20230215Gorman Direct with Exhibits.pdf

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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)
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)
)
)
)
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CASE NO. VEO-W-22-02
Direct Testimony & Exhibits of
Michael P. Gorman
On behalf of
Micron Technology, Inc.
February 15, 2023
RECEIVED
2023 February 15, 4:38PM
IDAHO PUBLIC
UTILITIES COMMISSION

Gorman, Di i
Micron Technology, Inc.
Table of Contents

I. SUMMARY ............................................................................................................................. 2
II. SALES FORECAST .............................................................................................................. 5
III. EMPLOYEE ADJUSTMENT .............................................................................................. 12
IV. RATE OF RETURN MARKET EVIDENCE ........................................................................ 15
IV.A. Utility Industry Authorized Returns on Equity,
Access to Capital, and Credit Strength ............................................................................. 16
IV.B. Federal Reserve’s Impact on Cost of Capital .......................................................... 23
IV.C. Market Sentiments and Utility Industry Outlook ..................................................... 29
IV.D. VWID’S Investment Risk ........................................................................................... 34
IV.E. VWID’s Proposed Capital Structure ......................................................................... 35
IV.F. Embedded Cost of Debt ............................................................................................ 36
V. RETURN ON EQUITY ......................................................................................................... 36
V.A. Risk Proxy Group ....................................................................................................... 37
V.B. DCF Model .................................................................................................................. 40
V.C. Sustainable Growth DCF ............................................................................................ 45
V.D. Multi-Stage Growth DCF Model ................................................................................. 47
V.E. DCF Summary Results ............................................................................................... 54
V.F. Risk Premium Model ................................................................................................... 55
V.G. Capital Asset Pricing Model (“CAPM”) ..................................................................... 61
V.H. Return on Equity Summary ....................................................................................... 70
V.I. Financial Integrity ........................................................................................................ 71
VI. RESPONSE TO VWID WITNESS MR. HAROLD WALKER .............................................. 75
VI.A. Leverage Risk Adjustment ........................................................................................... 77
VI.B. DCF ................................................................................................................................ 81
VI.C. CAPM ............................................................................................................................. 83
VI.D. Risk Premium ................................................................................................................ 85
VI.E. Additional Business Risks ........................................................................................... 87

Qualifications of Michael P. Gorman ........................................................................... Appendix A

Exhibit No. 401: Rate of Return
Exhibit No. 402: Valuation Metrics
Exhibit No. 403: Proxy Groups
Exhibit No. 404: Consensus Analysts’ Growth Rates
Exhibit No. 405: Constant Growth DCF Model
(Consensus Analysts' Growth Rates)
Exhibit No. 406: Payout Ratios
Exhibit No. 407: Sustainable Growth Rate
Exhibit No. 408: Constant Growth DCF Model
(Sustainable Growth Rate)
Exhibit No. 409: Electricity Sales Are Linked to U.S. Economic Growth
Exhibit No. 410: Multi-Stage Growth DCF Model
Exhibit No. 411: Common Stock Market/Book Ratio
Exhibit No. 412: Equity Risk Premium - Treasury Bond
Exhibit No. 413: Equity Risk Premium - Utility Bond
Exhibit No. 414: Bond Yield Spreads
Exhibit No. 415: Treasury and Utility Bond Yields
Exhibit No. 416: CAPM Return

Gorman, Di ii
Micron Technology, Inc.
Exhibit No. 417: Value Line Beta
Exhibit No. 418: Standard & Poor’s Credit Metrics

Gorman, Di 1
Micron Technology, Inc.
Q PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 1
A Michael P. Gorman. My business address is 16690 Swingley Ridge Road, 2
Suite 140, Chesterfield, MO 63017. 3

Q WHAT IS YOUR OCCUPATION? 4
A I am a consultant in the field of public utility regulation and a Managing Principal 5
with the firm of Brubaker & Associates, Inc. (“BAI”), energy, economic and 6
regulatory consultants. 7

Q PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND AND 8
EXPERIENCE. 9
A This information is included in Appendix A to my testimony. 10

Q ON WHOSE BEHALF ARE YOU APPEARING IN THIS PROCEEDING? 11
A I am appearing on behalf of Micron Technology, Inc., a large customer of Veolia 12
Water Idaho Inc. (“Veolia,” “VWID,” or “the Company”). 13

Q WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING? 14
A My testimony will address adjustments to VWID’s proposed revenue 15
requirement, the overall rate of return including return on equity, embedded debt 16
cost of VWID, and analysis of VWID’s testimony on these subjects. 17
18

Gorman, Di 2
Micron Technology, Inc.
Q DOES THE FACT THAT YOU DID NOT ADDRESS EVERY ISSUE RAISED IN 1
VWID’S TESTIMONY MEAN THAT YOU AGREE WITH VWID’S TESTIMONY 2
ON THOSE ISSUES? 3
A No. It merely reflects that I did not choose to address all those issues. It should 4
not be read as an endorsement of, or agreement with, VWID’s position on such 5
issues. 6

I. SUMMARY 7
Q WILL YOU SUMMARIZE YOUR ADJUSTMENTS TO VWID’S REVENUE 8
REQUIREMENT AS PRESENTED IN YOUR TESTIMONY? 9
A I recommend several adjustments to VWID’s claimed revenue deficiency. As 10
outlined in Table 1 below, I believe the Company’s claimed revenue deficiency of 11
$12.1 million is overstated by approximately $5.7 million. 12
Line
1 Claimed Revenue Deficiency 12.1$
Adjustments:
2 Return on Equity 3.1$
3 Sales Forecast 1.9$
4 Labor Expenses 0.8$
5 Total Adjustments 5.7$
6 Adjusted Revenue Deficiency 6.4$
Revenue Requirement Adjustments
($ Millions)
Amount
TABLE 1
Description

Gorman, Di 3
Micron Technology, Inc.
Q PLEASE SUMMARIZE YOUR RECOMMENDATIONS AND CONCLUSIONS 1
ON RATE OF RETURN. 2
A I recommend the Idaho Public Utilities Commission (“the Commission”) approve 3
a reasonable return on equity that reflects VWID’s investment risk, and charges 4
customers rates that are as low and competitive as possible while also fairly 5
compensating VWID, and maintains its access to capital, financial integrity and 6
credit standing. Specifically, I recommend the Commission award a return on 7
common equity within my recommended range of 9.00% to 9.70%, with a 8
midpoint of 9.35%. My proposed return on equity and the Company’s capital 9
structure will result in an overall rate of return of 6.97%, as shown on my Exhibit 10
No. 401. 11
My recommended return on equity will fairly compensate the Company for 12
its current market cost of common equity, and preserve its credit rating, its 13
access to capital on reasonable terms and its financial integrity. My 14
recommended return on equity will also mitigate the Company’s claimed revenue 15
deficiency in this proceeding while providing a return that fairly balances the 16
interests of customers and shareholders. 17
Finally, I respond to VWID witness Mr. Harold Walker’s return on equity 18
recommendation. Mr. Walker recommended an equity return in the range of 19
9.60% to 11.60% and a return on equity point estimate of 10.80%.1 Mr. Walker’s 20
recommended return on equity for VWID substantially exceeds a fair return on 21
equity for the Company’s investment risk. Mr. Walker’s return on equity is simply 22
excessive and would result in unjust and unreasonable rates for VWID’s retail 23
customers. 24

1 Walker Direct Testimony at pp. 4-5.

Gorman, Di 4
Micron Technology, Inc.
Q PLEASE SUMMARIZE YOUR PROPOSED ADJUSTMENT TO VWID’S 1
FORECASTED TEST YEAR SALES. 2
A VWID’s forecasted sales for residential customers in the test year ending March 3
31, 2023, reflects a pessimistic projected decline in the residential customer 4
water usage. The Company projects a significant decrease in use per residential 5
customer in the test year ending March 31, 2023, relative to actual annual use 6
over the past three to five years. Specifically, VWID’s projected use per 7
customer for the test year is 96.88 thousand gallons per customer compared to 8
the most recent actual use of 105.48 thousand gallons per customer. As a result, 9
VWID’s test year sales forecast applies an 8.59 thousand gallons usage 10
adjustment which lowers projected revenues by $2.4 million. I recommend a 11
more conservative estimate of use per customer in the test year, based on actual 12
normalized historical usage trends, which generally align with declining use the 13
Company has experienced over the past 15 years. This adjustment results in a 14
more reasonable projection of sales and revenue at current rates in the projected 15
test year. This adjustment increases residential sales in the forecasted test year 16
and increases revenue at proposed rates and reduces the Company’s projected 17
revenue deficiency by approximately $1.9 million. 18

Q PLEASE SUMMARIZE YOUR PROPOSED ADJUSTMENT TO VWID’S LABOR 19
EXPENSES. 20
A I adjusted VWID’s test year labor expense to remove the cost of budgeted but 21
vacant full-time equivalent (“FTE”) employee positions. The Company has not 22
justified the additional employees or explained why they are required and instead 23
relies on a headcount comparison to other utilities. It is not known if VWID will 24
incur the cost of unfilled/vacant FTE positions in the projected test year, and, 25

Gorman, Di 5
Micron Technology, Inc.
therefore, the cost of unfilled FTE positions is not a known and measurable cost 1
that should be included in the test year cost of service. Removing the 2
hypothetical cost of these vacant positions from VWID’s test year budget lowers 3
the test year cost of service by approximately $800,000. 4

II. SALES FORECAST 5
Q PLEASE PROVIDE AN OVERVIEW OF THE COMPANY’S FORECAST OF 6
TEST YEAR REVENUES AT PRESENT AND PROPOSED RATES. 7
A VWID witness Timothy Michaelson discusses the Company’s proof of revenue 8
under present and proposed rates and the development of test year revenues in 9
his direct testimony. As shown on his Exhibit No. 5, Schedule No. 1, Mr. 10
Michaelson forecasts $51.7 million of revenues in the test year ending March 31, 11
2023, at present rates and $63.8 million at proposed rates, an increase of $12.1 12
million. 13
As part of his analysis, Mr. Michaelson makes four adjustments to his 14
calculation of revenues at present and proposed rates. First, he adjusts 15
revenues by annualizing for gain or loss of customers during the historic test 16
year. Second, he adjusts revenues for a projected increase in the average 17
number of customers. Third, he adjusts revenues for a projected decline in 18
customer usage. Finally, he normalizes the number of bills and volumes for 19
existing Eagle Water Company2 customers in the historic test year. 20
Mr. Michaelson projects approximately 92,800 residential customers and 21
approximately 105,800 customers total. This includes a gain of 511 customers 22
by March 31, 2023, compared to the historical test year. 23

2 Eagle Water Company customers became part of VWID in December 2021.

Gorman, Di 6
Micron Technology, Inc.

Q DO YOU HAVE ANY CONCERNS WITH VWID’S SALES FORECAST? 1
A Yes. I believe the Company’s residential sales forecast underestimates 2
normalized sales and results in an understated and unreasonable projection of 3
residential sales in the test year. 4

Q PLEASE EXPLAIN HOW MR. MICHAELSON PROJECTED RESIDENTIAL 5
SALES REVENUE IN THE FORECASTED TEST YEAR? 6
A Mr. Michaelson’s residential and commercial use per customer adjustments take 7
the difference between actual residential or commercial usage in the historical 8
test year and a predicted usage based on his 30-year regression analysis. As a 9
result of his analysis, he applies an 8.59 thousand gallons per residential 10
customer declining usage adjustment. As shown on his Exhibit No. 5, Schedule 11
No. 1, Mr. Michaelson’s 8.59 thousand gallons adjustment (or 11.49 CCF 12
adjustment) lowers revenues at proposed rates by $2.4 million. Applying his 13
adjustment to the 92,800 residential customers lowers water consumption in the 14
test year ending March 31, 2023, by 1.066 million CCF. 15

Q HOW HAS MR. MICHAELSON UNDERSTATED RESIDENTIAL SALES 16
REVENUE IN THE FORECASTED TEST YEAR? 17
A Mr. Michaelson provides a graphical comparison of residential and commercial 18
actual usage versus his predicted usage on Exhibit No. 5, Schedule No. 6 and 19
Schedule No. 8. I replicated the residential comparison in Figure 1, below. 20
As shown on the figure, VWID’s residential sales forecast projects the 21
Company’s test year residential use per customer to be 96.88 thousand gallons 22
per year. This residential sales projection is well below actual residential usage 23

Gorman, Di 7
Micron Technology, Inc.
over the last 30 years but more importantly well below actual usage over the 1
most recent three- to five-year period. It is also significant that Mr. Michaelson’s 2
annual predicted use per customer during the period 2019 to 2022 was below 3
actual use in every one of those years. In contrast, the Company’s projected use 4
per customer prior to 2019 reflected a better fit and more reliable estimate of 5
sales because those projections varied between being above and below actual 6
use. If projected usage is consistently and materially less than actual usage, the 7
test period residential sales revenues will be unreasonably understated in a 8
forecasted test year. 9
In contrast, the commercial comparison Mr. Michaelson provided as 10
Exhibit No. 5, Schedule No. 8 shows the predicted usage produced by his 11
analysis is comparable to actual usage for the past several years. Mr. 12
Michaelson also projects declining usage for commercial customers in the test 13
year in his Exhibit No. 5, Schedule No. 1 and a revenue reduction of $920,000 to 14
this rate class in the test year. But the sales projections to this rate class have 15
not consistently understated actual sales and reflect a reasonable trend of annual 16
usage for the commercial customers. 17

Gorman, Di 8
Micron Technology, Inc.
Source:
Exhibit No. 5, Schedule No. 5.
Residential Use per Customer
Actual vs. Veolia Predicted
FIGURE 1
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Th
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Actual Residential Predicted Residential Test Year Ending March 2023
Test Year = 96.88 Thousand Gallons

VWID’s projected declining use adjustment for residential customers is 1
unreasonable and should be adjusted. Mr. Michaelson’s test year adjustment of 2
8.59 thousand gallons represents a 10% decrease in use per residential 3
customer for the test year compared to actual use per customer over the past 4
five years, which includes the two lowest residential sales years in the 30-year 5
time period. While it is reasonable to assume that use per customer will decline 6
over time as customers install more water efficient appliances and become more 7
aware of conservation efforts, it is also reasonable to expect that this declining 8
use per customer trend will moderate going forward compared to the 30-year 9
trend as the population of residential customers’ water appliances and 10
conservation practices are updated to reflect more efficient water appliances and 11
customer consumption behavior. Mr. Michaelson’s use of a declining use trend 12
based over a 30-year historical period does not allow for this rational expectation 13

Gorman, Di 9
Micron Technology, Inc.
of changing declining use trends over time. Again, as residential customers as a 1
group modernize their water appliances and consumption patterns, the forward 2
declining use trend will start to slow relative to the long-term past trend – an 3
expectation borne out by recent actual data. 4

Q WHAT DO YOU RECOMMEND? 5
A I recommend a residential declining use adjustment that is more in line with 6
actual usage patterns. Table 2, below, shows the most recent 15 years of 7
residential use per customer. As shown in the table, annual usage declined by 8
approximately 1.7% per year over the past 15 years. Applying my proposed 9
1.7% residential declining use adjustment results in a usage adjustment of 1.79 10
thousand gallons compared to the Company's 8.59 thousand gallons adjustment, 11
or a difference of 6.80 thousand gallons. 12
My proposed normalized residential sales in the test year for use per 13
residential customer is 103.686 thousand gallons compared to the Company’s 14
96.88 thousand gallons. My projection is based on a 1.7% declining use trend 15
adjustment (or 1.79 thousand gallons per customer) based on a 15-year trend 16
and is more reasonable than the Company’s declining use adjustment of 8.1% 17
(or 8.59 thousand gallons per customer) based on a 30-year trend. As shown in 18
Table 2 below, my estimate reflects a decrease in annual usage compared to the 19
last five years, but the decline in use is more moderate than the projection 20
proposed by the Company. 21

Gorman, Di 10
Micron Technology, Inc.
.
Difference Veolia
Actual From Prior Percent Predicted
Line Usage Year Change Usage
(1)(2)(3)(4)
1 2008 130,281 (8,949) -6.4%136,085
2 2009 123,172 (7,109) -5.5%127,306
3 2010 116,702 (6,471) -5.3%120,394
4 2011 114,864 (1,837) -1.6%118,224
5 2012 122,772 7,908 6.9%126,245
6 2013 122,630 (142) -0.1%126,093
7 2014 119,242 (3,388) -2.8%120,089
8 2015 116,753 (2,489) -2.1%120,240
9 2016 115,214 (1,540) -1.3%115,194
10 2017 108,042 (7,171) -6.2%107,929
11 2018 111,257 3,215 3.0%112,519
12 2019 103,460 (7,798) -7.0%97,838
13 2020 107,916 4,456 4.3%102,832
14 2021 111,201 3,285 3.0%103,487
15 2022 *105,479 (5,722) -5.1%96,885
16 15 Year Average -1.7%
17 Estimated YE 03/23 Usage 103,686
18 Difference 6,801
Source & Note:
Exhibit No. 5, Schedule No. 5.
*12 Months Ending June 2022
Year
TABLE 2
Residential Consumption - Last 15 Years
(Gallons per Customer)

A moderate declining use relative to the last five years is also reasonable in 1
recognition of weather impacts on sales over this five-year period. Mr. 2
Michaelson’s regression analysis relies on the Palmer Z index which is a 3
measure of short-term drought. The Palmer Z index for 2008 to 2022 is -0.27, 4
which is comparable to the 30-year average of -0.23.3 Hence, the 15-year 5
average trend period contains both a variety of rainfall and other weather 6
conditions which impact year-over-year usage by the residential class, as well as 7
more recent conservation impacted consumption behavior. 8

3 Michaelson Direct Testimony, Exhibit No. 5, Schedule No. 4E.

Gorman, Di 11
Micron Technology, Inc.
Q HOW DOES YOUR RESIDENTIAL SALES ADJUSTMENT IMPACT THE 1
COMPANY’S CLAIMED TEST YEAR REVENUE DEFICIENCY? 2
A This increases revenues and lowers the Company’s claimed revenue deficiency 3
by approximately $1.9 million, as shown below. My impact was calculated by 4
updating Mr. Michaelson’s Exhibit No. 5, Schedule No. 4E with my revised usage 5
of 103.686 thousand gallons. Mr. Michaelson’s 8.59 thousand gallons per 6
customer adjustment translates to 1.066 million CCF across the 92,800 7
residential customers while my adjustment translates to approximately 222,000 8
CCF across the same number of customers. This adjustment is shown in detail 9
in Table 3 below. 10

Gorman, Di 12
Micron Technology, Inc.
Usage (CCF)
Prior To Declining Use Adjusted Proposed Declining
Line Adjustments Adj. (CCF)Usage (CCF)Rates Use Adj.
(1)(2)(3)(4)(5)
Veolia Proposed
VWID & New Eagle Water Customers
1 Winter Usage - All CCF 4,298,207 (348,905) 3,949,302 1.9797$ 7,818,619$
2 Summer Usage - Up to 3 CCF 491,850 (39,916) 451,934 1.9797$ 894,714
3 Summer Usage - Over 3 CCF 7,839,227 (636,433) 7,202,793 2.5063$ 18,052,709
4 Subtotal 12,629,283 (1,025,254) 11,604,029 26,766,043$
Existing Eagle Water Customers
5 Winter Usage - All CCF 91,453 (13,975) 77,478 1.1548$ 89,472$
6 Summer Usage - Up to 3 CCF 5,861 (1,599) 4,262 1.1548$ 4,921
7 Summer Usage - Over 3 CCF 45,752 (25,491) 20,260 1.4621$ 29,622
8 Subtotal 143,065 (41,065) 102,000 124,016$
9 Total 12,772,348 (1,066,319) 11,706,029 26,890,058$
Adjusted
VWID & New Eagle Water Customers
10 Winter Usage - All CCF 4,298,207 (72,795) 4,225,411 1.9797$ 8,365,246$
11 Summer Usage - Up to 3 CCF 491,850 (8,328) 483,522 1.9797$ 957,251
12 Summer Usage - Over 3 CCF 7,839,227 (132,785) 7,706,442 2.5063$ 19,315,028
13 Subtotal 12,629,283 (213,908) 12,415,375 28,637,525$
Existing Eagle Water Customers
14 Winter Usage - All CCF 91,453 (2,916) 88,537 1.1548$ 102,243$
15 Summer Usage - Up to 3 CCF 5,861 (334) 5,527 1.1548$ 6,383
16 Summer Usage - Over 3 CCF 45,752 (5,319) 40,433 1.4621$ 59,117
17 Subtotal 143,065 (8,568) 134,498 167,742$
18 Total 12,772,348 (222,476) 12,549,872 28,805,267$
19 Difference - 843,843 843,843 1,915,209$
Source:
Michaelson Workpapers.
TABLE 3
Declining Use Adjustment
Description

III. EMPLOYEE ADJUSTMENT 1
Q DOES VWID’S TEST YEAR COST OF SERVICE INCLUDE LABOR 2
EXPENSES ASSOCIATED WITH A BUDGETED LEVEL OF EMPLOYEES? 3
A Yes. VWID witness Jarmila M. Cary proposes several operation and 4
maintenance (“O&M”) expense adjustments including an adjustment to labor 5
expenses to account for an increase of 15 positions due to the filling of vacant 6

Gorman, Di 13
Micron Technology, Inc.
FTE positions. VWID proposes to increase its total employee headcount from 1
122 filled full-time employee positions as of June 30, 2022 to 137 full-time 2
employees (or filled plus vacancies). Ms. Cary lists the 15 positions in her direct 3
testimony but does not describe why the positions are needed. As shown on her 4
Exhibit No. 10, Schedule 1, page 1, the payroll associated with 137 positions is 5
$10.4 million, of which 66.17% is charged to expense. 6

Q IS VWID’S BUDGETED TEST YEAR LABOR EXPENSE REASONABLE? 7
A No. VWID’s budgeted test year labor expense includes labor costs associated 8
with vacant or unfilled positions and new hires. Unfilled employee positions are 9
not known and measurable costs and should not be included in the development 10
of the test year labor expense. The Company will not incur costs associated with 11
the additional positions unless and until those positions are actually filled. 12

Q IS IT REASONABLE TO CONCLUDE THAT THE COMPANY CAN FILL ALL 13
OF ITS BUDGETED EMPLOYEE POSITIONS IN THE FORECASTED TEST 14
YEAR? 15
A Filling the new budgeted positions will be challenging because it requires finding 16
qualified employees to fill the new positions while at the same time the Company 17
will need to fill existing positions as employees leave the Company via retirement 18
or other reasons during the year. Employee attrition can offset increases in the 19
Company’s employee count as a result of hiring employees for new positions, 20
leaving the number of vacant positions unchanged. The employee headcount 21

Gorman, Di 14
Micron Technology, Inc.
chart on pdf page 94 of VWID witness Marshall Thompson’s direct testimony 1
shows that VWID’s headcount can decrease year-over-year as well as increase. 2

Q DID VWID PRESENT A PLAN TO FILL ALL BUDGETED POSITIONS IN THE 3
FORECASTED TEST YEAR? 4
A No. Therefore, its ability to fill all budgeted positions is uncertain and the 5
additional cost is not known and measurable. 6

Q DID VWID PROVIDE EVIDENCE THAT IT NEEDS TO INCREASE ITS 7
NUMBER OF EMPLOYEES IN ORDER TO PROVIDE HIGH QUALITY AND 8
RELIABLE SERVICE? 9
A No. VWID only relies on comparisons to other utilities to justify its proposed 10
increase in labor expenses. Specifically, VWID’s support for this adjustment is 11
limited to the following: 12
According to the American Water Works Association’s 2021 Utility 13
Benchmarking Study, the historic average for Customers per 14
Employee from that study’ [sic] peer utility group was 438.4 during 15
a 2006-2020 monitoring period. The graph below compares the 16
trend with Veolia Water Idaho metrics for the same period. 17
Inclusive of customer growth, the company’s 2022 customer per 18
employee ratio remains well outside of industry averages at 782 19
customers per employee. 20
* * * 21
Veolia’s 2022 metric of 782 leaves considerable room for 22
employee headcount growth before the company approaches the 23
AWWA median of its industry peers.5 24
VWID’s comparison to other utilities alone does not justify the Company’s 25
proposal to include in cost of service the cost of unfilled/vacant positions. The 26

4 This page was incorrectly numbered as p. 2 in Mr. Thompson’s testimony
5 Thompson Direct Testimony at pdf pp. 9-10, which were incorrectly numbered as pp. 2-3 in Mr.
Thompson’s testimony.

Gorman, Di 15
Micron Technology, Inc.
Company has not adequately demonstrated that it actually needs more 1
employees. And, as described above, it is not known whether VWID will incur its 2
full budgeted labor expense in the rate-effective period. 3

Q ARE YOU PROPOSING AN ADJUSTMENT TO VWID’S TEST YEAR LABOR 4
EXPENSE? 5
A Yes. I recommend the Commission remove from cost of service the budgeted 6
expense associated with the 15 vacant positions. The Company has not proven 7
that it needs to increase its number of employees in order to provide high quality 8
and reliable service. VWID’s increase in payroll expense is largely not known 9
and measurable and should be rejected. In addition, VWID is forecasting an 10
increase in overtime expense despite assuming it will have more employees in 11
the rate-effective period who could take work from employees currently working 12
overtime. For these reasons, I recommend the costs associated with the vacant 13
positions be removed from cost of service. This lowers VWID’s claimed revenue 14
deficiency by approximately $0.8 million.6 15

IV. RATE OF RETURN MARKET EVIDENCE 16
Q PLEASE DESCRIBE THIS SECTION OF YOUR TESTIMONY. 17
A In this section, I will provide observable market evidence, credit metrics to assess 18
the reasonableness of rate of return positions, and a detailed analysis to 19
demonstrate that my recommended rate of return will support VWID’s financial 20
integrity and access to capital. I also comment on market-based models to 21

6 $10,382,008 regular payroll for 137 positions divided by 137 positions times the 15 vacant
positions times the 66.17% applicable to O&M expense.

Gorman, Di 16
Micron Technology, Inc.
estimate the current market-required rate of return investors demand to assume 1
the risk of an investment similar to VWID’s. 2

IV.A. Utility Industry Authorized Returns on Equity, Access to 3
Capital, and Credit Strength 4

Q PLEASE DESCRIBE THE OBSERVABLE EVIDENCE ON TRENDS IN 5
AUTHORIZED RETURNS ON EQUITY FOR REGULATED UTILITIES. 6
A Authorized returns on equity are an important part of how utilities produce 7
revenues and cash flows adequate to support their credit standing and maintain 8
their financial integrity, which supports their access to capital under reasonable 9
terms and prices. Observable data, including on industry authorized returns on 10
equity, trends and outlooks on credit standing, and the ability of utilities to attract 11
capital to fund large investments, provides clear evidence that industry 12
authorized returns on equity have been judged by market participants to be fair 13
and reasonable. With this as background, it is significant to observe that industry 14
authorized returns on equity for electric and gas utilities have ranged from 9.29% 15
to 9.78% for the period from 2014 through the end of 2022 and, since 2020, 16
authorized returns on equity have averaged below 9.50%. These returns are 17
summarized in Figure 2 below. 18

Gorman, Di 17
Micron Technology, Inc.
ROE Distributions1/2
Electric Utilities 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
<= Average 51.7%55.0%51.0%50.0%56.3%56.5%53.1%59.5%47.4%45.5%33.3%31.4%36.4%> Average 48.3%45.0%49.0%50.0%43.8%43.5%46.9%40.5%52.6%54.5%66.7%68.6%63.6%
Gas Utilities
<= Average 56.4%31.3%45.7%47.6%50.0%50.0%53.8%70.8%47.5%51.5%51.4%46.5%70.6%> Average 43.6%68.8%54.3%52.4%50.0%50.0%46.2%29.2%52.5%48.5%48.6%53.5%29.4%
__________
Source and Notes:
1 S&P Global Market Intelligence, RRA Regulatory Focus, Major Rate Case Decisions -- January - September 2022, October 31, 2022, p. 4.2 Download from S&P Global Market Intelligence, December 21, 2022.
* Electric Returns exclude Limited Issue Rider Decisions.
* RRA excludes the 2017 Alaska ENSTAR decision from its Industry Average.
FIGURE 2
10.29%10.19%10.01%
9.81%9.75%9.60%9.60%
9.68%9.55%9.64%9.39%9.39%9.29%
10.15%
9.92%9.94%
9.68%9.78%9.60%9.54%
9.72%9.59%9.71%
9.46%9.56%9.42%
8.00%
8.50%
9.00%
9.50%
10.00%
10.50%
11.00%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Authorized Returns on Equity*
(Exclude Limited Issue Riders)
Electric Gas

Q HAVE UTILITIES BEEN ABLE TO ACCESS EXTERNAL CAPITAL TO 1
SUPPORT CAPITAL EXPENDITURE PROGRAMS? 2
A Yes. In Regulatory Research Associates’ (“RRA”) October 28, 2022 Utility 3
Capital Expenditures Update report, RRA Financial Focus, a division of S&P 4
Global Market Intelligence, made several relevant comments about utility 5
investments generally: 6
• 2022 capital expenditures by the Regulatory Research 7
Associates-tracked energy utilities may eclipse their total 8
investments in 2021 by more than 20%, with anticipated capex 9
rising to more than $158.6 billion, compared with actual 10
spending in 2021 of $131.8 billion. 11
• 2023 is anticipated to be another record year of increased 12
investment, with the aggregated forecast for energy utility 13
capex exceeding $169 billion. 14
• The nation's electric, gas and water utilities are investing in 15
infrastructure at record levels to upgrade aging transmission 16
and distribution systems; build new gas, solar and wind 17
generation; and implement new technologies, including those 18

Gorman, Di 18
Micron Technology, Inc.
related to smart meter deployment, smart grid systems, 1
cybersecurity measures, electric vehicles and battery storage. 2
The considerable spending levels are expected to serve as the 3
basis for solid profit expansion in the utility industry for the 4
foreseeable future. 5

• Several catalysts are anticipated to impel elevated spending 6
over the next several years, including replacement of aging 7
infrastructure, state renewable portfolio standards, and federal 8
infrastructure investment plans and tax credits incentivizing 9
conversion of the nation's power generation network to zero-10
carbon sources. The recently passed federal Inflation 11
Reduction Act of 2022 is expected to play a substantial role 12
over the next decade.7 13

As shown in Figure 3 below, capital expenditures for the regulated utilities have 14
increased considerably over the period 2021 into 2022, and the forecasted 15
capital expenditures remain elevated through the end of 2023, with projected 16
spend in 2024 tapering off slightly from 2022 levels. 17
$153,349
$162,527
$173,510
$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
FIGURE 3
Utility Capital Expenditures
(Dollars in Millions)
Electric distribution Other*Gas Electric transmission
Generation Renewables Corporate & other Environmental
Historical Total Trendline
*Other category consists of utilities that do not report capital expenditures by category: Avangrid, Hawaiian Electric, PG&E and Portland General Electric.
Source: S&P Global Market Intelligence, RRA Financial Focus, Utility Capital Expenditures Update, October 20, 2022,Tables 1 and 3.
As outlined in Figure 3 above, and in the comments made by RRA S&P 18
Global Market Intelligence, capital investments for the utility industry continue to 19

7 S&P Global Market Intelligence, RRA Financial Focus: “2023 energy, water utility capex plans
on track to break prior spending records,” October 28, 2022, (footnotes omitted).

Gorman, Di 19
Micron Technology, Inc.
stay at elevated levels, and these capital expenditures are expected to fuel 1
utilities’ profit growth into the foreseeable future. This is clear evidence that the 2
capital investments are enhancing shareholder value and are attracting both 3
equity and debt capital to the utility industry in a manner that allows for funding 4
these elevated capital investments. While capital markets embrace these profit-5
driven capital investments, regulatory commissions also must be careful to 6
maintain reasonable prices and tariff terms and conditions to protect customers’ 7
need for reliable utility service at reasonable rates. 8

Q HAVE WATER UTILITIES ALSO ENJOYED ACCESS TO EXTERNAL 9
CAPITAL TO FUND SALES GROWTH? 10
A Yes. In its latest RRA Water Advisory report, Standard & Poor’s (“S&P”) outlined 11
the robust capital expenditure programs undertaken by the water utilities: 12
The water utility sector has been accelerating its capital spending 13
budgets for decades. The group continues to outpace electric 14
and multi-utilities when comparing capex to depreciation and 15
amortization, and its spending rate is similar to the gas utility 16
level, which began to accelerate in the last decade. 17
18
* * * 19
Total capex for the IOUs, tracked by RRA, are expected to 20
increase 7.3% in 2022, continuing a long-term trend of 21
accelerating investments. Total capex for RRA-monitored water 22
utilities have grown at a 10-year compound annual growth rate of 23
11.1% and are expected to increase 7.3% in 2022 versus 2021 24
levels, to over $3.9 billion. In 2021, capex growth averaged just 25
4.8%. 26
27
RRA expects these water utilities to continue to invest at 28
accelerated rates. Investment in existing service territories has 29
been augmented by acquisitions and subsequent investment in 30
those often under-invested systems. Increased regulation by the 31
EPA could drive further expansion of water utility capital spending 32
programs, and continued expansion of water utilities’ operational 33

Gorman, Di 20
Micron Technology, Inc.
footprints and capex programs are likely to support further 1
earnings growth.8 2

Q IS THERE EVIDENCE OF ROBUST VALUATIONS OF REGULATED UTILITY 3
EQUITY SECURITIES? 4
A Yes. Robust valuations are an indication that utilities can sell securities at high 5
prices, which is a strong indication that they can access equity capital under 6
reasonable terms and conditions, and at relatively low cost. As shown on my 7
Exhibit No. 402, utility valuation metrics show robust valuation of utility securities 8
more recently compared to the historical period stretching back to 2002. 9
Specifically, The Value Line Investment Survey (“Value Line”) tracks and projects 10
various valuation metrics related to regulated utility securities, as well as non-11
regulated companies followed by Value Line. These valuation metrics are 12
considered by market participants in assessing the investment risk 13
characteristics of individual company stocks and industries and are used by 14
market participants to derive their required rates of return for making 15
investments. All of these valuation metrics for utility stocks indicate robust 16
valuations of utility stocks, which in turn support my finding that utilities’ cost of 17
capital is low by historical comparison and utilities are producing competitive 18
returns. 19
For example, my Exhibit No. 402 shows a Value Line electric utility 20
industry price-to-earnings ratio of 18.66x, compared to a 21-year average price-21
to-earnings ratio of around 17.17x (Page 1). The current price-to-earnings ratio 22
for gas utilities is 17.28x, which is still higher than the price-to-earnings ratio 23
relative to historical levels (Page 11). This strong price-to-earnings performance 24

8 S&P Global Market Intelligence RRA Water Advisory: “Intro to Water Utilities – Current Trends
and Growth Driver,” July 18, 2022, page 5.

Gorman, Di 21
Micron Technology, Inc.
indicates stock prices relative to earnings have been robust. Robust stock 1
prices, or higher stock prices, indicate lower cost of capital. 2
The market price-to-cash flow for electric utilities is currently 8.97x, 3
compared to the 21-year average of 7.53x (Page 2). The market price-to-cash 4
flow for gas utilities is currently 9.87x, compared to the 17-year average of 9.61x 5
(Page 11). Again, high stock prices in relationship to utility cash flows indicate 6
investors are willing to accept lower rates of return to invest in utility stocks. 7
Finally, the current market-to-book ratio for the electric utility industry is 8
1.98x, compared to the 18-year average of 1.73x (Page 3). The current market-9
to-book ratio for the gas utility industry is 1.78x, which is comparable to the 17-10
year average of 1.82x (Page 11). Again, the market-to-book ratio indicates 11
robust stock prices and low cost of capital to utilities. The utility industry exhibits 12
strong valuations in the marketplace, which is a clear indication that utilities have 13
access to external capital markets under favorable conditions and at low costs. 14

Q PLEASE DESCRIBE THE MARKET VALUATION OF WATER UTILITIES 15
STOCKS. 16
A Similar to electric and gas utilities, the water utilities market performance has 17
been quite robust and supportive of access to capital markets. Specifically, S&P 18
states the following: 19
Despite the pullback, water utilities continue to trade at a 20
historical premium to the electric, natural gas and multi-utility 21
sectors. Water utilities currently trade at a 27.9x price-to-22
earnings, or P/E, multiple based on 2023 earnings estimates. As 23
of Dec. 31, 2021, that multiple had been 35.3x. In contrast, 24
electric utilities trade at a 2023 P/E multiple of 17.9x, natural gas 25
utilities at 18.0x and multi-utility companies at 19.1x.9 26

9 Id. at 8.

Gorman, Di 22
Micron Technology, Inc.
Similarly, Value Line notes: 1
The demand to own shares by the large institutional investors 2
clearly outstrips the supply. This is one of the prime reasons for 3
these stocks trading at such seemingly inflated P/E ratios. Of the 4
six water stocks covered by Value Line, the P/E’s range from a 5
low of 24.8, to a high of 38.8, with the average being 32.4. 6
Essential Utilities is the only equity with a P/E below 30, mostly 7
because of its gas utility operations.10 8
9
10
11
Q PLEASE DESCRIBE UTILITY STOCK PRICE PERFORMANCE OVER THE 12
LAST SEVERAL YEARS. 13
A Figure 4 below, shows the utility stock price performance compared to overall 14
market. 15
-30.00
-20.00
-10.00
0.00
10.00
20.00
30.00
40.00
Pe
r
c
e
n
t

(
%
)
FIGURE 4
Quarterly Price Returns
NASDAQ S&P 500 S&P 500 UtilitiesSource: S&P Global Market Intelligence.*Data Through September 2022.
Utility stocks have not exhibited the higher volatility as the S&P 500 and have 16
maintained strong valuation relative to overall market performance. In fact, they 17
had a slightly higher stock price return than the S&P 500 (7.81% vs 7.08%, 18
respectively) in the last quarter of 2022. 19

10 Value Line Investment Survey, Water Utility Industry, January 6, 2023.

Gorman, Di 23
Micron Technology, Inc.
Q HOW SHOULD THE COMMISSION USE THIS MARKET INFORMATION IN 1
ASSESSING A FAIR RETURN FOR VWID? 2
A Observable market evidence is quite clear that capital market costs are near 3
historically low levels. Even as authorized returns on equity have fallen into the 4
mid-9% range, utilities continue to have access to large amounts of external 5
capital while still funding large capital programs. Furthermore, utilities’ 6
investment-grade credit ratings are stable and have improved due, in part, to 7
supportive regulatory treatment. The Commission should carefully weigh all this 8
important observable market evidence in assessing a fair return on equity for 9
VWID. 10

IV.B. Federal Reserve’s Impact on Cost of Capital 11
Q ARE THE MONETARY POLICY DECISIONS AND ACTIONS OF THE 12
FEDERAL RESERVE, AND OF THE FEDERAL RESERVE SYSTEM’S (“FRS”) 13
FEDERAL OPEN MARKET COMMITTEE (“FOMC”), KNOWN TO MARKET 14
PARTICIPANTS, AND IS IT REASONABLE TO BELIEVE THOSE DECISIONS 15
AND ACTIONS ARE REFLECTED IN THE MARKET’S VALUATION OF BOTH 16
DEBT AND EQUITY SECURITIES? 17
A Yes. The Federal Reserve has been transparent on its efforts to support the 18
economy to achieve maximum employment, and to manage long-term inflation to 19
around a 2% level. The Federal Reserve, in a February 1, 2023 press release, 20
noted that recent indicators point to modest growth in spending and production, 21
while job gains have been robust and the unemployment rate has remained low. 22
Meanwhile inflation has moderated but remains elevated. The Federal Reserve 23
also noted that Russia’s war against Ukraine is causing tremendous human and 24

Gorman, Di 24
Micron Technology, Inc.
economic hardship and is contributing to elevated global uncertainty. The 1
Federal Reserve noted that it is highly attentive to inflation risk.11 2
With this as a backdrop, the Federal Reserve announced it raised the 3
target range of the Federal Funds Rate (“FFR”) to 4.75%, and that it anticipates 4
ongoing increases to the FFR to achieve the target 2.0% inflation rate. The 5
Federal Reserve also stated that it will continue to reduce its holding of Treasury 6
securities, agency debt securities and agency mortgage-backed securities, as 7
outlined in the Size of The Federal Reserve Balance Sheet statement issued in 8
May 2022. In that statement, the Federal Reserve outlined its intention to reduce 9
the Federal Reserve’s securities holdings over time in a predictable manner 10
primarily by gradually adjusting the amounts reinvested of principal payments 11
received from securities holdings without disrupting markets.12 On February 1, 12
2023, the Federal Reserve reiterated its strong commitment to returning inflation 13
to the 2% rate objective.13 14
The trend in the Federal Reserve’s monetary actions on the Federal 15
Funds Rate is shown below in Figure 5. 16

11 Federal Reserve Press Release, February 1, 2023.
12 Federal Reserve Balance Sheet Developments, May 2022.
13 Federal Reserve Press Release, February 1, 2023.

Gorman, Di 25
Micron Technology, Inc.
Fed FFR Actions:
1 December 2015 0.25 →0.50 12 October 2019 1.50 →1.75
2 December 2016 0.50 →0.75 13 March 2020 1.00 →1.25
3 March 2017 0.75 →1.00 14 March 2020 0.00 →0.25
4 June 2017 1.00 →1.25 15 March 2022 0.25 →0.50
5 December 2017 1.25 →1.50 16 May 2022 0.75 →1.00
6 March 2018 1.50 →1.75 17 June 2022 1.50 →1.75
7 June 2018 1.75 →2.00 18 July 2022 2.25 →2.50
8 September 2018 2.00 →2.25 19 September 2022 3.00 →3.25
9 December 2018 2.25 →2.50 20 November 2022 3.75 →4.00
10 August 2019 2.00 →2.25 21 December 2022 4.25 →4.50
11 September 2019 1.75 →2.00 February 2023 4.50 →4.75
Sources:
Federal Reserve Bank of New York, https://apps.newyorkfed.org/markets/autorates/fed-funds-search-page
Board of Governors of the Federal Reserve System, https://www.federalreserve.gov/datadownload/
Moody's Credit Trends, https://credittrends.moodys.com/
Timeline of Federal Funds Rate Changes Since 2015
FIGURE 5
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
Yi
e
l
d

(
%
)
A-Rated Utility Bond
30 Yr Treasury Yield
Spread: Utility-T
Yield
Federal Funds Rate (FFR)

As shown in Figure 5, the Federal Reserve’s recent increase to the Federal 1
Funds Rate, currently at a 4.50% to 4.75% range, resulted in a higher Federal 2
Funds Rate than the rate prior to the economic effects of the worldwide 3
pandemic starting around March/April of 2020. 4

Q DO INDEPENDENT ECONOMISTS’ OUTLOOKS FOR FUTURE INTEREST 5
RATES ALIGN WITH THE FEDERAL RESERVE’S MONETARY POLICY? 6
A Yes. In its most recent report, Blue Chip Financial Forecasts (“BCFF”) outlines 7
consensus economists’ projections that reflect a rising risk of inflation, and likely 8
continued monetary tightening by the Federal Reserve to fight inflation. BCFF 9
indicated the likelihood that the Federal Reserve would increase the Federal 10

Gorman, Di 26
Micron Technology, Inc.
Funds Rate in December but at a slower rate. Importantly, the BCFF expects the 1
FFR to reach its peak in the second quarter of 2023 and gradually decline after 2
that.”14 In fact, the increase of the FFR in December was 25 basis points lower 3
than the last four increases of 75 basis points. As noted above, this trend was 4
also reflected in the most recent increase in February, an FFR hike of only 25 5
basis points. The BCFF also noted that there is a high probability of the 6
economy slowing down, possibly entering a recession, as illustrated by the 7
inverted yield curve. These outlooks and projections of short-term Federal Funds 8
Rate levels, long-term Treasury bond 30-year maturities, and of the U.S. 9
economic outlook more generally suggest inflation will impact interest rates over 10
the intermediate term but is expected to moderate over the long term. All of this 11
is illustrated in a comparison of interest rate and Gross Domestic Product 12
(“GDP”) projections over time as developed in Table 4 below. 13

14 Blue Chip Financial Forecasts, January 1, 2023 at 2.

Gorman, Di 27
Micron Technology, Inc.
3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Publication Date 2021 2021 2022 2022 2022 2022 2023 2023 2023 2023 2024
Federal Funds Rate
Nov-21 0.1 0.1 0.1 0.1 0.1 0.3 0.4
Dec-21 0.1 0.1 0.1 0.1 0.3 0.4 0.6
Jan-22 0.1 0.1 0.3 0.5 0.7 0.9 1.1
Feb-22 0.1 0.2 0.5 0.8 1.0 1.3 1.5
Mar-22 0.1 0.2 0.6 1.0 1.3 1.6 1.8
Apr-22 0.1 0.8 1.4 1.8 2.2 2.4 2.6
May-22 0.1 1.0 1.7 2.2 2.6 2.9 3.0
Jun-22 0.1 1.0 1.9 2.4 2.8 3.0 3.1
Jul-22 0.7 2.4 3.1 3.5 3.5 3.5 3.4
Aug-22 0.8 2.5 3.2 3.5 3.5 3.4 3.3
Sep-22 0.8 2.5 3.4 3.6 3.6 3.5 3.4
Oct-22 2.1 3.8 4.3 4.4 4.3 4.2 3.9
Nov-22 2.2 3.9 4.6 4.7 4.6 4.4 4.1
Dec-22 2.2 4.0 4.7 4.9 4.8 4.6 4.4
T-Bond, 30 yr.
Nov-21 1.9 2.2 2.3 2.4 2.5 2.6 2.7
Dec-21 1.9 2.1 2.2 2.3 2.5 2.6 2.7
Jan-22 2.0 2.1 2.2 2.4 2.5 2.7 2.8
Feb-22 2.0 2.2 2.3 2.5 2.6 2.7 2.8
Mar-22 2.0 2.2 2.5 2.6 2.7 2.9 3.0
Apr-22 2.3 2.6 2.8 3.0 3.2 3.3 3.3
May-22 2.3 2.9 3.1 3.2 3.4 3.5 3.5
Jun-22 2.3 3.0 3.3 3.4 3.5 3.6 3.6
Jul-22 3.0 3.5 3.6 3.7 3.8 3.8 3.8
Aug-22 3.0 3.2 3.4 3.5 3.5 3.5 3.5
Sep-22 3.0 3.1 3.4 3.5 3.6 3.6 3.6
Oct-22 3.2 3.8 3.9 4.0 3.9 3.8 3.8
Nov-22 3.3 4.0 4.1 4.1 4.0 3.9 3.9
Dec-22 3.3 4.0 4.2 4.2 4.1 3.9 3.9
GDP Price Index
Nov-21 5.7 3.4 2.7 2.6 2.5 2.4 2.3
Dec-21 5.9 4.6 3.4 2.8 2.7 2.5 2.5
Jan-22 4.6 3.7 3.1 2.8 2.6 2.5 2.5
Feb-22 6.9 4.3 3.4 3.0 2.8 2.6 2.5
Mar-22 7.1 4.8 3.8 3.1 2.8 2.6 2.5
Apr-22 4.8 5.1 3.7 3.0 2.8 2.6 2.6
May-22 8.0 5.6 4.0 3.4 3.0 2.8 2.6
Jun-22 8.1 5.9 4.6 3.5 3.1 2.8 2.7
Jul-22 5.9 5.2 3.9 3.4 2.8 2.7 2.6
Aug-22 8.7 5.3 3.8 3.3 2.7 2.7 2.6
Sep-22 8.9 4.9 4.1 3.3 2.7 2.7 2.5
Oct-22 4.9 4.3 3.5 3.0 2.8 2.7 2.5
Nov-22 4.1 4.6 3.8 3.1 2.7 2.7 2.3
Dec-22 4.3 4.3 3.8 3.0 2.7 2.6 2.3
Source and Note:
Blue Chip Financial Forecasts, January 2021 through December 2022.
Actual Yields in Bold.
Projected Federal Funds Rate, 30-Year Treasury Bond Yields, and GDP Price Index
Blue Chip Financial Forecasts
TABLE 4

Gorman, Di 28
Micron Technology, Inc.
Further, the outlook for long-term interest rates in the intermediate to longer term 1
is also impacted by the current Federal Reserve actions and the expectation that 2
eventually the Federal Reserve’s monetary actions will return to more normal 3
levels. Long-term interest rate projections are illustrated in Table 5 below. 4
30-Year Treasury Bond Yield Actual Vs. Projection
2-Year 5- to 10-Year
Description Actual Projected*Projected
2016
Q1 2.72%3.67%
Q2 2.64%3.50%4.3% - 4.6%
Q3 2.28%3.20%
Q4 2.82%3.20%4.2% - 4.5%
2017
Q1 3.04%3.70%
Q2 2.91%3.73%4.3% - 4.5%
Q3 2.82%3.66%
Q4 2.82%3.60%4.1% - 4.3%
2018
Q1 3.02%3.63%
Q2 3.09%3.80%4.2% - 4.4%
Q3 3.07%3.73%
Q4 3.27%3.67%3.9% - 4.2%
2019
Q1 3.01%3.50%
Q2 2.78%3.17%3.6% - 3.8%
Q3 2.30%2.70%
Q4 2.30%2.50%3.2% - 3.7%
2020
Q1 1.88%2.57%
Q2 1.38%1.90%3.0% - 3.8%
Q3 1.36%1.87%
Q4 1.62%1.97%2.8% - 3.6%
2021
Q1 2.07%2.23%
Q2 2.26%2.77%3.5% - 3.9%
Q3 1.93%2.63%
Q4 1.95%2.70%3.4% - 3.8%
2022
Q1 2.25%2.87%
Q2 3.04%3.47%3.8% - 3.9%
Q3 3.26%3.63%
Source and Note:
Blue Chip Financial Forecasts, January 2016 through
September 2022.
*Average of all 3 reports in Quarter.
TABLE 5

Gorman, Di 29
Micron Technology, Inc.
As outlined in Table 5 above, the outlook for increases in interest rates 1
has jumped more recently relative to 2020 but is still relatively modest. Indeed, 2
today’s relatively low capital market costs are expected to prevail at least in the 3
short-term, i.e., over the next five to ten years. While there may be some upward 4
movement in the cost of capital, that upward movement is not expected to be 5
significant. Importantly, the U.S. economy has largely recovered from the severe 6
effects of the COVID-19 pandemic experienced in 2020. Capital markets 7
continue to perform in a rational and economically logical manner at lower capital 8
costs for safe investment sectors such as the utility industry. 9
Moreover, while economists are projecting a modest increase in interest 10
rates relative to those published in the past, these projections of increases in 11
interest rates are, at best, uncertain. But more importantly, the projected 12
increases are relatively modest compared to prior projections and demonstrate 13
that VWID’s proposal to increase its authorized return on equity in this case is 14
simply not reflective of current or short-term forecast market capital costs. 15

IV.C. Market Sentiments and Utility Industry Outlook 16
Q PLEASE DESCRIBE THE CREDIT RATING OUTLOOK FOR REGULATED 17
UTILITIES. 18
A The global economy has faced the extraordinary challenges of COVID-19, which 19
led to nearly a complete shutdown of the global economy for a period of time. 20
This unprecedented event impacted all sectors and capital markets. However, 21
regulated utilities have generally performed well during the COVID-19 pandemic 22
with consistent access to capital markets. More recently, the regulated utilities 23

Gorman, Di 30
Micron Technology, Inc.
have faced higher inflation, natural gas prices and increasing recessionary 1
pressure. 2
S&P currently has a negative outlook for the regulated utility industry, 3
because utility companies are operating with minimum financial cushion from 4
their downgrade thresholds and their exposure to environmental, social and 5
governance risk. Specifically, in a recent report, S&P states the following: 6
The industry outlook remains negative and has been negative 7
since early 2020. Over this timeframe downgrades have outpaced 8
upgrades by more than 3:1 (see chart 8). While the industry's 9
percentage of negative outlooks has decreased to about 15% 10
from 35% at year-end 2020, prolonged inflationary risks or a 11
deeper-than-expected recession could harm the industry’s credit 12
quality in 2023. 13
* * * 14
MAIN ASSUMPTIONS ABOUT 2023 AND BEYOND 15
1. Minimal financial cushion 16
More than 40% of the industry is strategically managing their 17
financial performance with only minimal financial cushion, 18
reflecting funds from operations (FFO) to debt that is less than 19
100 basis points above the downgrade threshold. Because utility 20
cash flows are typically more stable than those of many other 21
industries, this strategy of limiting excess credit capacity works 22
well under ordinary conditions. However, when unexpected risks 23
occur or base case assumptions deviate from expectations, the 24
utility's credit quality can weaken, as we've seen over the past 25
three years. 26
2. Consistent access to the capital markets 27
Because of the industry's high capital spending and consistent 28
dividends, negative discretionary cashflow is regularly more than 29
$100 billion annually. To fund this large deficit, the industry 30
requires consistent access to the capital markets. Rising interest 31
rates, decreasing equity prices, and inflation could hamper 32
consistent access to the capital markets, potentially pressuring 33
credit quality. Typically, most of the funding of negative 34
discretionary cashflow is from new debt issuance with the balance 35
from common equity, hybrid securities, and asset sales. For 2023, 36
we expect the industry will rely on a lower percentage of common 37

Gorman, Di 31
Micron Technology, Inc.
equity compared to prior years and instead rely on a higher 1
percentage of asset sales. 2
3. Energy transition 3
Over the past decade, the utility industry reduced its reliance on 4
coal-fired generation by more than 50% and more than doubled its 5
generation from renewable energy. We expect that by the end of 6
the decade it will reduce coal-fired generation by about another 7
50% and will fully phase out coal by about 2040. 8
KEY RISKS OR OPPORTUNITIES AROUND THE BASELINE 9
1. Inflation reduction act (IRA) 10
While this legislation will benefit much of the industry, there are 11
aspects of the law that will be detrimental to a few companies. 12
The key benefits are the expansion of tax credits and the 13
transferability of these credits. The legislation provides long-term 14
tax credits for renewables, batteries, nuclear power, and 15
hydrogen. We expect the use of these credits will significantly 16
increase because of the relatively easy transferability of these tax 17
credits. Conversely, the IRA also establishes an alternative 18
minimal tax, which we expect will increase taxes for large 19
transmission and distribution holding companies, pressuring their 20
financial measures. 21
2. Recession 22
S&P Global's economists forecast the likelihood of a 2023 23
recession at greater than 50%. Should the recession be more 24
severe than expected, unemployment could rise faster than 25
expected, increasing the industry's uncollectibles and pressuring 26
its financial measures. 27
3. Affordability of customer bill 28
Customer bills may become less affordable because of rising 29
commodity prices, interest rates, inflation, and capital spending. 30
During 2022, Henry Hub natural gas prices, the U.S. benchmark, 31
peaked at about $9 per mmBTU. Although prices have since 32
retreated to about $4/mmBTU and the forward curve reflects 33
$3.50-$4.50/mmBTU, they remain substantially higher than 34
preinflation levels, pressuring the customer bill. While we 35
estimate the industry's average electric bill represents only about 36
2.5% of after-tax household income, sharp increases and bill 37
volatility often results in increasing customer dissatisfaction that 38

Gorman, Di 32
Micron Technology, Inc.
can ultimately heighten regulatory scrutiny and constrain the 1
industry's ability to effectively manage regulatory risk.15 2
More recently, Moody’s Investors Service (“Moody’s”) changed the 3
industry outlook to “Negative.” Specifically, Moody’s states: 4
» We have revised our outlook on the US regulated utilities 5
sector to negative from stable. We changed the outlook 6
because of increasingly challenging business and financial 7
conditions stemming from higher natural gas prices, inflation 8
and rising interest rates. These developments raise residential 9
customer affordability issues, increasing the level of 10
uncertainty with regard to the timely recovery of costs for fuel 11
and purchased power, as well as for rate cases more broadly. 12
* * * 13
» What could change our outlook: The outlook could return to 14
stable if the sector's regulatory support remains intact, natural 15
gas prices settle at a level where most utilities are able to fully 16
recover fuel and purchased power costs without a delay 17
beyond 12 months, overall inflation moderates, interest rates 18
stabilize and/or the sector's aggregate (FFO)-to-debt ratio 19
remains between 14% to 15%. We could change our outlook 20
to positive if utility regulation turns broadly more credit 21
supportive resulting in timelier cash flow recovery or we expect 22
the sector's aggregate (FFO)-to-debt ratio to rise above 17% 23
on a sustained basis.16 24
Fitch Ratings (“Fitch”) states the following: 25
The sector outlook for North American Utilities, Power and Gas in 26
2022 is neutral, according to Fitch Ratings. 27
Approximately 81% of rated entities in the sector have Stable 28
Rating Outlooks based on an expectation that retail electricity 29
sales will continue to strengthen and the regulatory environment 30
will remain supportive. 31
Key rating concerns include high natural gas prices, which will 32
increase the fuel and purchased power costs for utilities and will 33
be directly passed through to customers. Elevated capex, 34
recovery of storm restoration costs and recovery of deferred 35
coronavirus expenses will compound the pressure on customer 36

15 S&P Global Ratings: “Industry Top Trends: North America Regulated Utilities,” January 23,
2023, at 4. (emphasis added).
16 Moody’s Investors Service Outlook: “Regulated Electric and Gas Utilities – US; 2023 Outlook –
Negative on higher natural gas prices, inflation and rising interest rates,” November 10, 2022 at 1
(emphasis added).

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bills. Declining O&M costs due to cost control initiatives and the 1
ongoing energy transition to lower cost renewables should provide 2
some offset.17 3
As outlined above, S&P, Moody’s and Fitch all are concerned about utilities’ 4
ability to maintain rates which their customers can afford to pay and note that 5
cost recovery is increasingly becoming a concern to credit rating agencies. As 6
such, the Commission should carefully weigh the evidence in determining an 7
appropriate and fair overall rate of return for VWID in this case particularly, in 8
order to ensure that VWID’s rates are managed in a manner to minimize cost 9
increases and maintain the most competitive rate structure possible for this utility. 10
Maintaining competitive rates will support the economic strength of VWID’s 11
service territory, and make its rates more affordable for its customers, which in 12
turn will support stronger credit standing and financial integrity for VWID. 13

Q HOW DID YOU USE THIS OBSERVABLE MARKET DATA IN FORMING 14
YOUR RECOMMENDED RETURN ON EQUITY AND OVERALL RATE OF 15
RETURN FOR VWID? 16
A Generally, authorized returns on equity, credit standing, and access to capital 17
have been quite robust for utilities over the last several years. The COVID-19 18
pandemic has created challenges for the U.S. economy as a whole, including 19
utility companies. However, the U.S. economy has largely recovered and utilities 20
have mostly weathered the economic downturn caused by the pandemic. More 21
recently, regulated utilities are faced with higher inflation and increased interest 22
rates. Even so, the Federal Reserve has expressed its commitment, and taken 23
measures, to restore inflation to its target of 2.0%. In the meantime, it is critical 24

17 Fitch Ratings: “Neutral Outlook for North American Utilities, Power & Gas in 2022,”
December 9, 2021 at 1-2. (emphasis added).

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that the Commission ensure that rates are increased no more than necessary to 1
provide fair compensation and maintain financial integrity and be especially 2
concerned about rate impacts on the service area economies that are severely 3
constrained due to current economic conditions. 4

IV.D. VWID’S Investment Risk 5
Q PLEASE DESCRIBE THE MARKET’S ASSESSMENT OF THE INVESTMENT 6
RISK OF VWID. 7
A VWID does not raise capital on its own and does not have its own credit rating. 8
Rather, Veolia Utility Resources, LLC (“VUR”) provides all the external capital 9
needed for VWID utility operations in the state of Idaho. Therefore, the market 10
assessment of VWID’s investment risk is described by credit rating analysts’ 11
reports for VUR. VUR is currently not rated by Moody’s. However, its current 12
corporate bond rating from S&P is A.18 The Company’s credit outlook from S&P 13
is “Stable.” 14
Specifically, S&P states: 15
Rating Action Overview 16
• Veolia Environment S.A. (Veolia) acquired Suez S.A., fully 17
integrating its North American operations, including Veolia 18
Utility Resources LLC (VUR) (formerly Suez Water Resources 19
LLC) and its immediate holding company, Veolia Utility 20
Parent, Inc (formerly Suez Utility Holdings Inc). 21

• As part of this acquisition, Suez S.A. did not exercise any 22
drag-along rights to bring minority shareholder PGGM into the 23
sales process for Veolia Utility Parent, Inc. (VUPI). 24
Furthermore, PGGM, the 20% minority shareholder of Veolia 25
Utility Parent, Inc., has maintained its ownership interest. We 26
anticipate no changes to the insulating measures currently in 27
place for the foreseeable future. 28

18 Walker Direct Testimony at 28.

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• As such, we affirmed the ratings, including the 'A' issuer credit 1
rating on Veolia Utility Resources LLC. The outlook is stable. 2

• The stable outlook on VUR reflects our stable outlook on 3
Veolia as well as our view of VUR's low-risk, rate-regulated 4
water and wastewater utility operations. Furthermore, the 5
outlook reflects our expectation that the insulating measures 6
will remain in place for the foreseeable future and remain 7
adequate for us to rate VUR higher than Veolia. We also 8
expect that VUR will continue to reach constructive regulatory 9
outcomes and avoid any substantial rise in business risk. Our 10
base case forecast has VUR and VUPI maintaining adjusted 11
funds from operations (FFO) to debt of about 13%-15% over 12
the next few years. 19 13

IV.E. VWID’s Proposed Capital Structure 14
Q WHAT IS THE COMPANY’S PROPOSED CAPITAL STRUCTURE? 15
A VWID witness Mr. Walker also sponsors the Company’s proposed capital 16
structure, which is shown below in Table 6. 17

TABLE 6

VWID Proposed
Capital Structure

Description Weight

Debt 44.4%
Common Equity 55.6%
Total 100.0%
_________
Source:
Walker Direct Testimony at 19.

19 Standard & Poor’s RatingsDirect®: “Veolia Utility Resources LLC Ratings Affirmed After
Acquisition By Veolia Environnement; Outlook Stable,” May 5, 2022, at 1, emphasis added.

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IV.F. Embedded Cost of Debt 1
Q WHAT IS VWID’S EMBEDDED COST OF LONG-TERM DEBT? 2
A VWID is proposing an embedded cost of long-term debt of 3.99% as developed 3
on the Company’s Exhibit No. 6. I have used VWID’s proposed embedded cost 4
of long-term debt in my calculation of an overall weighted cost of capital. 5

V. RETURN ON EQUITY 6
Q PLEASE DESCRIBE WHAT IS MEANT BY A “UTILITY’S COST OF COMMON 7
EQUITY.” 8
A A utility’s cost of common equity is the expected return that investors require on 9
an investment in the utility. Investors expect to earn their required return from 10
receiving dividends and through stock price appreciation. 11

Q PLEASE DESCRIBE THE FRAMEWORK FOR DETERMINING A REGULATED 12
UTILITY’S COST OF COMMON EQUITY. 13
A In general, determining a fair cost of common equity for a regulated utility has 14
been framed by two hallmark decisions of the U.S. Supreme Court: Bluefield 15
Water Works & Improvement Co. v. Pub. Serv. Comm’n of W. Va., 262 U.S. 679 16
(1923) and Fed. Power Comm’n v. Hope Natural Gas Co., 320 U.S. 591 (1944). 17
In these decisions, the Supreme Court found that just compensation depends on 18
many circumstances and must be determined by fair and enlightened judgments 19
based on relevant facts. The Court found that a utility is entitled to have the 20
opportunity to earn a return on its property devoted to the convenience of the 21
public that is generally consistent with the same returns available in other 22
investments of corresponding risk. The Court continued that the utility has no 23

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constitutional rights to profits such as those realized or anticipated in highly 1
profitable enterprises or speculative ventures, and defined the ratepayer/investor 2
balance as follows: 3
The return should be reasonably sufficient to assure confidence in 4
the financial soundness of the utility and should be adequate, 5
under efficient and economical management, to maintain and 6
support its credit and enable it to raise the money necessary for 7
the proper discharge of its public duties.20 8
As such, a fair rate of return is based on the expectation that the utility’s 9
costs reflect efficient and economical management, and the return will support its 10
credit standing and access to capital, without being in excess of this level. From 11
these standards, rates to customers will be just and reasonable, and under 12
economic management, compensation to the utility will be fair and support 13
financial integrity and credit standing. 14

V.A. Risk Proxy Group 15
Q PLEASE DESCRIBE HOW YOU IDENTIFIED PROXY UTILITY GROUPS THAT 16
COULD BE USED TO ESTIMATE VWID’S CURRENT MARKET COST OF 17
EQUITY. 18
A I relied on the same water utility proxy group developed by VWID witness Mr. 19
Walker with the exception of York Water Company, which is no longer covered 20
by Value Line. 21
In addition, I also developed a gas utility proxy group comparable to 22
VWID. My gas utility proxy group was developed by starting with the gas 23
companies followed by Value Line. In developing my gas utility proxy group, I 24
excluded South Jersey Industries (“SJI”) because, in February 2022, SJI agreed 25
to be acquired by an Infrastructure Investment Fund (JPMorgan Chase), which 26

20 Bluefield, 262 U.S. 679, 693 (1923), emphasis added.

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significantly increased its stock price. I also excluded Chesapeake Utilities 1
Corporation because it is not rated by S&P or Moody’s. 2

Q WHY DID YOU RELY ON GAS UTILITIES AS A PROXY GROUP IN 3
ESTIMATING VWID’S COST OF EQUITY? 4
A I relied on a gas utility proxy group along with the water utility proxy group to 5
better measure VWID’s cost of equity. This was necessary for several reasons. 6
First, gas utilities’ securities are more widely followed than are water utility 7
stocks, and therefore the estimated cost of equity from a gas utility proxy group 8
provides a more robust estimate of VWID’s current market cost of equity. 9
Second, the asset capitalization and operations of water and gas utilities are very 10
similar. Both utility groups’ operations are dependent on large main investment 11
and operations, infrastructure replacement and upgrades, and reliability and 12
safety compliance with state, local and federal regulations. The two groups 13
together produce a better investment risk proxy than only a water utility proxy 14
group. 15
For these reasons, I believe these two proxy groups are reasonable to 16
estimate the investment risk of VWID. 17

Q WHY IS IT APPROPRIATE TO EXCLUDE COMPANIES WHICH ARE 18
INVOLVED IN MERGER AND ACQUISITION (“M&A”) ACTIVITY FROM THE 19
PROXY GROUPS? 20
A Companies that are involved in M&A or divestitures activities have market 21
valuations that may not accurately reflect the stand-alone valuation of the 22
company, but rather may anticipate enhanced valuation from the proposed M&A 23
transaction. Therefore, removing them from the proxy group is necessary 24

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because the resulting market-based return analyses on these specific companies 1
can be distorted and/or would simply be unreliable. 2

Q WHY IS IT APPROPRIATE TO EXCLUDE COMPANIES THAT DO NOT HAVE 3
A BOND RATING FROM S&P OR MOODY’S? 4
A Credit rating agencies undertake a detailed assessment of a company’s business 5
and financial risk in awarding a bond rating. This bond rating is available to 6
public capital market participants and is considered an independent assessment 7
of the investment risk of the subject company. While a bond rating generally 8
assesses the credit strength of the company, it is useful in determining the 9
predictability and strength of the company’s cash flows to meet its financial 10
obligations including cash needed to meet common equity shareholders’ 11
investment return outlooks. For these reasons, credit ratings from S&P and 12
Moody’s are information that is available to the investment community to assess 13
the overall investment risk of the underlying company. 14
Because Chesapeake Utilities does not have a bond rating from S&P or 15
Moody’s, it is not possible to rely on independent market participants’ 16
assessment of its investment risk in comparison to VWID, or VUR. Therefore, I 17
excluded this company from the proxy group. 18

Q PLEASE DESCRIBE WHY YOU BELIEVE YOUR WATER PROXY GROUP IS 19
REASONABLY COMPARABLE IN INVESTMENT RISK TO VWID. 20
A My water proxy group is shown in Exhibit No. 403. The water proxy group has 21
an average credit rating from S&P of A, which is identical to VUR’s S&P rating. 21 22

21 Walker Direct Testimony at 28.

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The water proxy group has an average Moody’s credit rating of Baa1. However, 1
VUR does not have a credit rating from Moody’s. 2
The water proxy group has an average common equity ratio of 54.8% 3
from S&P (including short-term debt) and a 48.4% equity ratio from Value Line 4
(excluding short-term debt). VWID’s proposed equity ratio of 55.6% is 5
significantly higher than that of the water proxy group average of 48.4%. 6

Q PLEASE DESCRIBE WHY YOU BELIEVE YOUR GAS PROXY GROUP IS 7
REASONABLY COMPARABLE IN INVESTMENT RISK TO VWID. 8
A My gas proxy group is also shown in Exhibit No. 403. The gas proxy group has 9
an average credit rating from S&P of A-, which is a notch lower than VUR’s S&P 10
rating of A. The gas proxy has an average Moody’s credit rating of A3. 11
My gas proxy group has an average common equity ratio of 38.0% from 12
S&P (including short-term debt) and a 44.3% equity ratio from Value Line 13
(excluding short-term debt). VWID’s equity ratio of 55.6% is again significantly 14
higher than that of the gas proxy group average of 44.3%. 15
Therefore, my proxy groups produce return on equity estimates that are 16
very conservative. 17

V.B. DCF Model 18
Q PLEASE DESCRIBE THE DCF MODEL. 19
A The DCF model posits that a stock price is valued by summing the present value 20
of expected future cash flows discounted at the investor’s required rate of return 21
or cost of capital. This model is expressed mathematically as follows: 22
P0 = D1 + D2 . . . . D∞ (Equation 1) 23
(1+K)1 (1+K)2 (1+K)∞ 24

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P0 = Current stock price 1
D = Dividends in periods 1 - ∞ 2
K = Investor’s required return 3
This model can be rearranged in order to estimate the discount rate or 4
investor-required return, known as “K.” If it is reasonable to assume that 5
earnings and dividends will grow at a constant rate, then Equation 1 can be 6
rearranged as follows: 7
K = D1/P0 + G (Equation 2) 8
K = Investor’s required return 9
D1 = Dividend in first year 10
P0 = Current stock price 11
G = Expected constant dividend growth rate 12
Equation 2 is referred to as the annual “constant growth” DCF model. 13

Q PLEASE DESCRIBE THE INPUTS TO YOUR CONSTANT GROWTH DCF 14
MODEL. 15
A As shown in Equation 2 above, the DCF model requires a current stock price, 16
expected dividend, and expected growth rate in dividends. 17

Q WHAT STOCK PRICE DID YOU USE IN YOUR CONSTANT GROWTH DCF 18
MODEL? 19
A I relied on the average of the weekly high and low stock prices of the utilities in 20
the proxy group over a 13-week period ending on January 20, 2023. An average 21
stock price is less susceptible to market price variations than a price at a single 22
point in time. Therefore, an average stock price is less susceptible to aberrant 23
market price movements, which may not reflect the stock’s long-term value. 24
A 13-week average stock price reflects a period that is still short enough 25
to contain data that reasonably reflects current market expectations, but the 26

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period is not so short as to be susceptible to market price variations that may not 1
reflect the stock’s long-term value. In my judgment, a 13-week average stock 2
price is a reasonable balance between the need to reflect current market 3
expectations and the need to capture sufficient data to smooth out aberrant 4
market movements. 5

Q WHAT DIVIDEND DID YOU USE IN YOUR CONSTANT GROWTH DCF 6
MODEL? 7
A I used the most recently paid quarterly dividend as reported in Value Line.22 This 8
dividend was annualized (multiplied by 4) and adjusted for next year’s growth to 9
produce the D1 factor for use in Equation 2 above. In other words, I calculate D1 10
by multiplying the annualized dividend (D0) by (1+G). 11

Q WHAT DIVIDEND GROWTH RATES DID YOU USE IN YOUR CONSTANT 12
GROWTH DCF MODEL? 13
A There are several methods that can be used to estimate the expected growth in 14
dividends. However, regardless of the method, to determine the market-required 15
return on common equity, one must attempt to estimate investors’ consensus 16
about what the dividend, or earnings growth rate, will be and not what an 17
individual investor or analyst may use to make individual investment decisions. 18
As predictors of future returns, securities analysts’ growth estimates have 19
been shown to be more accurate than growth rates derived from historical data.23 20
That is, assuming the market generally makes rational investment decisions, 21
analysts’ growth projections are more likely to influence investors’ decisions, 22

22 The Value Line Investment Survey, November 25, 2022 and January 25, 2023.
23 See, e.g., David Gordon, Myron Gordon & Lawrence Gould, “Choice Among Methods of
Estimating Share Yield,” The Journal of Portfolio Management, Spring 1989.

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Micron Technology, Inc.
which are captured in observable stock prices, than growth rates derived only 1
from historical data. 2
For my constant growth DCF analysis, I have relied on a consensus, or 3
mean, of professional securities analysts’ earnings growth estimates as a proxy 4
for investor consensus dividend growth rate expectations. I used the average of 5
analysts’ growth rate estimates from three sources: Zacks, MI, and Yahoo! 6
Finance. All such projections were available on January 20, 2023, and all were 7
reported online. 8
Each consensus growth rate projection is based on a survey of securities 9
analysts. There is no clear evidence whether a particular analyst is most 10
influential on general market investors. Therefore, a single analyst’s projection 11
does not as reliably predict consensus investor outlooks as does a consensus of 12
market analysts’ projections. The consensus estimate is a simple arithmetic 13
average, or mean, of surveyed analysts’ earnings growth forecasts. A simple 14
average of the growth forecasts gives equal weight to all surveyed analysts’ 15
projections. Therefore, a simple average, or arithmetic mean, of analyst 16
forecasts is a good proxy for market consensus expectations. 17

Q WHAT ARE THE GROWTH RATES YOU USED IN YOUR CONSTANT 18
GROWTH DCF MODEL? 19
A The growth rates I used in my DCF analysis are shown in Exhibit No. 404. The 20
average growth rate for my water proxy group is 6.69%. The average growth 21
rate for my gas proxy group is 5.73%. 22

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Q WHAT ARE THE RESULTS OF YOUR CONSTANT GROWTH DCF MODEL? 1
A As shown in Exhibit No. 405, the average and median constant growth DCF 2
returns for my water proxy group for the 13-week analysis are 8.62% and 9.49%, 3
respectively. The average and median constant growth DCF returns for my gas 4
proxy group for the 13-week analysis are 9.41% and 9.00%, respectively. 5

Q DO YOU HAVE ANY COMMENTS ON THE RESULTS OF YOUR CONSTANT 6
GROWTH DCF ANALYSIS? 7
A Yes. The constant growth DCF analysis for my water and gas proxy groups is 8
based on an average long-term sustainable growth rates of 6.69% and 5.73%, 9
respectively. The three- to five-year growth rate is higher than my estimate of a 10
maximum long-term sustainable growth rate of 4.00%. 11

Q HOW DID YOU ESTIMATE A MAXIMUM LONG-TERM SUSTAINABLE 12
GROWTH RATE? 13
A The long-term sustainable growth rate for a utility stock cannot exceed the 14
growth rate of the economy in which it sells its goods and services. The long-15
term maximum sustainable growth rate for a utility investment is, accordingly, 16
best proxied by the projected long-term GDP growth rate as that reflects the 17
projected long-term growth rate of the economy as a whole. While growth rates 18
on shorter periods can exceed the GDP growth rate, those short-term growth 19
periods are likely followed by other periods where the growth rate is below the 20
GDP. On average over long periods of time, the growth rate is most accurately 21
approximated by the long-term growth rate outlooks of the U.S. GDP. 22
Blue Chip Financial Forecasts projects that over the next 5 and 10 years, 23
the U.S. nominal GDP will grow at an annual rate of approximately 4.0%. These 24

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GDP growth projections reflect a real growth outlook of around 1.9% and an 1
inflation outlook of around 2.1% going forward. As such, the average nominal 2
growth rate over the next 5 to 10 years is around 4.0%, which I believe is a 3
reasonable proxy of long-term sustainable growth.24 4

Q IS THERE INDEPENDENT AUTHORITATIVE SUPPORT FOR USING LONG-5
TERM GDP GROWTH AS A MAXIMUM SUSTAINABLE GROWTH RATE? 6
A Yes. In my multi-stage growth DCF analysis, I discuss academic and investment 7
practitioner support for using the projected long-term GDP growth outlook as a 8
maximum sustainable growth rate projection. Using the long-term GDP growth 9
rate, however, as a conservative projection for the maximum sustainable growth 10
rate is logical, and is generally consistent with academic and economic 11
practitioner accepted practices. 12

V.C. Sustainable Growth DCF 13
Q PLEASE DESCRIBE HOW YOU ESTIMATED A SUSTAINABLE LONG-TERM 14
GROWTH RATE FOR YOUR SUSTAINABLE GROWTH DCF MODEL. 15
A A sustainable growth rate is based on the percentage of the utility’s earnings that 16
is retained and reinvested in utility plant and equipment. These reinvested 17
earnings increase the earnings base (rate base). Earnings grow when plant 18
funded by reinvested earnings is put into service, and the utility is allowed to earn 19
its authorized return on such additional rate base investment. 20
The internal growth methodology is tied to the percentage of earnings 21
retained by the utility and not paid out as dividends. The earnings retention ratio 22

24 Blue Chip Financial Forecasts, December 2, 2022, at 14.

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is 1 minus the dividend payout ratio. As the payout ratio declines, the earnings 1
retention ratio increases. An increased earnings retention ratio will fuel stronger 2
growth because the business funds more investments with retained earnings. 3
The payout ratios of the proxy group are shown in my Exhibit No. 406. 4
These dividend payout ratios and earnings retention ratios then can be used to 5
develop a sustainable long-term earnings retention growth rate. A sustainable 6
long-term earnings retention ratio will help gauge whether analysts’ current three- 7
to five-year growth rate projections can be sustained over an indefinite period of 8
time. 9
The data used to estimate the long-term sustainable growth rate is based 10
on VWID’s current market-to-book ratio and on Value Line’s three- to five-year 11
projections of earnings, dividends, earned returns on book equity, and stock 12
issuances. 13
As shown in Exhibit No. 407, the average sustainable growth rate using 14
this internal growth rate model is 5.55% for my water proxy group and 5.41% for 15
my gas proxy group. 16

Q WHAT IS THE DCF ESTIMATE USING THESE SUSTAINABLE LONG-TERM 17
GROWTH RATES? 18
A A DCF estimate based on these sustainable growth rates is developed in Exhibit 19
No. 408. As shown there, the sustainable growth DCF analysis produces water 20
proxy group average and median DCF results for the 13-week period of 7.45% 21
and 7.50%, respectively. The average and median DCF results for my gas proxy 22
group are 9.08% and 9.30%, respectively. 23

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V.D. Multi-Stage Growth DCF Model 1
Q HAVE YOU CONDUCTED ANY OTHER DCF STUDIES? 2
A Yes. My first constant growth DCF is based on consensus analysts’ growth rate 3
projections so it is a reasonable reflection of rational investment expectations 4
over the next three to five years. The limitation on this constant growth DCF 5
model is that it cannot reflect a rational expectation that a period of high or low 6
short-term growth can be followed by a change in growth to a rate that better 7
reflects long-term sustainable growth. Therefore, I performed a multi-stage 8
growth DCF analysis to reflect this outlook of changing growth expectations. 9

Q WHY DO YOU BELIEVE GROWTH RATES CAN CHANGE OVER TIME? 10
A Analyst-projected growth rates over the next three to five years will change as 11
utility earnings growth outlooks change. Utility companies go through cycles in 12
making investments in their systems. When utility companies are making large 13
investments, their rate base grows rapidly, which in turn accelerates earnings 14
growth. Once a major construction cycle is completed or levels off, growth in the 15
utility rate base slows and its earnings growth slows from an abnormally high 16
three- to five-year rate to a lower sustainable growth rate. 17
As major construction cycles extend over longer periods of time, even 18
with an accelerated construction program, the growth rate of the utility will slow 19
simply because the pace of rate base growth will slow and because the utility has 20
limited human and capital resources available to expand its construction 21
program. Therefore, the three- to five-year growth rate projection should only be 22
used as a long-term sustainable growth rate in concert with a reasonable, 23
informed judgment as to whether it considers the current market environment, 24

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the industry, and whether the three- to five-year growth outlook is actually 1
sustainable. 2

Q PLEASE DESCRIBE YOUR MULTI-STAGE GROWTH DCF MODEL. 3
A The multi-stage growth DCF model reflects the possibility of non-constant growth 4
for a company over time. The multi-stage growth DCF model reflects three 5
growth periods: (1) a short-term growth period consisting of the first five years; 6
(2) a transition period, consisting of the next five years (6 through 10); and (3) a 7
long-term growth period starting in year 11 through perpetuity. 8
For the short-term growth period, I relied on the consensus analysts’ 9
growth projections I used above in my constant growth DCF model. For the 10
transition period, the growth rates were reduced or increased by an equal factor 11
reflecting the difference between the analysts’ growth rates and the long-term 12
sustainable growth rate. For the long-term growth period, I assumed each 13
company’s growth would converge to the maximum sustainable long-term growth 14
rate, which is the projected long-term GDP growth rate. 15

Q WHY IS THE GDP GROWTH PROJECTION A REASONABLE PROXY FOR 16
THE MAXIMUM SUSTAINABLE LONG-TERM GROWTH RATE? 17
A Utilities cannot indefinitely sustain a growth rate that exceeds the growth rate of 18
the economy in which they sell services. Utilities’ earnings/dividend growth are 19
created by increased utility investment or rate base. Such investment, in turn, is 20
driven by service area economic growth and demand for utility service. In other 21
words, utilities invest in plant to meet sales demand growth. Sales growth, in 22
turn, is tied to economic growth in their service areas. 23

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The U.S. Department of Energy, Energy Information Administration 1
(“EIA”) has observed utility sales growth tracks U.S. GDP growth, albeit at a 2
lower level, as shown in Exhibit No. 409. Utility sales growth has lagged behind 3
GDP growth for more than a decade. As a result, nominal GDP growth is a very 4
conservative proxy for utility sales growth, rate base growth, and earnings 5
growth. Therefore, the U.S. GDP nominal growth rate is a reasonable proxy for 6
the highest sustainable long-term growth rate of a utility. 7

Q IS THERE RESEARCH THAT SUPPORTS YOUR POSITION THAT, OVER 8
THE LONG TERM, A COMPANY’S EARNINGS AND DIVIDENDS CANNOT 9
GROW AT A RATE GREATER THAN THE GROWTH OF THE U.S. GDP? 10
A Yes. This concept is supported in published analyst literature and academic 11
work. Specifically, in “Fundamentals of Financial Management,” a textbook 12
published by Eugene Brigham and Joel F. Houston, the authors state: 13
The constant growth model is most appropriate for mature 14
companies with a stable history of growth and stable future 15
expectations. Expected growth rates vary somewhat among 16
companies, but dividends for mature firms are often expected to 17
grow in the future at about the same rate as nominal gross 18
domestic product (real GDP plus inflation).25 19
The use of the economic growth rate is also supported by investment 20
practitioners as outlined as follows: 21
Estimating Growth Rates 22
One of the advantages of a three-stage discounted cash flow 23
model is that it fits with life cycle theories in regards to company 24
growth. In these theories, companies are assumed to have a life 25
cycle with varying growth characteristics. Typically, the potential 26
for extraordinary growth in the near term eases over time and 27
eventually growth slows to a more stable level. 28

25 “Fundamentals of Financial Management,” Eugene F. Brigham & Joel F. Houston, Eleventh
Edition 2007, Thomson South-Western, a Division of Thomson Corporation at 298, emphasis
added.

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* * * 1
Another approach to estimating long-term growth rates is to focus 2
on estimating the overall economic growth rate. Again, this is the 3
approach used in the Ibbotson Cost of Capital Yearbook. To 4
obtain the economic growth rate, a forecast is made of the growth 5
rate’s component parts. Expected growth can be broken into two 6
main parts: expected inflation and expected real growth. By 7
analyzing these components separately, it is easier to see the 8
factors that drive growth.26 9

Q ARE THERE ACTUAL INVESTMENT RESULTS THAT SUPPORT THE 10
THEORY THAT THE GROWTH ON STOCK INVESTMENTS WILL NOT 11
EXCEED THE NOMINAL GROWTH OF THE U.S. GDP? 12
A Yes. This is evident by a comparison of the compound annual growth of the U.S. 13
GDP to the geometric growth of the U.S. stock market. Kroll measures the 14
historical geometric growth of the U.S. stock market over the period 1926-2021 to 15
be approximately 6.4%.27 During this same time period, the U.S. nominal 16
compound annual growth of the U.S. GDP was approximately 6.0%.28 17
As such, over the past 95 years, the geometric average annual growth of 18
the U.S. nominal GDP has been slightly lower than, but comparable to, the 19
average annual growth of the U.S. stock market capital appreciation. This 20
historical relationship indicates that the U.S. GDP growth outlook is a reasonable 21
estimate of the long-term sustainable growth of U.S. stock investments. 22

26 Morningstar, Inc., Ibbotson SBBI 2013 Valuation Yearbook at 51 and 52.
27 Kroll, 2022 SBBI Yearbook at 145.
28 U.S. Bureau of Economic Analysis, Table 1.1.5 Gross Domestic Product, Revised May 26,
2022.

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Q WHAT IS THE GEOMETRIC AVERAGE AND WHY IS IT APPROPRIATE TO 1
USE THIS MEASURE TO COMPARE GDP GROWTH TO CAPITAL 2
APPRECIATION IN THE STOCK MARKET? 3
A The terms geometric average growth rate and compound annual growth rate are 4
used interchangeably. The geometric annual growth rate is the calculated 5
growth rate, or return, that measures the magnitude of growth from start to finish. 6
The geometric average is best, and most often, used as a measurement of 7
performance or growth over a long period of time.29 Because I am comparing 8
achieved growth in the stock market to achieved growth in U.S. GDP over a long 9
period of time, the geometric average growth rate is most appropriate. 10

Q HOW DID YOU DETERMINE A LONG-TERM GROWTH RATE THAT 11
REFLECTS THE CURRENT CONSENSUS MARKET PARTICIPANT 12
OUTLOOK? 13
A I relied on the economic consensus of long-term GDP growth projections. Blue 14
Chip Financial Forecasts publishes the consensus for GDP growth projections 15
twice a year. These consensus GDP growth outlooks are the best available 16
measure of the market’s assessment of long-term GDP growth because the 17
analysts’ projections reflect all current outlooks for GDP. They are therefore 18
likely the most influential on investors’ expectations of future growth outlooks. 19
The consensus projections published GDP growth rate outlook is 4.0% over the 20
next 5 to 10 years.30 21
I propose to use the consensus for projected five-year average GDP 22
growth rates of 4.0%, as published by Blue Chip Financial Forecasts, as an 23

29 New Regulatory Finance, Roger Morin, PhD, at 133-134.
30 Blue Chip Financial Forecasts, December 2, 2022, at p. 14.

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estimate of long-term sustainable growth. Blue Chip Financial Forecasts 1
projections provide real GDP growth projections of 1.9% and inflation of 2
approximately 2.1% over the next 5 to 10-year (2024-2033) period, resulting in 3
an average projected nominal annual GDP growth projection of 4.0%.31 These 4
GDP growth forecasts represent the most likely views of market participants 5
because they are based on published economic consensus projections. 6

Q DO YOU CONSIDER OTHER SOURCES OF PROJECTED LONG-TERM GDP 7
GROWTH? 8
A Yes, and these alternative sources corroborate the consensus analysts’ 9
projections I relied on. Various, commonly relied upon analysts’ projections are 10
shown in Table 7 below. 11

31 Id.

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Projected Real Nominal
Source Period GDP Inflation GDP
Blue Chip Financial Forecasts 1 5-10 Yrs 1.9%2.1%4.0%
EIA - Annual Energy Outlook2 29 Yrs 2.2%2.3%4.5%
Congressional Budget Office3 30 Yrs 1.6%2.1%3.7%
Moody's Analytics4 31 Yrs 2.1%2.1%4.2%
Social Security Administration5 78 Yrs 4.1%
Economist Intelligence Unit6 29 Yrs 1.8%2.4%4.3%
_________
Sources:
1Blue Chip Financial Forecasts, December 2, 2022 at 14.
2U.S. EnergyInformation Administration (EIA),
Annual Energy Outlook 2022, March 3, 2022.
3Congressional Budget Office, Long-Term Budget Outlook, July 2021.
4Moody’s Analytics Forecast, downloaded June 29, 2022.
5Social Security Administration, “2022 OASDI Trustees Report,”
Table VI.G4, June 2, 2022.
6S&P MI, Economist Intelligence Unit, downloaded on December 12, 2022.
TABLE 7
GDP Forecasts

As shown in the table above, the real GDP and inflation fall in the range 1
of 1.6% to 2.2% and 2.1% to 2.4%, respectively. This results in a nominal GDP 2
in the range of 3.7% to 4.5%. 3
Therefore, the nominal GDP growth projections made by these 4
independent sources support my use of 4.0% as a reasonable estimate of market 5
participants’ expectations for long-term GDP growth. 6

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Q WHAT STOCK PRICE, DIVIDEND, AND GROWTH RATES DID YOU USE IN 1
YOUR MULTI-STAGE GROWTH DCF ANALYSIS? 2
A I relied on the same 13-week average stock prices and the most recent quarterly 3
dividend payment data discussed above. For stage one growth, I used the 4
consensus analysts’ growth rate projections discussed above in my constant 5
growth DCF model. The first stage covers the first five years, consistent with the 6
time horizon of the securities analysts’ growth rate projections. The second 7
stage, or transition stage, begins in year 6 and extends through year 10. The 8
second stage growth transitions the growth rate from the first stage to the third 9
stage using a straight linear trend. For the third stage, or long-term sustainable 10
growth stage, starting in year 11, I used a 4.00% long-term sustainable growth 11
rate based on the consensus economists’ long-term projected nominal GDP 12
growth rate. 13

Q WHAT ARE THE RESULTS OF YOUR MULTI-STAGE GROWTH DCF 14
MODEL? 15
A As shown in Exhibit No. 410, the average and median DCF returns on equity for 16
my water proxy group using the 13-week average stock price are 6.23% and 17
6.31%, respectively. The average and median DCF returns on equity for my gas 18
proxy group are 8.03% and 8.08%, respectively. 19

V.E. DCF Summary Results 20
Q PLEASE SUMMARIZE THE RESULTS FROM YOUR DCF ANALYSES. 21
A The results from my DCF analyses are summarized in Table 8 below: 22

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TABLE 8

Summary of DCF Results

_____________Description__________________ Water Gas
Average Median Average Median

Constant Growth DCF Model (Analysts’ Growth) 8.62% 9.49% 9.41% 9.00%
Constant Growth DCF Model (Sustainable Growth) 7.45% 7.50% 9.08% 9.30%
Multi-Stage Growth DCF Model 6.23% 6.31% 8.03% 8.08%

Based on the current market conditions, my DCF studies indicate a fair 1
return on equity for VWID in the range of 8.60% to 9.50%, with an approximate 2
midpoint of 9.00%. 3

V.F. Risk Premium Model 4
Q PLEASE DESCRIBE YOUR BOND YIELD PLUS RISK PREMIUM MODEL. 5
A This model is based on the principle that investors require a higher return to 6
assume greater risk. Common equity investments have greater risk than bonds 7
because bonds have more security of payment in bankruptcy proceedings than 8
common equity and the coupon payments on bonds represent contractual 9
obligations. In contrast, companies are not required to pay dividends or 10
guarantee returns on common equity investments. Therefore, common equity 11
securities are considered to be riskier than bond securities. 12
This risk premium model is based on two estimates of an equity risk 13
premium. First, I quantify the difference between regulatory commission-14
authorized returns on common equity and contemporary U.S. Treasury bonds. 15
The difference between the authorized return on common equity and the 16
Treasury bond yield is the risk premium. I estimated the risk premium on an 17
annual basis for each year from 1986 through September 2022. The authorized 18

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returns on equity were based on regulatory commission-authorized returns for 1
utility companies. Authorized returns are typically based on expert witnesses’ 2
estimates of the investor-required return at the time of the proceeding. 3
The second equity risk premium estimate is based on the difference 4
between regulatory commission-authorized returns on common equity and 5
contemporary “A” rated utility bond yields by Moody’s. I selected the period 1986 6
through September 2022 because public utility stocks consistently traded at a 7
premium to book value during that period. This is illustrated in Exhibit No. 411, 8
which shows the market-to-book ratio since 1986 for the utility industry was 9
consistently above a multiple of 1.0x. Over this period, an analyst can infer that 10
authorized returns on equity were sufficient to support market prices that at least 11
exceeded book value. This is an indication that commission authorized returns 12
on common equity supported a utility’s ability to issue additional common stock 13
without diluting existing shares. It further demonstrates utilities were able to 14
access equity markets without a detrimental impact on current shareholders. 15
Based on this analysis, as shown in Exhibit No. 412, the average 16
indicated gas equity risk premium over U.S. Treasury bond yields has been 17
5.64%. Since the risk premium can vary depending upon market conditions and 18
changing investor risk perceptions, I believe using an estimated range of risk 19
premiums provides the best method to measure the current return on common 20
equity for a risk premium methodology. 21
I incorporated five-year and ten-year rolling average risk premiums over 22
the study period to gauge the variability over time of risk premiums. These rolling 23
average risk premiums mitigate the impact of anomalous market conditions and 24
skewed risk premiums over an entire business cycle. As shown on my Exhibit 25
No. 412, the five-year rolling average gas risk premium over Treasury bonds 26

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ranged from 4.17% to 7.17%, with an average of 5.61%. The ten-year rolling 1
average gas risk premium ranged from 4.30% to 6.92%, with an average of 2
5.60%. 3
As shown on my Exhibit No. 413, the average indicated gas equity risk 4
premium over contemporary “A” rated Moody’s utility bond yields was 4.28%. 5
The five-year rolling average gas risk premiums ranged from 2.80% to 5.97%, 6
with an average of 4.26%. The ten-year rolling average gas risk premiums 7
ranged from 3.11% to 5.75%, with an average of 4.23%. 8

Q DO YOU BELIEVE THAT THE TIME PERIOD USED TO DERIVE THESE 9
EQUITY RISK PREMIUM ESTIMATES IS APPROPRIATE TO FORM 10
ACCURATE CONCLUSIONS ABOUT CONTEMPORARY MARKET 11
CONDITIONS? 12
A Yes. Contemporary market conditions can change during the period that rates 13
determined in this proceeding will be in effect. A relatively long period of time 14
where stock valuations reflect premiums to book value indicates that the 15
authorized returns on equity and the corresponding equity risk premiums were 16
supportive of investors’ return expectations and provided utilities access to the 17
equity markets under reasonable terms and conditions. Further, this time period 18
is long enough to smooth abnormal market movement that might distort equity 19
risk premiums. While market conditions and risk premiums do vary over time, 20
this historical time period is a reasonable period to estimate contemporary risk 21
premiums. 22
Alternatively, some studies, such as Duff & Phelps, have recommended 23
that the use of “actual achieved investment return data” in a risk premium study 24
should be based on long historical time periods. The studies find that achieved 25

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returns over short time periods may not reflect investors’ expected returns due to 1
unexpected and abnormal stock price performance. Short-term, abnormal actual 2
returns would be smoothed over time and the achieved actual investment returns 3
over long time periods would approximate investors’ expected returns. 4
Therefore, it is reasonable to assume that averages of annual achieved returns 5
over long time periods will generally converge on the investors’ expected returns. 6
My risk premium study is based on data that inherently relied on investor 7
expectations, not actual investment returns, and, thus, need not encompass a 8
very long historical time period. 9

Q WHAT DOES CURRENT OBSERVABLE MARKET DATA SUGGEST ABOUT 10
INVESTOR PERCEPTIONS OF UTILITY INVESTMENTS? 11
A The equity risk premium should reflect the relative market perception of risk 12
today in the utility industry. I have gauged investor perceptions in utility risk 13
today in Exhibit No. 414, where I show the yield spread between utility bonds and 14
Treasury bonds over the last 43 years. As shown in this attachment, the average 15
utility bond yield spreads over Treasury bonds for “A” and “Baa” rated utility 16
bonds for this historical period are 1.49% and 1.91%, respectively. The utility 17
bond yield spreads over Treasury bonds for “A” and “Baa” rated utilities in 2022 18
were 1.60% and 1.91%, respectively. 19
The current 13-week average “A” rated utility bond yield of 5.47% when 20
compared to the current Treasury bond yield of 3.81%, as shown in Exhibit No. 21
415, implies a yield spread of 1.66%. This current utility bond yield spread is 22
higher than the 43-year average spread for “A” rated utility bonds of 1.49%. The 23
current spread for the “Baa” rated utility bond yield of 1.95% is slightly higher but 24
comparable to the 43-year average spread of 1.91%. 25

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Q IS THERE OBSERVABLE MARKET EVIDENCE TO HELP GAUGE MARKET 1
RISK PREMIUMS? 2
A Yes. Market data illustrates how the market is pricing investment risk and 3
gauging the current demands for returns based on securities of varying levels of 4
investment risk. This market evidence includes bond yield spreads for different 5
bond return ratings as implied by the yield spreads for Treasury, corporate and 6
utility bonds. These spreads provide an indication of the market’s return 7
requirement for securities of different levels of investment risk and required risk 8
premiums. 9
Table 9 below summarizes the utility and corporate bond spreads relative 10
to Treasury bond yields. 11
Year A Baa A Baa
Average Historical Spread 1.49%1.91%0.84%1.91%
2021 Spread 1.05%1.30%0.65%1.34%
2022 Spread 1.60%1.91%0.96%1.95%
Source: Moody's Bond Yields
TABLE 9
Comparison of Yield Spreads Over Treasury Bond Yields
Utility Corporate

As outlined above, the observable market evidence indicates that risk 12
premiums are reasonably aligned with long-term historical averages. As such, in 13
comparison to recent utility bond yields and Treasury bond yields, I believe the 14
most reasonable estimate of the current market cost of equity should reflect an 15
average historical yield spread. 16

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Micron Technology, Inc.
In terms of utility stock yields over utility bond yields, the risk premium 1
appears to be returning to more normal levels. As outlined on my Exhibit No. 2
402, page 4, stock yield spreads over A-rated utility bond yields have expanded 3
to around 1.0% from negative to very thin spreads extending back to 2016. The 4
same is true for utility stock yield spreads over Baa-rated utility bonds. 5
Observable stock yield spreads over utility bond yields indicate that risk 6
premiums in the marketplace today more reasonably align with normal risk 7
premiums that have been experienced over long historical periods. 8

Q WHAT IS YOUR RECOMMENDED RETURN FOR VWID BASED ON YOUR 9
RISK PREMIUM STUDY? 10
A I am recommending more weight be given to the high-end risk premium 11
estimates than the low-end. As outlined above, I believe the current market is 12
reflecting high premiums for investing in securities of greater levels of investment 13
risk. Based on this observation, I propose to be conservative in applying a risk 14
premium analysis. For these reasons, I will recommend my high-end equity risk 15
premium in forming a return on equity in this proceeding. 16
For Treasury bond yields, I relied on the five-year rolling average 17
historical risk premium of 5.61% in combination with the forecasted Treasury 18
bond yield. Using a Treasury bond risk premium of 5.61% and a projected 30-19
year Treasury bond yield of 3.80%32 produces an indicated equity risk premium of 20
9.41% (5.61% + 3.80%). 21
A risk premium based on utility bond yields reflects current observable 22
bond yields. Current observable bond yields may increase over time based on 23
economists’ projections of changes in interest rates. However, history indicates 24

32 Blue Chip Financial Forecasts, January 1, 2023 at 2.

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that economists typically overestimate increases in interest rates. Therefore, 1
current observable rates should also be considered. With current observable 2
rates, I recommend using the five-year rolling average risk premium estimate of 3
4.26%, which as shown on Exhibit No. 413 with an A utility yield of 5.47% as 4
shown on my Exhibit No. 415, page 1, produces a risk premium return on equity 5
of 9.73% (4.26% + 5.47%). 6
Based on this methodology, my Treasury bond risk premium and my 7
utility bond risk premium indicate a return in the range of 9.41% to 9.73%, with an 8
approximate midpoint of 9.60%. 9

V.G. Capital Asset Pricing Model (“CAPM”) 10
Q PLEASE DESCRIBE THE CAPM. 11
A The CAPM method of analysis is based upon the theory that the market-required 12
rate of return for a security is equal to the risk-free rate, plus a risk premium 13
associated with the specific security. This relationship between risk and return 14
can be expressed mathematically as follows: 15
Ri = Rf + Bi x (Rm - Rf) where: 16
Ri = Required return for stock i 17
Rf = Risk-free rate 18
Rm = Expected return for the market portfolio 19
Bi = Beta - Measure of the risk for stock 20
The stock-specific risk term in the above equation is beta. Beta 21
represents the investment risk that cannot be diversified away when the security 22
is held in a diversified portfolio. When stocks are held in a diversified portfolio, 23
stock-specific risks can be eliminated by balancing the portfolio with securities 24
that react in the opposite direction to firm-specific risk factors (e.g., business 25
cycle, competition, product mix, and production limitations). 26

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Risks that cannot be eliminated when held in a diversified portfolio are 1
non-diversifiable risks. Non-diversifiable risks are related to the market and 2
referred to as systematic risks. Risks that can be eliminated by diversification 3
are non-systematic risks. In a broad sense, systematic risks are market risks 4
and non-systematic risks are business risks. The CAPM theory suggests the 5
market will not compensate investors for assuming risks that can be diversified 6
away. Therefore, the only risk investors will be compensated for are systematic, 7
or non-diversifiable, risks. The beta is a measure of the systematic, or 8
non-diversifiable risks. 9

Q PLEASE DESCRIBE THE INPUTS TO YOUR CAPM. 10
A The CAPM requires an estimate of the market risk-free rate, VWID’s beta, and 11
the market risk premium. 12

Q WHAT DID YOU USE AS AN ESTIMATE OF THE MARKET RISK-FREE 13
RATE? 14
A As previously noted, Blue Chip Financial Forecasts’ projected 30-year Treasury 15
bond yield is 3.80%.33 The current 30-year Treasury bond yield is 3.81% as 16
shown in Exhibit No. 415. 17

Q WHY DID YOU USE LONG-TERM TREASURY BOND YIELDS AS AN 18
ESTIMATE OF THE RISK-FREE RATE? 19
A Treasury securities are backed by the full faith and credit of the United States 20
government. Therefore, long-term Treasury bonds are considered to have 21
negligible credit risk. Also, long-term Treasury bonds have an investment 22

33 Id.

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horizon similar to that of common stock. As a result, investor-anticipated long-1
run inflation expectations are reflected in both common stock required returns 2
and long-term bond yields. Therefore, the nominal risk-free rate (or expected 3
inflation rate and real risk-free rate) included in a long-term bond yield is a 4
reasonable estimate of the nominal risk-free rate included in common stock 5
returns. 6
Treasury bond yields, however, do include risk premiums related to 7
unanticipated future inflation and interest rates. In this regard, a Treasury bond 8
yield is not a risk-free rate. Risk premiums related to unanticipated inflation and 9
interest rates reflect systematic market risks. Consequently, for companies with 10
betas less than 1.0, using the Treasury bond yield as a proxy for the risk-free rate 11
in the CAPM analysis can produce an overstated estimate of the CAPM return. 12

Q WHAT BETA DID YOU USE IN YOUR ANALYSIS? 13
A As shown on my Exhibit No. 416, page 1, the average beta of my water and gas 14
proxy groups are 0.78 and 0.88, respectively. 15
I also reviewed the long-term trend of Value Line betas reported for the 16
proxy group companies, and the Value Line water and gas industries. As shown 17
on Exhibit No. 416, page 2, the proxy group betas have generally ranged 18
between 0.65 and 0.75 prior to the elevated betas published after the COVID-19 19
pandemic commenced. The historical variability in the proxy group Value Line 20
betas is similar to the historical variability in the water and gas regulated utility 21
industry betas followed by Value Line. This is shown on Exhibit No. 416, page 3. 22
On this schedule, similar to the proxy group companies, I show the Value Line 23
water and gas industry historical beta estimates, which also indicate that the 24

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current beta is abnormally high, and the long-term historical average beta of the 1
proxy groups reasonably aligns with that of the entire industry. 2
The average normalized historical beta estimates are 0.72 and 0.77 for 3
my water and gas proxy groups, respectively. Thus, the current beta estimates 4
of 0.78 (water) and 0.88 (gas) are well above the normalized historical beta. 5

Q HAVE YOU PERFORMED ANY STUDIES TO PROVE THAT PUBLISHED 6
VALUE LINE BETAS ARE ABNORMALLY HIGH AND DO NOT ACCURATELY 7
REFLECT INVESTMENT RISK OF VWID? 8
A Yes. Above I discuss beta variability based on published Value Line information. 9
However, using the S&P 500 utility index, relative to the New York Stock 10
Exchange, shows that beta estimates like those in Value Line are skewed due to 11
two extraordinary months within the 60-month time period used to measure beta. 12
The two months that skew the betas are March and April of 2020, the time period 13
that coincides with the start of the worldwide COVID-19 pandemic. Removing 14
these two months to derive a more normal level of beta has the effect of reducing 15
utility beta estimates from the very high levels right now of around 0.90, down to 16
more normalized betas in the range of 0.65 to 0.75. This beta regression study is 17
summarized in Table 10 below. 18

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Raw Adjusted
Beta Beta R 2
5Yr Ending Feb '20 0.45 0.65 0.18
May '20 - Current 0.66 0.79 0.39
Most Recent 5Yr Period 0.82 0.90 0.53
Note:
Calculated using Value Line's regression based beta methodology.
The current and most recent periods are through 1/20/23.
Regression Betas
S&P 500 Utilities vs. NYSE
TABLE 10
Period

Based on this analysis, I reject placing significant weight on Value Line 1
published betas and instead rely on more normalized historical betas to produce 2
a fair risk-adjusted return in this proceeding. 3

Q WHY IS IT NOT REASONABLE TO ESTIMATE A CAPM RETURN ON A 4
REGULATED UTILITY BASED ON BETA ESTIMATES THAT ARE CLEARLY 5
OUTLIERS FOR HISTORICAL AVERAGE BETAS? 6
A Utility company betas have increased from around 0.65 to 0.75 up to a current 7
level around 0.90 over the last two years. This increase in betas suggests that 8
utility companies’ investment risks are increasing relative to the overall general 9
marketplace. However, the outlook of increasing utility investment risk is simply 10
not supported by a review of other risk measures for utilities including: (a) current 11
robust valuation metrics of utilities as described above; (b) risk spreads of utility 12
stock yields relative to bond yields; (c) sustained investment grade bond ratings 13
for utility companies, and (d) access to significant amount of capital. Again, as 14
shown on Exhibit No. 402, the historically strong valuation metrics of regulated 15
utilities are particularly robust, indicating the market is paying a premium for utility 16

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stocks. The fact that utility stocks are trading at a premium is inconsistent with 1
the notion that the market perceives the utility industry’s investment risk to be 2
increasing. It also shows that the market is not demanding a higher rate of return 3
to invest in these securities. My conclusion is that the elevated betas for utility 4
stocks were skewed by the temporary effects of the market events during the 5
onset of the pandemic but the beta impacts have returned to more normal levels 6
as the market recovered. 7
For these reasons, in performing my CAPM I used a more normalized 8
beta of 0.75 and market risk premium factors in order to derive a CAPM return 9
estimate in this proceeding. 10

Q HOW DID YOU DERIVE YOUR MARKET RISK PREMIUM ESTIMATE? 11
A I derived two market risk premium estimates: a forward-looking estimate and one 12
based on a long-term historical average. 13
The forward-looking estimate was derived by estimating the expected 14
return on the market (as represented by the S&P 500) and subtracting the risk-15
free rate from this estimate. I estimated the expected return on the S&P 500 by 16
adding an expected inflation rate to the long-term historical arithmetic average 17
real return on the market. The real return on the market represents the achieved 18
return above the rate of inflation. 19
Kroll’s 2022 SBBI Yearbook estimates the historical arithmetic average 20
real market return over the period 1926 to 2021 to be 9.2%.34 A current 21
consensus for projected inflation, as measured by the Consumer Price Index, is 22
2.3%.35 Using these estimates, the expected market return is 11.71%.36 The 23

34 Kroll, 2022 SBBI Yearbook at 146.
35 Blue Chip Financial Forecasts, January 1, 2023 at 2.

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market risk premium then is the difference between the 11.71% expected market 1
return and my 3.80% risk-free rate estimate, or 7.91%, which I referred to as a 2
normalized market risk premium. 3
I also developed a current market risk premium based on the difference 4
between the expected return on the market of 11.71% as described above and 5
the current 30-year Treasury yield of 3.81% as shown on my Exhibit No. 415, 6
which produced a current market risk premium of approximately 7.90%. 7
A historical estimate of the market risk premium was also calculated by 8
using data provided by Kroll in its 2022 SBBI Yearbook. Over the period 1926 9
through 2021, the Kroll study estimated that the arithmetic average of the 10
achieved total return on the S&P 500 was 12.3%37 and the total return on 11
long-term Treasury bonds was 6.0%.38 The indicated market risk premium is 12
6.3% (12.3% - 6.0% = 6.3%). 13
The long-term government bond yield of 6.0% occurred during a period of 14
inflation of approximately 3.0%, thus implying a real return on long-term 15
government bonds of 3.0%. 16

Q HOW DOES YOUR ESTIMATED MARKET RISK PREMIUM RANGE 17
COMPARE TO THAT ESTIMATED BY KROLL? 18
A Kroll makes several estimates of a forward-looking market risk premium based 19
on actual achieved data from the historical period of 1926 through 2021 as well 20
as normalized data. Using this data, Kroll estimates a market risk premium 21
derived from the total return on the securities that comprise the S&P 500, less 22
the income return on Treasury bonds. The total return includes capital 23

36 { (1 + 0.092)  (1 + 0.023) – 1 }  100.
37 Kroll, 2022 SBBI Yearbook at 145.
38 Id.

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appreciation, dividend or coupon reinvestment returns, and annual yields 1
received from coupons and/or dividend payments. The income return, in 2
contrast, only reflects the income return received from dividend payments or 3
coupon yields. 4
Kroll’s range is based on several methodologies. First, Kroll estimates a 5
market risk premium of 7.46% based on the difference between the total market 6
return on common stocks (S&P 500) less the income return on 20-year Treasury 7
bond investments over the 1926-2021 period.39 8
Second, Kroll used the Ibbotson & Chen supply-side model which 9
produced a market risk premium estimate of 6.22%.40 Kroll explains that the 10
historical market risk premium based on the S&P 500 was influenced by an 11
abnormal expansion of P/E ratios relative to earnings and dividend growth during 12
the period, primarily over the last 30 years. Kroll believes this abnormal P/E 13
expansion is not sustainable. In order to control for the volatility of extraordinary 14
events and their impacts on P/E ratios, Kroll takes into consideration the three-15
year average P/E ratio as well as the current P/E ratio.41 16
Finally, Kroll develops its own recommended equity, or market risk 17
premium, by employing an analysis that takes into consideration a wide range of 18
economic information, multiple risk premium estimation methodologies, and the 19
current state of the economy by observing measures such as the level of stock 20
indices and corporate spreads as indicators of perceived risk. Based on this 21
methodology, and utilizing the higher of a “normalized” risk-free rate of 3.5%, 22
Kroll concludes the current expected, or forward-looking, market risk premium is 23
5.5%, implying an expected return on the market of 9.0%. However, when the 24

39 Id. at 199.
40 Id. at 207-208.
41 Id.

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current market risk-free rate exceeds the normalized risk-free rate, Kroll 1
recommends applying the current 20-year Treasury yield of approximately 3.8% 2
as of January 20, 2023. Currently, the 20-year Treasury yield is above the 3
normalized risk-free rate. Hence, based on Kroll’s methodology, the risk 4
premium is 9.3%.42 5
Importantly, Kroll’s market risk premiums are measured over a 20-year 6
Treasury bond. Because I am relying on a projected 30-year Treasury bond 7
yield, the results of my CAPM analysis should be considered conservative 8
estimates for the cost of equity. 9

Q WHAT ARE THE RESULTS OF YOUR CAPM ANALYSIS? 10
A The current observable beta estimate for both my water and gas proxy groups is 11
approximately 0.83. However, recognizing beta estimates are currently skewed, 12
the normalized beta estimate for both my water and gas proxy groups is 13
reasonably estimated using the average historical beta estimate of approximately 14
0.75. 15
As shown on my Exhibit No. 417, using a current market risk-free rate of 16
3.81% and a projected market return of 11.71% produces a market risk premium 17
of 7.90%. When combined with the current beta of 0.83, this indicates a CAPM 18
return estimate of 10.36%. 19
Using a market return of 11.71%, with a projected risk-free rate of 3.80%, 20
produces a market risk premium of 7.91%. This market risk premium and risk-21
free rate with a normalized utility beta of 0.75, indicates a CAPM return of 9.71%. 22

42 Kroll, “Kroll Increases U.S. Normalized Risk-Free Rate from 3.0% to 3.5%, but Spot 20-Year
U.S. Treasury Yield Preferred When Higher,” June 16, 2022.

Gorman, Di 70
Micron Technology, Inc.
As discussed above, the current elevated betas do not reflect the low 1
industry risk for VWID or the utility industry as a whole. Therefore, I find a more 2
reasonable result using a CAPM study in this case would be to use a normalized 3
utility beta, which produces a return on equity of approximately 9.70%. 4

V.H. Return on Equity Summary 5
Q BASED ON THE RESULTS OF YOUR RETURN ON COMMON EQUITY 6
ANALYSES DESCRIBED ABOVE, WHAT RETURN ON COMMON EQUITY DO 7
YOU RECOMMEND FOR VWID? 8
A Based on my analyses, I recommend VWID’s current market cost of equity be in 9
the range of 9.00% to 9.70%, with a point estimate of 9.35%. 10

Gorman, Di 71
Micron Technology, Inc.

TABLE 11

Return on Common Equity Summary

Description Results
DCF 9.00%
Risk Premium 9.60%
CAPM

9.70%

My recommended return on common equity of 9.35% falls within my 1
range of 9.00% to 9.70%. The low-end of my range is based on my DCF 2
analyses, and the high-end is based on my CAPM studies. My risk premium 3
analysis falls in this range. 4
My return on equity estimates reflect observable market evidence, the 5
impact of Federal Reserve policies on current and expected long-term capital 6
market costs, an assessment of the current risk premium built into current market 7
securities, and a general assessment of the current investment risk 8
characteristics of the regulated utility industry and the market’s demand for utility 9
securities. 10

V.I. Financial Integrity 11
Q WILL YOUR RECOMMENDED OVERALL RATE OF RETURN SUPPORT AN 12
INVESTMENT GRADE BOND RATING FOR VWID? 13
A Yes. I have reached this conclusion by comparing the key credit rating financial 14
ratios for VWID at my proposed return on equity and VWID’s recommended 15
capital structure to S&P’s benchmark financial ratios using S&P’s new credit 16
metric ranges. 17

Gorman, Di 72
Micron Technology, Inc.

Q PLEASE DESCRIBE THE MOST RECENT S&P FINANCIAL RATIO CREDIT 1
METRIC METHODOLOGY. 2
A S&P publishes a matrix of financial ratios corresponding to its assessment of the 3
business risk of utility companies and related bond ratings. On May 27, 2009, 4
S&P expanded its matrix criteria by including additional business and financial 5
risk categories.43 6
Based on S&P’s most recent credit matrix, the business risk profile 7
categories are “Excellent,” “Strong,” “Satisfactory,” “Fair,” “Weak,” and 8
“Vulnerable.” Most utilities have a business risk profile of “Excellent” or “Strong.” 9
The financial risk profile categories are “Minimal,” “Modest,” 10
“Intermediate,” “Significant,” “Aggressive,” and “Highly Leveraged.” Most of the 11
utilities have a financial risk profile of “Aggressive.” Based on the most recent 12
S&P report, VWID has an “Excellent” business risk profile and an “Intermediate” 13
financial risk profile and falls in the “Low Volatility” benchmark tables. 14

Q PLEASE DESCRIBE S&P’S USE OF THE FINANCIAL BENCHMARK RATIOS 15
IN ITS CREDIT RATING REVIEW. 16
A S&P evaluates a utility’s credit rating based on an assessment of its financial and 17
business risks. A combination of financial and business risks equates to the 18
overall assessment of VWID’s total credit risk exposure. On November 19, 2013, 19
S&P updated its methodology. In its update, S&P published a matrix of financial 20
ratios that defines the level of financial risk as a function of the level of business 21
risk. 22

43 S&P updated its 2008 credit metric guidelines in 2009, and incorporated utility metric
benchmarks with the general corporate rating metrics. Standard & Poor’s RatingsDirect: “Criteria
Methodology: Business Risk/Financial Risk Matrix Expanded,” May 27, 2009.

Gorman, Di 73
Micron Technology, Inc.
S&P publishes ranges for primary financial ratios that it uses as guidance 1
in its credit review for utility companies. The two core financial ratio benchmarks 2
it relies on in its credit rating process include: (1) Debt to Earnings Before 3
Interest, Taxes, Depreciation and Amortization (“EBITDA”); and (2) Funds From 4
Operations (“FFO”) to Total Debt.44 5

Q HOW DID YOU APPLY S&P’S FINANCIAL RATIOS TO TEST THE 6
REASONABLENESS OF YOUR RATE OF RETURN RECOMMENDATIONS? 7
A I calculated each of S&P’s financial ratios based on VWID’s cost of service for its 8
regulated utility operations in its Idaho service territory. While S&P would 9
normally look at total consolidated VWID financial ratios in its credit review 10
process, my investigation in this proceeding is not the same as S&P’s. I am 11
attempting to judge the reasonableness of my proposed cost of capital for rate-12
setting in VWID’s Idaho regulated utility operations. Hence, I am attempting to 13
determine whether my proposed rate of return will in turn support cash flow 14
metrics, balance sheet strength, and earnings that will support an investment 15
grade bond rating and VWID’s financial integrity. 16

Q DID YOU INCLUDE ANY OFF-BALANCE SHEET (“OBS”) DEBT 17
EQUIVALENTS? 18
A No. In response to Micron 2nd Data Request No. 39, VWID stated that it does not 19
have any off-balance sheet debt equivalents. Therefore, I did not include any in 20
the development of my credit metrics. 21

44 Standard & Poor’s RatingsDirect: “Criteria: Corporate Methodology,” November 19, 2013.

Gorman, Di 74
Micron Technology, Inc.
Q PLEASE DESCRIBE THE RESULTS OF THIS CREDIT METRIC ANALYSIS 1
AS IT RELATES TO VWID. 2
A The S&P financial metric calculations for VWID at a 9.35% return are developed 3
on Exhibit No. 418, page 1. The credit metrics produced below, with VWID’s 4
financial risk profile from S&P of “Intermediate” and business risk profile of 5
“Excellent,” will be used to assess the strength of the credit metrics based on 6
VWID’s retail operations in the state of Idaho. 7
The adjusted debt ratio for credit metric purposes at the Company’s 8
proposed capital structure is 44.4%, which is significantly lower than the adjusted 9
industry median debt ratio for A rated utilities in the range of 48.5% to 52.7%, as 10
shown on page 3 of Exhibit No. 418. A lower debt ratio indicates, all else equal, 11
less financial risk. VWID’s financial risk is significantly lower than the industry 12
average. 13
Based on an equity return of 9.35% and the Company’s proposed 14
common equity ratio of 55.6%, VWID will be provided an opportunity to produce 15
a Debt to Earnings Before Interest, Taxes, Depreciation and Amortization 16
(“EBITDA”) ratio of 3.5x. This is within S&P’s “Intermediate” guideline range of 17
3.0x to 4.0x.45 18
VWID’s retail utility operations FFO to total debt coverage at a 9.35% 19
equity return and 55.6% equity ratio is 20%, which is within S&P’s “Intermediate” 20
metric guideline range of 13% to 23%. This ratio is again within the FFO/total 21
debt range that will support VWID’s credit rating. 22
I conclude that VWID’s core credit metrics ratios based on the Company’s 23
proposed capital structure and my return on equity will support its investment 24
grade credit rating of A. 25

45 Standard & Poor’s RatingsDirect®: “Criteria: Corporate Methodology,” November 19, 2013.

Gorman, Di 75
Micron Technology, Inc.

Q DOES THIS FINANCIAL INTEGRITY ASSESSMENT SUPPORT YOUR 1
RECOMMENDED OVERALL RATE OF RETURN FOR VWID? 2
A Yes. As noted above, I believe my return on equity and the Company’s proposed 3
capital structure represent fair compensation in today’s very low capital market 4
costs, and as outlined above, my overall rate of return will provide VWID an 5
opportunity to earn credit metrics that will support its bond rating. 6

VI. RESPONSE TO VWID WITNESS MR. HAROLD WALKER 7
Q WHAT RETURN ON COMMON EQUITY IS VWID PROPOSING FOR THIS 8
PROCEEDING? 9
A VWID’s proposed 10.80% return on equity is supported by its witness Mr. 10
Walker.46 His recommended return on equity is based on several market-based 11
models such as DCF, CAPM and risk premium (“RP”) applied to a group of 12
publicly traded water utilities. Mr. Walker’s results fall in in the range of 9.60% to 13
11.60% and are summarized in Table 12 below. 14

46 Walker Direct Testimony at pp. 4-5.

Gorman, Di 76
Micron Technology, Inc.

TABLE 12

Summary of Mr. Walker’s ROE Estimate

Description
Walker
Range
(1)

Adjusted
Walker
(2)

DCF
DCF 8.5% 8.5%
Risk Adj. 1.1% Reject
Adjusted DCF 9.6% 8.5%

CAPM
CAPM 9.0% 9.6%
Risk Adj. 2.6% Reject
Adjusted CAPM 11.6% 9.6%

Risk Premium
RP 10.2% 9.8%
Risk Adj. 1.1% Reject
Adjusted RP 11.3% 9.8%

Recommended ROE 10.8% 9.35%
_______
Sources:
Walker Direct Testimony at pdf page numbers 50, 54 and 60-61, which
were incorrectly numbered as pages 25, 29 and 35-36, respectively, in
Mr. Walker’s testimony.

As illustrated above in Table 12 under Column 2, Mr. Walker’s market-1
based models without his adjustments would support my proposed return on 2
equity of 9.35%. For reasons set forth below, Mr. Walker’s proposed 3
adjustments to his DCF, CAPM and RP results are unjust and unreasonable and 4
should be rejected. Without these risk adjustments and correcting some of the 5
inputs used in his studies, Mr. Walker’s DCF, CAPM and RP results indicate a 6
return on equity for VWID that supports my proposed return on equity of 9.35%. 7

Gorman, Di 77
Micron Technology, Inc.
VI.A. Leverage Risk Adjustment 1
Q HOW DID MR. WALKER DEVELOP HIS RISK ADJUSTMENT? 2
A Mr. Walker’s risk adjustment is actually a market-to-book ratio or a leverage 3
adjustment that he applied to all of his return on equity model results. To 4
develop his adjustment, on his Exhibit No. 1, Schedule 16, Mr. Walker employs 5
the Hamada beta adjustment to modify the water group’s original Value Line beta 6
of 0.77 up to a relevered beta of 1.10, producing a risk adjustment factor of 7
1.82x.47 He produces his return on equity adjustments from the difference in the 8
equity ratio for the proxy group using the market value capitalization equity ratio 9
of 74.4%, compared to the book value equity ratio of 48.1%. His claim is that this 10
market-to-book ratio leverage difference requires a financial risk adder to the 11
model result when applied to a book value equity rate base. 12
Then, he averages the spread between the AAA and A rated bonds of 13
approximately 0.45% with his Hamada risk adjustment of 1.8% (his actual 14
estimate is 1.82% but Mr. Walker used 1.8%) to produce an adjustment of 1.10% 15
to be applied to all of his return estimates.48 16

Q IS MR. WALKER’S LEVERAGE ADJUSTMENT REASONABLE? 17
A No. Again, investors do not distinguish the financial risk of an enterprise based 18
on the difference between its market value common equity ratio and its book 19
value common equity ratio. Rather, investors perceive the earnings strength of 20
the company based on its book value, and value the stock based on this same 21
stock value placed by the market on the company’s earnings and dividends 22
outlook. 23

47 Walker Direct Testimony, Exhibit No. 1, Schedule 16.
48 Walker Direct Testimony at pdf pp. 49-50, which were incorrectly numbered as pp. 24-25 in Mr.
Walker’s testimony.

Gorman, Di 78
Micron Technology, Inc.
The stability and predictability of earnings and dividends are based on 1
book value financial risk characteristics, which are then valued by the market to 2
produce market prices and dividend yields. 3
Because Value Line beta estimates are estimated originally based on 4
differences in returns on market value securities, the leverage risk reflected in the 5
Value Line beta reflects the market risk of the stocks, which is not distinct and 6
separate from the financial risk based on the Company’s book value. More 7
specifically, the Company only has one measure of financial risk and it is the 8
same regardless of its market-to-book ratio. The Company does not have two 9
different measures of financial risk – one on market value and a second on book 10
value. 11
Further, Mr. Walker’s leverage adjustment as developed on his Exhibit 12
No. 1, Schedule 16, is really nothing more than a market-to-book ratio 13
adjustment, which produces a premium to the CAPM return estimate. A market-14
to-book ratio adjustment to either a DCF, CAPM or RP is severely flawed 15
because it provides the utility an ability to earn an above market rate of return on 16
incremental plant investments, which is in excess of the returns the utility can 17
earn in other enterprises of comparable risk, including buying back its own stock. 18
For these reasons, the beta leverage adjustment proposed by Mr. Walker is 19
flawed and produces a return on equity that is not balanced, reasonable or an 20
accurate measurement of a fair rate of return for VWID. 21

Gorman, Di 79
Micron Technology, Inc.
Q DOES MR. WALKER’S PROPOSED LEVERAGE ADJUSTMENT PRODUCE A 1
RATE OF RETURN THAT IS FAIR TO BOTH CUSTOMERS AND 2
INVESTORS? 3
A No. Under the Hope and Bluefield standard, the return on equity should produce 4
just and reasonable prices and provide investors an opportunity to earn the same 5
rate of return in utility plant investment as they can by investing in another 6
enterprise of comparable risk. This standard illustrates the imbalanced nature of 7
Mr. Walker’s market-to-book ratio. 8
Specifically, if Mr. Walker’s market-to-book (“M/B”) ratio adjustment were 9
adopted, then VWID would be able to earn a much higher rate of return by 10
making incremental utility plant investments than it could by repurchasing its own 11
stock—these are comparable risk investments. For example, using Mr. Walker’s 12
DCF results, VWID would be allowed to earn a return on equity of 9.60% (a 13
market return of 8.50% plus a M/B ratio return on equity adder of 1.10%) for 14
incremental plant investments. However, if it invested in its own stock, it would 15
expect to earn a market return of 8.50%, because the market return would not be 16
subject to the M/B return on equity adder. 17
As such, Mr. Walker’s market-to-book ratio adjustment would provide 18
VWID an opportunity for a well above market return on incremental plant 19
investments, compared to alternative investments of comparable risk. Therefore, 20
the market-to-book ratio adjustment fails to meet the fair compensation standard 21
of Hope and Bluefield, and should be rejected. 22

Gorman, Di 80
Micron Technology, Inc.
Q DID MR. WALKER OFFER AN EXAMPLE OF WHY HE BELIEVES HIS 1
MARKET-TO-BOOK RATIO ADJUSTMENT IS REASONABLE? 2
A Yes. On Mr. Walker’s Exhibit No. 1, Schedule 15, he shows three different 3
situations where a DCF return of 10% is applied to book value when the market-4
to-book ratio of the Company ranges from 50% to 100% to 200%. In each 5
scenario, applying a 10% return to the book value of $50 will produce an equity 6
return on book value of around $5. With that $5 return, Mr. Walker’s illustration is 7
that the actual return to the shareholder will depend on the market-to-book ratio 8
of the Company. With a $5 return on a book value of $50, where the market-to-9
book ratio is 50%, Mr. Walker estimates that the $5 earnings relative to a market 10
value of $25 would produce a return on market value of around 20%. With a 11
market-to-book ratio of 1, the $5 return on book value would also produce a 10% 12
return on market value. However, when the market-to-book ratio exceeds 1, in 13
this case up to 2, then a $5 return on book value would only produce a 5% return 14
on market value. Using Mr. Walker’s market-to-book ratio adjustment, the return 15
on book value would be set equal to the return necessary to achieve the 10% of 16
market value in each instance. 17

Q DOES MR. WALKER’S EXHIBIT NO. 1, SCHEDULE 15 SUPPORT HIS 18
MARKET-TO-BOOK RATIO ADJUSTMENT IN THIS CASE? 19
A No. What Mr. Walker fails to recognize is that customers are obligated to pay a 20
fair rate of return on utility plant investment based on the company’s cost of 21
making that investment. Customers are not obligated to pay a rate of return to 22
maintain a targeted market price of stock. Rather, customers are obligated to 23
pay a fair rate of return that ensures that the utility has an economic incentive to 24
continue to reinvest in utility plant and equipment. This is accomplished by 25

Gorman, Di 81
Micron Technology, Inc.
providing the utility the same rate of return for incremental plant investments that 1
the utility could earn by buying back its own stock or reinvesting in another 2
enterprise of comparable investment risk. In this instance, the fair rate of return 3
should be set at the return on the market, regardless of what the market-to-book 4
ratio is, and Mr. Walker’s market-to-book ratio return on equity adder should be 5
rejected. 6

VI.B. DCF 7
Q PLEASE DESCRIBE MR. WALKER’S DCF ANALYSIS. 8
A As shown on his Exhibit No. 1, Schedule 12, Mr. Walker’s constant growth DCF 9
return is based on an average growth rate of 6.6% from First Call, S&P, Zacks, 10
and Value Line, added to his water group’s adjusted dividend yield of 1.9% as of 11
July 2022 to produce a return on equity of 8.5%. Next, Mr. Walker increases his 12
traditional DCF return estimate by 110 basis points to account for the difference 13
in market price and book value of his proxy group. His adjusted DCF estimates 14
produce a return on equity of 9.6%.49 15

Q IS MR. WALKER’S DCF RETURN ESTIMATE OF 9.6% A REASONABLE 16
ESTIMATE OF VWID’S DCF COST OF EQUITY? 17
A No. Mr. Walker’s DCF return estimate is overstated for two main reasons. First, 18
the 6.6% growth rate used in his constant growth DCF model is excessive and 19
overstates the constant growth DCF return. Second, for the reasons I previously 20
discussed, his proposed market-to-book adjustment is flawed and unreasonable, 21
and significantly inflates the return on equity estimate for VWID. 22

49 Walker Direct Testimony at pdf p. 50, which was incorrectly numbered as p. 25 in Mr. Walker’s
testimony.

Gorman, Di 82
Micron Technology, Inc.

Q PLEASE EXPLAIN WHY MR. WALKER’S DCF GROWTH RATE OF 6.6% IS 1
EXCESSIVE. 2
A Mr. Walker’s projected growth rate of 6.6% is based on the average growth rate 3
from consensus analysts’ estimates from First Call, S&P, and Zacks and single 4
analysts’ projections from Value Line. While a 6.6% growth rate may be 5
appropriate for the water utility companies over the next three to five years, it is 6
not an appropriate estimate of a long-term sustainable growth rate for these 7
companies over an indefinite period of time. 8
As discussed in regard to my own DCF studies, it is not rational to expect 9
a utility company to have a growth rate higher than the growth of the economy in 10
which it sells its goods and services. Therefore, the long-term maximum 11
sustainable growth rate for a utility investment is best proxied by the projected 12
long-term GDP growth of 4.0%. 13

Q CAN MR. WALKER’S DCF MODEL BE MODIFIED TO PRODUCE A 14
REASONABLE RETURN ON EQUITY FOR VWID? 15
A Yes. Disregarding his risk adjustment of 1.10%, Mr. Walker’s constant growth 16
DCF model produces a return of 8.5% as shown on his Exhibit No. 1, Schedule 17
12. Even though this DCF return is based on an excessive growth rate estimate, 18
to limit the issues in this regulatory proceeding, I consider Mr. Walker’s DCF 19
return of 8.5% as a reasonable high end return estimate. 20

Gorman, Di 83
Micron Technology, Inc.
VI.C. CAPM 1
Q PLEASE DESCRIBE MR. WALKER’S CAPM ANALYSIS. 2
A Mr. Walker conducts a traditional CAPM analysis using a risk-free rate of 3.2%, a 3
beta estimate of 0.77, a historical risk premium of 7.5% and a prospective market 4
risk premium of 13.7%, which indicate a traditional CAPM return in the range of 5
9.00% (historical) to 13.75% (projected).50 Then, Mr. Walker adds a small 6
company risk premium of 1.5 percentage points, which produces an adjusted 7
CAPM return estimate in the range of 10.5% to 15.2%. These CAPM return 8
estimates are developed on Mr. Walker’s Exhibit No. 1, Schedule 17. To arrive 9
at his final CAPM return estimate, Mr. Walker relies only on his historical CAPM 10
result of 10.5%. He applies his M/B or leverage adjustment of 110 basis points 11
to his historical CAPM return of 10.5% to produce a CAPM return of 11.6%.51 12

Q IS MR. WALKER’S CAPM RETURN ESTIMATE REASONABLE? 13
A No. There are many aspects of his CAPM analysis with which I disagree, 14
however, my primary issue with his CAPM study is his adders to his return 15
estimate for VWID. Specifically, his leverage and his small size adjustments 16
should be rejected. The deficiencies in Mr. Walker’s leverage adjustment were 17
already discussed in detail above. Mr. Walker has failed to show that either of 18
these adjustments is necessary to produce a fair and reasonable return for 19
VWID. 20

50 3.2% + 0.77 x 7.5% = 9.0% and 3.2% + 0.77 x 13.7% = 13.75%
51 Walker Direct testimony at pdf p. 54, which was incorrectly numbered as p. 29 in Mr. Walker’s
testimony.

Gorman, Di 84
Micron Technology, Inc.
Q PLEASE DESCRIBE WHY MR. WALKER’S SMALL COMPANY RISK 1
PREMIUM ADJUSTMENT OF 1.50% IS UNREASONABLE. 2
A Mr. Walker derives his size premium estimate based on Kroll’s 2022 SBBI 3
development of a size differentiated adjustment to the CAPM return estimate. 4
Kroll reviews the beta risk of companies based on different market 5
capitalizations. This adjustment, as shown on page 4 of Mr. Walker’s Exhibit No. 6
1, Schedule 17, relied on a beta estimate for Mid-Cap companies of 1.13. This 7
beta estimate is significantly higher than the average beta estimate of 0.77 for 8
the water utility companies included in his analysis. Importantly, the Value Line 9
beta used by Mr. Walker and me has already been adjusted for the tendency of 10
the beta estimate to move toward the market beta of 1.0.52 However, the beta 11
estimates used by Kroll are raw betas that have not been adjusted. Therefore, 12
Mr. Walker’s methodology suffers from the use of inconsistent betas that distort 13
the measurement of risk and CAPM return and renders his CAPM return 14
unreliable. 15
For example, adjusting the Value Line beta to be consistent with the Kroll 16
beta would require reversing the Value Line beta adjustment. This would revise 17
the average proxy group Value Line beta of 0.77, down to an unadjusted beta of 18
0.63.53 This unadjusted beta would produce a lower CAPM to coincide with 19
Mr. Walker’s small capitalization adder. 20
Further, the unadjusted Value Line beta of 0.63 is much lower than Kroll’s 21
Mid-Cap Index beta of 1.13. His size adjustment is based on companies that 22
have significantly more systematic risks that are not reflective of the utility 23
industry or VWID. The size adjustments relied on by Mr. Walker reflect 24

52 Meir Statman, Betas Compared: Merrill Lynch vs. Value Line, The Journal of Portfolio
Management Winter 1981, pages 41-44.
53 Raw Beta = (VL Beta - 0.35) / 0.67, Raw Beta = (0.77 – 0.35) / 0.67 = 0.63.

Gorman, Di 85
Micron Technology, Inc.
companies that have unadjusted beta estimates well in excess of 1.00. As 1
shown on his schedule, every decile measured by Kroll has a much higher beta 2
than Mr. Walker’s water group. The typical company in each decile is much 3
riskier than the typical utility company. This significant difference in the two betas 4
distorts the measurement of market risk and renders Mr. Walker’s CAPM return 5
unreliable. Mr. Walker has not provided evidence that Kroll’s Mid-Cap Index 6
presents risk comparable to regulated water companies generally or VWID 7
specifically and should be rejected. 8

Q HOW WOULD MR. WALKER’S CAPM RETURN ESTIMATE CHANGE IF 9
THESE INAPPROPRIATE RETURN ADD-ONS ARE ELIMINATED? 10
A Eliminating his leverage and small company adjustments and relying on Mr. 11
Walker’s risk premium of 7.5%, his beta estimate of 0.77, and an updated risk 12
free rate of 3.8% as described in my own CAPM analysis would reduce his 13
CAPM return from 11.6% to 9.6%.54 14

VI.D. Risk Premium 15
Q PLEASE DESCRIBE MR. WALKER’S RISK PREMIUM STUDY. 16
A As developed on his Exhibit No. 1, Schedule 18, Mr. Walker’s risk premium 17
(“RP”) study is based on an estimated equity risk premium of 5.5% added to his 18
projected utility bond yield of 4.7%. This produced a risk premium estimate of 19
10.2%. Mr. Walker developed the equity risk premium of 5.5% based on the 20
public utility stock returns, less “A” rated public utility bond yields. He then 21

54 3.8% + 0.77 x 7.5% = 9.58%, rounded to 9.6%.

Gorman, Di 86
Micron Technology, Inc.
inflates the traditional risk premium estimate of 10.2% up to 11.3% to account for 1
his leverage adjustment applied to all of his market-based models.55 2

Q DO YOU HAVE ANY ISSUES WITH MR. WALKER’S RP ANALYSIS? 3
A Yes. I have two major issues with Mr. Walker’s RP analysis. First, his index 4
selection is not risk comparable to his water utility proxy group. Second, his 5
leverage adjustment to his RP return estimate should be rejected as discussed 6
above. 7

Q WHY IS MR. WALKER’S RISK PREMIUM ESTIMATE NOT APPROPRIATE 8
FOR VWID? 9
A Mr. Walker has not shown that the Public Utility Index is an appropriate risk proxy 10
for VWID. The Public Utility Index includes electric utility companies that are 11
much higher risk than low-risk water utility companies. Specifically, electric 12
utilities have commodity cost recovery risk for coal, purchased power energy 13
charges and natural gas expense. Given the volatile nature of commodity pricing 14
and procurement constraints, an electric utility has much greater operating risk 15
than that of a water utility. 16
Therefore, because the Public Utility Index includes integrated utility 17
companies, it is not an appropriate risk proxy for VWID. Hence, the equity risk 18
premium estimated by Mr. Walker is not an appropriate estimate for VWID. 19

55 Walker Direct Testimony at pdf p. 60. This page is incorrectly numbered as p. 35 in Mr.
Walker’s testimony.

Gorman, Di 87
Micron Technology, Inc.
Q WHAT WOULD BE A REASONABLE RISK PREMIUM RETURN FOR VWID? 1
A Disregarding Mr. Walker’s leverage adjustment and reflecting his “A” rated utility 2
bond yield of 4.7%, along with my market risk premium of approximately 4.3% as 3
described above in regard to my own RP analysis, would indicate a current return 4
on equity for VWID of 9.0%. Using a more updated 13-week average A-rated 5
utility yield of approximately 5.5% as discussed above will result in a risk 6
premium return of 9.8%. 7

VI.E. Additional Business Risks 8
Q DID MR. WALKER CONSIDER ADDITIONAL BUSINESS RISKS TO JUSTIFY 9
HIS RETURN ON EQUITY OF 10.8%? 10
A Yes. Mr. Walker believes that VWID is exposed to several additional risks that 11
should be accounted for such as: (1) the Company’s small size; and (2) VWID’s 12
planned capital expenditure.56 Mr. Walker believes that these additional risks 13
should be considered in determining the return on equity for VWID. 14

Q WHY DO YOU BELIEVE THAT VWID FACES RISKS THAT ARE 15
COMPARABLE TO THE RISKS FACED BY MR. WALKER’S AND YOUR 16
PROXY GROUP COMPANIES? 17
A The major business risks identified by Mr. Walker are considered in the assigning 18
of a credit rating by the various credit rating agencies. 19
As shown on page 14 of Mr. Walker’s testimony, the average S&P credit 20
rating for his and my water proxy group is A, which is identical to VUR’s credit 21
rating from S&P. The relative risks discussed in Mr. Walker’s testimony are 22

56 Walker Direct Testimony at pdf pp. 20-32, which were incorrectly numbered as pp. 20-7 in Mr.
Walker’s testimony.

Gorman, Di 88
Micron Technology, Inc.
already incorporated in the credit ratings of the proxy group companies. S&P 1
and other credit rating agencies go through great detail in assessing a utility’s 2
business risk and financial risk in order to evaluate their assessment of its total 3
investment risk. This total investment risk assessment of VWID, in comparison 4
to a proxy group, is fully absorbed into the market’s perception of the Company’s 5
risk. The use of my proxy group fully captures the investment risk of VWID. 6

Q HOW DOES S&P ASSIGN CORPORATE CREDIT RATINGS FOR 7
REGULATED UTILITIES? 8
A In assigning corporate credit ratings, the credit rating agency considers both 9
business and financial risks. Business risks, among others, include a company’s 10
size, competitive position, generation portfolio, and capital expenditure programs, 11
as well as consideration of the regulatory environment, current state of the 12
industry, and the economy as whole. Specifically, S&P states: 13
To determine the assessment for a corporate issuer’s business 14
risk profile, the criteria combine our assessments of industry risk, 15
country risk, and competitive position. Cash flow/leverage 16
analysis determines a company’s financial risk profile assessment. 17
The analysis then combines the corporate issuer’s business risk 18
profile assessment and its financial risk profile assessment to 19
determine its anchor. In general, the analysis weighs the 20
business risk profile more heavily for investment-grade anchors, 21
while the financial risk profile carries more weight for speculative-22
grade anchors.57 23

Q DOES THIS CONCLUDE YOUR DIRECT TESTIMONY? 24
A Yes, it does. 25

57 Standard & Poor’s RatingsDirect: “Criteria/Corporates/General: Corporate Methodology,”
November 19, 2013.

Appendix A
Gorman, Di 89
Micron Technology, Inc.
Appendix A - Qualifications of Michael P. Gorman

Q PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 1
A Michael P. Gorman. My business address is 16690 Swingley Ridge Road, Suite 140, 2
Chesterfield, MO 63017. 3

Q PLEASE STATE YOUR OCCUPATION. 4
A I am a consultant in the field of public utility regulation and a Managing Principal with 5
the firm of Brubaker & Associates, Inc. (“BAI”), energy, economic and regulatory 6
consultants. 7

Q PLEASE SUMMARIZE YOUR EDUCATIONAL BACKGROUND AND WORK 8
EXPERIENCE. 9
A In 1983 I received a Bachelor of Science Degree in Electrical Engineering from 10
Southern Illinois University, and in 1986, I received a Master’s Degree in Business 11
Administration with a concentration in Finance from the University of Illinois at 12
Springfield. I have also completed several graduate level economics courses. 13
In August of 1983, I accepted an analyst position with the Illinois Commerce 14
Commission (“ICC”). In this position, I performed a variety of analyses for both formal 15
and informal investigations before the ICC, including: marginal cost of energy, central 16
dispatch, avoided cost of energy, annual system production costs, and working 17
capital. In October of 1986, I was promoted to the position of Senior Analyst. In this 18
position, I assumed the additional responsibilities of technical leader on projects, and 19
my areas of responsibility were expanded to include utility financial modeling and 20
financial analyses. 21

Appendix A
Gorman, Di 90
Micron Technology, Inc.
In 1987, I was promoted to Director of the Financial Analysis Department. In 1
this position, I was responsible for all financial analyses conducted by the Staff. 2
Among other things, I conducted analyses and sponsored testimony before the ICC 3
on rate of return, financial integrity, financial modeling and related issues. I also 4
supervised the development of all Staff analyses and testimony on these same 5
issues. In addition, I supervised the Staff's review and recommendations to the 6
Commission concerning utility plans to issue debt and equity securities. 7
In August of 1989, I accepted a position with Merrill-Lynch as a financial 8
consultant. After receiving all required securities licenses, I worked with individual 9
investors and small businesses in evaluating and selecting investments suitable to 10
their requirements. 11
In September of 1990, I accepted a position with Drazen-Brubaker & 12
Associates, Inc. (“DBA”). In April 1995, the firm of Brubaker & Associates, Inc. was 13
formed. It includes most of the former DBA principals and Staff. Since 1990, I have 14
performed various analyses and sponsored testimony on cost of capital, cost/benefits 15
of utility mergers and acquisitions, utility reorganizations, level of operating expenses 16
and rate base, cost of service studies, and analyses relating to industrial jobs and 17
economic development. I also participated in a study used to revise the financial 18
policy for the municipal utility in Kansas City, Kansas. 19
At BAI, I also have extensive experience working with large energy users to 20
distribute and critically evaluate responses to requests for proposals (“RFPs”) for 21
electric, steam, and gas energy supply from competitive energy suppliers. These 22
analyses include the evaluation of gas supply and delivery charges, cogeneration 23
and/or combined cycle unit feasibility studies, and the evaluation of third-party 24
asset/supply management agreements. I have participated in rate cases on rate 25
design and class cost of service for electric, natural gas, water and wastewater 26

Appendix A
Gorman, Di 91
Micron Technology, Inc.
utilities. I have also analyzed commodity pricing indices and forward pricing methods 1
for third party supply agreements, and have also conducted regional electric market 2
price forecasts. 3
In addition to our main office in St. Louis, the firm also has branch offices in 4
Corpus Christi, Texas; Detroit, Michigan; Louisville, Kentucky and Phoenix, Arizona. 5

Q HAVE YOU EVER TESTIFIED BEFORE A REGULATORY BODY? 6
A Yes. I have sponsored testimony on cost of capital, revenue requirements, cost of 7
service and other issues before the Federal Energy Regulatory Commission and 8
numerous state regulatory commissions including: Alaska, Arkansas, Arizona, 9
California, Colorado, Delaware, the District of Columbia, Florida, Georgia, Idaho, 10
Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, 11
Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, New 12
Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, 13
Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, 14
Washington, West Virginia, Wisconsin, Wyoming, and before the provincial regulatory 15
boards in Alberta, Nova Scotia, and Quebec, Canada. I have also sponsored 16
testimony before the Board of Public Utilities in Kansas City, Kansas; presented rate 17
setting position reports to the regulatory board of the municipal utility in Austin, Texas, 18
and Salt River Project, Arizona, on behalf of industrial customers; and negotiated rate 19
disputes for industrial customers of the Municipal Electric Authority of Georgia in the 20
LaGrange, Georgia district. 21

Appendix A
Gorman, Di 92
Micron Technology, Inc.
Q PLEASE DESCRIBE ANY PROFESSIONAL REGISTRATIONS OR 1
ORGANIZATIONS TO WHICH YOU BELONG. 2
A I earned the designation of Chartered Financial Analyst (“CFA”) from the CFA 3
Institute. The CFA charter was awarded after successfully completing three 4
examinations which covered the subject areas of financial accounting, economics, 5
fixed income and equity valuation and professional and ethical conduct. I am a 6
member of the CFA Institute’s Financial Analyst Society. 7
20861009_v5
DECLARATION OF MICHAEL P. GORMAN 1
I, Michael P. Gorman, declare under penalty of perjury under the laws of the state 2
of Idaho: 3
1.My name is Michael P. Gorman. I am employed by Brubaker &4
Associates, Inc. (“BAI”) as a Managing Principal and consultant in the field of 5
public utility regulation. 6
2.On behalf of Micron Technology, Inc., I present this pre-filed direct7
testimony and Exhibit Nos. 401 through 418 in this matter. 8
3.To the best of my knowledge, my pre-filed direct testimony and9
exhibits are true and accurate. 10
I hereby declare that the above statement is true to the best of my knowledge 11
and belief, and that I understand it is made for use as evidence before the Idaho 12
Public Utilities Commission and is subject to penalty for perjury. 13
SIGNED this ___ day of February 2023, at Chesterfield, Missouri. 14
Signed: 15
16
17
20891148_v1 18
14th
Declaration Gorman, Di 93 Micron Technology, 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. 401 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Weighted
Line Amoun Weight Cost Cost
(1) (2) (3) (4)
1 Long-Term Debt 124,730,248$ 44.43% 3.99% 1.77%
2 Common Equity 156,025,777$ 55.57%9.35%5.20%
3 Total 280,756,025$ 100.00% 6.97%
Source:
VWID Exhibit No. 1, Schedule 1 and Exhibit No. 6.
Veolia Water Idaho, Inc.
Rate of Return
Description
(June 30, 2022)
Exhibit No. 401 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 402 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
21-Year
Line Average 2022 2 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22)
2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
1 ALLETE 18.08 15.70 16.70 18.28 24.75 22.17 23.05 18.63 15.06 17.23 18.59 15.88 14.66 15.98 16.08 13.95 14.78 16.55 17.91 25.21 N/A N/A2Alliant Energy 16.81 22.10 21.90 21.23 21.16 19.14 20.60 22.30 18.07 16.60 15.28 14.50 14.45 12.47 13.86 13.43 15.08 16.82 12.59 14.00 12.69 19.93
3 Ameren Corp.16.54 23.10 21.10 22.23 22.09 18.29 20.60 18.29 17.55 16.71 16.52 13.35 11.93 9.66 9.26 14.21 17.45 19.39 16.72 16.28 13.51 15.78
4 American Electric Power 14.92 21.00 17.90 19.57 21.41 18.04 19.33 15.16 15.77 15.88 14.49 13.77 11.92 13.42 10.03 13.06 16.27 12.91 13.70 12.42 10.66 12.685 Avangrid, Inc.25.91 19.30 19.10 25.34 22.15 26.05 27.27 20.49 40.94 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
6 Avista Corp.18.52 17.90 22.30 21.18 14.98 24.54 23.37 18.80 17.60 17.28 14.64 19.30 14.08 12.74 11.42 14.97 30.88 15.39 19.45 24.43 13.84 19.27
7 Black Hills 17.90 15.80 20.00 17.00 21.18 16.82 19.48 22.29 16.14 19.03 18.24 17.13 31.13 18.10 9.93 N/A 15.02 15.77 17.27 17.13 15.95 12.528 CenterPoint Energy 16.63 23.30 26.60 15.92 19.45 36.99 17.91 21.91 18.10 16.96 18.75 14.85 14.58 13.78 11.81 11.27 15.00 10.27 19.06 17.84 6.05 5.59
9 CMS Energy Corp.18.08 23.50 23.70 23.32 24.28 20.31 21.32 20.94 18.29 17.30 16.32 15.07 13.62 12.46 13.56 10.87 26.84 22.18 12.60 12.39 N/A N/A
10 Consol. Edison 16.09 19.00 20.00 20.08 21.10 17.10 19.77 18.80 15.59 15.90 14.72 15.39 15.08 13.30 12.55 12.29 13.78 15.49 15.13 18.21 14.30 13.2811 Dominion Resources 20.49 16.60 20.00 43.94 35.21 21.80 22.17 21.33 22.14 22.97 19.25 18.91 17.27 14.35 12.74 13.78 20.63 15.98 24.89 15.07 15.24 12.05
12 DTE Energy 15.90 28.10 19.60 16.30 19.88 17.41 18.59 18.97 18.11 14.91 17.92 14.89 13.51 12.27 10.41 14.81 18.27 17.43 13.80 16.04 13.69 11.2813Duke Energy 17.72 17.10 20.90 22.40 17.71 19.41 19.93 21.25 18.22 17.91 17.45 17.46 13.76 12.69 13.32 17.28 16.13 N/A N/A N/A N/A N/A
14 Edison Int'l 15.26 12.80 15.60 34.93 16.66 N/A 17.23 17.92 14.77 13.05 12.70 9.71 11.81 10.32 9.72 12.36 16.03 12.99 11.74 37.59 6.97 7.78
15 El Paso Electric 17.68 N/A N/A N/A N/A 26.85 21.78 18.66 18.33 16.38 15.88 14.47 12.60 10.72 10.79 11.89 15.26 16.92 26.72 22.03 18.26 22.9916Entergy Corp.13.81 18.10 15.40 15.26 16.50 13.81 15.01 10.92 12.53 12.89 13.21 11.22 9.06 11.57 11.98 16.56 19.30 14.28 16.28 15.09 13.77 11.53
17 Eversource Energy 18.38 18.10 21.30 24.33 22.11 18.73 19.47 18.69 18.11 17.92 16.94 19.86 15.35 13.42 11.96 13.66 18.75 27.07 19.76 20.77 13.35 16.07
18 Evergy, Inc.21.02 19.40 17.90 21.71 21.76 22.71 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A19Exelon Corp.15.11 17.20 20.70 15.39 15.75 20.09 13.41 18.68 12.58 16.02 13.43 19.08 11.30 10.97 11.49 17.97 18.22 16.53 15.37 12.99 11.77 10.46
20 FirstEnergy Corp. 18.25 15.10 17.90 20.24 23.78 26.47 11.41 15.91 17.02 39.79 13.06 21.10 22.39 11.75 13.02 15.64 15.59 14.23 16.07 14.13 22.47 12.95
21 Fortis Inc.19.29 21.00 21.30 20.63 19.22 17.08 16.81 21.60 18.00 24.29 19.97 20.12 18.79 18.22 16.36 17.48 21.14 17.68 N/A N/A N/A N/A22 Great Plains Energy 15.52 N/A N/A N/A N/A N/A NMF 17.98 19.37 16.47 14.19 15.53 16.11 12.10 16.03 20.55 16.35 18.30 13.96 12.59 12.23 11.09
23 Hawaiian Elec.18.51 15.70 20.70 21.48 21.27 18.95 20.69 13.56 20.40 15.88 16.21 15.81 17.09 18.59 19.79 23.16 21.57 20.33 18.27 19.18 13.76 13.47
24 IDACORP, Inc.17.05 19.20 23.50 19.88 22.31 20.50 20.60 19.06 16.22 14.67 13.45 12.41 11.54 11.83 10.20 13.93 18.19 15.07 16.70 15.49 26.51 18.88
25 NextEra Energy, Inc.18.46 25.60 32.50 31.75 26.79 24.80 21.65 20.71 16.89 17.25 16.57 14.43 11.54 10.83 13.42 14.48 18.90 13.65 17.88 13.65 17.88 13.60
26 NorthWestern Corp 17.22 14.50 18.70 19.49 19.89 16.77 17.85 17.19 18.36 16.24 16.86 15.72 12.62 12.90 11.54 13.87 21.74 25.95 17.09 N/A N/A N/A27OGE Energy 15.26 18.60 15.20 16.25 19.00 16.53 18.32 17.68 17.69 18.27 17.69 15.16 14.37 13.31 10.83 12.41 13.75 13.68 14.95 14.13 11.84 14.12
28 Otter Tail Corp.23.34 13.60 13.80 18.31 23.51 22.25 22.06 20.19 18.20 18.84 21.12 21.75 47.48 55.10 31.16 30.06 19.02 17.35 15.40 17.34 17.77 16.01
29 Pinnacle West Capital 16.12 15.10 19.90 16.71 19.37 17.82 19.28 18.74 16.04 15.89 15.27 14.35 14.60 12.57 13.74 16.07 14.93 13.69 19.24 15.80 13.96 14.4330PNM Resources 18.55 18.10 20.20 20.79 21.08 23.39 20.43 19.83 16.85 18.68 16.13 14.97 14.53 14.05 18.09 N/A 35.65 15.57 17.38 15.02 14.73 15.08
31 Portland General 17.52 14.40 19.60 26.57 22.31 18.42 20.03 19.06 17.71 15.32 16.88 13.98 12.37 12.00 14.40 16.30 11.94 23.35 N/A N/A N/A N/A
32 PPL Corp.14.44 18.50 21.60 13.94 13.29 11.33 17.65 12.83 13.92 14.08 12.84 10.88 10.52 11.93 25.69 17.64 17.26 14.10 15.12 12.51 10.59 11.0633 Public Serv. Enterprise 14.67 16.40 31.30 14.91 15.10 18.71 16.31 15.35 12.41 12.61 13.50 12.79 10.40 10.37 10.04 13.65 16.54 17.81 16.74 14.26 10.58 10.00
34 SCANA Corp.13.96 N/A N/A N/A N/A N/A 14.46 16.80 14.67 13.68 14.43 14.80 13.67 12.93 11.63 12.67 14.96 15.42 14.44 13.57 13.05 12.17
35 Sempra Energy 15.84 17.00 20.10 19.62 22.50 20.40 24.33 24.37 19.73 21.87 19.68 14.89 11.77 12.60 10.09 11.80 14.01 11.50 11.79 8.65 8.96 8.1936Southern Co.16.10 19.50 20.60 17.91 17.58 15.06 15.48 17.76 15.85 16.04 16.19 16.97 15.85 14.90 13.52 16.13 15.95 16.19 15.92 14.68 14.83 14.63
37 Vectren Corp.17.05 N/A N/A N/A N/A N/A 23.54 19.18 17.92 19.98 20.66 15.02 15.83 15.10 12.89 16.79 15.33 18.92 15.11 17.57 14.80 14.1638 WEC Energy Group 17.21 23.90 21.30 24.89 23.49 19.57 20.01 19.95 21.33 17.71 16.50 15.76 14.25 14.01 13.35 14.77 16.47 15.97 14.46 17.51 12.43 10.46
39 Westar Energy 15.58 N/A N/A N/A N/A N/A 23.40 21.59 18.45 15.36 14.04 13.43 14.78 12.96 14.95 16.96 14.10 12.18 14.79 17.44 10.78 14.02
40 Xcel Energy Inc.17.86 18.80 23.90 23.88 22.34 18.93 20.20 18.48 16.54 15.44 15.04 14.82 14.24 14.13 12.66 13.69 16.65 14.80 15.36 13.65 11.62 40.80
41 Average 17.17 18.66 20.65 21.30 20.88 20.21 19.60 18.77 17.73 17.45 16.17 15.51 15.28 14.22 13.53 15.29 17.83 16.53 16.39 16.61 13.71 14.26
42 Median 16.20 18.10 20.20 20.24 21.18 19.14 19.97 18.80 17.69 16.54 16.20 14.99 14.25 12.82 12.70 14.34 16.41 15.97 15.92 15.29 13.60 13.38
Sources:1Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, March 12, April 23, and May 14, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, March 11, April 22, and May 13, 2022.
2The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Veolia Water Idaho, Inc.
Electric Utilities
(Valuation Metrics)
Price to Earnings (P/E) Ratio 1
Company
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 16
Veolia Water Idaho, Inc.
Electric Utilities
(Valuation Metrics)
21-Year
Line Average 2022 2/a 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22)
7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
1 ALLETE 9.40 7.83 8.61 8.14 11.38 10.16 10.95 8.26 7.49 8.80 9.15 8.18 7.91 8.04 8.51 9.29 10.30 11.06 11.54 11.46 N/A N/A
2 Alliant Energy 8.08 10.87 10.31 10.66 10.74 9.71 13.21 10.67 8.86 8.40 7.52 7.50 7.21 6.59 6.23 7.49 7.92 8.00 5.09 5.52 4.76 5.203Ameren Corp.7.27 9.46 9.03 9.63 9.45 7.95 8.38 7.44 6.87 6.95 6.61 5.48 5.02 4.23 4.25 6.35 7.69 8.57 8.57 8.24 6.74 7.96
4 American Electric Power 6.58 8.25 7.57 8.41 9.34 8.03 8.81 7.57 7.09 7.00 6.57 5.93 5.46 5.54 4.71 5.71 6.84 5.54 6.07 5.50 4.69 5.19
5 Avangrid, Inc.9.99 8.75 11.19 9.39 9.11 10.24 10.14 8.56 11.30 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A6Avista Corp.6.86 7.85 8.03 7.80 7.34 10.14 9.35 7.63 6.76 7.30 6.21 6.88 6.40 5.80 4.06 5.12 7.58 5.30 6.58 7.58 5.36 5.90
7 Black Hills 7.87 9.19 8.84 8.56 10.65 8.83 9.20 9.33 8.06 8.81 8.03 6.04 7.85 6.16 4.25 11.26 7.62 6.92 7.57 6.69 6.89 5.92
8 CenterPoint Energy 5.34 8.08 7.95 5.94 7.03 8.45 6.97 5.96 5.75 6.25 6.56 5.15 5.39 4.70 4.05 4.29 5.17 3.94 4.70 4.26 2.08 2.16
9 CMS Energy Corp.6.27 9.59 9.27 9.87 9.85 8.40 8.75 8.50 7.53 7.13 6.68 6.03 5.41 4.48 3.64 3.45 5.57 4.40 4.04 3.20 2.88 NMF
10 Consol. Edison 8.22 8.55 7.26 8.35 9.46 8.73 9.64 9.39 7.96 7.89 7.77 8.31 8.15 7.39 6.72 6.89 8.31 8.65 8.59 9.31 7.90 7.6411 Dominion Resources 9.95 9.77 11.15 14.59 13.47 10.94 11.35 11.59 11.84 12.27 10.88 9.92 9.45 8.12 6.98 8.27 8.65 7.81 10.09 7.68 7.51 6.53
12 DTE Energy 6.68 10.04 10.62 7.85 9.67 8.54 9.05 8.64 8.52 6.42 6.65 5.91 5.18 4.69 3.59 4.90 5.73 5.21 5.54 6.00 5.62 5.20
13 Duke Energy 7.63 7.55 7.89 8.06 7.40 7.65 8.40 8.57 7.95 8.12 8.11 9.53 6.56 6.01 5.96 7.13 7.16 N/A N/A N/A N/A N/A14Edison Int'l 5.99 5.88 7.14 7.57 7.25 13.46 7.05 6.77 5.92 5.68 5.46 4.59 4.22 4.11 3.95 5.63 7.01 5.87 5.61 6.84 2.82 2.96
15 El Paso Electric 5.93 N/A N/A N/A N/A 9.43 8.54 7.46 6.47 6.33 6.19 5.78 5.16 4.31 3.98 4.95 6.44 6.25 6.67 4.65 3.90 4.39
16 Entergy Corp.5.72 6.39 5.61 5.78 6.05 4.92 4.66 4.01 4.11 4.21 4.03 4.23 3.90 4.66 5.68 7.96 9.21 7.16 8.76 7.12 6.84 5.5717 Eversource Energy 7.43 10.19 11.41 12.53 11.47 9.16 10.36 10.14 10.12 10.14 8.08 9.30 6.99 4.97 4.61 4.12 6.18 6.02 3.55 3.78 2.85 2.75
18 Evergy, Inc.7.41 8.22 7.41 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
19 Exelon Corp.5.95 7.13 5.08 4.44 5.29 5.05 4.45 4.80 4.70 5.09 4.61 5.54 5.86 5.10 5.98 9.65 9.89 8.62 7.97 6.29 5.71 4.9720 FirstEnergy Corp. 6.75 8.41 6.60 9.23 11.09 8.84 4.76 5.12 5.38 7.43 6.15 7.42 7.33 4.49 4.91 7.58 7.89 7.53 6.04 5.15 6.90 5.10
21 Fortis Inc.8.43 9.92 9.57 9.50 9.46 7.97 8.23 10.46 7.29 9.25 7.93 8.09 8.38 7.40 6.76 7.58 9.18 7.89 N/A N/A N/A N/A22 Great Plains Energy 6.89 N/A N/A N/A N/A N/A 14.62 8.63 6.66 6.45 5.73 6.09 5.74 4.49 5.06 7.71 7.13 7.68 6.70 6.52 5.92 5.14
23 Hawaiian Elec.8.07 8.32 8.23 8.69 9.30 8.34 9.21 7.44 9.25 7.64 8.15 8.05 7.73 7.81 6.95 9.10 7.95 8.47 8.29 8.44 6.12 6.20
24 IDACORP, Inc.8.70 12.93 11.84 11.38 12.75 11.72 11.56 10.95 9.37 8.59 7.78 7.05 6.64 6.52 5.31 7.10 8.23 7.73 7.55 7.15 7.27 7.5325 NextEra Energy, Inc.8.82 15.61 20.40 15.48 12.33 10.77 11.61 9.24 7.93 7.98 7.60 7.58 5.98 5.33 6.09 7.34 9.02 6.51 6.71 6.71 5.97 5.77
26 NorthWestern Corp 7.85 8.37 8.83 8.88 9.93 8.19 8.82 8.65 8.99 9.01 7.61 6.85 5.89 5.79 5.05 5.57 8.45 9.39 7.31 8.13 N/A N/A
27 OGE Energy 7.92 8.27 7.64 8.38 10.58 9.36 10.52 9.03 9.25 10.65 9.93 7.35 7.48 6.61 5.37 6.43 7.58 7.50 7.04 6.73 5.62 5.3928Otter Tail Corp.9.41 9.04 8.61 9.99 12.42 11.58 11.09 9.38 9.04 9.45 9.58 8.43 9.04 8.07 8.01 11.65 9.53 8.66 8.18 9.01 8.13 8.33
29 Pinnacle West Capital 6.25 6.36 6.19 7.49 8.30 7.09 8.73 7.89 6.91 7.03 6.85 6.34 5.80 5.65 3.84 4.19 4.76 4.48 7.48 5.88 4.80 5.21
30 PNM Resources 6.90 7.09 7.81 7.87 7.92 7.57 7.40 7.64 6.95 7.48 6.47 5.80 4.94 4.58 4.53 7.10 10.67 7.50 7.62 6.84 5.55 5.7231Portland General 5.93 6.51 6.48 6.72 7.65 6.56 7.45 7.12 6.73 5.49 6.06 5.08 4.86 4.13 4.63 4.81 5.34 5.74 N/A N/A N/A N/A
32 PPL Corp.7.79 8.93 13.74 7.46 7.99 7.02 10.11 8.37 8.73 7.32 6.59 5.87 5.98 7.46 8.82 9.17 8.90 7.58 7.57 6.49 5.41 5.30
33 Public Serv. Enterprise 7.73 9.93 11.32 8.22 8.72 9.48 8.67 8.56 6.66 6.48 6.40 6.40 6.03 6.04 6.20 8.46 9.83 8.41 8.59 7.17 6.79 6.24
34 SCANA Corp.7.09 N/A N/A N/A N/A N/A 8.26 9.59 8.33 7.50 7.49 7.40 6.75 6.52 5.88 6.38 7.15 7.03 5.40 6.86 6.59 6.36
35 Sempra Energy 8.37 10.17 13.23 10.40 12.05 10.10 10.65 10.88 9.99 10.77 9.37 7.26 6.13 6.53 6.07 7.07 8.61 7.22 6.96 5.16 4.85 4.0036Southern Co.8.20 9.68 8.72 8.34 8.80 7.05 7.49 8.83 8.23 8.42 8.30 8.75 8.22 7.79 7.08 8.18 8.62 8.47 8.41 8.28 8.28 7.83
37 Vectren Corp.7.08 N/A N/A N/A N/A N/A 10.32 8.60 7.82 7.57 6.82 5.79 5.81 5.58 5.24 6.90 6.53 7.37 7.06 7.63 7.27 6.92
38 WEC Energy Group 9.07 12.07 11.99 13.67 12.88 10.82 11.04 10.95 12.90 10.27 9.58 9.24 8.43 8.15 6.87 7.57 7.84 7.27 6.40 6.27 4.91 4.2739Westar Energy 6.91 N/A N/A N/A N/A N/A 10.87 10.86 9.05 7.93 7.23 6.71 6.67 5.51 5.32 7.09 6.88 5.81 7.00 6.54 4.24 2.94
40 Xcel Energy Inc.6.93 8.86 9.19 10.07 9.44 7.90 8.50 8.10 7.62 7.31 7.00 6.85 6.47 6.28 5.43 5.71 6.51 5.54 5.62 5.31 4.27 5.46
41 Average 7.53 8.97 9.28 9.10 9.60 8.86 9.21 8.50 7.96 7.81 7.31 6.91 6.49 5.94 5.54 6.98 7.73 7.11 7.05 6.70 5.62 5.50
42 Median 7.37 8.75 8.72 8.48 9.46 8.73 9.05 8.57 7.93 7.54 7.12 6.85 6.27 5.80 5.35 7.09 7.76 7.37 7.04 6.71 5.62 5.43
Sources:1Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, March 12, April 23, and May 14, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, March 11, April 22, and May 13, 2022.
2The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Note:
aBased on the average of the high and low price and the projected Cash Flow per share.
Company
Market Price to Cash Flow (MP/CF) Ratio 1
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 2 of 16
Veolia Water Idaho, Inc.
Electric Utilities
(Valuation Metrics)
18-Year
Line Average 2022 2/b 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19)
6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
1 ALLETE 1.59 1.33 1.43 1.39 1.91 1.79 1.78 1.53 1.37 1.42 1.51 1.34 1.35 1.28 1.15 1.55 1.89 2.09 2.22
2 Alliant Energy 1.78 2.39 2.26 2.30 2.32 2.16 2.38 2.17 1.86 1.86 1.70 1.57 1.46 1.31 1.04 1.33 1.67 1.52 1.333Ameren Corp.1.54 2.24 2.13 2.21 2.26 1.95 1.93 1.67 1.46 1.45 1.29 1.18 0.90 0.83 0.78 1.25 1.60 1.62 1.68
4 American Electric Power 1.62 2.01 1.87 2.09 2.20 1.82 1.88 1.81 1.55 1.54 1.40 1.31 1.23 1.23 1.08 1.48 1.85 1.56 1.57
5 Avangrid, Inc.0.93 0.89 1.01 0.97 1.02 1.02 0.93 0.83 0.72 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A6Avista Corp.1.33 1.34 1.42 1.37 1.54 1.88 1.73 1.57 1.36 1.33 1.25 1.21 1.19 1.07 0.94 1.11 1.29 1.30 1.13
7 Black Hills 1.52 1.61 1.52 1.55 1.95 1.61 2.06 1.94 1.59 1.79 1.62 1.21 1.14 1.07 0.83 1.22 1.57 1.47 1.63
8 CenterPoint Energy 2.32 2.00 1.74 1.90 2.21 2.18 2.59 2.73 2.43 2.27 2.30 1.99 1.87 1.96 1.77 2.49 3.13 2.75 3.06
9 CMS Energy Corp.2.14 2.89 2.69 3.24 3.28 2.81 2.93 2.72 2.43 2.26 2.09 1.91 1.66 1.48 1.10 1.23 1.82 1.42 1.32
10 Consol. Edison 1.41 1.54 1.34 1.44 1.59 1.49 1.63 1.58 1.42 1.34 1.38 1.47 1.38 1.22 1.08 1.17 1.47 1.47 1.5211 Dominion Resources 2.61 2.25 2.37 2.72 2.18 2.40 2.94 3.15 3.34 3.55 2.97 2.84 2.37 2.01 1.80 2.42 2.69 2.07 2.50
12 DTE Energy 1.58 2.51 2.82 1.80 2.07 1.91 2.01 1.82 1.65 1.62 1.51 1.35 1.20 1.16 0.89 1.10 1.35 1.29 1.39
13 Duke Energy 1.25 1.59 1.58 1.47 1.47 1.33 1.41 1.35 1.29 1.28 1.19 1.12 1.11 1.00 0.91 1.06 1.15 N/A N/A14Edison Int'l 1.67 1.74 1.67 1.62 1.80 1.97 2.17 1.92 1.76 1.68 1.57 1.53 1.24 1.07 1.04 1.56 2.05 1.80 1.93
15 El Paso Electric 1.56 N/A N/A N/A N/A 1.94 1.87 1.68 1.48 1.52 1.49 1.59 1.64 1.17 0.98 1.33 1.69 1.71 1.76
16 Entergy Corp.1.75 1.89 1.75 1.93 2.03 1.74 1.76 1.67 1.40 1.33 1.21 1.31 1.35 1.62 1.66 2.44 2.65 1.89 2.0117 Eversource Energy 1.52 1.87 2.00 2.11 1.99 1.68 1.73 1.64 1.53 1.47 1.38 1.28 1.50 1.31 1.12 1.31 1.60 1.22 1.05
18 Evergy, Inc.1.50 1.60 1.50 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
19 Exelon Corp.2.12 1.94 1.37 1.20 1.43 1.31 1.20 1.20 1.14 1.28 1.17 1.46 1.95 2.07 2.57 4.39 4.79 3.89 3.6020 FirstEnergy Corp. 2.04 2.67 2.33 2.81 3.39 2.67 3.53 2.37 1.16 1.15 1.28 1.44 1.33 1.36 1.54 2.52 2.23 1.92 1.64
21 Fortis Inc.1.47 1.57 1.48 1.47 1.41 1.24 1.41 1.26 1.33 1.35 1.45 1.59 1.59 1.56 1.33 1.48 1.63 1.96 N/A22 Great Plains Energy 1.21 N/A N/A N/A N/A N/A 1.33 1.17 1.12 1.11 1.02 0.96 0.93 0.87 0.80 1.11 1.66 1.77 1.86
23 Hawaiian Elec.1.66 1.85 1.81 1.82 2.02 1.76 1.76 1.63 1.71 1.49 1.54 1.62 1.54 1.44 1.16 1.61 1.57 2.01 1.78
24 IDACORP, Inc.1.48 1.96 1.88 1.84 2.10 1.96 1.94 1.76 1.54 1.45 1.33 1.19 1.17 1.13 0.92 1.09 1.26 1.37 1.2225 NextEra Energy, Inc.2.26 4.08 4.27 3.58 2.75 2.32 2.35 2.30 2.09 2.15 1.93 1.74 1.55 1.49 1.70 2.06 2.34 1.80 1.93
26 NorthWestern Corp 1.46 1.26 1.43 1.45 1.74 1.48 1.64 1.68 1.60 1.54 1.56 1.42 1.35 1.22 1.07 1.15 1.48 1.65 1.42
27 OGE Energy 1.84 1.83 1.67 1.86 2.06 1.75 1.82 1.73 1.79 2.22 2.24 1.94 1.90 1.70 1.37 1.52 1.98 1.91 1.8028Otter Tail Corp.1.87 2.54 2.33 2.04 2.62 2.49 2.33 1.90 1.78 1.90 1.96 1.58 1.35 1.19 1.18 1.71 1.93 1.76 1.74
29 Pinnacle West Capital 1.43 1.33 1.45 1.63 1.91 1.74 1.91 1.72 1.52 1.44 1.47 1.39 1.25 1.14 0.95 1.00 1.26 1.26 1.25
30 PNM Resources 1.32 1.71 1.86 1.87 2.28 1.83 1.84 1.56 1.33 1.21 1.09 0.98 0.80 0.69 0.56 0.66 1.23 1.21 1.4531Portland General 1.35 1.58 1.55 1.57 1.84 1.56 1.69 1.56 1.42 1.37 1.28 1.14 1.09 0.94 0.92 1.05 1.32 1.36 N/A
32 PPL Corp.2.06 1.42 1.52 1.63 1.86 1.81 2.40 2.46 2.24 1.64 1.55 1.58 1.47 1.61 2.10 3.19 3.05 2.43 2.50
33 Public Serv. Enterprise 1.91 2.35 2.11 1.70 1.97 1.81 1.68 1.67 1.58 1.57 1.44 1.46 1.59 1.67 1.78 2.58 2.99 2.46 2.45
34 SCANA Corp.1.51 N/A N/A N/A N/A N/A 1.65 1.74 1.47 1.48 1.48 1.48 1.36 1.33 1.20 1.45 1.62 1.64 1.72
35 Sempra Energy 1.80 1.84 1.64 1.84 2.22 2.06 2.24 2.00 2.17 2.20 1.84 1.53 1.28 1.35 1.32 1.60 1.87 1.70 1.7336Southern Co.2.08 2.61 2.39 2.20 2.13 1.89 2.07 2.01 1.99 2.02 2.04 2.15 1.99 1.83 1.73 2.12 2.24 2.23 2.35
37 Vectren Corp.1.83 N/A N/A N/A N/A N/A 2.75 2.29 2.11 2.08 1.82 1.57 1.53 1.41 1.34 1.64 1.74 1.77 1.82
38 WEC Energy Group 2.02 2.72 2.61 2.84 2.62 2.11 2.10 2.09 1.82 2.34 2.21 2.05 1.81 1.65 1.40 1.57 1.77 1.71 1.6239Westar Energy 1.37 N/A N/A N/A N/A N/A 1.94 1.95 1.49 1.44 1.33 1.26 1.20 1.10 0.93 1.10 1.36 1.30 1.41
40 Xcel Energy Inc.1.69 2.28 2.27 2.46 2.34 1.97 2.06 1.88 1.66 1.55 1.50 1.51 1.41 1.32 1.19 1.30 1.53 1.40 1.38
41 Average 1.73 1.98 1.92 1.94 2.07 1.87 1.98 1.84 1.66 1.68 1.59 1.51 1.42 1.34 1.24 1.63 1.90 1.77 1.79
42 Median 1.69 1.87 1.75 1.84 2.04 1.83 1.91 1.74 1.55 1.53 1.49 1.47 1.35 1.31 1.14 1.46 1.68 1.71 1.72
Sources:1Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, March 12, April 23, and May 14, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, March 11, April 22, and May 13, 2022.2The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Notes:
bBased on the average of the high and low price and the projected Book Value per share.
Market Price to Book Value (MP/BV) Ratio 1
Company
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 3 of 16
17-Year 2022 2021 2020 2019
Line Average 2022 2/a 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)2 6 7 8 9 10 11 12 13 14 15 16 17 18 19 201 ALLETE 3.94% 4.15% 3.88% 4.03% 2.85% 2.99% 2.97% 3.56% 3.97% 3.92% 3.89% 4.49% 4.58% 5.03% 5.79% 4.37% 3.60% 3.16%2 Alliant Energy 3.65% 2.86% 2.97% 2.90% 2.88% 3.20% 3.07% 3.21% 3.60% 3.53% 3.74% 4.07% 4.28% 4.61% 5.73% 4.10% 3.13% 3.32%
3 Ameren Corp.4.26% 2.63% 2.74%2.57% 2.59% 3.04% 3.12% 3.50% 3.96% 4.02% 4.61% 4.97% 5.28% 5.76% 5.98% 6.21% 4.88% 4.93%4 American Electric Power 4.00% 3.34% 3.61% 3.28% 3.10% 3.60%3.42% 3.54% 3.80% 3.83% 4.23% 4.58% 4.96% 4.90% 5.50% 4.20% 3.40% 4.06%5 Avangrid, Inc.3.71% 3.94% 3.53% 3.69% 3.52% 3.49% 3.79% 4.26% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
6 Avista Corp.3.77% 4.23% 3.94%4.03% 3.48% 2.93% 3.14% 3.39% 3.97% 3.99% 4.51% 4.55% 4.54% 4.76% 4.49% 3.39% 2.68% 2.52%7 Black Hills 3.72% 3.32% 3.50% 3.42% 2.74% 3.31% 2.75% 2.87% 3.55% 2.84% 3.19% 4.39% 4.64% 4.79% 6.17% 4.21% 3.40% 3.79%8 CenterPoint Energy 4.34% 2.41% 2.77% 4.38% 2.98% 4.09% 4.79% 4.70% 5.06% 3.94% 3.57% 4.04% 4.27% 5.29% 6.37% 4.98% 3.87% 4.39%
9 CMS Energy Corp.3.20% 2.74% 2.92% 2.65% 2.64% 3.03% 2.88% 2.99% 3.36% 3.59% 3.76% 4.16% 4.25% 3.98% 3.97% 2.69% 1.16% N/A10 Consol. Edison 4.38% 3.51% 4.10%3.87% 3.44% 3.68% 3.40% 3.62% 4.12% 4.38% 4.25% 4.07% 4.46% 5.16% 5.99% 5.67% 4.84% 5.04%11 Dominion Resources 4.01% 3.55% 3.38% 4.31% 4.76% 4.72% 3.88% 3.82% 3.66% 3.43% 3.78% 4.06% 4.13% 4.41% 5.20% 3.77% 3.32% 3.60%12 DTE Energy 4.05% 2.83% 3.06% 3.57% 3.07% 3.34% 3.15% 3.34% 3.53% 3.54% 3.84% 4.19% 4.68% 4.75% 6.29% 5.24% 4.36% 4.86%13 Duke Energy 4.67% 3.98% 4.02% 4.35% 4.17% 4.54% 4.15% 4.26% 4.34% 4.26% 4.45% 4.68% 5.21% 5.71% 6.25% 5.16% 4.44% N/A14 Edison Int'l 3.23% 4.37% 4.39%4.29% 3.73% 3.84% 2.87% 2.81% 2.83% 2.62% 2.85% 2.97% 3.37% 3.66% 3.95% 2.69% 2.21% 2.58%15 El Paso Electric 2.74% N/A N/A N/A N/A 2.55% 2.49% 2.75% 3.13% 2.97% 2.99% 2.97% 2.11% N/A N/A N/A N/A N/A16 Entergy Corp.4.04% 3.60% 3.84%3.55% 3.52% 4.41% 4.49% 4.55% 4.59% 4.47% 5.07% 4.91% 4.85% 4.20% 3.97% 2.92% 2.39% 2.82%17 Eversource Energy 3.24% 3.09% 2.85% 2.63% 2.81% 3.32% 3.14% 3.22% 3.34% 3.40% 3.48% 3.52% 3.23% 3.64% 4.16% 3.25% 2.60% 3.27%18 Evergy, Inc.3.59% 3.52% 3.59% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A19 Exelon Corp.3.81% 2.89% 3.17%3.82% 3.06% 3.32% 3.51% 3.75% 3.88% 3.69% 4.69% 5.73% 4.96% 4.95% 4.26% 2.78% 2.48% 2.83%20 FirstEnergy Corp. 4.35% 3.71% 4.39% 4.17% 3.50% 5.17% 4.62% 4.31% 4.23% 4.26% 4.26% 4.90% 5.23% 5.76% 5.09% 3.21% 3.12% 3.40%21 Fortis Inc.3.68% 3.62% 3.77% 3.66% 3.60% 4.07% 3.69% 3.80% 3.76% 3.88% 3.84% 3.64% 3.58% 3.80% 4.21% 3.76% 3.01% 2.79%
22 Great Plains Energy 4.52% N/A N/A N/A N/A N/A 3.58% 3.64% 3.76% 3.62% 3.84%4.08% 4.15% 4.49% 5.03% 6.96% 5.49% 5.60%23 Hawaiian Elec.4.47% 3.58% 3.44% 3.40% 3.02% 3.54% 3.65% 3.99% 4.05% 4.76% 4.72% 4.70% 5.04% 5.51% 6.89% 5.00% 5.18% 4.59%24 IDACORP, Inc.3.17% 2.84% 2.89%2.92% 2.49% 2.61% 2.58% 2.77% 3.06% 3.12% 3.21% 3.28% 3.10% 3.44% 4.46% 3.95% 3.55% 3.39%
25 NextEra Energy, Inc.2.97% 2.11% 1.90% 2.10% 2.41% 2.68%2.79% 2.91% 3.01% 3.02% 3.30% 3.65% 3.96% 3.90% N/A N/A N/A N/A26 NorthWestern Corp 4.07% 4.49% 4.00% 4.02% 3.28% 3.86% 3.52% 3.43% 3.61% 3.30% 3.66% 4.17% 4.51% 4.93% 5.75% 5.38% 4.09% 3.65%27 OGE Energy 3.75% 4.27% 4.81% 4.68% 3.54% 3.98% 3.61% 3.87% 3.51% 2.63% 2.48% 2.94% 3.06% 3.68% 4.96% 4.52% 3.77% 3.99%
28 Otter Tail Corp.4.02% 2.36% 2.81% 3.45% 2.74% 2.92% 3.12% 3.87% 4.33% 4.14% 4.11% 5.21% 5.57% 5.68% 5.38% 3.63% 3.46% 3.92%29 Pinnacle West Capital 4.48% 4.88% 4.44% 3.97%3.29% 3.55% 3.16% 3.46% 3.88% 4.09% 3.98% 5.32% 4.81% 5.43% 6.76% 6.17% 4.75% 4.67%30 PNM Resources 3.15% 3.06% 2.09%2.80% 2.45% 2.79% 2.53% 2.69% 2.90% 2.79% 2.99% 2.96% 3.19% 4.09% 4.76% 4.85% 3.36% 3.21%
31 Portland General 3.67% 3.62% 3.62% 3.47% 2.85% 3.27% 2.92% 3.06% 3.27% 3.34% 3.67% 4.11% 4.37% 5.20% 5.36% 4.28% 3.34% 2.54%32 PPL Corp.4.61% 3.93% 5.83% 5.84% 5.24% 5.61% 4.24% 4.25% 4.55% 4.45% 4.81% 5.07% 5.10% 5.12% 4.51% 3.10% 2.69% 3.41%33 Public Serv. Enterprise 3.76% 3.37% 3.37% 3.64%3.19% 3.49% 3.74% 3.78% 3.81% 3.92% 4.35% 4.55% 4.24% 4.30% 4.30% 3.26% 2.73% 3.47%
34 SCANA Corp.4.37% N/A N/A N/A N/A N/A 4.03% 3.29% 3.90% 4.05% 4.15%4.25% 4.78% 4.93% 5.67% 4.92% 4.29% 4.21%35 Sempra Energy 2.98% 2.99% 3.39%3.24% 2.88% 3.20% 2.92% 2.92% 2.71% 2.61% 3.03% 3.71% 3.65% 3.08% 3.23% 2.62% 2.08% 2.47%36 Southern Co.4.65% 3.82% 4.17%4.36% 4.41% 5.27% 4.63% 4.42% 4.78% 4.69% 4.61% 4.29% 4.63% 5.13% 5.52% 4.58% 4.39% 4.52%37 Vectren Corp.4.38% N/A N/A N/A N/A N/A 2.79% 3.31% 3.60% 3.62% 4.15%4.82% 5.06% 5.53% 5.85% 4.79% 4.53% 4.52%38 WEC Energy Group 3.02% 2.98% 3.00% 2.68% 2.81% 3.38% 3.31% 3.35% 3.49% 3.40% 3.49% 3.24% 3.35% 2.97% 3.16% 2.41% 2.14% 2.18%39 Westar Energy 4.37% N/A N/A N/A N/A N/A 3.00% 2.90% 3.73% 3.88% 4.27%4.57% 4.84% 5.32% 6.27% 5.22% 4.16% 4.28%40 Xcel Energy Inc.3.76% 2.84% 2.81%2.58% 2.75%3.25% 3.10% 3.33% 3.69% 3.83% 3.86% 3.90% 4.20% 4.54% 5.14% 4.70% 4.05% 4.40%
41 Average 3.85% 3.41% 3.52% 3.60% 3.23% 3.60% 3.40% 3.52% 3.74% 3.68% 3.89% 4.20% 4.32% 4.66% 5.18% 4.25% 3.53% 3.72%42 Median 3.62% 3.51% 3.50% 3.61% 3.06%3.38% 3.16% 3.46% 3.75% 3.76% 3.85% 4.18% 4.48% 4.79% 5.28% 4.25% 3.43% 3.62%
43 20-Yr Treasury Yields3 3.19% 3.30% 1.98% 1.35% 2.40% 3.02% 2.65% 2.23% 2.55% 3.07% 3.12% 2.54% 3.62% 4.03% 4.11% 4.36% 4.91% 4.99%
44 20-Yr TIPS3 1.03% 0.64% -0.43% -0.30% 0.60% 0.94% 0.75% 0.66% 0.78% 0.87% 0.75% 0.21% 1.19% 1.73% 2.21% 2.19% 2.36% 2.31%
45 Implied Inflationb 2.14% 2.64% 2.42% 1.66% 1.79% 2.06% 1.89% 1.56% 1.75% 2.19% 2.35% 2.33% 2.40% 2.26% 1.85% 2.13% 2.49% 2.62%
46 Real Dividend Yieldc 1.67% 0.75% 1.07% 1.90% 1.41% 1.51% 1.48% 1.94% 1.96% 1.46% 1.50% 1.83% 1.88% 2.35% 3.26% 2.07% 1.01% 1.06%
47 Nominal "A" Rated Yield4 4.65%4.74% 3.10% 3.05% 3.77% 4.25% 4.00% 3.93% 4.12% 4.28% 4.48% 4.13% 5.04% 5.46% 6.04% 6.53% 6.07% 6.07%
48 Real "A" Rated Yield 2.46% 2.05% 0.67% 1.37% 1.94% 2.14% 2.07% 2.34% 2.33% 2.04% 2.08% 1.76% 2.58% 3.13% 4.11% 4.31% 3.49% 3.36%
49 Nominal "Baa" Rated Yield 5.17% 5.05% 3.36% 3.44% 4.19% 4.67%4.38% 4.67% 5.03% 4.80% 4.98% 4.83% 5.57% 5.96% 7.06% 7.25% 6.33% 6.32%50 Real "Baa" Rated Yield 2.96% 2.35% 0.91% 1.74% 2.36% 2.55%2.44% 3.07% 3.22% 2.55% 2.57% 2.44% 3.09% 3.62% 5.11% 5.01% 3.74% 3.60%
51 Nominal Spreadd 0.80% 1.33% -0.41% -0.55% 0.54% 0.65% 0.60% 0.41% 0.37% 0.60% 0.59% -0.07% 0.72% 0.80% 0.86% 2.28% 2.55% 2.35%
52 Real Spreade 0.78% 1.29% -0.40% -0.54% 0.53% 0.64% 0.59% 0.40% 0.36% 0.59% 0.58% -0.07% 0.70% 0.79% 0.85% 2.23% 2.49% 2.29%
53 Nominal Spreadb 1.32% 1.64% -0.16% -0.16% 0.97% 1.07% 0.98% 1.15% 1.28% 1.12% 1.10% 0.62% 1.24% 1.30% 1.88% 3.00% 2.80% 2.60%
54 Real Spreadc 1.29% 1.60% -0.16% -0.16% 0.95% 1.05% 0.96% 1.13% 1.26% 1.10% 1.07% 0.61% 1.22% 1.28% 1.84% 2.93% 2.74% 2.53%
55 Nominalf -0.66% -0.11% -1.54% -2.24% -0.83% -0.58% -0.75% -1.30% -1.20% -0.60% -0.77% -1.66% -0.70% -0.63% -1.07% 0.11% 1.38% 1.28%
56 Realg -0.65% -0.11% -1.50% -2.21% -0.81% -0.57% -0.73% -1.28% -1.18% -0.59% -0.75% -1.62% -0.68% -0.62% -1.05% 0.11% 1.35% 1.24%
Sources:1Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, March 12, April 23, and May 14, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, March 11, April 22, and May 13, 2022.
2The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
3St. Louis Federal Reserve: Economic Research, http://research.stlouisfed.org.4www.moodys.com, Bond Yields and Key Indicators, through December 31, 2022.Notes:a Based on the average of the high and low price and the projected Dividends Declared per share, published in the Value Line Investment Survey.
b Line 47 = (1 + Line 45) / (1 + Line 46) - 1.c Line 48 = (1 + Line 43) / (1 +Line 47) - 1.
d The spread being measured here is the nominal A-rated utility bond yield over the average nominal utility dividend yield; (Line 49 - Line 43).e The spread being measured here is the real A-rated utility bond yield over the average real utility dividend yield; Line 50 - Line 48)f The spread being measured here is the nominal 20-Year Treasury yield over the average nominal utility dividend yield; (Line 45 - Line 43).g The spread being measured here is the real 20-Year TIPS yield over the average real utility dividend yield; Line 48 - Line 46)
Spreads (A-Rated Utility Bond - Stock)
Spreads (Treasury Bond - Stock)
Veolia Water Idaho, Inc.
Electric Utilities
(Valuation Metrics)
Dividend Yield1
Company
A-Rated Utility
Baa-Rated Utility
Spreads (Baa-Rated Utility Bond - Stock)
‐1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
Trends in Dividend Yield and "A" Rated Utility Bond Yield
Average Nom. Dividend Yield Nom. "A" Rated Utility Bond Yield Real "A" Rated Yield Real Dividend Yield Nominal Spread Real Spread
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 4 of 16
17-Year 2017
Line Average 20222 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
2 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
1 ALLETE 1.98 2.60 2.52 2.47 2.35 2.24 2.14 2.08 2.02 1.96 1.90 1.84 1.78 1.76 1.76 1.72 1.64 1.45
2 Alliant Energy 1.04 1.71 1.61 1.52 1.42 1.34 1.26 1.18 1.10 1.02 0.94 0.90 0.85 0.79 0.75 0.70 0.64 0.58
3 Ameren Corp.1.89 2.36 2.20 2.00 1.92 1.85 1.78 1.72 1.66 1.61 1.60 1.60 1.56 1.54 1.54 2.54 2.54 2.544 American Electric Power 2.10 3.17 3.00 2.84 2.71 2.53 2.39 2.27 2.15 2.03 1.95 1.88 1.85 1.71 1.64 1.64 1.58 1.50
5 Avangrid, Inc.1.75 1.76 1.76 1.76 1.76 1.74 1.73 1.73 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
6 Avista Corp.1.18 1.76 1.69 1.62 1.55 1.49 1.43 1.37 1.32 1.27 1.22 1.16 1.10 1.00 0.81 0.69 0.60 0.57
7 Black Hills 1.66 2.41 2.29 2.17 2.05 1.93 1.81 1.68 1.62 1.56 1.52 1.48 1.46 1.44 1.42 1.40 1.37 1.32
8 CenterPoint Energy 0.87 0.71 0.66 0.90 0.86 1.12 1.35 1.03 0.99 0.95 0.83 0.81 0.79 0.78 0.76 0.73 0.68 0.609CMS Energy Corp.1.05 1.84 1.74 1.63 1.53 1.43 1.33 1.24 1.16 1.08 1.02 0.96 0.84 0.66 0.50 0.36 0.20 N/A
10 Consol. Edison 2.60 3.16 3.10 3.06 2.96 2.86 2.76 2.68 2.60 2.52 2.46 2.42 2.40 2.38 2.36 2.34 2.32 2.30
11 Dominion Resources 2.38 2.67 2.52 3.45 3.67 3.34 3.04 2.80 2.59 2.40 2.25 2.11 1.97 1.83 1.75 1.58 1.46 1.38
12 DTE Energy 2.83 3.60 3.88 4.12 3.85 3.59 3.36 3.06 2.84 2.69 2.59 2.42 2.32 2.18 2.12 2.12 2.12 2.08
13 Duke Energy 3.23 3.98 3.90 3.82 3.75 3.64 3.49 3.36 3.24 3.15 3.09 3.03 2.97 2.91 2.82 2.70 2.58 N/A14Edison Int'l 1.72 2.84 2.69 2.58 2.48 2.43 2.23 1.98 1.73 1.48 1.37 1.31 1.29 1.27 1.25 1.23 1.18 1.10
15 El Paso Electric 1.11 N/A N/A N/A N/A 1.42 1.32 1.23 1.17 1.11 1.05 0.97 0.66 N/A N/A N/A N/A N/A
16 Entergy Corp.3.27 4.09 3.86 3.74 3.66 3.58 3.50 3.42 3.34 3.32 3.32 3.32 3.32 3.24 3.00 3.00 2.58 2.16
17 Eversource Energy 1.50 2.55 2.41 2.27 2.14 2.02 1.90 1.78 1.67 1.57 1.47 1.32 1.10 1.03 0.95 0.83 0.78 0.73
18 Evergy, Inc.2.18 2.33 2.18 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A19Exelon Corp.1.64 1.35 1.53 1.53 1.45 1.38 1.31 1.26 1.24 1.24 1.46 2.10 2.10 2.10 2.10 2.05 1.82 1.64
20 FirstEnergy Corp. 1.80 1.56 1.56 1.56 1.53 1.82 1.44 1.44 1.44 1.44 1.65 2.20 2.20 2.20 2.20 2.20 2.05 1.85
21 Fortis Inc.1.37 2.21 2.08 1.97 1.86 1.75 1.65 1.55 1.43 1.30 1.25 1.21 1.17 1.12 1.04 1.00 0.82 0.67
22 Great Plains Energy 1.11 N/A N/A N/A N/A N/A 1.10 1.06 1.00 0.94 0.88 0.86 0.84 0.83 0.83 1.66 1.66 1.66
23 Hawaiian Elec.1.26 1.40 1.36 1.32 1.28 1.24 1.24 1.24 1.24 1.24 1.24 1.24 1.24 1.24 1.24 1.24 1.24 1.2424IDACORP, Inc.1.79 3.05 2.88 2.72 2.56 2.40 2.24 2.08 1.92 1.76 1.57 1.37 1.20 1.20 1.20 1.20 1.20 1.20
25 NextEra Energy, Inc.0.79 1.70 1.54 1.40 1.25 1.11 0.98 0.87 0.77 0.73 0.66 0.60 0.55 0.50 0.47 0.45 0.41 0.38
26 NorthWestern Corp 1.75 2.52 2.48 2.40 2.30 2.20 2.10 2.00 1.92 1.60 1.52 1.48 1.44 1.36 1.34 1.32 1.28 1.24
27 OGE Energy 1.03 1.66 1.63 1.58 1.51 1.40 1.27 1.16 1.05 0.95 0.85 0.80 0.76 0.73 0.71 0.70 0.68 0.67
28 Otter Tail Corp.1.26 1.65 1.56 1.48 1.40 1.34 1.28 1.25 1.23 1.21 1.19 1.19 1.19 1.19 1.19 1.19 1.17 1.1529 Pinnacle West Capital 2.50 3.44 3.36 3.23 3.04 2.87 2.70 2.56 2.44 2.33 2.23 2.67 2.10 2.10 2.10 2.10 2.10 2.03
30 PNM Resources 0.82 1.41 0.98 1.25 1.18 1.09 0.99 0.88 0.80 0.76 0.68 0.58 0.50 0.50 0.50 0.61 0.91 0.86
31 Portland General 1.19 1.79 1.70 1.59 1.52 1.43 1.34 1.26 1.18 1.12 1.10 1.08 1.06 1.04 1.01 0.97 0.93 0.68
32 PPL Corp.1.47 1.07 1.66 1.66 1.65 1.64 1.58 1.52 1.50 1.49 1.47 1.44 1.40 1.40 1.38 1.34 1.22 1.10
33 Public Serv. Enterprise 1.54 2.16 2.04 1.96 1.88 1.80 1.72 1.64 1.56 1.48 1.44 1.42 1.37 1.37 1.33 1.29 1.17 1.1434SCANA Corp.2.00 N/A N/A N/A N/A N/A 2.45 2.30 2.18 2.10 2.03 1.98 1.94 1.90 1.88 1.84 1.76 1.68
35 Sempra Energy 2.60 4.58 4.40 4.18 3.87 3.58 3.29 3.02 2.80 2.64 2.52 2.40 1.92 1.56 1.56 1.37 1.24 1.20
36 Southern Co.2.06 2.70 2.62 2.54 2.46 2.38 2.30 2.22 2.15 2.08 2.01 1.94 1.87 1.80 1.73 1.66 1.60 1.54
37 Vectren Corp.1.42 N/A N/A N/A N/A N/A 1.71 1.62 1.54 1.46 1.43 1.41 1.39 1.37 1.35 1.31 1.27 1.23
38 WEC Energy Group 1.49 2.91 2.71 2.53 2.36 2.21 2.08 1.98 1.74 1.56 1.45 1.20 1.04 0.80 0.68 0.54 0.50 0.4639Westar Energy 1.30 N/A N/A N/A N/A N/A 1.60 1.52 1.44 1.40 1.36 1.32 1.28 1.24 1.20 1.16 1.08 0.98
40 Xcel Energy Inc.1.24 1.95 1.83 1.72 1.62 1.52 1.44 1.36 1.28 1.20 1.11 1.07 1.03 1.00 0.97 0.94 0.91 0.88
41 Average 1.74 2.36 2.28 2.25 2.16 2.05 1.91 1.80 1.71 1.62 1.57 1.55 1.47 1.43 1.39 1.40 1.33 1.25
42 Industry Average Growth 4.08% 3.40% 1.43% 4.36% 5.33% 7.06% 6.02% 5.44% 5.37% 3.48% 0.97% 5.83% 2.45% 3.16% -0.52% 4.95% 6.51%
Sources:
1 Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, March 12, April 23, and May 14, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, March 11, April 22, and May 13, 2022.
2 The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Company
Dividend per Share1
Veolia Water Idaho, Inc.
Electric Utilities
(Valuation Metrics)
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 5 of 16
17-Yea 2017
Line Average 20222 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
2 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
1 ALLETE 2.90 3.75 3.23 3.35 3.33 3.38 3.13 3.14 3.38 2.90 2.63 2.58 2.65 2.19 1.89 2.82 3.08 2.77
2 Alliant Energy 1.70 2.80 2.63 2.47 2.33 2.19 1.99 1.65 1.69 1.74 1.65 1.53 1.38 1.38 0.95 1.27 1.35 1.03
3 Ameren Corp.2.83 4.10 3.84 3.50 3.35 3.32 2.77 2.68 2.38 2.40 2.10 2.41 2.47 2.77 2.78 2.88 2.98 2.66
4 American Electric Power 3.48 5.20 4.96 4.42 4.08 3.90 3.62 4.23 3.59 3.34 3.18 2.98 3.13 2.60 2.97 2.99 2.86 2.86
5 Avangrid, Inc.1.79 2.37 1.97 1.88 2.26 1.92 1.67 1.98 0.86 N/A N/A N/A N/A N/A N/A N/A N/A N/A
6 Avista Corp.1.78 1.95 2.10 1.90 2.97 2.07 1.95 2.15 1.89 1.84 1.85 1.32 1.72 1.65 1.58 1.36 0.72 1.477 Black Hills 2.55 4.10 3.74 3.73 3.53 3.47 3.38 2.63 2.83 2.89 2.61 1.97 1.01 1.66 2.32 0.18 2.68 2.218 CenterPoint Energy 1.20 1.40 0.94 1.29 1.49 0.74 1.57 1.00 1.08 1.42 1.24 1.35 1.27 1.07 1.01 1.30 1.17 1.339 CMS Energy Corp.1.70 2.90 2.58 2.64 2.39 2.32 2.17 1.98 1.89 1.74 1.66 1.53 1.45 1.33 0.93 1.23 0.64 0.64
10 Consol. Edison 3.80 4.55 4.74 3.94 4.08 4.55 4.10 3.94 4.05 3.62 3.93 3.86 3.57 3.47 3.14 3.36 3.48 2.95
11 Dominion Resources 2.84 4.10 3.19 1.82 2.19 3.25 3.53 3.44 3.20 3.05 3.09 2.75 2.76 2.89 2.64 3.04 2.13 2.40
12 DTE Energy 4.37 4.75 4.10 7.08 6.31 6.17 5.73 4.83 4.44 5.10 3.76 3.88 3.67 3.74 3.24 2.73 2.66 2.45
13 Duke Energy 3.93 5.45 4.93 3.92 5.07 4.13 4.22 3.71 4.10 4.13 3.98 3.71 4.14 4.02 3.39 3.03 3.60 2.73
14 Edison Int'l 3.24 4.50 2.00 1.72 3.98 -1.26 4.51 3.94 4.15 4.33 3.78 4.55 3.23 3.35 3.24 3.68 3.32 3.2815 El Paso Electric 2.02 N/A N/A N/A N/A 2.07 2.42 2.39 2.03 2.27 2.20 2.26 2.48 2.07 1.50 1.73 1.63 1.2716 Entergy Corp.6.14 6.60 6.87 6.90 6.30 5.88 5.19 6.88 5.81 5.77 4.96 6.02 7.55 6.66 6.30 6.20 5.60 5.3617 Eversource Energy 2.51 4.10 3.54 3.55 3.45 3.25 3.11 2.96 2.76 2.58 2.49 1.89 2.22 2.10 1.91 1.86 1.59 0.8218 Evergy, Inc.3.83 3.55 3.83 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
19 Exelon Corp.2.90 2.25 1.74 2.60 3.01 2.07 2.78 1.80 2.54 2.10 2.31 1.92 3.75 3.87 4.29 4.10 4.03 3.50
20 FirstEnergy Corp. 2.59 2.44 2.69 1.85 1.84 1.33 2.73 2.10 2.00 0.85 2.97 2.13 1.88 3.25 3.32 4.38 4.22 3.82
21 Fortis Inc.1.92 2.75 2.61 2.60 2.68 2.52 2.66 1.89 2.11 1.38 1.63 1.65 1.74 1.62 1.51 1.52 1.29 1.36
22 Great Plains Energy 1.33 N/A N/A N/A N/A N/A -0.06 1.61 1.37 1.57 1.62 1.35 1.25 1.53 1.03 1.16 1.85 1.6223 Hawaiian Elec.1.58 2.15 2.25 1.81 1.99 1.85 1.64 2.29 1.50 1.64 1.62 1.67 1.44 1.21 0.91 1.07 1.11 1.3324 IDACORP, Inc.3.55 5.00 4.85 4.69 4.61 4.49 4.21 3.94 3.87 3.85 3.64 3.37 3.36 2.95 2.64 2.18 1.86 2.3525 NextEra Energy, Inc.1.37 2.90 1.81 2.10 1.94 1.67 1.63 1.45 1.52 1.40 1.21 1.14 1.21 1.19 0.99 1.02 0.82 0.8126 NorthWestern Corp 2.63 3.35 3.60 3.06 3.53 3.40 3.34 3.39 2.90 2.99 2.46 2.26 2.53 2.14 2.02 1.77 1.44 1.31
27 OGE Energy 1.76 2.25 2.36 2.08 2.24 2.12 1.92 1.69 1.69 1.98 1.94 1.79 1.73 1.50 1.33 1.25 1.32 1.23
28 Otter Tail Corp.1.62 6.00 4.23 2.34 2.17 2.06 1.86 1.60 1.56 1.55 1.37 1.05 0.45 0.38 0.71 1.09 1.78 1.69
29 Pinnacle West Capital 3.70 4.00 5.47 4.87 4.77 4.54 4.43 3.95 3.92 3.58 3.66 3.50 2.99 3.08 2.26 2.12 2.96 3.17
30 PNM Resources 1.43 2.60 2.27 2.15 2.28 1.66 1.92 1.65 1.64 1.45 1.41 1.31 1.08 0.87 0.58 0.11 0.76 1.72
31 Portland General 1.96 2.80 2.72 1.72 2.39 2.37 2.29 2.16 2.04 2.18 1.77 1.87 1.95 1.66 1.31 1.39 2.33 1.1432 PPL Corp.2.23 1.37 0.53 2.04 2.37 2.58 2.11 2.79 2.37 2.38 2.38 2.61 2.61 2.29 1.19 2.45 2.63 2.2933 Public Serv. Enterprise 2.89 3.48 2.55 3.61 3.90 2.76 2.82 2.83 3.30 2.99 2.45 2.44 3.11 3.07 3.08 2.90 2.59 1.8534 SCANA Corp.3.30 N/A N/A N/A N/A N/A 4.20 4.16 3.81 3.79 3.39 3.15 2.97 2.98 2.85 2.95 2.74 2.59
35 Sempra Energy 4.72 8.65 4.01 6.58 5.97 5.48 4.63 4.24 5.23 4.63 4.22 4.35 4.47 4.02 4.78 4.43 4.26 4.23
36 Southern Co.2.73 3.55 3.42 3.25 3.17 3.00 3.21 2.83 2.84 2.77 2.70 2.67 2.55 2.36 2.32 2.25 2.28 2.10
37 Vectren Corp.1.94 N/A N/A N/A N/A N/A 2.60 2.55 2.39 2.02 1.66 1.94 1.73 1.64 1.79 1.63 1.83 1.44
38 WEC Energy Group 2.54 4.40 4.11 3.79 3.58 3.34 3.14 2.96 2.34 2.59 2.51 2.35 2.18 1.92 1.60 1.52 1.42 1.32
39 Westar Energy 1.96 N/A N/A N/A N/A N/A 2.27 2.43 2.09 2.35 2.27 2.15 1.79 1.80 1.28 1.31 1.84 1.8840 Xcel Energy Inc.2.01 3.15 2.96 2.79 2.64 2.47 2.30 2.21 2.10 2.03 1.91 1.85 1.72 1.56 1.49 1.46 1.35 1.35
41 Averag 2.70 3.69 3.24 3.18 3.30 2.89 2.92 2.82 2.70 2.66 2.53 2.45 2.45 2.36 2.19 2.20 2.27 2.11
42 Industry Average Growt 3.67 14.02 1.94 -3.70 14.28 -0.95 3.31 4.55 1.35 5.18 3.33 -0.08 3.73 8.14 -0.77 -2.88 7.31
Sources:1 Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, March 12, April 23, and May 14, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, March 11, April 22, and May 13, 2022.
2 The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Company
Earnings per Share1
Veolia Water Idaho, Inc.
Electric Utilities
(Valuation Metrics)
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 6 of 16
3 - 5 yr4
Line 20191 20201 20212 20223 20234 Projection
(1) (2) (3) (4) (5)(5)
1 ALLETE 0.63x 0.74x 0.80x 2.26x 1.43x 1.34x
2 Alliant Energy 0.73x 0.82x 0.97x 0.94x 0.97x 1.08x
3 Ameren Corp.0.79x 0.51x 0.59x 0.72x 0.80x 0.90x
4 American Electric Power 0.75x 0.74x 0.69x 0.73x 0.84x 1.00x
5 Avangrid, Inc.0.70x 0.56x 0.62x 0.61x 0.60x 0.63x
6 Avista Corp.0.89x 0.85x 0.87x 0.83x 0.94x 1.12x
7 Black Hills 0.51x 0.72x 0.76x 0.85x 0.92x 1.05x
8 CenterPoint Energy 0.83x 0.88x 0.62x 0.62x 0.52x 0.62x
9 CMS Energy Corp. 0.79x 0.82x 0.77x 0.78x 0.75x 0.90x
10 Consol. Edison 0.79x 0.82x 0.89x 0.83x 0.72x 0.84x
11 Dominion Resources 0.81x 1.00x 0.89x 0.74x 0.67x 1.07x
12 DTE Energy 0.83x 0.67x 0.70x 0.75x 0.83x 0.92x
13 Duke Energy 0.78x 0.86x 0.93x 0.81x 0.84x 0.96x
14 Edison Int'l 0.69x 0.67x 0.74x 0.67x 0.77x 0.81x
15 El Paso Electric 0.96x 1.00x 0.83x N/A N/A N/A
16 Entergy Corp.0.79x 0.81x 1.05x 0.98x 0.94x 1.04x
17 Eversource Energy 0.78x 0.95x 0.74x 0.72x 0.81x 1.05x
18 Evergy, Inc.1.34x 1.06x 0.96x 0.94x 0.91x 1.05x
19 Exelon Corp.1.18x 1.30x 1.32x 0.96x 0.99x 1.07x
20 FirstEnergy Corp. 0.74x 0.96x 0.91x 0.86x 0.89x 0.98x
21 Fortis Inc.0.68x 0.60x 0.74x 0.75x 0.82x 0.91x
22 Hawaiian Elec.1.12x 1.10x 1.42x 1.30x 1.47x 1.38x
23 IDACORP, Inc.1.25x 1.25x 1.16x 0.83x 0.62x 1.03x
24 NextEra Energy, Inc. 0.67x 0.58x 0.69x 0.54x 0.64x 0.68x
25 NorthWestern Corp 1.07x 0.98x 0.82x 0.66x 0.75x 1.23x
26 OGE Energy 1.26x 1.43x 1.13x 0.99x 1.04x 1.32x
27 Otter Tail Corp.0.80x 0.45x 1.42x 1.45x 1.12x 1.08x
28 Pinnacle West Capital 0.98x 0.98x 0.85x 0.78x 0.83x 0.95x
29 PNM Resources 0.72x 0.59x 0.51x 0.63x 0.63x 0.90x
30 Portland General 0.99x 0.75x 0.97x 1.01x 1.07x 1.24x
31 PPL Corp.0.92x 1.06x 1.12x 1.35x 1.06x 1.18x
32 Public Serv. Enterprise 1.07x 1.00x 1.05x 0.82x 0.89x 1.07x
33 Sempra Energy 0.66x 0.92x 0.78x 0.92x 1.19x 1.45x
34 Southern Co.0.88x 1.01x 0.93x 0.97x 0.97x 1.23x
35 WEC Energy Group 0.91x 0.70x 0.75x 0.87x 0.92x 1.11x
36 Xcel Energy Inc.0.69x 0.99x 0.86x 0.80x 0.92x 1.11x
37 Average 0.86x 0.86x 0.88x 0.89x 0.89x 1.04x
38 Median 0.80x 0.86x 0.86x 0.83x 0.89x 1.05x
Source:
1 The Value Line Investment Survey, January 24, February 14, and March 13, 2020.
2 The Value Line Investment Survey, March 12, April 23, and May 14, 2021.
3 The Value Line Investment Survey, March 11, April 22, and May 13, 2022.
4 The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Notes:
Based on the projected Cash Flow per share and Capital Spending per share.
Company
Veolia Water Idaho, Inc.
Electric Utilities
(Valuation Metrics)
Cash Flow / Capital Spending
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 7 of 16
17-Yea
Line Average 2022 2/a 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
2 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1 ALLETE 5.95% 5.53% 5.56% 5.61% 5.44% 5.35% 5.29% 5.45% 5.45% 5.59% 5.86% 6.04% 6.18% 6.46% 6.67% 6.78% 6.80% 6.62%
2 Alliant Energy 6.33% 6.83% 6.73% 6.68% 6.68% 6.90% 7.32% 6.96% 6.70% 6.56% 6.36% 6.37% 6.26% 6.06% 5.98% 5.48% 5.23% 5.04%
3 Ameren Corp.6.02% 5.87% 5.84% 5.67% 5.87% 5.92% 6.01% 5.86% 5.78% 5.82% 5.93% 5.87% 4.76% 4.79% 4.66% 7.74% 7.84% 7.97%
4 American Electric Power 6.28% 6.70% 6.74% 6.86% 6.82% 6.56% 6.43% 6.42% 5.90% 5.91% 5.91% 5.99% 6.10% 6.04% 5.97% 6.23% 6.28% 6.32%
5 Avangrid, Inc.3.05% 3.52% 3.57% 3.58% 3.57% 3.57% 3.54% 3.53% 0.00% N/A N/A N/A N/A N/A N/A N/A N/A N/A
6 Avista Corp.4.99% 5.66% 5.61% 5.53% 5.37% 5.52% 5.41% 5.33% 5.38% 5.33% 5.65% 5.51% 5.42% 5.07% 4.23% 3.77% 3.44% 3.26%7 Black Hills 5.33% 5.34% 5.32% 5.32% 5.34% 5.31% 5.67% 5.55% 5.66% 5.06% 5.17% 5.31% 5.30% 5.14% 5.10% 5.15% 5.34% 5.58%8 CenterPoint Energy 9.85% 4.81% 4.82% 8.35% 6.59% 8.94% 12.39% 12.82% 12.30% 8.96% 8.23% 8.05% 7.97% 10.36% 11.28% 12.40% 12.12% 12.09%9 CMS Energy Corp. 6.56% 7.93% 7.87% 8.57% 8.66% 8.52% 8.43% 8.14% 8.16% 8.10% 7.86% 7.94% 7.05% 5.90% 4.38% 3.31% 2.11% 0.00%
10 Consol. Edison 6.05% 5.41% 5.48% 5.56% 5.46% 5.49% 5.55% 5.72% 5.84% 5.87% 5.88% 5.97% 6.15% 6.27% 6.47% 6.60% 7.12% 7.40%
11 Dominion Resources 10.35% 7.98% 8.00% 11.72% 10.39% 11.31% 11.41% 12.04% 12.20% 12.16% 11.24% 11.50% 9.81% 8.86% 9.38% 9.14% 8.95% 7.46%
12 DTE Energy 6.11% 7.12% 8.64% 6.43% 6.34% 6.38% 6.34% 6.09% 5.81% 5.72% 5.79% 5.66% 5.60% 5.49% 5.59% 5.76% 5.91% 6.28%
13 Duke Energy 5.36% 6.34% 6.34% 6.39% 6.12% 6.04% 5.85% 5.73% 5.61% 5.45% 5.28% 5.22% 5.81% 5.72% 5.66% 5.45% 5.12% 0.00%
14 Edison Int'l 5.26% 7.61% 7.36% 6.96% 6.73% 7.56% 6.23% 5.39% 4.97% 4.41% 4.48% 4.54% 4.16% 3.90% 4.12% 4.19% 4.53% 4.65%15 El Paso Electric 2.94% N/A N/A 5.13% N/A 4.94% 4.67% 4.62% 4.63% 4.53% 4.46% 4.72% 3.47% 0.00% 0.00% 0.00% 0.00% 0.00%16 Entergy Corp.6.72% 6.82% 6.72% 6.85% 7.13% 7.65% 7.90% 7.58% 6.44% 5.95% 6.15% 6.42% 6.53% 6.82% 6.59% 7.13% 6.34% 5.34%17 Eversource Energy 4.95% 5.77% 5.69% 5.54% 5.59% 5.57% 5.43% 5.27% 5.12% 4.99% 4.82% 4.49% 4.86% 4.75% 4.66% 4.26% 4.16% 4.00%18 Evergy, Inc.5.37% 5.63% 5.41% 5.32% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
19 Exelon Corp.7.21% 5.60% 4.36% 4.62% 4.38% 4.34% 4.23% 4.51% 4.42% 4.72% 5.49% 8.38% 9.68% 10.25% 10.96% 12.21% 11.87% 11.02%
20 FirstEnergy Corp. 8.79% 9.90% 10.26% 11.70% 11.86% 13.82% 16.34% 10.21% 4.91% 4.88% 5.44% 7.03% 6.93% 7.85% 7.84% 8.10% 6.96% 6.54%
21 Fortis Inc.5.36% 5.70% 5.59% 5.39% 5.08% 5.03% 5.19% 4.80% 5.00% 5.22% 5.58% 5.81% 5.70% 5.91% 5.60% 5.55% 4.90% 5.47%
22 Great Plains Energy 5.31% N/A N/A N/A N/A N/A 4.78% 4.27% 4.21% 4.02% 3.91% 3.93% 3.84% 3.90% 4.03% 7.76% 9.13% 9.94%23 Hawaiian Elec.7.23% 6.64% 6.22% 6.17% 6.12% 6.24% 6.43% 6.51% 6.91% 7.10% 7.27% 7.62% 7.77% 7.91% 7.96% 8.08% 8.11% 9.22%24 IDACORP, Inc.4.59% 5.58% 5.45% 5.36% 5.24% 5.11% 5.02% 4.87% 4.70% 4.53% 4.26% 3.91% 3.62% 3.87% 4.11% 4.32% 4.48% 4.66%25 NextEra Energy, Inc. 6.49% 8.63% 8.13% 7.51% 6.61% 6.22% 6.55% 6.69% 6.29% 6.49% 6.36% 6.34% 6.12% 5.82% 5.99% 6.30% 6.22% 6.21%26 NorthWestern Corp 5.84% 5.65% 5.73% 5.84% 5.69% 5.70% 5.76% 5.77% 5.78% 5.08% 5.71% 5.90% 6.08% 6.01% 6.13% 6.21% 6.06% 6.00%
27 OGE Energy 6.78% 7.81% 8.04% 8.71% 7.28% 6.96% 6.59% 6.70% 6.30% 5.84% 5.56% 5.70% 5.81% 6.24% 6.79% 6.89% 7.47% 7.61%
28 Otter Tail Corp.7.19% 5.99% 6.54% 7.05% 7.19% 7.29% 7.27% 7.34% 7.70% 7.86% 8.07% 8.25% 7.52% 6.77% 6.33% 6.22% 6.67% 6.90%
29 Pinnacle West Capital 6.18% 6.51% 6.43% 6.47% 6.29% 6.16% 6.03% 5.93% 5.91% 5.89% 5.84% 7.38% 6.00% 6.20% 6.42% 6.15% 5.98% 5.87%
30 PNM Resources 3.83% 5.23% 3.88% 5.23% 5.59% 5.12% 4.67% 4.18% 3.85% 3.37% 3.26% 2.89% 2.55% 2.84% 2.65% 3.20% 4.13% 3.89%
31 Portland General 4.79% 5.73% 5.61% 5.45% 5.24% 5.09% 4.94% 4.78% 4.64% 4.56% 4.70% 4.70% 4.78% 4.90% 4.93% 4.48% 4.42% 3.45%32 PPL Corp.8.96% 5.56% 8.89% 9.55% 9.74% 10.13% 10.18% 10.44% 10.19% 7.28% 7.43% 8.00% 7.48% 8.24% 9.47% 9.89% 8.20% 8.27%33 Public Serv. Enterprise 6.89% 7.93% 7.12% 6.18% 6.28% 6.31% 6.27% 6.31% 6.03% 6.14% 6.28% 6.66% 6.75% 7.20% 7.66% 8.40% 8.15% 8.54%34 SCANA Corp.6.44% N/A N/A N/A N/A N/A 6.67% 5.74% 5.72% 6.01% 6.14% 6.29% 6.48% 6.54% 6.80% 7.12% 6.94% 6.89%
35 Sempra Energy 5.32% 5.51% 5.56% 5.96% 6.39% 6.59% 6.53% 5.83% 5.89% 5.74% 5.60% 5.66% 4.68% 4.16% 4.27% 4.18% 3.89% 4.19%
36 Southern Co.9.55% 9.98% 9.96% 9.59% 9.42% 9.95% 9.59% 8.89% 9.53% 9.48% 9.39% 9.22% 9.22% 9.38% 9.55% 9.74% 9.83% 10.07%
37 Vectren Corp.7.71% N/A N/A N/A N/A N/A 7.67% 7.60% 7.57% 7.51% 7.55% 7.57% 7.74% 7.78% 7.84% 7.85% 7.86% 7.97%
38 WEC Energy Group 6.20% 8.11% 7.83% 7.62% 7.36% 7.12% 6.94% 7.00% 6.35% 7.96% 7.71% 6.65% 6.05% 4.92% 4.42% 3.78% 3.77% 3.72%
39 Westar Energy 5.71% N/A N/A N/A N/A N/A 5.82% 5.66% 5.57% 5.60% 5.70% 5.77% 5.81% 5.84% 5.83% 5.75% 5.64% 5.56%40 Xcel Energy Inc.6.15% 6.47% 6.38% 6.34% 6.42% 6.39% 6.38% 6.26% 6.13% 5.94% 5.78% 5.88% 5.91% 5.97% 6.09% 6.13% 6.19% 6.16%
41 Average 6.34% 6.50% 6.50% 6.69% 6.60% 6.72% 6.76% 6.48% 6.14% 6.10% 6.11% 6.29% 6.10% 6.06% 6.12% 6.36% 6.27% 6.06%42 Median 6.06% 5.99% 6.34% 6.26% 6.32% 6.24% 6.27% 5.86% 5.81% 5.83% 5.82% 5.98% 6.06% 5.99% 5.99% 6.21% 6.21% 6.19%
Sources:
1 Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, March 12, April 23, and May 14, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, March 11, April 22, and May 13, 2022.
2 The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
a Based on the projected 2022 Dividend Declared per share and Book Value per share,
published in The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Veolia Water Idaho, Inc.
Electric Utilities
(Valuation Metrics)
Percent Dividends to Book Value 1
Company
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 8 of 16
Veolia Water Idaho, Inc.
Electric Utilities
(Valuation Metrics)
17-Yea
Line Average 2022 2/a 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1 ALLETE 0.69 0.69 0.78 0.74 0.71 0.66 0.68 0.66 0.60 0.68 0.72 0.71 0.67 0.80 0.93 0.61 0.53 0.52
2 Alliant Energy 0.61 0.61 0.61 0.62 0.61 0.61 0.63 0.72 0.65 0.59 0.57 0.59 0.62 0.57 0.79 0.55 0.47 0.56
3 Ameren Corp.0.67 0.58 0.57 0.57 0.57 0.56 0.64 0.64 0.70 0.67 0.76 0.66 0.63 0.56 0.55 0.88 0.85 0.95
4 American Electric Power 0.60 0.61 0.60 0.64 0.66 0.65 0.66 0.54 0.60 0.61 0.61 0.63 0.59 0.66 0.55 0.55 0.55 0.525 Avangrid, Inc.0.90 0.74 0.89 0.94 0.78 0.91 1.03 0.87 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A6 Avista Corp.0.67 0.90 0.80 0.85 0.52 0.72 0.73 0.64 0.70 0.69 0.66 0.88 0.64 0.61 0.51 0.51 0.83 0.397 Black Hills 1.11 0.59 0.61 0.58 0.58 0.56 0.54 0.64 0.57 0.54 0.58 0.75 1.45 0.87 0.61 7.78 0.51 0.60
8 CenterPoint Energy 0.75 0.51 0.70 0.70 0.58 1.51 0.86 1.03 0.92 0.67 0.67 0.60 0.62 0.73 0.75 0.56 0.58 0.45
9 CMS Energy Corp. 0.57 0.63 0.67 0.62 0.64 0.62 0.61 0.63 0.61 0.62 0.61 0.63 0.58 0.50 0.54 0.29 0.31 N/A
10 Consol. Edison 0.69 0.69 0.65 0.78 0.73 0.63 0.67 0.68 0.64 0.70 0.63 0.63 0.67 0.69 0.75 0.70 0.67 0.78
11 Dominion Resources 0.87 0.65 0.79 1.90 1.68 1.03 0.86 0.81 0.81 0.79 0.73 0.77 0.71 0.63 0.66 0.52 0.69 0.58
12 DTE Energy 0.67 0.76 0.95 0.58 0.61 0.58 0.59 0.63 0.64 0.53 0.69 0.62 0.63 0.58 0.65 0.78 0.80 0.8513 Duke Energy 0.81 0.73 0.79 0.97 0.74 0.88 0.83 0.91 0.79 0.76 0.78 0.82 0.72 0.72 0.83 0.89 0.72 N/A14 Edison Int'l 0.38 0.63 1.35 1.50 0.62 - 1.93 0.50 0.50 0.42 0.34 0.36 0.29 0.40 0.38 0.38 0.33 0.35 0.3415 El Paso Electric 0.50 N/A N/A N/A N/A 0.68 0.54 0.51 0.57 0.49 0.48 0.43 0.27 N/A N/A N/A N/A N/A16 Entergy Corp.0.54 0.62 0.56 0.54 0.58 0.61 0.67 0.50 0.57 0.58 0.67 0.55 0.44 0.49 0.48 0.48 0.46 0.40
17 Eversource Energy 0.60 0.62 0.68 0.64 0.62 0.62 0.61 0.60 0.61 0.61 0.59 0.70 0.50 0.49 0.50 0.44 0.49 0.88
18 Evergy, Inc.0.57 0.66 0.57 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
19 Exelon Corp.0.60 0.60 0.88 0.59 0.48 0.67 0.47 0.70 0.49 0.59 0.63 1.09 0.56 0.54 0.49 0.50 0.45 0.47
20 FirstEnergy Corp. 0.80 0.64 0.58 0.84 0.83 1.37 0.53 0.69 0.72 1.69 0.56 1.03 1.17 0.68 0.66 0.50 0.49 0.4821 Fortis Inc.0.71 0.80 0.80 0.76 0.69 0.69 0.62 0.82 0.68 0.94 0.77 0.73 0.67 0.69 0.69 0.66 0.64 0.4922 Great Plains Energy - 0.82 N/A N/A N/A N/A N/A -18.33 0.66 0.73 0.60 0.54 0.63 0.67 0.54 0.81 1.43 0.90 1.0223 Hawaiian Elec.0.84 0.65 0.60 0.73 0.64 0.67 0.76 0.54 0.83 0.76 0.77 0.74 0.86 1.02 1.36 1.16 1.12 0.9324 IDACORP, Inc.0.50 0.61 0.59 0.58 0.56 0.53 0.53 0.53 0.50 0.46 0.43 0.41 0.36 0.41 0.45 0.55 0.65 0.51
25 NextEra Energy, Inc. 0.56 0.59 0.85 0.67 0.64 0.66 0.60 0.60 0.51 0.52 0.55 0.53 0.45 0.42 0.47 0.44 0.50 0.47
26 NorthWestern Corp 0.68 0.75 0.69 0.78 0.65 0.65 0.63 0.59 0.66 0.54 0.62 0.65 0.57 0.64 0.66 0.75 0.89 0.95
27 OGE Energy 0.58 0.74 0.69 0.76 0.67 0.66 0.66 0.68 0.62 0.48 0.44 0.45 0.44 0.49 0.54 0.56 0.52 0.55
28 Otter Tail Corp.1.08 0.28 0.37 0.63 0.65 0.65 0.69 0.78 0.79 0.78 0.87 1.13 2.64 3.13 1.68 1.09 0.66 0.68
29 Pinnacle West Capital 0.69 0.86 0.61 0.66 0.64 0.63 0.61 0.65 0.62 0.65 0.61 0.76 0.70 0.68 0.93 0.99 0.71 0.6430 PNM Resources 0.89 0.54 0.43 0.58 0.52 0.65 0.52 0.53 0.49 0.52 0.48 0.44 0.46 0.57 0.86 5.50 1.20 0.5031 Portland General 0.62 0.64 0.63 0.92 0.64 0.60 0.59 0.58 0.58 0.51 0.62 0.57 0.54 0.62 0.77 0.70 0.40 0.5932 PPL Corp.0.80 0.78 3.13 0.81 0.70 0.64 0.75 0.54 0.63 0.63 0.62 0.55 0.54 0.61 1.16 0.55 0.46 0.48
33 Public Serv. Enterprise 0.54 0.62 0.80 0.54 0.48 0.65 0.61 0.58 0.47 0.49 0.59 0.58 0.44 0.45 0.43 0.44 0.45 0.62
34 SCANA Corp.0.61 N/A N/A N/A N/A N/A 0.58 0.55 0.57 0.55 0.60 0.63 0.65 0.64 0.66 0.62 0.64 0.65
35 Sempra Energy 0.55 0.53 1.10 0.64 0.65 0.65 0.71 0.71 0.54 0.57 0.60 0.55 0.43 0.39 0.33 0.31 0.29 0.28
36 Southern Co.0.75 0.76 0.77 0.78 0.78 0.79 0.72 0.79 0.76 0.75 0.75 0.73 0.73 0.76 0.75 0.74 0.70 0.73
37 Vectren Corp.0.75 N/A N/A N/A N/A N/A 0.66 0.64 0.64 0.72 0.86 0.72 0.80 0.84 0.75 0.80 0.69 0.8538 WEC Energy Group 0.55 0.66 0.66 0.67 0.66 0.66 0.66 0.67 0.74 0.60 0.58 0.51 0.48 0.42 0.42 0.36 0.35 0.3539 Westar Energy 0.68 N/A N/A N/A N/A N/A 0.70 0.63 0.69 0.60 0.60 0.61 0.72 0.69 0.94 0.89 0.59 0.5240 Xcel Energy Inc.0.62 0.62 0.62 0.62 0.61 0.62 0.63 0.62 0.61 0.59 0.58 0.58 0.60 0.64 0.65 0.64 0.67 0.65
41 Average 0.66 0.65 0.78 0.76 0.67 0.64 0.17 0.66 0.64 0.64 0.62 0.66 0.67 0.68 0.70 0.97 0.62 0.61
42 Median 0.63 0.64 0.68 0.67 0.64 0.65 0.63 0.64 0.63 0.60 0.61 0.63 0.62 0.62 0.66 0.61 0.59 0.56
Sources:1 Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, March 12, April 23, and May 14, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, March 11, April 22, and May 13, 2022.2 The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Note:b Based on the projected 2022 Dividends Declared per share and Earnings per share,
published in The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Company
Dividends to Earnings Ratio 1
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 9 of 16
Veolia Water Idaho, Inc.
Electric Utilities
(Valuation Metrics)
17-Yea
Line Average 2022 2/a 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1 ALLETE 0.80 2.16 0.55 0.55 0.63 1.22 1.61 1.32 1.16 0.45 0.67 0.49 0.77 0.63 0.39 0.46 0.65 1.23
2 Alliant Energy 0.80 0.93 0.95 N/A N/A N/A 0.49 N/A 0.81 0.91 1.01 0.57 0.91 0.67 0.39 0.57 1.04 1.27
3 Ameren Corp.0.88 0.74 0.62 0.62 0.79 0.80 0.75 0.75 0.75 0.75 0.89 1.07 1.31 1.36 0.81 0.66 0.97 1.21
4 American Electric Power 0.87 0.75 0.81 0.81 0.75 0.68 0.67 0.85 0.85 0.87 0.91 1.07 1.19 1.24 1.02 0.70 0.77 0.755 Avangrid, Inc.0.70 0.61 0.56 0.56 0.62 0.85 0.57 0.86 0.89 N/A N/A N/A N/A N/A N/A N/A N/A N/A6 Avista Corp.0.90 0.83 0.88 0.88 0.92 0.78 0.77 0.84 0.76 0.80 0.86 0.80 0.90 0.99 1.15 0.97 0.73 1.367 Black Hills 0.65 0.89 0.61 0.61 0.53 0.87 1.17 0.71 0.64 0.70 0.74 0.71 0.40 0.41 0.61 0.35 0.76 0.55
8 CenterPoint Energy 1.03 0.60 0.73 0.73 0.83 0.98 1.22 1.12 0.92 1.20 1.18 1.37 1.12 0.88 0.99 1.16 0.98 1.08
9 CMS Energy Corp. 0.87 0.78 0.78 0.78 0.79 0.77 0.89 0.81 0.81 0.74 0.82 0.82 1.05 1.13 0.97 1.11 0.55 1.07
10 Consol. Edison 0.82 0.81 0.83 0.83 0.87 0.82 0.76 0.65 0.76 0.88 0.86 1.01 0.98 0.90 0.75 0.70 0.81 0.74
11 Dominion Resources 0.78 0.75 0.73 0.73 0.96 1.04 0.81 0.65 0.64 0.63 0.77 0.73 0.79 0.87 0.75 0.83 0.74 0.85
12 DTE Energy 1.00 0.72 0.74 0.74 0.83 0.84 0.94 0.93 0.84 1.02 0.96 0.93 1.09 1.51 1.50 0.98 1.07 1.0313 Duke Energy 0.89 0.83 0.85 0.85 0.80 0.81 0.87 0.82 0.96 1.20 1.09 0.87 0.89 0.78 0.77 0.71 1.09 0.9714 Edison Int'l 0.74 0.74 0.55 0.55 0.68 0.34 0.94 0.91 0.80 0.83 0.80 0.76 0.61 0.60 0.79 0.93 0.88 0.9315 El Paso Electric 0.87 N/A 0.83 N/A N/A 0.86 1.04 0.85 0.67 0.69 0.79 0.85 1.03 0.98 0.68 0.78 0.84 1.2616 Entergy Corp.0.98 0.98 0.74 0.74 0.79 0.73 0.76 1.08 1.05 1.19 1.03 0.88 1.15 1.24 1.02 0.93 1.14 1.13
17 Eversource Energy 0.85 0.72 0.80 0.80 0.75 0.83 0.79 0.87 0.91 0.90 1.13 0.86 0.80 1.05 0.96 0.77 0.68 0.67
18 Evergy, Inc.1.03 0.94 1.03 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
19 Exelon Corp.1.24 0.96 1.09 1.09 1.20 1.05 1.06 0.76 0.82 0.93 1.07 0.98 1.19 1.66 1.66 1.61 1.84 1.86
20 FirstEnergy Corp. 1.02 0.87 0.83 0.83 0.80 0.76 1.03 0.94 0.93 0.54 0.91 0.85 1.05 1.32 1.22 0.95 1.56 1.7521 Fortis Inc.0.68 0.75 0.65 0.65 0.68 0.72 0.76 0.76 0.65 0.60 0.77 0.72 0.66 0.68 0.63 0.66 0.57 0.6322 Great Plains Energy 0.79 N/A N/A N/A N/A N/A 0.78 1.17 0.90 0.79 0.91 0.86 1.03 0.86 0.50 0.35 0.69 0.6423 Hawaiian Elec.1.09 1.59 1.27 1.27 1.08 0.85 0.81 1.37 0.98 1.03 0.92 0.99 1.30 1.50 0.79 0.87 1.15 1.2324 IDACORP, Inc.1.12 0.82 1.33 1.33 1.46 1.42 1.33 1.16 1.15 1.21 1.34 1.24 0.86 0.78 0.96 0.82 0.64 0.89
25 NextEra Energy, Inc. 0.62 0.64 0.58 0.58 0.67 0.56 0.53 0.63 0.71 0.77 0.68 0.39 0.58 0.69 0.60 0.63 0.56 0.73
26 NorthWestern Corp 1.04 0.67 0.84 0.84 1.13 1.23 1.21 1.13 1.01 0.93 0.92 0.88 1.04 0.76 0.88 1.27 1.23 1.29
27 OGE Energy 0.91 0.99 1.24 1.24 1.27 1.30 0.81 1.00 1.18 1.19 0.69 0.63 0.51 0.69 0.61 0.60 0.79 0.84
28 Otter Tail Corp.0.84 1.78 0.48 0.48 0.80 1.49 1.10 0.84 0.74 0.70 0.67 0.85 1.16 1.09 0.56 0.37 0.65 1.44
29 Pinnacle West Capital 0.95 0.79 0.91 0.91 1.03 1.06 0.76 0.81 0.92 0.97 0.87 0.96 0.91 0.97 1.06 0.86 0.99 1.2830 PNM Resources 0.71 0.64 0.72 0.72 0.78 0.82 0.84 0.57 0.57 0.63 0.80 0.87 0.77 0.82 0.70 0.44 0.43 0.8931 Portland General 0.84 0.99 0.78 0.78 1.03 1.00 1.07 0.88 0.80 0.47 0.59 1.28 1.25 0.81 0.44 0.77 0.72 0.7832 PPL Corp.0.96 1.24 0.90 0.90 0.98 0.93 0.82 1.00 0.72 0.75 0.69 0.91 1.07 1.11 1.07 1.25 1.13 1.18
33 Public Serv. Enterprise 1.12 1.03 1.13 1.13 1.08 0.70 0.64 0.61 0.80 1.04 0.93 0.96 1.30 1.23 1.41 1.34 1.64 1.94
34 SCANA Corp.0.86 N/A N/A N/A N/A N/A 0.86 0.66 0.83 0.90 0.83 0.77 0.88 0.86 0.76 0.76 0.92 1.26
35 Sempra Energy 0.81 0.94 0.77 0.77 0.88 0.80 0.67 0.56 0.81 0.74 0.84 0.73 0.72 0.90 1.02 0.87 0.90 0.93
36 Southern Co.0.89 0.97 0.99 0.99 0.88 0.83 0.90 0.77 0.88 0.80 0.86 0.93 0.94 0.93 0.78 0.87 0.91 1.00
37 Vectren Corp.1.00 N/A N/A N/A N/A N/A 0.82 0.87 0.95 0.98 1.05 1.13 1.20 1.31 0.83 0.82 0.98 1.0038 WEC Energy Group 0.98 0.87 0.97 0.97 0.91 0.90 0.92 1.20 0.97 1.37 1.42 1.30 1.02 0.97 0.89 0.61 0.56 0.6939 Westar Energy 0.72 N/A N/A N/A N/A N/A 0.91 0.63 0.86 0.70 0.72 0.67 0.71 0.88 0.68 0.36 0.48 1.0040 Xcel Energy Inc.0.75 0.80 0.66 0.66 0.78 0.77 0.84 0.79 0.63 0.68 0.60 0.76 0.83 0.76 0.89 0.75 0.71 0.90
41 Average 0.89 0.92 0.83 0.82 0.88 0.89 0.89 0.87 0.85 0.86 0.88 0.88 0.95 0.97 0.86 0.80 0.89 1.06
42 Median 0.83 0.83 0.81 0.78 0.83 0.84 0.84 0.84 0.83 0.82 0.86 0.87 0.96 0.90 0.80 0.77 0.82 1.00
Sources:1 Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, March 12, April 23, and May 14, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, March 11, April 22, and May 13, 2022.2 The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Notes:c Based on the projected Cash Flow per share and Capital Spending per share
published in The Value Line Investment Survey, September 9, October 21, and November 11, 2022.
Cash Flow to Capital Spending Ratio 1
Company
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 10 of 16
17-Yea
Line Average 2022 2 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
2 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
1 Atmos Energy 17.37 18.50 19.30 22.30 23.22 21.75 22.04 20.80 17.50 16.09 15.87 15.93 14.36 13.21 12.54 13.59 15.87 13.52
2 Chesapeake Utilities 18.86 22.70 26.30 21.57 24.74 22.94 27.84 21.77 19.15 17.70 15.62 14.81 14.16 12.21 14.20 14.15 16.72 17.85
3 New Jersey Resources 17.29 17.20 17.50 17.70 24.33 15.64 22.38 21.25 16.61 11.73 15.98 16.83 16.76 14.98 14.93 12.27 21.61 16.13
4 NiSource Inc. 19.86 16.50 19.50 18.67 21.32 19.34 NMF 23.18 37.34 22.74 18.89 17.87 19.36 15.33 14.34 12.07 18.82 19.16
5 Northwest Nat. Gas 20.91 17.60 17.60 24.96 30.85 26.63 NMF 26.92 23.69 20.69 19.38 21.08 19.02 16.97 15.17 18.08 16.74 15.85
6 ONE Gas Inc. 21.56 19.80 18.60 21.71 25.27 23.06 23.47 22.74 19.79 17.83 N/A N/A N/A N/A N/A N/A N/A N/A7 South Jersey Inds. 18.55 19.40 14.30 14.89 28.28 22.64 27.92 21.71 17.95 18.03 18.90 16.94 18.48 16.81 14.96 15.90 17.18 11.868 Southwest Gas 17.57 14.50 15.30 16.80 21.30 20.61 22.21 21.64 19.35 17.86 15.76 15.00 15.69 13.97 12.20 20.27 17.26 15.949 Spire Inc. 18.96 15.80 19.00 51.12 22.79 16.74 19.82 19.61 16.49 19.80 21.25 14.46 13.05 13.74 13.39 14.31 14.19 13.60
10 UGI Corp. 15.75 10.80 12.90 13.80 23.40 17.77 20.84 19.33 17.71 15.81 15.44 16.38 15.03 10.86 10.30 13.30 15.14 13.97
11 WGL Holdings Inc. 16.71 N/A N/A N/A N/A N/A 25.40 20.05 16.99 15.15 18.25 15.27 16.97 15.11 12.58 13.66 15.60 15.46
12 Average 18.30 17.28 18.03 22.35 24.55 20.71 23.55 21.73 20.23 17.58 17.53 16.46 16.29 14.32 13.46 14.76 16.91 15.33
13 Median 17.40 17.40 18.10 20.12 23.87 21.18 22.38 21.64 17.95 17.83 17.11 16.15 16.22 14.48 13.80 13.91 16.73 15.66
17-Yea
Line Average 2022 2 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
7 8 9 10 11 12 13 14 15 16 17 18 19 20 2114 Atmos Energy 9.04 11.93 10.99 13.11 13.35 12.02 11.99 11.36 9.30 8.79 7.72 7.02 6.87 6.15 5.76 6.48 7.44 6.3615 Chesapeake Utilities 10.17 14.66 14.20 12.31 14.17 12.24 13.78 12.06 10.16 9.25 8.12 7.46 7.35 6.36 9.48 7.88 8.58 9.4016 New Jersey Resources 12.00 11.53 11.56 11.10 15.98 11.44 14.45 13.94 11.71 8.95 11.29 12.29 12.71 11.32 11.34 9.15 13.76 11.0117 NiSource Inc. 7.87 8.17 7.89 7.83 8.81 8.91 12.11 8.56 10.38 10.56 8.71 7.81 6.81 5.09 4.06 4.87 6.69 6.87
18 Northwest Nat. Gas 12.66 8.70 8.57 10.10 13.13 11.75 59.72 11.57 9.46 8.84 8.61 9.48 9.08 8.94 8.26 8.75 8.54 7.83
19 ONE Gas Inc. 10.64 10.01 9.32 10.85 12.75 11.85 11.89 11.10 9.19 8.16 N/A N/A N/A N/A N/A N/A N/A N/A
20 South Jersey Inds. 10.57 10.81 9.26 7.54 12.38 10.72 12.33 10.88 10.70 10.57 11.57 10.95 11.98 10.78 9.57 10.38 11.23 8.32
21 Southwest Gas 6.44 7.53 6.87 7.05 8.92 9.32 9.10 7.41 6.56 6.35 5.94 5.55 5.60 4.91 3.84 4.89 5.42 5.28
22 Spire Inc. 9.80 8.04 7.55 14.01 11.27 9.60 10.39 10.32 8.47 12.03 13.76 8.80 8.08 8.12 8.58 8.95 8.46 8.4623 UGI Corp. 8.04 7.31 9.56 7.39 12.95 9.01 10.09 9.02 8.47 7.49 6.55 6.30 7.51 6.02 5.74 7.11 7.92 7.4824 WGL Holdings Inc. 9.17 N/A N/A N/A N/A N/A 12.92 11.36 9.59 8.46 9.83 9.03 9.52 8.34 7.17 7.68 8.39 7.81
25 Average 9.61 9.87 9.58 10.13 12.37 10.69 16.25 10.69 9.45 9.04 9.21 8.47 8.55 7.60 7.38 7.62 8.64 7.88
26 Median 8.84 9.35 9.29 10.47 12.85 11.08 12.11 11.10 9.46 8.84 8.66 8.31 7.80 7.24 7.71 7.78 8.42 7.82
17-Yea
Line Average 2022 2 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
27 Atmos Energy 1.58 1.66 1.59 1.95 2.10 2.03 2.16 2.11 1.72 1.55 1.39 1.28 1.30 1.18 1.05 1.20 1.40 1.34
28 Chesapeake Utilities 2.03 2.68 2.77 2.27 2.69 2.50 2.51 2.28 2.19 2.12 1.83 1.66 1.61 1.40 1.37 1.64 1.84 1.85
29 New Jersey Resources 2.26 2.27 2.26 1.90 2.75 2.63 2.70 2.52 2.28 2.13 2.05 2.33 2.31 2.09 2.16 1.92 2.17 2.0130 NiSource Inc. 1.53 1.92 1.86 1.95 2.09 1.92 1.96 1.84 1.95 1.94 1.58 1.37 1.15 0.92 0.69 0.94 1.16 1.1931 Northwest Nat. Gas 1.87 1.56 1.45 1.98 2.38 2.35 2.41 1.92 1.63 1.59 1.56 1.72 1.70 1.78 1.73 1.96 2.05 1.6932 ONE Gas Inc. 1.69 1.72 1.57 1.90 2.20 1.93 1.89 1.67 1.26 1.07 N/A N/A N/A N/A N/A N/A N/A N/A33 South Jersey Inds. 2.05 1.62 1.54 1.52 2.06 2.11 2.29 1.79 1.77 2.07 2.27 2.21 2.59 2.38 1.95 2.08 2.21 1.93
34 Southwest Gas 1.55 1.48 1.32 1.49 1.84 1.79 2.13 1.96 1.68 1.68 1.61 1.51 1.43 1.24 0.97 1.20 1.46 1.46
35 Spire Inc. 1.57 1.43 1.47 1.67 1.78 1.63 1.65 1.64 1.44 1.33 1.34 1.51 1.46 1.39 1.68 1.71 1.66 1.71
36 UGI Corp. 2.03 1.41 1.64 1.87 2.92 2.30 2.62 2.41 2.29 1.97 1.69 1.45 1.75 1.55 1.66 2.01 2.16 2.21
37 WGL Holdings Inc. 1.81 N/A N/A N/A N/A N/A 2.69 2.45 2.15 1.69 1.71 1.66 1.63 1.50 1.45 1.59 1.64 1.59
38 Average 1.82 1.78 1.75 1.85 2.28 2.12 2.27 2.05 1.85 1.74 1.70 1.67 1.69 1.54 1.47 1.62 1.78 1.7039 Median 1.69 1.64 1.58 1.90 2.15 2.07 2.29 1.96 1.77 1.69 1.65 1.58 1.62 1.45 1.56 1.67 1.75 1.70
Sources:
1 Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, February 26, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, February 25, 2022.
2 The Value Line Investment Survey, November 25, 2022.
Notes:
a Based on the average of the high and low price for year and the projected Cash Flow per share, published in The Value Line Investment Survey.
b Based on the average of the high and low price for the year and the projected Book Value per share, published in The Value Line Investment Survey.
Company
Market Price to Book Value (MP/BV) Ratio 1
Company
Veolia Water Idaho, Inc.
Natural Gas Utilities
(Valuation Metrics)
Price to Earnings (P/E) Ratio 1
Company
Market Price to Cash Flow (MP/CF) Ratio 1
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 11 of 16
17-Yea 2022 2021 2020 2019
Line Average 2022 2/a 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
2 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1 Atmos Energy 3.45% 2.46% 2.63% 2.19% 2.08% 2.23% 2.27% 2.39% 2.88% 3.11% 3.53% 4.13% 4.19% 4.70% 5.34% 4.78% 4.16% 4.66%2 Chesapeake Utilities 2.75% 1.61% 1.50% 1.86% 1.68% 1.76% 1.69% 1.91% 2.18% 2.44% 2.87% 3.25% 3.36% 3.91% 4.09% 4.10% 3.62% 3.76%3 New Jersey Resources 3.21% 3.40% 3.50% 3.47% 2.50% 2.61% 2.69% 2.86% 3.14% 3.50% 3.71% 3.38% 3.33% 3.69% 3.46% 3.35% 3.02% 3.19%
4 NiSource Inc.3.99% 3.33% 3.60% 3.41% 2.86% 3.10% 2.79% 2.76% 3.53% 2.69% 3.30% 3.84% 4.53% 5.66% 7.64% 5.69% 4.29% 4.21%5 Northwest Nat. Gas 3.56% 3.86% 3.90% 3.33% 2.81% 3.05% 3.02% 3.28% 4.01% 4.14% 4.22% 3.83% 3.85% 3.63% 3.73% 3.27% 3.12% 3.73%
6 ONE Gas Inc.2.54% 3.08% 3.21% 2.70% 2.25% 2.46% 2.37% 2.32% 2.71% 2.28% N/A N/A N/A N/A N/A N/A N/A N/A
7 South Jersey Inds.3.48% 4.28% 4.88% 4.76% 3.66% 3.62% 3.20% 3.64% 3.95% 3.40% 3.14% 3.22% 2.81% 3.00% 3.43% 3.08% 2.81% 3.15%8 Southwest Gas 2.92% 3.14% 3.65% 3.28% 2.60% 2.74% 2.46% 2.62% 2.87% 2.72% 2.69% 2.75% 2.78% 3.15% 4.01% 3.19% 2.56% 2.60%
9 Spire Inc.3.78% 3.89% 3.79% 3.38% 2.95% 3.10% 3.09% 3.08% 3.53% 3.78% 3.96% 4.11% 4.31% 4.70% 3.91% 3.94% 4.43% 4.34%
10 UGI Corp.2.86% 3.61% 3.25% 3.56% 2.16% 2.09% 2.01% 2.35% 2.50% 2.61% 3.01% 3.68% 3.30% 3.48% 3.23% 2.85% 2.69% 2.96%11 WGL Holdings Inc.3.91% N/A N/A N/A N/A N/A 2.56% 2.94% 3.41% 4.24% 3.94% 3.89% 4.06% 4.37% 4.62% 4.22% 4.19% 4.48%
12 Average 3.34% 3.27% 3.39% 3.19% 2.56% 2.68% 2.56% 2.74% 3.16% 3.17% 3.44% 3.61% 3.65% 4.03% 4.35% 3.85% 3.49% 3.71%
13 Median 3.37% 3.37% 3.55% 3.35% 2.55% 2.68% 2.56% 2.76% 3.14% 3.11% 3.42% 3.75% 3.60% 3.80% 3.96% 3.65% 3.37% 3.75%
14 20-Yr Treasury Yields3 3.19% 3.30% 1.98% 1.35% 2.40% 3.02% 2.65% 2.23% 2.55% 3.07% 3.12% 2.54% 3.62% 4.03% 4.11% 4.36% 4.91% 4.99%
15 20-Yr TIPS3 1.03% 0.64% -0.43% -0.30% 0.60% 0.94% 0.75% 0.66% 0.78% 0.87% 0.75% 0.21% 1.19% 1.73% 2.21% 2.19% 2.36% 2.31%
16 Implied Inflationb 2.14% 2.64% 2.42% 1.66% 1.79% 2.06% 1.89% 1.56% 1.75% 2.19% 2.35% 2.33% 2.40% 2.26% 1.85% 2.13% 2.49% 2.62%
17 Real Dividend Yieldc 1.18% 0.61% 0.95% 1.51% 0.75% 0.60% 0.65% 1.17% 1.38% 0.96% 1.06% 1.25% 1.22% 1.73% 2.45% 1.68% 0.97% 1.06%
18 Nominal "A" Rated Yield4 4.65% 4.74% 3.10% 3.05% 3.77% 4.25% 4.00% 3.93% 4.12% 4.28% 4.48% 4.13% 5.04% 5.46% 6.04% 6.53% 6.07% 6.07%
19 Real "A" Rated Yield 2.46% 2.05% 0.67% 1.37% 1.94% 2.14% 2.07% 2.34% 2.33% 2.04% 2.08% 1.76% 2.58% 3.13% 4.11% 4.31% 3.49% 3.36%
20 Nominald 1.31% 1.47% -0.29% -0.14% 1.21% 1.57% 1.44% 1.19% 0.96% 1.11% 1.04% 0.52% 1.39% 1.43% 1.69% 2.68% 2.59% 2.36%
21 Reale 1.28% 1.44% -0.28% -0.14% 1.19% 1.54% 1.41% 1.17% 0.94% 1.08% 1.01% 0.51% 1.36% 1.40% 1.66% 2.62% 2.52% 2.30%
22 Nominal -0.15% 0.03% -1.41% -1.84% -0.15% 0.34% 0.09% -0.52% -0.61% -0.10% -0.32% -1.06% -0.03% 0.00% -0.24% 0.51% 1.42% 1.28%
23 Realg -0.15% 0.03% -1.38% -1.81% -0.15% 0.34% 0.09% -0.51% -0.60% -0.10% -0.31% -1.04% -0.03% 0.00% -0.23% 0.50% 1.39% 1.25%
Sources:1 Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, February 26, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, February 25, 2022.
2 The Value Line Investment Survey, November 25, 2022.
3 St. Louis Federal Reserve: Economic Research, http://research.stlouisfed.org.
4 www.moodys.com, Bond Yields and Key Indicators, through December 31, 2022.Notes:
a Based on the average of the high and low price for the year and the projected Dividends Declared per share published in the Value Line Investment Survey.
b Line 16 = (1 + Line 14) / (1 + Line 15) - 1.
c Line 17 = (1 + Line 12) / (1 +Line 16) - 1.d The spread being measured here is the nominal A-rated utility bond yield over the average nominal utility dividend yield; (Line 18 - Line 12).
e The spread being measured here is the real A-rated utility bond yield over the average real utility dividend yield; Line 19 - Line 17).f The spread being measured here is the nominal 20-Year Treasury yield over the average nominal utility dividend yield; (Line 14 - Line 12).
g The spread being measured here is the real 20-Year TIPS yield over the average real utility dividend yield; Line 15 - Line 17).
Spreads (Utility Bond - Stock)
Spreads (Treasury Bond - Stock)
Veolia Water Idaho, Inc.
Natural Gas Utilities
(Valuation Metrics)
Dividend Yield1
Company
Utilit
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
2022 2/a2021202020192018201720162015201420132012201120102009200820072006
Trends in Dividend Yield and "A" Rated Utility Bond Yield
 Nom. "A" Rated Utility Bond Yield Average Nom. Dividend Yield Nominal Spread Real "A" Rated Yield Real Dividend Yield Real Spread
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 12 of 16
17-Year 2017 2017 2018 2017
Line Average 2022 2 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 CAGR CAGR
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20)
2 4 5 6 7 8 9 10 11 12 13 14 15 16
1 Atmos Energy 1.52 2.72 2.30 1.48 1.40 1.94 1.80 1.68 1.56 1.48 1.40 1.38 1.36 1.34 1.32 1.30 1.28 1.26 2.89% 3.30%
2 Chesapeake Utilities 1.05 2.03 1.69 1.07 1.01 1.39 1.26 1.19 1.12 1.07 1.01 0.96 0.91 0.87 0.83 0.81 0.78 0.77 3.97% 4.58%
3 New Jersey Resources 0.81 1.45 1.27 0.86 0.81 1.11 1.04 0.98 0.93 0.86 0.81 0.77 0.72 0.68 0.62 0.56 0.51 0.48 5.70% 7.28%
4 NiSource Inc. 0.89 0.94 0.84 1.02 0.98 0.78 0.70 0.64 0.83 1.02 0.98 0.94 0.92 0.92 0.92 0.92 0.92 0.92 -1.08% -2.45%
5 Northwest Nat. Gas 1.75 1.93 1.91 1.85 1.83 1.89 1.88 1.87 1.86 1.85 1.83 1.79 1.75 1.68 1.60 1.52 1.44 1.39 2.05% 2.78%6 ONE Gas Inc. 1.42 2.48 2.16 0.84 N/A 1.84 1.68 1.40 1.20 0.84 N/A N/A N/A N/A N/A N/A N/A N/A 11.58% 25.99%
7 South Jersey Inds. 0.85 1.25 1.19 0.96 0.90 1.13 1.10 1.06 1.02 0.96 0.90 0.83 0.75 0.68 0.61 0.56 0.51 0.46 6.11% 8.25%
8 Southwest Gas 1.38 2.48 2.26 1.46 1.32 2.08 1.98 1.80 1.62 1.46 1.32 1.18 1.06 1.00 0.95 0.90 0.86 0.82 6.33% 8.34%
9 Spire Inc. 1.77 2.74 2.49 1.76 1.70 2.25 2.10 1.96 1.84 1.76 1.70 1.66 1.61 1.57 1.53 1.49 1.45 1.40 3.18% 3.75%
10 UGI Corp. 0.76 1.41 1.32 0.79 0.74 1.02 0.96 0.93 0.89 0.79 0.74 0.71 0.68 0.60 0.52 0.50 0.48 0.46 5.47% 7.02%11 WGL Holdings Inc. 1.63 N/A N/A 1.72 1.66 N/A 2.02 1.93 1.83 1.72 1.66 1.59 1.55 1.50 1.47 1.41 1.37 1.35 N/A 3.77%
12 Average 1.28 1.94 1.74 1.25 1.24 1.54 1.50 1.40 1.34 1.25 1.24 1.18 1.13 1.08 1.04 1.00 0.96 0.93 4.62% 6.60%
13 Industry Average Growth 5.24% 11.47% 38.90% 1.58% -19.95% 2.76% 6.99% 5.03% 6.50% 1.58% 4.67% 4.35% 4.34% 4.47% 4.20% 3.83% 3.13%
Sources:
1 Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, February 26, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, February 25, 2022.
2 The Value Line Investment Survey, November 25, 2022.
Veolia Water Idaho, Inc.
Natural Gas Utilities
(Valuation Metrics)
Dividend per Share1
Company
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 13 of 16
17-Year 2017
Line Average 2022 2 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
2 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
1 Atmos Energy 3.01 5.60 5.12 4.72 4.35 4.00 3.60 3.38 3.09 2.96 2.50 2.10 2.26 2.16 1.97 2.00 1.94 2.00
2 Chesapeake Utilities 2.50 4.75 4.70 4.21 3.72 3.45 2.68 2.86 2.68 2.47 2.26 1.99 1.91 1.82 1.43 1.39 1.29 1.15
3 New Jersey Resources 1.60 2.40 2.16 2.07 1.96 2.72 1.73 1.61 1.78 2.08 1.37 1.36 1.29 1.23 1.20 1.35 0.78 0.93
4 NiSource Inc. 1.16 1.45 1.35 1.32 1.31 1.30 0.39 1.00 0.63 1.67 1.57 1.37 1.05 1.06 0.84 1.34 1.14 1.14
5 Northwest Nat. Gas 2.11 2.60 2.50 2.30 2.19 2.33 -1.94 2.12 1.96 2.16 2.24 2.22 2.39 2.73 2.83 2.57 2.76 2.35
6 ONE Gas Inc. 3.03 4.00 3.85 3.68 3.51 3.25 3.02 2.65 2.24 2.07 N/A N/A N/A N/A N/A N/A N/A N/A
7 South Jersey Inds. 1.36 1.70 1.65 1.68 1.12 1.38 1.23 1.34 1.44 1.57 1.52 1.52 1.45 1.35 1.19 1.14 1.05 1.23
8 Southwest Gas 2.89 3.50 3.80 4.14 3.94 3.68 3.62 3.18 2.92 3.01 3.11 2.86 2.43 2.27 1.94 1.39 1.95 1.98
9 Spire Inc. 2.92 3.95 4.96 1.44 3.52 4.33 3.43 3.24 3.16 2.35 2.02 2.79 2.86 2.43 2.92 2.64 2.31 2.37
10 UGI Corp. 1.86 2.90 2.96 2.67 2.28 2.74 2.29 2.05 2.01 1.92 1.59 1.17 1.37 1.59 1.57 1.33 1.18 1.10
11 WGL Holdings Inc. 2.56 N/A N/A N/A N/A N/A 3.11 3.27 3.16 2.68 2.31 2.68 2.25 2.27 2.53 2.44 2.09 1.94
12 Average 2.29 3.29 3.31 2.82 2.79 2.92 2.11 2.43 2.28 2.27 2.05 2.01 1.93 1.89 1.84 1.76 1.65 1.62
13 Industry Average Growth 5.02% -0.61% 17.07% 1.18% -4.39% 38.59% -13.26% 6.50% 0.54% 10.67% 2.13% 4.13% 1.87% 2.61% 4.79% 6.67% 1.82%
Sources:
1 Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, February 26, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, February 25, 2022.
2 The Value Line Investment Survey, November 25, 2022.
Veolia Water Idaho, Inc.
Natural Gas Utilities
(Valuation Metrics)
Earnings per Share1
Company
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 14 of 16
3 - 5 yr3
Line 20191 20201 20212 20223 20234 Projection
(1) (2) (3) (4) (5)(5)
1 Atmos Energy 0.53x 0.53x 0.53x 0.52x 0.55x 0.66x
2 Chesapeake Utilities 0.66x 0.64x 0.82x 0.84x 0.90x 0.93x
3 New Jersey Resources 1.41x 0.65x 0.72x 0.68x 0.76x 0.50x
4 NiSource Inc.0.66x 0.65x 0.69x 0.73x 0.48x 0.59x
5 Northwest Nat. Gas 0.77x 0.75x 0.61x 0.70x 0.81x 0.76x
6 ONE Gas Inc.0.78x 0.88x 0.86x 0.89x 0.87x 1.04x
7 South Jersey Inds. 0.48x 0.47x 0.49x 0.51x 0.59x 0.65x
8 Southwest Gas 0.62x 0.53x 0.61x 0.80x 0.92x 0.69x
9 Spire Inc.0.65x 0.65x 0.70x 0.71x 0.70x 0.91x
10 UGI Corp.1.33x 1.54x 1.66x 1.55x 1.56x 1.96x
11 Average 0.79x 0.73x 0.77x 0.79x 0.81x 0.87x
12 Median 0.66x 0.65x 0.69x 0.72x 0.78x 0.73x
Sources:
1 The Value Line Investment Survey, February 28, 2020.
2 The Value Line Investment Survey, February 26, 2021.
3 The Value Line Investment Survey, February 25, 2022.
4 The Value Line Investment Survey, November 25, 2022.
Notes:
Based on the projected Cash Flow per share and Capital Spending per share.
Veolia Water Idaho, Inc.
Natural Gas Utilities
(Valuation Metrics)
Cash Flow / Capital Spending
Company
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 15 of 16
17-Yea
Line Average 2022 2/a 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
2 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1 Atmos Energy 5.10% 4.10% 4.19% 4.26% 4.36% 4.53% 4.90% 5.04% 4.96% 4.81% 4.92% 5.28% 5.44% 5.55% 5.61% 5.75% 5.82% 6.25%
2 Chesapeake Utilities 5.21% 4.31% 4.15% 4.23% 4.53% 4.39% 4.23% 4.35% 4.78% 5.18% 5.25% 5.39% 5.42% 5.49% 5.60% 6.71% 6.66% 6.95%
3 New Jersey Resources 7.19% 7.73% 7.92% 6.60% 6.85% 6.87% 7.26% 7.21% 7.16% 7.45% 7.60% 7.86% 7.69% 7.72% 7.48% 6.42% 6.54% 6.40%
4 NiSource Inc. 5.59% 6.39% 6.69% 6.64% 5.99% 5.96% 5.46% 5.08% 6.89% 5.22% 5.22% 5.25% 5.19% 5.22% 5.25% 5.34% 4.97% 5.02%
5 Northwest Nat. Gas 6.53% 6.03% 5.66% 6.57% 6.69% 7.16% 7.27% 6.30% 6.53% 6.58% 6.59% 6.57% 6.55% 6.44% 6.43% 6.41% 6.39% 6.32%
6 ONE Gas Inc. 4.26% 5.30% 5.04% 5.14% 4.96% 4.73% 4.48% 3.88% 3.41% 2.44% N/A N/A N/A N/A N/A N/A N/A N/A7 South Jersey Inds. 6.99% 6.94% 7.53% 7.21% 7.53% 7.63% 7.34% 6.53% 6.98% 7.04% 7.12% 7.09% 7.26% 7.13% 6.69% 6.40% 6.22% 6.09%8 Southwest Gas 4.42% 4.64% 4.80% 4.87% 4.79% 4.90% 5.25% 5.14% 4.82% 4.57% 4.33% 4.16% 3.98% 3.90% 3.89% 3.83% 3.74% 3.80%9 Spire Inc. 5.89% 5.58% 5.56% 5.63% 5.25% 5.06% 5.09% 5.06% 5.07% 5.04% 5.31% 6.22% 6.30% 6.53% 6.56% 6.74% 7.33% 7.43%
10 UGI Corp. 5.62% 5.07% 5.34% 6.65% 6.30% 4.82% 5.28% 5.65% 5.72% 5.14% 5.07% 5.35% 5.77% 5.41% 5.35% 5.72% 5.82% 6.54%
11 WGL Holdings Inc. 6.86% N/A N/A N/A N/A N/A 6.88% 7.21% 7.33% 7.14% 6.73% 6.45% 6.60% 6.57% 6.72% 6.71% 6.88% 7.13%
12 Average 5.83% 5.61% 5.69% 5.78% 5.72% 5.60% 5.77% 5.59% 5.78% 5.51% 5.82% 5.96% 6.02% 6.00% 5.96% 6.00% 6.04% 6.19%
13 Median 5.72% 5.44% 5.45% 6.10% 5.62% 4.98% 5.28% 5.14% 5.72% 5.18% 5.28% 5.80% 6.03% 5.99% 6.02% 6.41% 6.30% 6.36%
17-Yea
Line Average 2022 2/a 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
6 7 8 9 10 11 12 13 14 15 16 17 18 19 2014 Atmos Energy 0.56 0.49 0.49 0.49 0.48 0.49 0.50 0.50 0.50 0.50 0.56 0.66 0.60 0.62 0.67 0.65 0.66 0.6315 Chesapeake Utilities 0.48 0.43 0.39 0.40 0.42 0.40 0.47 0.42 0.42 0.43 0.45 0.48 0.48 0.48 0.58 0.58 0.61 0.6716 New Jersey Resources 0.55 0.60 0.63 0.61 0.61 0.41 0.60 0.61 0.52 0.41 0.59 0.57 0.56 0.55 0.52 0.41 0.65 0.5117 NiSource Inc. 0.83 0.65 0.65 0.64 0.61 0.60 1.79 0.64 1.32 0.61 0.62 0.69 0.88 0.87 1.10 0.69 0.81 0.81
18 Northwest Nat. Gas 0.64 0.74 0.77 0.83 0.87 0.81 - 0.97 0.88 0.95 0.86 0.82 0.81 0.73 0.62 0.57 0.59 0.52 0.59
19 ONE Gas Inc. 0.54 0.62 0.60 0.59 0.57 0.57 0.56 0.53 0.54 0.41 N/A N/A N/A N/A N/A N/A N/A N/A
20 South Jersey Inds. 0.65 0.74 0.74 0.71 1.04 0.82 0.89 0.79 0.71 0.61 0.59 0.54 0.52 0.50 0.51 0.49 0.48 0.37
21 Southwest Gas 0.51 0.71 0.63 0.55 0.55 0.57 0.55 0.57 0.55 0.49 0.42 0.41 0.44 0.44 0.49 0.65 0.44 0.41
22 Spire Inc. 0.68 0.69 0.52 1.73 0.67 0.52 0.61 0.60 0.58 0.75 0.84 0.59 0.56 0.65 0.52 0.56 0.63 0.5923 UGI Corp. 0.44 0.49 0.46 0.49 0.50 0.37 0.42 0.45 0.44 0.41 0.46 0.60 0.50 0.38 0.33 0.38 0.41 0.4124 WGL Holdings Inc. 0.64 N/A N/A N/A N/A N/A 0.65 0.59 0.58 0.64 0.72 0.59 0.69 0.66 0.58 0.58 0.65 0.69
25 Average 0.60 0.62 0.59 0.70 0.63 0.55 0.55 0.60 0.65 0.56 0.61 0.59 0.59 0.58 0.59 0.56 0.59 0.57
26 Median 0.59 0.63 0.61 0.60 0.59 0.54 0.56 0.59 0.55 0.50 0.59 0.59 0.56 0.58 0.54 0.58 0.62 0.59
17-Yea
Line Average 2022 2/a 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18)
8 9 10 11 12 13 14 15 16 17 18 19 20
27 Atmos Energy 0.66 0.54 0.58 0.52 0.53 0.55 0.62 0.59 0.60 0.65 0.55 0.59 0.68 0.77 0.78 0.81 0.94 0.82
28 Chesapeake Utilities 0.73 0.96 0.81 0.78 0.62 0.39 0.50 0.50 0.53 0.71 0.65 0.79 1.12 1.10 1.14 0.83 0.82 0.45
29 New Jersey Resources 1.26 0.61 0.62 0.71 0.51 0.85 0.70 0.59 0.67 1.79 1.46 1.48 1.51 1.55 1.75 2.11 1.67 2.1430 NiSource Inc. 0.76 0.56 0.68 0.66 0.61 0.58 0.41 0.59 0.53 0.56 0.57 0.65 0.75 1.11 1.06 0.94 1.11 1.3731 Northwest Nat. Gas 0.94 0.61 0.68 0.66 0.69 0.71 0.14 1.01 1.12 1.15 0.98 1.01 1.33 0.55 1.02 1.35 1.21 1.3432 ONE Gas Inc. 0.86 0.84 0.86 0.83 0.89 0.84 0.87 0.92 0.86 0.79 N/A N/A N/A N/A N/A N/A N/A N/A33 South Jersey Inds. 0.82 0.55 0.55 0.54 0.40 0.73 0.81 0.76 0.50 0.53 0.51 0.58 0.70 0.75 1.01 1.67 1.70 1.40
34 Southwest Gas 0.86 0.84 0.86 0.69 0.53 0.56 0.68 0.83 0.84 0.99 1.05 0.90 0.82 1.37 1.28 0.85 0.78 0.72
35 Spire Inc. 1.07 0.83 0.75 0.42 0.44 0.77 0.72 0.96 0.92 0.98 0.78 0.95 1.53 1.61 1.93 1.64 1.42 1.28
36 UGI Corp. 1.47 1.53 1.32 1.59 1.22 1.64 1.29 1.35 1.48 1.53 1.32 1.52 1.28 1.36 1.52 1.72 1.62 1.69
37 WGL Holdings Inc. 1.02 N/A N/A N/A N/A N/A 0.61 0.56 0.60 0.63 0.71 0.93 1.02 1.60 1.60 1.60 1.17 1.18
38 Average 0.95 0.79 0.77 0.74 0.64 0.76 0.67 0.79 0.79 0.94 0.86 0.94 1.07 1.18 1.31 1.35 1.24 1.2439 Median 0.76 0.72 0.72 0.67 0.57 0.72 0.68 0.76 0.67 0.79 0.74 0.92 1.07 1.23 1.21 1.48 1.19 1.31
Sources:
1 Data for years 2019 and prior were retrieved from the Value Line Investment Survey Investment Analyzer Software, downloaded on June 18, 2021.
Data for the year 2020 was retrieved from Value Line Investment Surveys, February 26, 2021.
Data for the year 2021 was retrieved from Value Line Investment Surveys, February 25, 2022.
2 The Value Line Investment Survey, November 25, 2022.
Notes:
a Based on the projected Dividends Declared per share and Book Value per share, published in The Value Line Investment Survey.
b Based on the projected Dividends Declared per share and Earnings per share, published in The Value Line Investment Survey.
c Based on the projected Cash Flow per share and Capital Spending per share, published in The Value Line Investment Survey.
Company
Cash Flow to Capital Spending Ratio 1
Company
Veolia Water Idaho, Inc.
Natural Gas Utilities
(Valuation Metrics)
Percent Dividends to Book Value 1
Company
Dividends to Earnings Ratio 1
Exhibit No. 402 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 16 of 16
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. 403 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Line Company S&P Moody's MI1 Value Line2
(1) (2)(3)(4)
Water
1 American States Water Company A+ WR 50.7% 53.9%
2 American Water Works Company, Inc.A Baa1 60.6% 41.4%
3 California Water Service Group A+ NR 52.5% 52.7%
4 Essential Utilities, Inc.A Baa2 55.3% 47.3%
5 Middlesex Water Company A NR 47.5% 54.4%
6 SJW Group A- NR 62.1% 40.9%
Average A Baa1 54.8% 48.4%
Gas
7 Atmos Energy Corporation A- A1 51.1% 61.6%
8 New Jersey Resources Corporation NR A1 37.2% 43.0%
9 NiSource Inc.BBB+ Baa2 31.6% 33.5%
10 Northwest Natural Holding Company A+ Baa1 38.2% 47.2%
11 ONE Gas, Inc.A- A3 35.8% 39.0%
12 Southwest Gas Holdings, Inc.BBB- Baa2 30.8% 41.8%
13 Spire Inc.A- Baa2 37.8% 43.2%
14 UGI Corporation NR A3 41.6% 44.7%
15 Average A- A3 38.0% 44.3%
16 Veolia Water Idaho, Inc.A NR 55.6%
1 S&P Global Market Intelligence, Downloaded on January 20, 2023.
2 The Value Line Investment Survey, November 25, 2022 and January 6, 2023.
3 Walker Direct, Page 28.
4 Walker Exhibit No. 1, Schedule 1.
Subsidiary ratings used if parent company is unrated.
Sources:
Veolia Water Idaho, Inc.
Proxy Group
Credit Ratings1 Common Equity Ratios
Exhibit No. 403 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 404 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Average of
Estimated Number of Estimated Number of Estimated Number of Growth
Line Growth %1 Estimates Growth %2 Estimates Growth %3 Estimates Rates
(1)(2) (3) (4) (5) (6) (7)
Water
1 American States Water Company N/A N/A 7.00% 1 4.40% N/A 5.70%
2 American Water Works Company, Inc.8.08% N/A 7.72% 3 8.28% N/A 8.03%
3 California Water Service Group N/A N/A 6.00% 1 11.70% N/A 8.85%
4 Essential Utilities, Inc.6.14% N/A 6.64% 2 6.60% N/A 6.46%
5 Middlesex Water Company N/A N/A N/A N/A 2.70% N/A 2.70%
6 SJW Group N/A N/A 7.00% 1 9.80% N/A 8.40%
Average 7.11% N/A 6.87% 2 7.25% N/A 6.69%
Gas
7 Atmos Energy Corporation 7.48% N/A 7.52% 4 8.16% N/A 7.72%
8 New Jersey Resources Corporation 4.30% N/A 6.20% 3 6.00% N/A 5.50%
9 NiSource Inc.6.82% N/A 7.13% 5 6.35% N/A 6.77%
10 Northwest Natural Holding Company 4.30% N/A 4.33% 4 4.30% N/A 4.31%
11 ONE Gas, Inc.5.00% N/A 5.00% 2 5.00% N/A 5.00%
12 Southwest Gas Holdings, Inc.5.00% N/A 3.00% 3 4.00% N/A 4.00%
13 Spire Inc.5.00% N/A 2.53% 3 8.00% N/A 5.18%
14 UGI Corporation 8.00% N/A 7.50% 2 6.60% N/A 7.37%
15 Average 5.74% N/A 5.40% 3 6.05% N/A 5.73%
1 Zacks, http://www.zacks.com/, downloaded on January 20, 2023.
2 S&P Global Market Intelligence, https://platform.mi.spglobal.com, downloaded on January 20, 2023.
3 Yahoo! Finance, https://finance.yahoo.com/, downloaded on January 20, 2023.
Sources:
Company
eolia Water Idaho, Inc.
Consensus Analysts' Growth Rates
Zacks MI Yahoo! Finance
Exhibit No. 404 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 405 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
13-Week AVG Analysts' Annualized Adjusted Constant
Line Stock Price1 Growth2 Dividend3 Yield Growth DCF
(1)(2)(3)(4)(5)
Water
1 American States Water Company $93.68 5.70%$1.59 1.79%7.49%
2 American Water Works Company, Inc.$150.34 8.03%$2.62 1.88%9.91%
3 California Water Service Group $61.70 8.85%$1.00 1.76% 10.61%
4 Essential Utilities, Inc.$46.88 6.46%$1.15 2.61%9.07%
5 Middlesex Water Company $86.81 2.70%$1.25 1.48%4.18%
6 SJW Group $75.78 8.40%$1.44 2.06% 10.46%
7 Average $85.86 6.69%$1.51 1.93%8.62%
8 Median $81.30 7.24%$1.35 1.84%9.49%
Gas
9 Atmos Energy Corporation $112.66 7.72%$2.96 2.83% 10.55%
10 New Jersey Resources Corporation $48.04 5.50%$1.45 3.18%8.68%
11 NiSource Inc.$26.82 6.77%$0.94 3.74% 10.51%
12 Northwest Natural Holding Company $47.81 4.31%$1.94 4.23%8.54%
13 ONE Gas, Inc.$78.48 5.00%$2.48 3.32%8.32%
14 Southwest Gas Holdings, Inc.$66.64 4.00%$2.48 3.87%7.87%
15 Spire Inc.$69.53 5.18%$2.74 4.14%9.32%
16 UGI Corporation $37.71 7.37%$1.44 4.10% 11.47%
17 Average $60.96 5.73%$2.05 3.68%9.41%
18 Median $57.34 5.34%$2.21 3.81%9.00%
1 S&P Global Intelligence, Downloaded on January 20, 2023.
2 Exhibit No. 404.
3 The Value Line Investment Survey , November 25, 2022 and January 6, 2023.
Veolia Water Idaho, Inc.
Constant Growth DCF Model
(Consensus Analysts' Growth Rates)
Company
Sources:
Exhibit No. 405 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 406 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Line 2021 Projected 2021 Projected 2021 Projected
(1)(2)(3)(4)(5)(6)
Water
1 American States Water Company $1.40 $2.15 $2.55 $3.25 54.9% 66.2%
2 American Water Works Company, Inc. $2.36 $3.55 $6.95 $5.75 34.0% 61.7%
3 California Water Service Group $0.92 $1.25 $1.96 $2.55 46.9% 49.0%
4 Essential Utilities, Inc. $1.04 $1.55 $1.67 $2.25 62.3% 68.9%
5 Middlesex Water Company $1.11 $1.50 $2.07 $3.00 53.6% 50.0%
6 SJW Group $1.36 $1.76 $2.03 $3.25 67.0% 54.2%
Average $1.37 $1.96 $2.87 $3.34 53.1% 58.3%
Gas
7 Atmos Energy Corporation $2.50 $3.50 $5.12 $7.30 48.8% 47.9%
8 New Jersey Resources Corporation $1.36 $1.95 $2.16 $2.90 63.0% 67.2%
9 NiSource Inc.$0.88 $1.08 $1.37 $2.10 64.2% 51.4%
10 Northwest Natural Holding Company $1.92 $1.96 $2.56 $3.30 75.0% 59.4%
11 ONE Gas, Inc.$2.32 $3.12 $3.85 $5.30 60.3% 58.9%
12 Southwest Gas Holdings, Inc.$2.38 $3.15 $3.39 $5.75 70.2% 54.8%
13 Spire Inc.$2.60 $3.30 $4.96 $5.50 52.4% 60.0%
14 UGI Corporation $1.35 $1.54 $2.96 $3.90 45.6% 39.5%
15 Average $1.91 $2.45 $3.30 $4.51 59.9% 54.9%
Source:
The Value Line Investment Surve , November 25, 2022 and January 6, 2023.
Company
eolia Water Idaho, Inc.
Payout Ratios
Dividends Per Share Earnings Per Share Payout Ratio
Exhibit No. 406 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 407 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Sustainable
Dividends Earnings Book Value Book Value Adjustment Adjusted Payout Retention Internal Growth
Line Per Share Per Share Per Share Growth ROE Factor ROE Ratio Rate Growth Rate Rate
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)
Water
1 American States Water Company $2.15 $3.25 $23.75 5.04% 13.68% 1.02 14.02% 66.15% 33.85% 4.75% 5.76%
2 American Water Works Company, Inc. $3.55 $5.75 $57.80 7.54% 9.95% 1.04 10.31% 61.74% 38.26% 3.94% 6.02%
3 California Water Service Group $1.25 $2.55 $27.30 4.49% 9.34% 1.02 9.55% 49.02% 50.98% 4.87% 4.87%
4 Essential Utilities, Inc.$1.55 $2.25 $26.90 5.58% 8.36% 1.03 8.59% 68.89% 31.11% 2.67% 4.88%
5 Middlesex Water Company $1.50 $3.00 $22.80 1.67% 13.16% 1.01 13.27% 50.00% 50.00% 6.63% 8.05%
6 SJW Group $1.76 $3.25 $40.85 3.57% 7.96% 1.02 8.10% 54.15% 45.85% 3.71% 3.71%
Average $1.96 $3.34 $33.23 4.65% 10.41% 1.02 10.64% 58.33% 41.67% 4.43% 5.55%
Gas
7 Atmos Energy Corporation $3.50 $7.30 $82.85 6.77% 8.81% 1.03 9.10% 47.95% 52.05% 4.74% 7.09%
8 New Jersey Resources Corporation $1.95 $2.90 $25.00 7.79% 11.60% 1.04 12.03% 67.24% 32.76% 3.94% 5.50%
9 NiSource Inc.$1.08 $2.10 $17.50 5.59% 12.00% 1.03 12.33% 51.43% 48.57% 5.99% 6.43%
10 Northwest Natural Holding Company $1.96 $3.30 $37.65 4.62% 8.76% 1.02 8.96% 59.39% 40.61% 3.64% 5.64%
11 ONE Gas, Inc.$3.12 $5.30 $63.15 7.59% 8.39% 1.04 8.70% 58.87% 41.13% 3.58% 3.66%
12 Southwest Gas Holdings, Inc.$3.15 $5.75 $95.00 14.21% 6.05% 1.07 6.45% 54.78% 45.22% 2.92% 4.25%
13 Spire Inc.$3.30 $5.50 $67.10 7.50% 8.20% 1.04 8.49% 60.00% 40.00% 3.40% 3.90%
14 UGI Corporation $1.54 $3.90 $35.90 7.27% 10.86% 1.04 11.24% 39.49% 60.51% 6.80% 6.81%
15 Average $2.45 $4.51 $53.02 7.67% 9.34% 1.04 9.66% 54.89% 45.11% 4.38% 5.41%
Sources and Notes:
Cols. (1), (2) and (3): The Value Line Investment Surve , November 25, 2022 and January 6, 2023.
Col. (4): [ Col. (3) / Page 2 Col. (2) ] ^ (1/number of years projected) - 1.
Col. (5): Col. (2) / Col. (3).
Col. (6): [ 2 * (1 + Col. (4)) ] / (2 + Col. (4)).
Col. (7): Col. (6) * Col. (5).
Col. (8): Col. (1) / Col. (2).
Col. (9): 1 - Col. (8).
Col. (10): Col. (9) * Col. (7).
Col. (11): Col. (10) + Page 2 Col. (9).
Company
eolia Water Idaho, Inc.
Sustainable Growth Rate
3 to 5 Year Projections
Exhibit No. 407 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 2
13-Week 2021 Market
Average Book Value to Book
Line Stock Price1 Per Share2 Ratio 2020 3-5 Years Growth S Factor3 V Factor4 S * V
(1)(2)(3)(4)(5)(6)(7)(8)(9)
1 American States Water Company $93.68 $18.57 5.04 36.94 37.50 0.25% 1.27% 80.18% 1.02%
2 American Water Works Company, Inc. $150.34 $40.18 3.74 181.61 190.00 0.76% 2.83% 73.27% 2.07%
3 California Water Service Group $61.70 $21.92 2.81 53.72 50.00 - 1.19% - 3.35% 64.47% - 2.16%
4 Essential Utilities, Inc.$46.88 $20.50 2.29 252.87 280.00 1.71% 3.92% 56.27% 2.20%
5 Middlesex Water Company $86.81 $20.99 4.14 17.52 18.00 0.45% 1.87% 75.82% 1.42%
6 SJW Group $75.78 $34.28 2.21 30.18 30.00 - 0.10% - 0.22% 54.76% - 0.12%
Average $85.86 $26.07 3.37 95.47 100.92 0.31% 1.05% 67.46% 0.74%
7 Atmos Energy Corporation $112.66 $59.71 1.89 132.42 155.00 2.66% 5.02% 47.00% 2.36%
8 New Jersey Resources Corporation $48.04 $17.18 2.80 94.95 100.00 0.87% 2.43% 64.24% 1.56%
9 NiSource Inc.$26.82 $13.33 2.01 404.30 415.00 0.44% 0.88% 50.30% 0.44%
10 Northwest Natural Holding Company $47.81 $30.04 1.59 31.13 38.00 3.38% 5.38% 37.17% 2.00%
11 ONE Gas, Inc.$78.48 $43.81 1.79 56.63 57.00 0.11% 0.19% 44.18% 0.09%
12 Southwest Gas Holdings, Inc.$66.64 $48.89 1.36 60.42 75.00 3.67% 5.00% 26.64% 1.33%
13 Spire Inc.$69.53 $46.74 1.49 51.70 55.00 1.04% 1.54% 32.78% 0.51%
14 UGI Corporation $37.71 $25.27 1.49 209.84 210.00 0.01% 0.02% 32.98% 0.01%
15 Average $60.96 $35.62 1.80 130.17 138.13 1.52% 2.56% 41.91% 1.04%
Sources and Notes:
1 S&P Global Intelligence, Downloaded on January 20, 2023.
2 The Value Line Investment Survey, November 25, 2022 and January 6, 2023.
3 Expected Growth in the Number of Shares, Column (3) * Column (6).
4 Expected Profit of Stock Investment, [ 1 - 1 / Column (3) ].
Outstanding (in Millions)2
Company
eolia Water Idaho, Inc.
Sustainable Growth Rate
Common Shares
Exhibit No. 407 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 2 of 2
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. 408 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Sustainable Annualized Adjusted Constant
Line Growth2 Dividend3 Yield Growth DCF
(2)(3)(4)(5)
Wate
1 American States Water Company $93.68 5.76% $1.59 1.80% 7.56%
2 American Water Works Company, Inc.$150.34 6.02% $2.62 1.85% 7.86%
3 California Water Service Group $61.70 4.87% $1.00 1.70% 6.57%
4 Essential Utilities, Inc.$46.88 4.88% $1.15 2.57% 7.45%
5 Middlesex Water Company $86.81 8.05% $1.25 1.56% 9.60%
6 SJW Group $75.78 3.71% $1.44 1.97% 5.68%
Averag $85.86 5.55 $1.51 1.91 7.45
Median $81.30 5.32 $1.35 1.82 7.50
Gas
7 Atmos Energy Corporation $112.66 7.09% $2.96 2.81% 9.91%
8 New Jersey Resources Corporation $48.04 5.50% $1.45 3.18% 8.68%
9 NiSource Inc.$26.82 6.43% $0.94 3.73% 10.16%
10 Northwest Natural Holding Company $47.81 5.64% $1.94 4.29% 9.93%
11 ONE Gas, Inc.$78.48 3.66% $2.48 3.28% 6.94%
12 Southwest Gas Holdings, Inc.$66.64 4.25% $2.48 3.88% 8.13%
13 Spire Inc.$69.53 3.90% $2.74 4.09% 8.00%
14 UGI Corporation $37.71 6.81% $1.44 4.08% 10.89%
15 Averag $60.96 5.41 $2.05 3.67 9.08
16 Median $57.3 5.57 $2.21 3.80 9.30
Sources:
1 S&P Global Intelligence, Downloaded on January 20, 2023.
2 Exhibit No. 407.
3 The Value Line Investment Survey, November 25, 2022 and January 6, 2023.
(1)
eolia Water Idaho, Inc.
Constant Growth DCF Model
(Sustainable Growth Rate)
Company
13-Week AVG
Stock Price1
Exhibit No. 408 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 409 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Note:
1988 represents the base year. Graph depicts increases or decreases from the base year.
Sources:
U.S. Energy Information Administration
Federal Reserve Bank of St. Louis
Veolia Water Idaho, Inc.
Electricity Sales Are Linked to U.S. Economic Growth
Real GDP
Electricity Use
Total Energy Use
90
100
110
120
130
140
150
160
170
180
190
200
210
220
230
Exhibit No. 409 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 410 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
13-Week AVG Annualized First Stage Third Stage Multi-Stage
Line Stock Price1 Dividend2 Growth3 Year 6 Year 7 Year 8 Year 9 Year 10 Growth4 Growth DCF
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)
Water
1 American States Water Company $93.68 $1.59 5.70% 5.42% 5.13% 4.85% 4.57% 4.28% 4.00% 5.93%
2 American Water Works Company, Inc.$150.34 $2.62 8.03% 7.36% 6.68% 6.01% 5.34% 4.67% 4.00% 6.34%
3 California Water Service Group $61.70 $1.00 8.85% 8.04% 7.23% 6.43% 5.62% 4.81% 4.00% 6.29%
4 Essential Utilities, Inc.$46.88 $1.15 6.46% 6.05% 5.64% 5.23% 4.82% 4.41% 4.00% 6.98%
5 Middlesex Water Company $86.81 $1.25 2.70% 2.92% 3.13% 3.35% 3.57% 3.78% 4.00% 5.24%
6 SJW Group $75.78 $1.44 8.40% 7.67% 6.93% 6.20% 5.47% 4.73% 4.00% 6.62%
Average $85.86 $1.51 6.69% 6.24% 5.79% 5.34% 4.90% 4.45% 4.00% 6.23%
Median $81.30 $1.35 7.24% 6.70% 6.16% 5.62% 5.08% 4.54% 4.00% 6.31%
Gas
7 Atmos Energy Corporation $112.66 $2.96 7.72% 7.10% 6.48% 5.86% 5.24% 4.62% 4.00% 7.46%
8 New Jersey Resources Corporation $48.04 $1.45 5.50% 5.25% 5.00% 4.75% 4.50% 4.25% 4.00% 7.45%
9 NiSource Inc.$26.82 $0.94 6.77% 6.31% 5.84% 5.38% 4.92% 4.46% 4.00% 8.33%
10 Northwest Natural Holding Company $47.81 $1.94 4.31% 4.26% 4.21% 4.15% 4.10% 4.05% 4.00% 8.30%
11 ONE Gas, Inc.$78.48 $2.48 5.00% 4.83% 4.67% 4.50% 4.33% 4.17% 4.00% 7.50%
12 Southwest Gas Holdings, Inc.$66.64 $2.48 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 7.87%
13 Spire Inc.$69.53 $2.74 5.18% 4.98% 4.78% 4.59% 4.39% 4.20% 4.00% 8.41%
14 UGI Corporation $37.71 $1.44 7.37% 6.81% 6.24% 5.68% 5.12% 4.56% 4.00% 8.89%
15 Average $60.96 $2.05 5.73% 5.44% 5.15% 4.86% 4.58% 4.29% 4.00% 8.03%
4 Median $57.34 $2.21 5.34% 5.12% 4.89% 4.67% 4.45% 4.22% 4.00% 8.08%
Sources:
1 S&P Global Intelligence, Downloaded on January 20, 2023.
2 The Value Line Investment Survey, November 25, 2022 and January 6, 2023.
3 Exhibit No. 404.
4 Blue Chip Financial Forecasts, December 2, 2022 at page 14.
Veolia Water Idaho, Inc.
Multi-Stage Growth DCF Model
Second Stage Growth
Company
Exhibit No. 410 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 411 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Source:
1980 - 2000: Mergent Public Utility Manual.
2001 - 2015: AUS Utility Reports, multiple dates.
2016 - 2021: Value Line Investment Survey, multiple dates.
*Value Line Investment Survey Reports, September 9, October 21, November 11, and November 25, 2022.
Veolia Water Idaho, Inc.
Common Stock Market/Book Ratio
0.000
0.500
1.000
1.500
2.000
2.500
Exhibit No. 411 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 412 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Authorized 30 yr.Indicated Rolling Rolling
Gas Treasury Risk 5 - Year 10 - Year
Line Returns1 Bond Yield2 Premium Average Average
(1)(2)(3)(4)(5)
1 1986 13.46%7.80%5.66%
2 1987 12.74%8.58%4.16%
3 1988 12.85%8.96%3.89%
4 1989 12.88%8.45%4.43%
5 1990 12.67%8.61%4.06%4.44%
6 1991 12.46%8.14%4.32%4.17%
7 1992 12.01%7.67%4.34%4.21%
8 1993 11.35%6.60%4.75%4.38%
9 1994 11.35%7.37%3.98%4.29%
10 1995 11.43%6.88%4.55%4.39%4.42%
11 1996 11.19%6.70%4.49%4.42%4.30%
12 1997 11.29%6.61%4.68%4.49%4.35%
13 1998 11.51%5.58%5.93%4.73%4.55%
14 1999 10.66%5.87%4.79%4.89%4.59%
15 2000 11.39%5.94%5.45%5.07%4.73%
16 2001 10.95%5.49%5.46%5.26%4.84%
17 2002 11.03%5.43%5.60%5.45%4.97%
18 2003 10.99%4.96%6.03%5.47%5.10%
19 2004 10.59%5.05%5.54%5.62%5.25%
20 2005 10.46%4.65%5.81%5.69%5.38%
21 2006 10.40%4.87%5.53%5.70%5.48%
22 2007 10.22%4.83%5.39%5.66%5.55%
23 2008 10.39%4.28%6.11%5.68%5.57%
24 2009 10.22%4.07%6.15%5.80%5.71%
25 2010 10.15%4.25%5.90%5.81%5.75%
26 2011 9.92%3.91%6.01%5.91%5.81%
27 2012 9.94%2.92%7.02%6.24%5.95%
28 2013 9.68%3.45%6.23%6.26%5.97%
29 2014 9.78%3.34%6.44%6.32%6.06%
30 2015 9.60%2.84%6.76%6.49%6.15%
31 2016 9.54%2.60%6.94%6.68%6.29%
32 2017 9.72%2.90%6.83%6.64%6.44%
33 2018 9.59%3.11%6.48%6.69%6.48%
34 2019 9.71%2.58%7.13%6.83%6.57%
35 2020 9.46%1.56%7.90%7.05%6.77%
36 2021 9.56%2.05%7.51%7.17%6.92%
37 2022 3 9.42%2.85%6.57%7.12%6.88%
38 Average 10.83%5.18%5.64%5.61%5.60%
39 Minimum 4.17%4.30%
40 Maximum 7.17%6.92%
Sources: 1 Regulatory Research Associates, Inc., Regulatory Focus, Major Rate Case Decisions, Jan. 1997 p. 5, and Jan. 2011 p. 3.
S&P Global Market Intelligence, RRA Regulatory Focus, Major Rate Case Decisions, January - September 2022,
October 31, 2022, p. 4 .2 St. Louis Federal Reserve: Economic Research, http://research.stlouisfed.org/.
The yields from 2002 to 2005 represent the 20-Year Treasury yields obtained from the Federal Reserve Bank. 3 Data represents January - September, 2022.
Veolia Water Idaho, Inc.
Equity Risk Premium - Treasury Bon
Year
Exhibit No. 412 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 413 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Authorized Averag Indicated Rolling Rolling
Gas "A" Rated Utilit Risk 5 - Yea 10 - Yea
Line Returns1 Bond Yield2 Premium Average Average
(1)(2)(3)(4)(5)
1 1986 13.46%9.58%3.88%
2 1987 12.74%10.10%2.64%
3 1988 12.85%10.49%2.36%
4 1989 12.88%9.77%3.11%
5 1990 12.67%9.86%2.81%2.96%
6 1991 12.46%9.36%3.10%2.80%
7 1992 12.01%8.69%3.32%2.94%
8 1993 11.35%7.59%3.76%3.22%
9 1994 11.35%8.31%3.04%3.21%
10 1995 11.43%7.89%3.54%3.35%3.16%
11 1996 11.19%7.75%3.44%3.42%3.11%
12 1997 11.29%7.60%3.69%3.49%3.22%
13 1998 11.51%7.04%4.47%3.64%3.43%
14 1999 10.66%7.62%3.04%3.64%3.42%
15 2000 11.39%8.24%3.15%3.56%3.45%
16 2001 10.95%7.76%3.19%3.51%3.46%
17 2002 11.03%7.37%3.66%3.50%3.50%
18 2003 10.99%6.58%4.41%3.49%3.56%
19 2004 10.59%6.16%4.43%3.77%3.70%
20 2005 10.46%5.65%4.81%4.10%3.83%
21 2006 10.40%6.07%4.33%4.33%3.92%
22 2007 10.22%6.07%4.15%4.43%3.96%
23 2008 10.39%6.53%3.86%4.32%3.90%
24 2009 10.22%6.04%4.18%4.27%4.02%
25 2010 10.15%5.47%4.68%4.24%4.17%
26 2011 9.92%5.04%4.88%4.35%4.34%
27 2012 9.94%4.13%5.81%4.68%4.55%
28 2013 9.68%4.48%5.20%4.95%4.63%
29 2014 9.78%4.28%5.50%5.22%4.74%
30 2015 9.60%4.12%5.48%5.38%4.81%
31 2016 9.54%3.93%5.61%5.52%4.94%
32 2017 9.72%4.00%5.72%5.50%5.09%
33 2018 9.59%4.25%5.34%5.53%5.24%
34 2019 9.71%3.77%5.94%5.62%5.42%
35 2020 9.46%3.05%6.41%5.80%5.59%
36 2021 9.56%3.10%6.46%5.97%5.75%
37 2022 3 9.42%4.41%5.01%5.83%5.67%
38 Average 10.83%6.54%4.28%4.26%4.23%
39 Minimum 2.80%3.11%
40 Maximum 5.97%5.75%
Sources:
1 Regulatory Research Associates, Inc., Regulatory Focus, Major Rate Case Decisions, Jan. 1997 p. 5, and Jan. 2011 p. 3.
S&P Global Market Intelligence, RRA Regulatory Focus, Major Rate Case Decisions, January - September 2022
October 31, 2022, p. 4 .
2 Mergent Public Utility Manual, Mergent Weekly News Reports, 2003.
Veolia Water Idaho, Inc.
Equity Risk Premium - Utility Bond
Year
Exhibit No. 413 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 414 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Line Year
T-Bond
Yield1 A2 Baa2 A-T-Bond
Spread
Baa-T-Bond
Spread Aaa3 Baa3 Aaa-T-Bond
Spread
Baa-T-Bond
Spread
Baa
Spread
A-Aaa
Spread
(1) (2) (3) (4)(5)(6) (7) (8)(9)(10)(11)
1 1980 11.30% 13.34% 13.95% 2.04% 2.65% 11.94% 13.67% 0.64%2.37% 0.28% 1.40%
2 1981 13.44% 15.95% 16.60% 2.51% 3.16% 14.17% 16.04% 0.73%2.60% 0.56% 1.78%
3 1982 12.76% 15.86% 16.45% 3.10% 3.69% 13.79% 16.11% 1.03%3.35% 0.34% 2.07%4 1983 11.18% 13.66% 14.20% 2.48% 3.02% 12.04% 13.55% 0.86%2.38% 0.65% 1.62%
5 1984 12.39% 14.03% 14.53% 1.64% 2.14% 12.71% 14.19% 0.32%1.80% 0.34% 1.32%
6 1985 10.79% 12.47% 12.96% 1.68% 2.17% 11.37% 12.72% 0.58%1.93% 0.24% 1.10%
7 1986 7.80% 9.58% 10.00% 1.78% 2.20% 9.02% 10.39% 1.22% 2.59% -0.39% 0.56%8 1987 8.58% 10.10% 10.53% 1.52% 1.95% 9.38% 10.58% 0.80% 2.00% -0.05% 0.72%
9 1988 8.96% 10.49% 11.00% 1.53% 2.04%9.71% 10.83% 0.75% 1.87% 0.17% 0.78%
10 1989 8.45% 9.77% 9.97% 1.32% 1.52% 9.26% 10.18% 0.81% 1.73% -0.21% 0.51%11 1990 8.61% 9.86% 10.06% 1.25% 1.45% 9.32% 10.36% 0.71% 1.75% -0.30% 0.54%
12 1991 8.14% 9.36% 9.55% 1.22% 1.41% 8.77% 9.80% 0.63% 1.67% -0.25% 0.59%
13 1992 7.67% 8.69% 8.86% 1.02% 1.19% 8.14% 8.98% 0.47% 1.31% -0.12% 0.55%
14 1993 6.60% 7.59% 7.91% 0.99% 1.31% 7.22% 7.93% 0.62% 1.33% -0.02% 0.37%15 1994 7.37% 8.31% 8.63% 0.94% 1.26%7.96% 8.62% 0.59% 1.25% 0.01% 0.35%
16 1995 6.88% 7.89% 8.29% 1.01% 1.41%7.59% 8.20% 0.71% 1.32% 0.09% 0.30%
17 1996 6.70% 7.75% 8.17% 1.05% 1.47%7.37% 8.05% 0.67% 1.35% 0.12% 0.38%18 1997 6.61% 7.60% 7.95% 0.99% 1.34%7.26% 7.86% 0.66% 1.26% 0.09% 0.34%
19 1998 5.58% 7.04% 7.26% 1.46% 1.68%6.53% 7.22% 0.95% 1.64% 0.04% 0.51%
20 1999 5.87% 7.62% 7.88% 1.75% 2.01%7.04% 7.87% 1.18% 2.01% 0.01% 0.58%
21 2000 5.94% 8.24% 8.36% 2.30% 2.42% 7.62% 8.36% 1.68% 2.42% -0.01% 0.62%22 2001 5.49% 7.76% 8.03% 2.27% 2.54%7.08% 7.95% 1.59% 2.45% 0.08% 0.68%
23 2002 5.43% 7.37% 8.02% 1.94% 2.59%6.49% 7.80% 1.06% 2.37% 0.22% 0.88%
24 2003 4.96% 6.58% 6.84% 1.62% 1.89%5.67% 6.77% 0.71% 1.81% 0.08% 0.91%25 2004 5.05% 6.16% 6.40% 1.11% 1.35%5.63% 6.39% 0.58% 1.35% 0.00% 0.53%
26 2005 4.65% 5.65% 5.93% 1.00% 1.28% 5.24% 6.06% 0.59% 1.42% -0.14% 0.41%
27 2006 4.87% 6.07% 6.32% 1.20% 1.44% 5.59% 6.48% 0.71% 1.61% -0.16% 0.48%
28 2007 4.83% 6.07% 6.33% 1.24% 1.50% 5.56% 6.48% 0.72% 1.65% -0.15% 0.52%
29 2008 4.28% 6.53% 7.25% 2.25% 2.97% 5.63% 7.45% 1.35% 3.17% -0.20% 0.90%
30 2009 4.07% 6.04% 7.06% 1.97% 2.99% 5.31% 7.30% 1.24% 3.23% -0.24% 0.73%
31 2010 4.25% 5.47% 5.96% 1.22% 1.71% 4.95% 6.04% 0.70% 1.79% -0.08% 0.52%
32 2011 3.91% 5.04% 5.57% 1.13% 1.66% 4.64% 5.67% 0.73% 1.76% -0.10% 0.40%
33 2012 2.92% 4.13% 4.83% 1.21% 1.90% 3.67% 4.94% 0.75% 2.02% -0.11% 0.46%
34 2013 3.45% 4.48% 4.98% 1.03% 1.53% 4.24% 5.10% 0.79% 1.65% -0.12% 0.24%
35 2014 3.34% 4.28% 4.80% 0.94% 1.46% 4.16% 4.86% 0.82% 1.52% -0.06% 0.12%
36 2015 2.84% 4.12% 5.03% 1.27% 2.19%3.89% 5.00% 1.05% 2.16% 0.03% 0.23%
37 2016 2.60% 3.93% 4.67% 1.33% 2.08% 3.66% 4.71% 1.07% 2.12% -0.04% 0.27%
38 2017 2.90% 4.00% 4.38% 1.10% 1.48% 3.74% 4.44% 0.85% 1.55% -0.06% 0.26%
39 2018 3.11% 4.25% 4.67% 1.14% 1.56% 3.93% 4.80% 0.82% 1.69% -0.13% 0.32%
40 2019 2.58% 3.77% 4.19% 1.18% 1.61% 3.39% 4.38% 0.81% 1.79% -0.18% 0.38%
41 2020 1.56% 3.05% 3.44% 1.49% 1.87% 2.53% 3.66% 0.96% 2.10% -0.22% 0.53%
42 2021 2.05% 3.10% 3.36% 1.05% 1.30% 2.70%3.39% 0.65% 1.34% -0.04% 0.40%
43 2022 4 3.12% 4.72% 5.03% 1.60% 1.91% 4.07% 5.07% 0.96% 1.95% -0.04% 0.65%
44 Average 6.14% 7.62% 8.05% 1.49% 1.91% 6.98% 8.05% 0.84%1.92% 0.00% 0.65%
Sources:1 St. Louis Federal Reserve: Economic Research, http://research.stlouisfed.org/.
2 The utility yields for the period 1980-2000 were obtained from Mergent Public Utility Manual, Mergent Weekly News Reports, 2003.
The utility yields for the period 2001-2009 were obtained from the Mergent Bond Record. The utility yields for the period 2010-2022 were obtained from http://credittrends.moodys.com/.
3 The corporate yields for the period 1980-2009 were obtained from the St. Louis Federal Reserve: Economic Research, http://research.stlouisfed.org/.
The corporate yields from 2010-2022 were obtained from http://credittrends.moodys.com/.4 Data represents January - December, 2022.
Public Utility Bond Corporate Bond Utility to Corporate
eolia Water Idaho, Inc.
Bond Yield Spreads
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
Utility A - T-Bond Spread Utility Baa - T-Bond Spread
Corporate Aaa - T-Bond Spread Corporate Baa - T-Bond Spread
Yield Spreads
Treasury Vs. Corporate & Treasury Vs. Utility
Exhibit No. 414 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 415 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Treasur "A" Rated Utilit "Baa" Rated Utilit
Line Date Bond Yield1 Bond Yield2 Bond Yield2
(1)(2)(3)
1 01/20/23 3.66%5.16%5.46%
2 01/13/23 3.61%5.15%5.44%
3 01/06/23 3.67%5.28%5.59%
4 12/30/22 3.97%5.53%5.83%
5 12/23/22 3.82%5.42%5.72%
6 12/16/22 3.53%5.15%5.43%
7 12/09/22 3.56%5.17%5.45%
8 12/02/22 3.56%5.26%5.54%
9 11/25/22 3.74%5.46%5.74%
10 11/18/22 3.92%5.66%5.95%
11 11/10/22 4.03%5.86%6.16%
12 11/04/22 4.27%6.05%6.35%
13 10/28/22 4.15%5.96%6.27%
14 Average 3.81%5.47%5.76%
15 Spread To Treasury 1.66%1.95%
Sources:
1 St. Louis Federal Reserve: Economic Research, http://research.stlouisfed.org.
2 http://credittrends.moodys.com/.
Treasury and Utility Bond Yields
Veolia Water Idaho, Inc.
Exhibit No. 415 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 3
__________
Sources:
Mergent Bond Record.
www.moodys.com, Bond Yields and Key Indicators.
St. Louis Federal Reserve: Economic Research, http://research.stlouisfed.org/
Veolia Water Idaho, Inc.
Trends in Bond Yields
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
"Baa" Rated Utility Bond Yield
"A" Rated Utility Bond Yield
30‐Year Treasury Bond
Exhibit No. 415 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 2 of 3
__________
Sources:
Mergent Bond Record.
www.moodys.com, Bond Yields and Key Indicators.
St. Louis Federal Reserve: Economic Research, http://research.stlouisfed.org/
Veolia Water Idaho, Inc.
Yield Spread Between Utility Bonds and 30-Year Treasury Bonds
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
A Spread Baa Spread
Exhibit No. 415 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 3 of 3
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. 416 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Line Beta
Wate
1 American States Water Company 0.65
2 American Water Works Company, Inc.0.90
3 California Water Service Group 0.70
4 Essential Utilities, Inc.0.95
5 Middlesex Water Company 0.70
6 SJW Group 0.80
Water Average 0.78
Gas
7 Atmos Energy Corporation 0.80
8 New Jersey Resources Corporation 0.95
9 NiSource Inc.0.85
10 Northwest Natural Holding Company 0.80
11 ONE Gas, Inc.0.80
12 Southwest Gas Holdings, Inc.0.90
13 Spire Inc.0.85
14 UGI Corporation 1.05
15 Gas Average 0.88
16 Total Proxy Group Average 0.83
Source:
The Value Line Investment Survey,
November 25, 2022 and January 6, 2023.
Veolia Water Idaho, Inc.
alue Line Beta
Company
Exhibit No. 416 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 7
Line Compan Average 3Q22 2Q22 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Water
1 American States Water Company 0.70 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65
2 American Water Works Company, Inc.0.71 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85
3 California Water Service Group 0.72 0.65 0.65 0.70 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65
4 Essential Utilities, Inc.0.77 0.95 0.95 N/A 0.95 0.95 0.95 0.95 0.90 0.90 0.90 0.90
5 Middlesex Water Company 0.73 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70
6 SJW Group 0.73 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80
Water Average 0.72 0.77 0.77 0.74 0.77 0.77 0.77 0.77 0.76 0.76 0.76 0.76
Gas
7 Atmos Energy Corporation 0.74 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.55
8 New Jersey Resources Corporation 0.82 0.95 0.95 1.00 1.00 1.00 1.00 0.95 0.95 0.90 0.90 0.65
9 NiSource Inc.0.72 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.55
10 Northwest Natural Holding Company 0.70 0.80 0.80 0.80 0.85 0.85 0.85 0.80 0.80 0.80 0.80 0.55
11 ONE Gas, Inc.0.72 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.60
12 Southwest Gas Holdings, Inc.0.81 0.90 0.90 0.95 0.95 0.95 0.95 0.95 0.95 0.90 0.90 0.65
13 Spire Inc.0.73 0.80 0.80 0.85 0.85 0.85 0.85 0.85 1.00 0.80 0.80 0.60
14 UGI Corporation 0.92 1.00 1.05 1.05 1.05 1.05 N/A N/A 1.00 1.00 0.95 0.75
15 Gas Average 0.77 0.86 0.87 0.89 0.89 0.89 0.87 0.86 0.89 0.86 0.85 0.61
16 Total Proxy Group Average 0.75 0.81 0.82 0.81 0.83 0.83 0.82 0.81 0.83 0.81 0.80 0.69
Source: Value Line Software Analyzer
Veolia Water Idaho, Inc.
Historical Betas
alue Line
Exhibit No. 416 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 2 of 7
Lin Compan 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 3Q15 2Q15 1Q15 4Q14 3Q14
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21) (22)
Water
1 American States Water Company 0.65 0.65 0.65 0.65 0.75 0.75 0.75 0.75 0.80 0.80 0.80 0.80 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70
2 American Water Works Company, Inc.0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.70 0.70
3 California Water Service Group 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.80 0.80 0.80 0.80 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.70 0.70
4 Essential Utilities, Inc.0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.70 0.70
5 Middlesex Water Company 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.80 0.80 0.80 0.80 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.70 0.706 SJW Group 0.60 0.60 0.60 0.60 0.65 0.65 0.65 0.65 0.75 0.75 0.75 0.75 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.85 0.85
Water Averag 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.70 0.70 0.70 0.70 0.73 0.73 0.73 0.73 0.73 0.73
Gas
7 Atmos Energy Corporation 0.60 0.60 0.65 0.60 0.60 0.60 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.75 0.75 0.80 0.80 0.85 0.85 0.85 0.80 0.808 New Jersey Resources Corporation 0.70 0.70 0.70 0.70 0.70 0.70 0.80 0.75 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.85 0.80 0.80 0.80 0.809 NiSource Inc.0.55 0.55 0.55 0.55 0.50 0.55 0.60 0.60 0.60 NMF 0.65 NMF NMF NMF NMF NMF NMF NMF 0.85 0.85 0.85 0.80
10 Northwest Natural Holding Company 0.60 0.60 0.60 0.65 0.60 0.65 0.70 0.65 0.70 0.70 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.70
11 ONE Gas, Inc.0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.70 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
12 Southwest Gas Holdings, Inc.0.70 0.70 0.70 0.70 0.70 0.75 0.80 0.75 0.80 0.75 0.75 0.75 0.75 0.75 0.75 0.80 0.80 0.85 0.85 0.85 0.85 0.85
13 Spire Inc.0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.65 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.7014 UGI Corporation N/A N/A 0.80 0.80 0.80 0.85 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.95 0.95 0.95 0.95 0.95 0.90 0.85 0.85
15 Gas Averag 0.64 0.64 0.66 0.66 0.65 0.68 0.74 0.71 0.74 0.75 0.73 0.75 0.75 0.76 0.77 0.78 0.78 0.82 0.81 0.81 0.79 0.79
16 Total Proxy Group Averag 0.64 0.64 0.66 0.66 0.68 0.69 0.72 0.71 0.74 0.75 0.74 0.75 0.73 0.73 0.73 0.74 0.76 0.78 0.77 0.77 0.76 0.76
Source: Value Line Software Analyzer
Veolia Water Idaho, Inc.
alue Line
Historical Betas
Exhibit No. 416 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 3 of 7
Line Averag 3Q22 2Q22 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Electric
1 ALLETE, Inc.0.78 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.85 0.85 0.85 0.60
2 Alliant Energy Corporation 0.74 0.85 0.80 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.80 0.55
3 Ameren Corporation 0.70 0.85 0.80 0.80 0.80 0.85 0.80 0.80 0.85 0.80 0.80 0.50
4 American Electric Power Company, Inc.0.67 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.50
5 Avangrid, Inc.0.59 0.85 0.85 0.85 0.85 0.85 0.85 N/A 0.85 0.80 0.80 0.40
6 Avista Corporation 0.77 0.90 0.95 0.95 0.95 0.95 0.95 0.95 0.90 0.95 0.60 0.60
7 Black Hills Corporation 0.89 0.95 1.00 1.00 1.00 1.00 1.00 1.00 0.95 1.00 0.65 0.70
8 CenterPoint Energy, Inc.0.92 1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.15 1.10 1.15 0.70
9 CMS Energy Corporation 0.68 0.80 0.75 0.80 0.80 0.80 0.80 0.75 0.80 0.80 0.80 0.50
10 Consolidated Edison, Inc.0.58 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.40
11 Dominion Resources, Inc.0.70 0.80 0.80 0.85 0.85 0.85 0.85 0.80 0.80 0.80 0.80 0.50
12 DTE Energy Company 0.73 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.90 0.90 0.50
13 Duke Energy Corporation 0.65 0.85 0.85 0.85 0.85 0.90 0.85 0.85 0.85 0.85 0.85 0.45
14 Edison International 0.72 0.95 0.95 0.95 1.00 0.95 0.95 0.95 0.90 0.90 0.55 0.55
15 Entergy Corporation 0.73 0.95 0.90 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.60
16 Evergy, Inc.0.97 0.90 0.90 0.95 0.95 0.95 0.95 0.95 1.00 1.00 1.05 NMF
17 Eversource Energy 0.74 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.55
18 Exelon Corporation 0.76 NMF 1.00 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.90 0.65
19 FirstEnergy Corp.0.71 0.85 0.80 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.60
20 Fortis Inc.0.69 0.70 0.70 0.75 0.75 0.75 0.75 0.75 N/A 0.80 0.80 0.60
21 Hawaiian Electric Industries, Inc.0.72 0.80 0.85 0.85 0.85 0.80 0.80 0.80 0.80 0.80 0.55 0.55
22 IDACORP, Inc.0.73 0.80 0.80 0.80 0.85 0.85 0.80 0.80 0.80 0.80 0.50 0.55
23 NextEra Energy, Inc.0.72 0.95 0.90 0.95 0.90 0.95 0.90 0.90 0.90 0.85 0.85 0.50
24 NorthWestern Corporation 0.73 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.90 0.90 0.55 0.60
25 OGE Energy Corp.0.94 1.00 1.00 1.05 1.05 1.05 1.05 1.05 1.10 1.05 1.05 0.70
26 Otter Tail Corporation 0.83 0.85 0.85 0.85 0.90 0.90 0.90 0.85 0.85 0.85 0.85 0.70
27 Pinnacle West Capital Corporation 0.71 0.90 0.90 0.90 0.95 0.90 0.90 0.90 0.85 0.85 0.45 0.50
28 PNM Resources, Inc.0.78 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.95 0.90 0.50 0.60
29 Portland General Electric Company 0.74 0.85 0.85 0.90 0.90 0.90 0.90 0.85 0.85 0.85 0.55 0.55
30 PPL Corporation 0.81 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.15 1.10 1.05 0.65
31 Public Service Enterprise Group Incorporated 0.76 0.90 0.90 0.90 0.90 0.95 0.90 0.90 0.90 0.90 0.90 0.60
32 Sempra Energy 0.82 0.95 0.95 0.95 1.00 N/A 0.95 1.00 0.95 0.95 0.65 0.70
33 Southern Company 0.66 0.90 0.90 0.95 0.95 0.95 0.95 0.95 0.90 0.90 0.90 0.50
34 WEC Energy Group, Inc.0.66 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.45
35 Xcel Energy Inc.0.64 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.75 0.45 0.50
36 Electric Average 0.74 0.89 0.88 0.90 0.90 0.90 0.90 0.89 0.89 0.88 0.77 0.56
Source: Value Line Software Analyzer
Veolia Water Idaho, Inc.
Value Line Electric Industry
Historical Betas
Compan
Exhibit No. 416 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 4 of 7
Line Averag 3Q22 2Q22 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Natural Gas
1 Atmos Energy Corporation 0.73 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.55
2 Chesapeake Utilities Corporation 0.69 0.80 0.75 0.80 0.80 0.80 N/A N/A N/A N/A N/A N/A
3 New Jersey Resources Corporation 0.82 0.95 0.95 1.00 1.00 1.00 1.00 0.95 0.95 0.90 0.90 0.65
4 NiSource Inc.0.72 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.55
5 Northwest Natural Gas Company 0.70 0.80 0.80 0.80 0.85 0.85 0.85 0.80 0.80 0.80 0.80 0.55
6 ONE Gas, Inc.0.72 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.60
7 South Jersey Industries, Inc.0.87 0.95 1.00 1.00 1.05 1.05 1.05 1.05 1.05 1.00 0.95 0.80
8 Southwest Gas Corporation 0.81 0.90 0.90 0.95 0.95 0.95 0.95 0.95 0.95 0.90 0.90 0.65
9 Spire Inc.0.73 0.80 0.80 0.85 0.85 0.85 0.85 0.85 1.00 0.80 0.80 0.60
10 UGI Corporation 0.92 1.00 1.05 1.05 1.05 1.05 N/A N/A 1.00 1.00 0.95 0.75
11 Natural Gas Average 0.77 0.87 0.87 0.89 0.90 0.90 0.89 0.88 0.91 0.87 0.86 0.63
Source: Value Line Software Analyzer
Line Averag 3Q22 2Q22 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)
Water
1 American States Water Company 0.70 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65
2 American Water Works Company, Inc.0.71 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85 0.85
3 California Water Service Group 0.72 0.65 0.65 0.70 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65
4 Essential Utilities, Inc.0.77 0.95 0.95 N/A 0.95 0.95 0.95 0.95 0.90 0.90 0.90 0.90
5 Middlesex Water Company 0.73 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70
6 SJW Group 0.73 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80
7 Water Average 0.72 0.77 0.77 0.74 0.77 0.77 0.77 0.77 0.76 0.76 0.76 0.76
Source: Value Line Software Analyzer
Veolia Water Idaho, Inc.
Compan
Value Line Natural Gas Industry
Historical Betas
Compan
Veolia Water Idaho, Inc.
Value Line Water Industry
Historical Betas
Exhibit No. 416 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 5 of 7
Line 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 3Q15 2Q15 1Q15 4Q14
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21)
Electric1 ALLETE, Inc.0.65 0.65 0.65 0.65 0.65 0.70 0.75 0.75 0.80 0.75 0.80 0.80 0.75 0.75 0.75 0.80 0.80 0.80 0.80 0.80 0.80
2 Alliant Energy Corporation 0.60 0.60 0.60 0.65 0.60 0.65 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.75 0.75 0.80 0.80 0.80 0.80 0.80 0.80
3 Ameren Corporation 0.55 0.55 0.60 0.60 0.55 0.60 0.65 0.65 0.70 0.65 0.65 0.70 0.65 0.70 0.75 0.75 0.75 0.75 0.75 0.75 0.75
4 American Electric Power Company, Inc. 0.55 0.55 0.55 0.55 0.55 0.60 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.70 0.70 0.70
5 Avangrid, Inc.0.40 0.40 0.40 0.40 0.30 0.30 0.40 0.35 NMF NMF NMF NMF NMF N/A N/A N/A N/A N/A N/A N/A N/A6 Avista Corporation 0.60 0.60 0.65 0.65 0.65 0.70 0.70 0.75 0.75 0.70 0.70 0.70 0.70 0.75 0.75 0.80 0.80 0.80 0.80 0.80 0.807 Black Hills Corporation 0.70 0.75 0.80 0.75 0.80 0.85 0.90 0.90 0.90 0.85 0.85 0.90 0.90 0.90 0.90 0.90 0.95 0.95 0.95 0.90 0.908 CenterPoint Energy, Inc.0.80 0.80 0.80 0.80 0.85 0.85 0.90 0.85 0.90 0.90 0.85 0.85 0.85 0.80 0.85 0.85 0.85 0.80 0.80 0.80 0.759 CMS Energy Corporation 0.50 0.55 0.55 0.55 0.55 0.55 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.75 0.75 0.70 0.75 0.75 0.70
10 Consolidated Edison, Inc.0.45 0.45 0.45 0.45 0.45 0.45 0.50 0.50 0.50 0.50 0.50 0.55 0.55 0.55 0.55 0.55 0.60 0.60 0.60 0.60 0.60
11 Dominion Resources, Inc.0.55 0.55 0.55 0.55 0.60 0.60 0.65 0.65 0.65 0.65 0.65 0.70 0.65 0.70 0.70 0.70 0.78 0.70 0.70 0.70 0.70
12 DTE Energy Company 0.55 0.55 0.55 0.55 0.55 0.60 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.75 0.75 0.75 0.75 0.75 0.75
13 Duke Energy Corporation 0.50 0.50 0.50 0.50 0.55 0.55 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.65 0.50 0.60 0.60 0.60 0.60
14 Edison International 0.60 0.60 0.60 0.55 0.60 0.60 0.60 0.65 0.65 0.60 0.60 0.65 0.65 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.7515 Entergy Corporation 0.60 0.60 0.60 0.60 0.60 0.60 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.65 0.70 0.70 0.7016 Evergy, Inc.NMF NMF NMF NMF NMF NMF N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A17 Eversource Energy 0.55 0.60 0.60 0.60 0.60 0.60 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.75 0.75 0.75
18 Exelon Corporation 0.70 0.70 0.70 0.70 0.65 0.65 0.70 0.70 0.70 0.70 0.65 0.70 0.65 0.70 0.65 0.70 0.70 0.65 0.70 0.70 0.70
19 FirstEnergy Corp.0.65 0.60 0.65 0.65 0.60 0.60 0.65 0.70 0.70 0.65 0.65 0.65 0.65 0.65 0.70 0.65 0.70 0.65 0.70 0.70 0.70
20 Fortis Inc.0.60 0.65 0.65 0.65 0.60 0.65 0.70 0.70 0.70 0.70 0.65 0.65 0.65 N/A N/A N/A N/A N/A N/A N/A N/A
21 Hawaiian Electric Industries, Inc.0.55 0.55 0.60 0.60 0.60 0.65 0.65 0.70 0.70 0.70 0.70 0.70 0.70 0.75 0.75 0.80 0.80 0.80 0.80 0.80 0.80
22 IDACORP, Inc.0.55 0.60 0.60 0.55 0.60 0.65 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.80 0.80 0.80 0.80 0.80 0.80 0.8023 NextEra Energy, Inc.0.55 0.55 0.60 0.60 0.60 0.60 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.75 0.70 0.75 0.70 0.7024 NorthWestern Corporation 0.60 0.60 0.60 0.55 0.60 0.65 0.65 0.70 0.70 0.65 0.65 0.70 0.70 0.70 0.70 0.70 0.70 0.75 0.70 0.70 0.7025 OGE Energy Corp.0.75 0.80 0.80 0.85 0.85 0.90 0.95 0.95 0.95 0.95 0.95 0.95 0.90 0.90 0.95 0.95 0.95 0.90 0.90 0.90 0.9026 Otter Tail Corporation 0.70 0.65 0.70 0.70 0.75 0.80 0.85 0.85 0.90 0.90 0.90 0.85 0.85 0.85 0.80 0.85 0.85 0.85 0.90 0.90 0.90
27 Pinnacle West Capital Corporation 0.55 0.55 0.55 0.55 0.60 0.65 0.65 0.70 0.70 0.65 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.70 0.70 0.70 0.70
28 PNM Resources, Inc.0.60 0.60 0.65 0.65 0.60 0.75 0.70 0.75 0.75 0.75 0.70 0.75 0.75 0.80 0.80 0.80 0.85 0.85 0.85 0.85 0.85
29 Portland General Electric Company 0.60 0.60 0.60 0.60 0.60 0.65 0.65 0.70 0.70 0.70 0.70 0.70 0.70 0.75 0.80 0.80 0.80 0.80 0.80 0.80 0.80
30 PPL Corporation 0.70 0.65 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.65 0.65 0.65 0.60
31 Public Service Enterprise Group Incorporated 0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.65 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.75 0.75 0.7532 Sempra Energy 0.75 0.75 0.75 0.75 0.75 0.75 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.85 0.80 0.80 0.80 0.80 0.75 0.7533 Southern Company 0.50 0.50 0.50 0.50 0.50 0.50 0.55 0.65 0.55 0.55 0.55 0.55 0.55 0.55 0.55 0.60 0.60 0.55 0.60 0.55 0.5534 WEC Energy Group, Inc.0.50 0.50 0.50 0.55 0.50 0.55 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.65 0.65 0.70 0.70 0.70 0.70 0.65 0.65
35 Xcel Energy Inc.0.50 0.50 0.50 0.50 0.55 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.70
36 Electric Averag 0.59 0.60 0.61 0.61 0.61 0.64 0.68 0.69 0.70 0.69 0.69 0.70 0.69 0.71 0.73 0.75 0.75 0.74 0.75 0.74 0.74
Source: Value Line Software Analyzer
Veolia Water Idaho, Inc.
alue Line Electric Industr
Historical Betas
Company
Exhibit No. 416 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 6 of 7
Line 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 3Q15 2Q15 1Q15 4Q14
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21)
Natural Gas1 Atmos Energy Corporation 0.60 0.60 0.65 0.60 0.60 0.60 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.75 0.75 0.80 0.80 0.85 0.85 0.85 0.80
2 Chesapeake Utilities Corporation N/A N/A 0.65 0.70 0.65 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.65 0.60 0.60 0.65 0.65 0.65 0.65 NA 0.65
3 New Jersey Resources Corporation 0.70 0.70 0.70 0.70 0.70 0.70 0.80 0.75 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.80 0.85 0.80 0.80 0.80
4 NiSource Inc.0.55 0.55 0.55 0.55 0.50 0.55 0.60 0.60 0.60 NMF 0.65 NMF NMF NMF NMF NMF NMF NMF 0.85 0.85 0.85
5 Northwest Natural Gas Company 0.60 0.60 0.60 0.65 0.60 0.65 0.70 0.65 0.70 0.70 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.706 ONE Gas, Inc.0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.70 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A7 South Jersey Industries, Inc.0.80 0.80 0.80 0.85 0.80 0.75 0.85 0.80 0.85 0.85 0.80 0.80 0.80 0.80 0.80 0.85 0.80 0.85 0.85 0.80 0.808 Southwest Gas Corporation 0.70 0.70 0.70 0.70 0.70 0.75 0.80 0.75 0.80 0.75 0.75 0.75 0.75 0.75 0.75 0.80 0.80 0.85 0.85 0.85 0.859 Spire Inc.0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.65 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70
10 UGI Corporation N/A N/A 0.80 0.80 0.80 0.85 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.95 0.95 0.95 0.95 0.95 0.90 0.85
11 Natural Gas Average 0.66 0.66 0.68 0.69 0.67 0.69 0.75 0.72 0.75 0.76 0.74 0.75 0.74 0.74 0.75 0.78 0.77 0.80 0.80 0.81 0.78
Source: Value Line Software Analyzer
Line 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 3Q15 2Q15 1Q15 4Q14
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) (21)
Wate
1 American States Water Company 0.65 0.65 0.65 0.65 0.75 0.75 0.75 0.75 0.80 0.80 0.80 0.80 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.702 American Water Works Company, Inc.0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.703 California Water Service Group 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.80 0.80 0.80 0.80 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.70
4 Essential Utilities, Inc.0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.70
5 Middlesex Water Company 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.80 0.80 0.80 0.80 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.70
6 SJW Group 0.60 0.60 0.60 0.60 0.65 0.65 0.65 0.65 0.75 0.75 0.75 0.75 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.85
7 Water Average 0.65 0.65 0.65 0.65 0.70 0.70 0.70 0.70 0.75 0.75 0.75 0.75 0.70 0.70 0.70 0.70 0.73 0.73 0.73 0.73 0.73
Source: Value Line Software Analyzer
Company
eolia Water Idaho, Inc.
alue Line Natural Gas Industr
Historical Betas
Company
eolia Water Idaho, Inc.
alue Line Water Industr
Historical Betas
Exhibit No. 416 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 7 of 7
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. 417 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Current Normalized
Market Risk Market Risk
Line Premium Premium
(1)(2)
1 Risk-Free Rate1,2 3.81%3.80%
2 Risk Premium3 7.90%7.91%
3 Beta4,5 0.83 0.75
4 CAPM 10.36%9.71%
Sources:
1 Exhibit No. 415.
Blue Chip Financial Forecasts January 1, 2023 , at 2.
Kroll 2022 Yearbook, at 146.
4 Exhibit No. 416, Page 1.
Exhibit No. 416, Page 2.
CAPM Return
Description
Veolia Water Idaho, Inc.
Exhibit No. 417 Case No. VEO-W-22-02 Gorman, Micron Technology, Inc. Page 1 of 1
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. 418 TO ACCOMPANY THE
DIRECT TESTIMONY OF MICHAEL P. GORMAN
Retail
Cost of Service
Line Amount Intermediate Significant Aggressive Reference
(1)(2)(3)(4)(5)
1 Rate Base 280,756,025$ Exhibit No. 9.
2 Weighted Common Return 5.20%Page 2, Line 2, Col. 4.
3 Pre-Tax Rate of Return 8.83%Page 2, Line 3, Col. 5.
4 Income to Common 14,588,410$ Line 1 x Line 2.
5 EBIT 24,778,086$ Line 1 x Line 3.
6 Depreciation & Amortization 10,929,675$ Exhibit No. 9.
7 Imputed Amortization -$ Micron 2nd Data Request, Response No. 39.
8 Capitalized Interest*-$ Micron 2nd Data Request, Response No. 31.
9 Deferred Income Taxes & ITC -$ Exhibit No. 9.
10 Funds from Operations (FFO)25,518,085$ Sum of Line 4 and Lines 6 through 9.
11 Imputed Interest Expense -$ Micron 2nd Data Request, Response No. 39.
12 EBITDA 35,707,761$ Sum of Lines 5 through 7 and Line 11.
13 Adjusted Debt 124,730,248$ Page 2, Line 1, Col. 1.
14 Total Adjusted Debt Ratio 44.4%Page 2, Line 1, Col 2.
15 Debt to EBITDA 3.5x 3.0x - 4.0x 4.0x - 5.0x 5.0x - 6.0x Line 13 / Line 12.
16 FFO to Total Debt 20%13% - 23% 9% - 13% 6% - 9% Line 10 / Line 13.
17 Indicative Credit Rating A+/A A-BBB S&P Methodology, November 19, 2013.
Sources:
Standard & Poor's: "Criteria: Corporate Methodology," November 19, 2013.
Note:
Based on the May 2022 S&P report, VUR has an "A" credit rating, an "Excellent" business profile, and an "Intermediate" financial profile,
a "Stable" outlook and falls under the 'Low Volatility' matrix.
3 (intermediate) 4 (significant) 5 (aggressive)
1 (excellent)a+/a a-bbb
2 (strong)a-/bbb+ bbb bb+
3 (satisfactory) bbb/bbb- bbb-/bb+ bb
Business Risk
Profile
eolia Water Idaho, Inc.
Standard & Poor's Credit Metrics
S&P Benchmark (Low Volatility)
S&P Business/Financial Risk Profile Matrix
Financial Risk Profile
Description
Exhibit No. 418
Case No. VEO-W-22-02
Gorman, Micron Technology, Inc.
Page 1 of 3
Pre-Tax
Weighted Weighted
Line Amoun Weight Cost Cost Cost
(1)(2)(3)(4)(5)
1 Long-Term Debt 124,730,248$ 44.43% 3.99% 1.77% 1.77%
2 Common Equity 156,025,777$ 55.57%9.35%5.20%7.05%
3 Total 280,756,025$ 100.00% 6.97% 8.83%
4 Tax Conversion Factor* 1.35733
Sources:
VWID Exhibit No. 1, Schedule 1 and Exhibit No. 6.
*Exhibit No. 9.
Veolia Water Idaho, Inc.
Standard & Poor's Credit Metrics
(Pre-Tax Rate of Return)
Description
Exhibit No. 418
Case No. VEO-W-22-02
Gorman, Micron Technology, Inc.
Page 2 of 3
Rating Average <45 45 to 50 50 to 55 >55
AA-43.6% 67% 33% 0% 0%
A+52.7% 18% 36% 0% 45%
A 48.5% 26% 41% 15% 19%
A-52.4% 7% 24% 39% 30%
BBB+ 52.0% 9% 29% 39% 23%
BBB 48.6% 30% 23% 30% 17%
Source:
S&P Capital IQ, downloaded June 7, 2022.
Veolia Water Idaho, Inc.
S&P Adjusted Debt Ratio
(Operating Subsidiaries of Value Line Electric, Gas and Water Utilities)
(Industry Medians)
% Distribution of 3 Year Average
Exhibit No. 418
Case No. VEO-W-22-02
Gorman, Micron Technology, Inc.
Page 3 of 3