Walke
Preston N. Carter, ISB No. 8462
Blake W. Ringer, ISB No. 11223
Givens Pursley LLP
601 W. Bannock St.
Boise, Idaho 83702
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
Attorneys for Veolia Water Idaho, Inc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF VEOLIA WATER IDAHO, INC. FOR
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR WATER SERVICE IN
THE STATE OF IDAHO
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CASE NO. VEO-W-22-02
BEFORE THE IDAHO PUBLIC UTILITIES
COMMISSION EXHIBIT NO. 15 TO ACCOMPANY THE
REBUTTAL TESTIMONY OF HAROLD WALKER, III
RECEIVED
2023 March, 8 4:42PM
IDAHO PUBLIC
UTILITIES COMMISSION
P-E Multiples and Market/Book Multiples
As of 1/20/23
For Mr. Gorman's Water Proxy Group and Gas Proxy Group
Market to
PE Book
Mult Mult
Mr. Gorman's Water Proxy Group
American States Water Co 43.0 4.87
American Water Works Co Inc 20.9 3.55
California Water Service Gp 40.9 2.61
Essential Utilities, Inc. 26.1 2.28
Middlesex Water Co 33.4 3.57
SJW Corp 39.4 2.20
Average 34.0 3.18
Mr. Gorman's Gas Proxy Group
Atmos Energy Corporation 20.4 1.69
New Jersey Resources Corporation 21.7 2.62
NiSource Inc. 16.4 1.96
Northwest Natural Holding Company 20.3 1.53
ONE Gas, Inc. 19.3 1.70
Southwest Gas Holdings, Inc. 28.7 1.30
Spire Inc. 17.9 1.43
UGI Corporation 6.1 1.40
Average 18.8 1.70
Water Proxy as a Percentage of Gas Proxy 180% 187%
Source of Information: S&P Capital IQ
Case No. VEO-W-22-02
Exhibit No. 15
Schedule 1
H. Walker
Page 1 of 1
Comparable Earnings Method
For Mr. Terry's Proxy Group
Company
American States Water Co 14.21% 13.90% 14.54%
American Water Works Co Inc 18.37% 11.28% 10.36%
California Water Service Gp 9.60% 11.38% 8.36%
Essential Utilities, Inc. 8.75% 6.65% 7.62%
Middlesex Water Co 10.18% 11.40% 11.74%
SJW Corp 6.20% 6.81% 2.66%
York Water Co 11.48% 11.97% 11.06%
Veolia Environnement 5.26% 2.96% 12.38%
Average 10.50% 9.54% 9.84%
Max 18.37% 13.90% 14.54%
Min 5.26% 2.96% 2.66%
Median 9.89% 11.33% 10.71%
Average (2019-2021) 9.96%
Median (2019-2021) 10.71%
Results Excluding Veolia Environnement
Average 11.25% 10.48% 9.48%
Max 18.37% 13.90% 14.54%
Min 6.20% 6.65% 2.66%
Median 10.18% 11.38% 10.36%
Average (2019-2021)10.41%
Median (2019-2021)11.06%
Source of Information: S&P Capital IQ
Case No. VEO-W-22-02
Exhibit No. 15
Schedule 2
H. Walker
Page 1 of 1
2021
ROE
2020
ROE
2019
ROE
Mr. Terry's DCF After Corrections For
Next Year's Dividend Yield and Removal of Companies
Based on Mr. Terry's Proxy Group
Company
Dividend
Yield
Projected
Growth Est
Dividend Yield
Adjusted for
Growth (D1/2)
DCF Est
Based on
Projected
Growth
American States Water Co 1.67% 4.40% 1.71% 6.11%
American Water Works Co Inc 1.71% 8.28% 1.78% 10.06%
California Water Service Gp 1.68% 11.70% 1.78% 13.48%
Essential Utilities, Inc. 2.44% 6.60% 2.52% 9.12%
Middlesex Water Co 1.45% 2.70% 1.47% 4.17%
SJW Corp 1.97% 9.80% 2.07% 11.87%
York Water Co 1.81% 4.90% 1.85% 6.75%
Veolia Envronnement 3.37% 11.70% 3.57% 15.27%
Average 9.60%
Max 15.27%
Min 4.17%
Median 9.59%
Average 9.57%
Max 13.48%
Min 6.11%
Median 9.59%
Source of Information: Mr. Terry's Exhibit No. 119.
Case No. VEO-W-22-02
Exhibit No. 15
Schedule 3
H. Walker
Page 1 of 1
Result After Removal of
Highest and Lowest Result
Comparison of the Sales Growth for Mr. Gorman's Water Proxy Group and the US Economic Growth
1988 - 2021
Mr. Gorman's Water Proxy Group
Period Year
American
States
Water
Company
American
Water
Works
Company,
Inc.
California
Water
Service
Group
Essential
Utilities,
Inc.
Middlesex
Water
Company
SJW
Group
Gross Domestic
Product
(Millions of Dollars) (Billions of Dollars)
33 1988 80.175 511.906 113.755 125.872 24.034 62.627 5,236.438
32 1989 85.564 527.545 117.488 133.517 23.499 56.044 5,641.580
31 1990 90.398 572.938 124.387 82.267 26.417 70.458 5,963.144
30 1991 90.660 635.979 127.176 88.648 29.853 76.281 6,158.129
29 1992 100.660 657.360 139.805 93.307 30.861 89.109 6,520.327
28 1993 108.506 717.537 151.716 101.244 35.479 95.045 6,858.559
27 1994 122.675 770.241 157.271 108.636 36.122 99.422 7,287.236
26 1995 129.813 802.820 165.086 117.044 37.847 97.385 7,639.749
25 1996 151.529 894.646 182.764 122.503 38.025 102.593 8,073.122
24 1997 153.755 1,131.374 198.347 235.852 40.294 110.084 8,577.552
23 1998 148.060 1,200.037 214.926 250.771 43.058 106.010 9,062.817
22 1999 173.421 1,260.857 234.937 256.546 53.497 117.001 9,631.172
21 2000 183.960 1,350.590 244.806 274.014 54.477 123.157 10,250.952
20 2001 197.514 1,438.887 246.820 307.280 59.638 136.083 10,581.929
19 2002 209.205 1,715.173 263.151 322.028 61.933 146.373 10,929.108
18 2003 212.669 1,890.291 277.128 367.233 64.111 150.454 11,456.450
17 2004 229.090 2,017.871 315.567 442.039 70.991 166.911 12,217.196
16 2005 238.128 2,136.746 320.728 496.779 74.613 180.105 13,039.197
15 2006 268.629 2,093.067 334.717 533.491 81.061 189.238 13,815.583
14 2007 301.370 2,214.215 367.082 602.499 86.114 206.601 14,474.228
13 2008 311.246 2,336.928 410.312 626.972 91.038 220.347 14,769.862
12 2009 353.251 2,290.446 449.372 633.292 91.243 216.097 14,478.067
11 2010 399.776 2,555.035 460.399 660.186 102.735 215.638 15,048.970
10 2011 419.913 2,666.236 501.814 687.291 102.069 238.955 15,599.731
9 2012 466.908 2,853.926 559.966 750.685 110.379 261.547 16,253.970
8 2013 472.077 2,879.000 584.103 761.893 114.846 276.869 16,843.196
7 2014 465.791 3,011.000 597.499 779.903 117.139 319.668 17,550.687
6 2015 458.641 3,159.000 588.368 814.204 126.025 305.082 18,206.023
5 2016 436.087 3,302.000 609.370 819.875 132.906 339.706 18,695.106
4 2017 440.603 3,357.000 676.113 809.525 130.775 389.225 19,477.337
3 2018 436.816 3,440.000 698.196 838.091 138.077 397.699 20,533.058
2 2019 473.869 3,610.000 714.557 889.692 134.598 420.482 21,380.976
1 2020 488.243 3,777.000 794.307 1,462.698 141.592 564.526 21,060.474
0 2021 498.853 3,930.000 790.909 1,878.144 143.141 573.686 23,315.081
Group's
Average GDP's
Change Change
Period % Change
1988 - 2021 522% 668% 595% 1392% 496% 816%748%345%
1991 - 2021 450% 518% 522% 2019% 379% 652%757%279%
2001 - 2021 153% 173% 220% 511% 140% 322%253%120%
2011 - 2021 19% 47% 58% 173% 40% 140%80%49%
Percent
Greater Than GDP
1988 - 2021 117%
1991 - 2021 172%
2001 - 2021 110%
2011 - 2021 61%
Source of Information: S&P Capital IQ, Annual Reports, and Federal Reserve Bank of St. Louis.
Case No. VEO-W-22-02
Exhibit No. 15
Schedule 4
H. Walker
Page 1 of 1
Recent Differences in Book Value and Market Values for
Mr. Terry's Proxy Group and Mr. Gorman's Water Proxy Group
Recent Book Value Capitalization Ratios Recent Market Capitalization Ratios
@ 9/30/22 @ 1/20/23
Long-Term Preferred Common Long-Term Preferred Common
Debt Stock Equity Total Debt Stock Equity Total
Walker's Comparison Group
American States Water Co 50% 0% 50% 100% 17% 0% 83% 100%
American Water Works Co Inc 59% 0% 41% 100% 29% 0% 71% 100%
California Water Service Gp 45% 0% 55% 100% 24% 0% 76% 100%
Essential Utilities, Inc. 54% 0% 46% 100% 34% 0% 66% 100%
Middlesex Water Co 44% 0% 56% 100% 18% 0% 82% 100%
SJW Corp 58% 0% 42% 100% 39% 0% 61% 100%
York Water Co 38% 0% 62% 100% 16% 0% 84% 100%
Mr. Terry's Proxy Group Average* 50% 0% 50% 25% 0% 75%
Mr. Gorman's Water Proxy Group Averag 52% 0% 48% 27% 0% 73%
Recent
Book Value Recent
Capitalization Maket Value
Ratios Capitalization
(1/20/23) Ratios
Mr. Terry's Proxy Group Average*
Long Term Debt 25%
Preferred Stock 0%
Common Equity 75%
Total 100%
Mr. Gorman's Water Proxy Group Average
Long Term Debt 27%
Preferred Stock 0%
Common Equity 73%
Total 100%
* Excludes Veolia Environnement due to lack of information.
Source of Information: S&P Capital IQ
Case No. VEO-W-22-02
Exhibit No. 15
Schedule 5
H. Walker
Page 1 of 1
100%
50%
0%
50%
52%
0%
48%
100%
Capital Asset Pricing Method
For Mr. Terry's Proxy Group
Return
S&P Since 1922 12.47%
1 Mo 30 Yr
Avg Risk Free Rate 1.86% 3.15%
1/27/2023 Risk Free Rate 4.61% 3.64%
Company Beta 1 Mo 30 Yr 1 Mo 30 Yr
American States Water Co 0.65 8.76% 9.21% 9.72% 9.38%
American Water Works Co Inc 0.90 11.41% 11.54% 11.68% 11.59%
California Water Service Gp 0.70 9.29% 9.67% 10.11% 9.82%
Essential Utilities, Inc. 0.95 11.94% 12.00% 12.08% 12.03%
Middlesex Water Co 0.70 9.29% 9.67% 10.11% 9.82%
SJW Corp 0.80 10.35% 10.61% 10.90% 10.70%
York Water Co 0.80 10.35% 10.61% 10.90% 10.70%
Veolia Envronnement 1.06 13.11% 13.03% 12.94% 13.00%
Min Max Mean Median
8.76% 13.11% 10.82% 10.66%
Case No. VEO-W-22-02
Exhibit No. 15
Schedule 6
H. Walker
Page 1 of 1
Average Risk Free Rate Jan 27 Risk Free Rate