The URL can be used to link to this page

Home My WebLink About20230308Walker Rebuttal Exhibits.PDFCase 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: (208) 388-1200 Facsimile: (208) 388-1300 prestoncarter@givenspursley.com blakeringer@givenspursley.com 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 ) ) ) ) ) ) ) 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