20250731Reply Comments.pdf

RECEIVED
July 31, 2025
IDAHO PUBLIC
UTILITIES COMMISSION
N. Carter, ISB No. 8462
Megann E. Meier, ISB No. 11948
GIVENS PURSLEY LLP
601 West Bannock Street
P.O. Box 2720
Boise, Idaho 83701-2720
Office: [phone]
Fax: [phone]
[e-mail]
[e-mail]
19035413.9[13988-221
Attorneys for Falls Water Co., Inc.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION Case No. FLS-W-24-02
OF FALLS WATER CO., INC. FOR THE
AUTHORITY TO INCREASE ITS RATES FALLS WATER CO.,INC.'S REPLY
AND CHARGES FOR WATER SERVICE COMMENTS
IN THE STATE OF IDAHO
Falls Water Co., Inc. (Falls Water,Applicant, or Company) submits the following
comments in reply to the comments filed by the Idaho Public Utilities Commission's Staff.
GENERAL COMMENTS AND REPLY TO NON-REVENUE ASPECTS OF STAFF'S COMMENT
Falls Water thanks Staff for its continued diligence in reviewing rate-case filings. Falls
Water acknowledges and agrees with Staff s recognition that its systems have been brought into
compliance with regulatory standards, and that reliability has been improved, though further
investments are needed to meet current requirements for firm capacity in the Morningview and
Taylor Mountain systems and future requirements for firm capacity in the Falls Water system.
Water loss. The Company acknowledges the high rates of water loss for the Morningview
system and accepts Staffs recommendations to continue identifying root causes and to further
reduce water losses before its next general rate case.
REPLY COMMENTS PAGE I OF 15

Meter accuracy testing program. The Company acknowledges that it is not as far along
with its meter-testing program as it would like to be. The Company attempted to acquire a meter-
testing station that would test multiple meters at the same time. However, commercially
available meter-testing stations are expensive, often in excess of$20,000. The Company intends
to reduce costs by constructing its own station,but has been unable to do so due to the limited
capacity of its employees. The Company anticipates that the meter-testing station will be
operational in the third or fourth quarter 2025,with testing to begin in early 2026.
As a point of clarification,while up to five different meter types can be found in limited
quantities throughout its systems, the Company uses two primary meter types. The Company
intends to test these two types of meters.
The Company intends to have test results before its next general rate case and intends to
provide the information identified in Staff s comments.
Rate design. The Company accepts Staff s rate design principles and applies them to the
Company's proposed revenue requirement.
Future rate case fling The Company welcomes meetings with Staff to discuss practices
regarding rate cases going forward. As part of those meetings, the Company and Staff will
discuss the balancing account for the water mitigation amortization, including the current
balance in that account.
Tariff lane The Company accepts Staff s recommendation to display all commodity
prices in a per 1,000 gallon format and to add language that defines secondary irrigation and the
months when this charge is applied.
Hookup charges. The Company accepts Staff's recommended hookup charges.
Cost ofservice. The Company has not evaluated whether a defensible cost-of-service
analysis can be completed for secondary irrigation customers. If there are sufficient data and
REPLY COMMENTS PAGE 2 OF 15

information, the Company agrees to conduct this analysis and provide it with its next rate case. If
the Company does not believe sufficient data or information is available, the Company agrees to
explain the steps it took to consider the analysis and to support its conclusion that a cost-of-
service analysis was not feasible in its next rate case.
The Company provides the following specific replies to the recommendations and
statements made in Staff s comments.
SPECIFIC RESPONSES TO STAFF'S RECOMMENDATIONS
1. Agreed-upon adjustment to Staffs recommendation on water rights mitigation fees
Staff recommended"maintaining the balance account and keeping the existing baseline
of$182,920 in order to protect the Company and its customers." Staff Comments at 21.
However, Staffs revenue-requirement calculations include no recovery in rates for the baseline
amount.
After Staffs comments were filed, during a conversation with Falls Water representatives,
Staff confirmed this error and indicated to the Company that it should identify to the Commission
that Staffs recommended expenses were understated by $182,920 due to this error in calculation.
Stated another way, Staff intended to recommend that $182,920 remain as part of the revenue
requirement calculation but did not actually include it.
Upon investigating this issue, the Company realized that it had understated the necessary
recovery of ongoing water rights mitigation fees. The Company should have included an amount
equal to or greater than the $182,920 baseline expense amount approved in Falls Water's previous
rate case but instead recommended$119,691. Including the full $182,920 in recoverable expenses
increases the Company's requested revenue requirement above that in the original application.
Falls Water acknowledges that, at this stage of the case, it cannot increase the requested
revenue requirement above that in the original application. Under all the circumstances, the
REPLY COMMENTS PAGE 3 OF 15

Company requests that, consistent with Staff s intent, $182,920 be added to the balancing
account and that the Company recover the entire revenue requirement of$4,495,646 requested in
the Application. See Direct Testimony of M. Rowell at p. 4 (total revenue requirement).
2. Cost of Capital
Cost of debt. Staff proposes to use a cost of debt of 4.7%rather than the Company's
proposed 5.22%. The Company accepts this recommendation.
Return on equity. In testimony filed with Falls Water's Application in this case,Falls Water
Witness Matthew Rowell provided an ROE analysis that produced an average ROE of 10.55%
based on DCF, CAPM, and Comparable Earnings models. The Company proposed an ROE lower
than that average (10.2%) in order to be more consistent with ROES recently approved by the
IPUC.
Staff proposes an ROE of 9.7%. Staffs ROE is based on a DCF and CAPM analysis. The
Company has updated its ROE analysis (attached as Exhibits 7a — 7h) and the updated analysis
shows that an ROE of 11.03% is justifiable.
The primary differences between the Company and Staffs ROE analysis are:
• Staffs risk free rate used in the CAPM is an average of 12 months of data ending on
5/29/25,the Company's risk free rate is a three-month average ending July 24,2025. More
recent numbers are preferable because they capture the market's current state and are more
indicative of future expectations.
• The Company and Staff use Betas from different sources for their CAPM analysis. Some
of Staffs Betas are unrealistically low (0.36 for CWT and 0.58 for ARTNA.)
• Staffs estimates of dividend growth rates used in the DCF are lower than the Company's.
• Staff does not employ a Comparable Earnings analysis. A Comparable Earnings analysis
is more closely aligned with the Hope and Bluefield legal standard that approved ROEs
must be comparable to returns on investments with comparable risks. The Comparable
Earnings analysis presented in attached Exhibit 7c shows clearly that water utilities are
earning actual ROEs well in excess of 10%.
REPLY COMMENTS PAGE 4 OF 15

While the Company believes a higher ROE is justified, taking into account Staff s recent
recommendation of 9.8% for Gem State Water, the Company proposes an ROE of 9.95%. This is
the average of Staffs recommended 9.7% and the Company's originally recommended ROE of
10.2% and, the Company submits, is a reasonable return on equity in light of the information in
the record.
3. Net-to-gross multiplier.
The Company accepts Staff s recommendations regarding net-to-gross multiplier.
4. Rate base
Plant in service—general. Staff updates plant in service based on the response to Staff s
Production Request No. 6. This response showed plant balances through May 31, 2025.
The Company provides supplemental responses to Production Request Nos. 81 and 82
along with these reply comments. Generally, the Company requests that plant placed in service
on or before the effective date of rates be included in rate base. Updates to the particular
components of plant in service are discussed below.
Water rim The Company accepts Staff s recommendation to the water rights pro
forma adjustment.
Morningview Well Replacement. Staff recommends providing recovery of the actual cost
of the Morningview Replacement Well as reported in the Supplemental Response to Production
Request No. 81, $212,422 (compared with the Company's amount of$305,000). That number
represents actual costs through May 28, 2025. Between May 28 and July 24, 2025, an additional
$151,434 has been spent on the Morningview Replacement Well. The Company's Second
Supplemental Response to Production Request 81, attached to these comments, provides details
and invoices for this additional amount. This brings the total spent on the Morningview
REPLY COMMENTS PAGE 5 OF 15

Replacement Well to $363,856. The Company requests that the full cost of the Morningview
Replacement Well, $363,856,be included in rate base.
Falls Water system meter replacements. Staff reduced the cost of the meter replacement
project to $173,679 (from the Company's amount of$221,700)based on Falls Water's response
to Data Request No. 82. The Second Supplemental Response to Data Request No. 82 provides
updated installation costs and includes a hydrant meter that was inadvertently not included in the
original response. The Second Supplemental Response to Data Request No. 82, attached,
supports a cost of the meter replacement program of$174,839 and the Company requests this
amount be included in rate base.
Backhoe rolacement& skid steer. The Company accepts Staff s adjustments to the
Backhoe replacement& skid steer costs.
Service line replacements. The Company accepts Staffs adjustment to the Service line
Replacements pro forma.
Backup generators for well no. S & oTice building The Company accepts Staffs
adjustment to the proforma for backup generators.
Accumulated depreciation. The Company accepts Staffs adjustments to accumulated
depreciation, except for the accumulated depreciation related to the Morningview Replacement
Well and Meter Replacements projects discussed above. Based upon its reply comments above,
the Company recommends accumulated depreciation for those projects of$7,277 and $3,497,
respectively.
Contributions in Aid of Construction ("CIAC") and accumulated amortization of CIAC.
The Company accepts Staffs adjustments to CIAC and Accumulated Amortization of CIAC.
Working capital. The Company is requesting a working capital allowance of$259,907,
which is derived from its recommended adjusted expenses.
REPLY COMMENTS PAGE 6 OF 15

5. Revenue
Other water sales. The Company accepts Staff s adjustment to other water sales.
6. Expenses
Employee wage increases. The Company proposed a 10% increase in wages to correct for
years of below market wages at Falls Water. Staff disagrees with the Company's proposal based
on an analysis of U.S. Bureau of Labor("BLS") data specific to Idaho. Staff recommends a 3%
wage increase be allowed in rates. Staff justifies its 3%wage increase recommendation by
stating that it will result in 60% of Falls Water employees earning more than the median Idaho
income. This means that 40% of Falls Water employees will be earning less than the median
income. Given the essential nature of the service Falls Water provides and the technical nature of
both the field and office work,the Company submits that its employees should earn at least the
Idaho median wage.
Staff cites Consumer Price Index ("CPI") data for the West Mountain Region that shows
a 1.7% increase in the cost of goods and services between May 2024 and May 2025 as further
evidence that a 3%wage increase is justified. This one-year CPI increase is accurate; however, it
does not tell the whole story. Between May 2020 and May 2025, the CPI for the Mountain West
has increased 26%. Over that time period, Falls Water has not provided 26%wage increases.
Part of the current 10% increase is an effort to play catch up so that employees have the same
purchasing power they had before the intense inflation that occurred over that time period.
Limiting the inflation analysis to a single year does not tell the whole story and is an inadequate
method for analyzing the appropriateness of the proposed wage increases.
In addition, as the Commission previously recognized, Falls Water's wage increases
"must be considered in tandem with the significant deficit that existed prior to the increase."
Order No. 34925 at 6. Falls Water's "service territory is growing rapidly, and the Company must
REPLY COMMENTS PAGE 7 OF 15

offer competitive wages to attract and retain quality employees,"which is in the "long-term
benefit of customers."Id. Falls Water is still attempting to catch up to local wages—as noted
below, a 10% increase will make its wages comparable to the City of Idaho Falls. A 3% increase
will cause the Company to fall yet further behind on wages, which will require even greater
increases in the future.
The Company used wages at its closest competitor for employees, the City of Idaho Falls
water department. The Company's response to Production Request No. 81, attached, shows that
the proposed wages after the 10% increase are comparable to those at the City of Idaho Falls. In
most cases, Falls Water wages are less than comparable positions at the City of Idaho Falls and
in the cases where they are not less, they are very close to equal. Staff rejects the comparison to
the City of Idaho Falls because "the Company selected a step on the pay scale based solely on
longevity." This is not accurate. The Company's assessment of the relevant pay scale to use as a
comparison is based on job responsibilities, relevant experience,professional certifications and
education, and job performance. The Company believes the wages prevailing at its closest
competitor for employees are a relevant factor that should not be ignored.
Another important point to consider is that the City of Idaho Falls offers its employees a
pension plan and Falls Water does not offer a pension plan. This is not unique to the City of
Idaho Falls; most municipalities offer pension benefits. And most water utility employees in the
US and in Idaho are employees of municipal utilities. So, the BLS data(either US or Idaho
specific) for water utility wages is heavily influenced by wages at entities that offer a pension
benefit. This means a Falls Water employee being paid the same wage as a city employee is
actually earning less in total compensation. While we cannot directly quantify this difference in
the value of wages, it does imply that wages in the higher range of what the BLS reports is
justified for Falls Water.
REPLY COMMENTS PAGE 8 OF 15

Staff also asserts that bonus expenses were double counted by the Company and removes
what it considers bonus expenses from the admin labor account. Staff s comments do not explain
how Staff arrived at this conclusion, and Staff does not indicate the exact amount of the alleged
double counting. The amount of Staffs double counting adjustment appears to be between
$3,000 and$4,000. The Company has reviewed its records and does not believe any double
counting has occurred.
For these reasons we request that the Commission approve the salary expense as filed by
the Company, including the 10% increase for 2025.
Seasonal labor. Staffs adjustment to the Company's seasonal labor expense reduces the
Company's revenue requirement by $9,549. The Company believes that seasonal labor is a cost-
effective source to obtain additional capacity for in-house tasks. The Company does not agree
with the rationale for this adjustment and believes its recommended expense is justified.
However, in order to reduce the issues in dispute in this case, the Company accepts Staffs
Seasonal Labor adjustment.
Capitalized labor. Staff recommends an increase to the capitalized labor expense contra
account so that 9.7% of the proforma plant is recognized as capitalized labor. Labor is
capitalized and included in rate base when an employee works directly on the installation of a
capital project. Labor expense that is capitalized is removed from expenses through a contra
expense account(i.e., a negative expense). Staff calculated the 9.7%based on 2024. The
Company used 8%because in 2025,there will be fewer employee hours devoted to capital
projects than in 2024.
While Staff has put additional capitalized labor in the expense contra account, from a
review of Staffs workpapers it does not appear that Staff has made a corresponding adjustment
to the proforma plant so that the extra capitalized labor has been added to rate base.
REPLY COMMENTS PAGE 9 OF 15

For these reasons, Staff s capitalized labor adjustment should not be adopted.
Bonus expense. Staff reduces the Company's bonus expense because of the criteria for
awarding bonuses. Staff asserts that the criteria are weighted such that 55% of the bonus is based
on net income targets and growth metrics while 45% is based on customer service metrics. Staff
believes that the 55%based on net income and growth benefit the Company and not the
customers and therefore should not be included in rates.
The Company disagrees. In between rate cases, the primary way a general manager has to
increase net income is to keep costs under control which is a direct benefit to customers when the
next rate case is considered. Similarly, customer growth results in greater revenue without
increasing rates. Customer growth can therefore reduce the need for rate increases. So,both net
income and growth-related metrics benefit customers. For this reason, the Commission should
accept the bonus expense requested by the Company.
Payroll tax. The wage-related adjustments discussed above include a component that
flows through to payroll tax. Staff includes an adjustment to payroll tax to account for their
adjustments to the Company's proposed wages. Because the Company disagrees with most of
Staffs wage adjustments, it also disagrees with Staffs payroll tax adjustment. The Company's
proposed payroll tax based on the above discussion is shown on Exhibit 2.
Power expenses. Staffs adjustment to power expense is based on using five years of data
to create a normalized power expense. Staff s analysis has several flaws. First, the total
production for each year is overstated because Falls Water's waste production is double counted.
This artificially depresses the dollar per gallon factor Staff uses to calculate its normalized bill.
Since the dollar per gallon factor Staff employs is lower than the actual, it will produce an
expense number that is lower than actual when applied to gallons pumped.
REPLY COMMENTS PAGE 10 OF 15

Second, for Falls Water's largest system, Staff excludes 2024 from its calculation of
average gallons produced. Staff claims this is because the 2024 production is "higher compared
to typical trend." Staff s exclusion of 2024 in the calculation of the average usage is not justified.
Falls Water has compared its water production in the first half of 2025 to the same period in
2024, and it is actually higher. This indicates that the increased production in 2024, relative to
earlier years, is not an anomaly. Rather, the 2024 production number represents the new normal
for Falls Water.
Also, 2022 and 2023 were drought condition years and the Company urged its customers
to cut back and use less water than normal. So it is natural that usage in 2022 and 2023 would be
less than normal. This means that 2022 and 2023 are the anomalous years, not 2024. Further,
Staff notes the Company's average growth rate of approximately 4.7%, which is expected to
continue. Staff Comments at 4. Customer growth results in permanent increases in water
production. This further confirms that power costs from 2022 and 2023 are not indicative of
current operations.
In addition, two booster pumps were placed in service in November 2023. The additional
booster pumps resulted in what is expected to be a permanent increase in power usage that will
not return to pre-2024 levels. This new infrastructure cannot be normalized out of the
calculation.
Finally, Staffs method simply applies the overall percent increase in revenue for each of
Rocky Mountain Power's tariffs to Staff s normalized power bill to get the power bill adjusted
for Rocky Mountain Power's rate increase. This method does not account for Rocky Mountain
Power's rate design. Because of demand charges, individual customer's bill impact can vary
widely from the overall revenue increase on each tariff. Falls Water has taken the actual rates
approved by the IPUC for Rocky Mountain Power and applied them to Falls Water's actual test
REPLY COMMENTS PAGE I I OF 15

year usage (the application applied proposed rates.) This produces a purchased power expense of
$388,494. This is $5,000 less than what the Company originally proposed, because the original
proposal was based on Rocky Mountain Power's proposed new rates since their rate case was in
process when Falls Water filed its rate case.
For the reasons discussed above, the Company requests that the Commission adopt a
$5,000 reduction to the Company's original Electric Power cost rather than Staff s proposed
$74,139 reduction.
Chemical expenses. The Company accepts Staffs recommended adjustment to chemicals
expense.
Water mitigation amortization. As noted above, Staffs comments unintentionally
removed $182,920 from recoverable expenses, which should be included in revenue requirement
as reflected in Exhibit 2. Additionally, Staffs calculation of its proposed adjustment appears to
be based on a calculation of the Deferral account balance that is different from the Company's
calculation of that balance. As stated above, the Company and Staff will meet to discuss the
balancing account for the water mitigation amortization, including the current balance in that
account. Based upon their meeting with Staff, the Company will make a compliance filing in
this case in the next few months that quantifies the current balance in that account.
Shared services. The Company accepts Staffs recommended adjustment to shared
services.
Bad debt. The Company adjusted bad debt for both the 2024 increase in revenue
attributable to the Company's last rate case and for the 2025 increase in revenue requested in this
case. Rates approved in the Company's last case went into effect on December 15, 2023. The test
year in this case spans 2023 and 2024, with one quarter in 2023 and three quarters in 2024. As
such, the Company adjusted revenue so that all 12 months of the test year would be considered
REPLY COMMENTS PAGE 12 OF 15

as having the 2024 rates in effect. This resulted in an upward adjustment to bad debt of$638. An
additional $3,916 adjustment to bad debt based on increased revenue requested in this rate case
was also proposed. Staff recommends rejecting this second adjustment. Adjustments to bad debt
based on the requested revenue increase are a standard rate making adjustment and Staff s
recommendation to eliminate it should be rejected.
Rate case expense amortization. As of July 30, 2025, the Company has received
$18,136.50 in legal invoices related to this rate case, as demonstrated in supplemental responses
to Production Request No. 87, attached. The Company anticipates an additional $2,000 in legal
costs associated with reviewing and filing these comments and other items necessary before an
order is issued in this case. The Company requests that $20,136.50 amortized over 3 years be
included in rates ($6,712 per year).
7. Revenue requirement and rate design
The revenue requirement calculation as proposed by the Company in its original
application, as presented by Staff in its comments, and as presented by the Company in these
comments are as follows:
Line Description Company Staff Company
No. Request per Comments Reply
Application Request
1 Rate Base 15,924,094 15,017,145 15,103,936
2 Required Return on Rate Base 7.96% 7.45% 7.59%
3 Required Net Operating Income 1,267,399 1,118,777 1,146,011
4 Net Operating Income Realized 608,531 907,651 454,633
5 Net Operating Income Deficiency 658,867 211,127 691,378
6 Net to Gross Multiplier 136.521% 134.674% 134.674%
7 Gross Revenue Deficiency 899,493 284,333 931,107
8 Test Year Revenue 3,595,153 3,583,381 3,583,381
9 Revenue Increase Percentage 25.02% 7.93% 25.98%
Required
10 Revenue Requirement 4,494,646 3,867,713 4,514,488
REPLY COMMENTS PAGE 13 OF 15

As stated above, since the revenue requirement based on the Company's reply comments
is higher than the revenue requirement originally requested by the Company, the Company is
requesting only the amount included in its application: $4,494,646. The Company's proposed
rates shown on Exhibit 5 are designed to produce that amount.
In its comments, Staff recommended several changes to the Company's proposed rate
design. Staff proposed to keep the monthly minimum charges unchanged whereas the Company
had proposed to recover a significant amount of the proposed increase in the monthly minimum
charge. Similarly, the Company had proposed to reduce the free allowance included with the
monthly minimum from 8,000 gallons to 5,000 gallons, whereas Staff proposed to reduce it to
6,00 gallons. Staff also allocates a higher percent of the increase to the third tier commodity rate
than the Company had originally proposed. The Company accepts Staff s rate design principles
and incorporates them into its rate design shown on Exhibit 5.
Conclusion
For these reasons, the Company requests that the Commission approve the rates as
proposed in the Application, which are designed to collect a revenue requirement of$4,495,646,
as reflected in Exhibit 5, and issue an order that reflects the contents of these reply comments
with rates to become effective on September 1, 2025.
Dated: July 31, 2025.
GIVENS PURSLEY LLP
By Al Preston N. Carter
Preston N. Carter
Attorneys for Falls Water Co., Inc.
REPLY COMMENTS PAGE 14 OF 15

CERTIFICATE OF SERVICE
I hereby certify that on July 31, 2025, I caused to be served a true and correct copy of the
foregoing document to the person(s) listed below by the method indicated:
Monica Barrios-Sanchez ® Email
Commission Secretary ❑ U.S. Mail
Idaho Public Utilities Commission ❑ Fax
P.O. Box 83720 ❑ Hand Delivery
Boise, Idaho 83720-0074
[e-mail]
monica.barriossanchezkpuc.idaho.gov
Adam Triplett ® Email
Deputy Attorney General ❑ U.S. Mail
Idaho Public Utilities Commission ❑ Fax
P.O. Box 83720 ❑ Hand Delivery
Boise, Idaho 83720-0074
Adam.triplett gpuc.idaho.gov
Is/Preston N. Carter
Preston N. Carter
REPLY COMMENTS PAGE 15 OF 15

FALLS WATER CO., INC.
CASE No. FLS-W-24-02
REPLY COMMENTS
EXHIBIT I

FALLS WATER COMPANY Reply Comments
EXHIBIT 1
Rate Base
Test Year End 9/30/2024
(A) (R) (S)
FY Ended
September 30, Total Post Test Accepted Staff Total Gross Plant in
Plant in Service 2024 Year Assets' Adjustments Service
1 303 Land&Land Rights 2,346,675 356,059 2,702,734
2 304 Well Structures&Improvements 3,080,965 98,591 3,179,556
3 307 Wells 683,008 363,856 1,046,864
4 310 Generators 467,894 - 467,894
5 311 Pumps&Accessories 1,479,679 2,000 1,481,679
6 320 Purification Systems 51,608 15,000 66,608
7 320 Separators-Chlorinators 29,793 - 29,793
8 330 Tanks 1,840,224 - 1,840,224
9 331 Water Mains 4,398,878 129,814 4,528,692
10 334 Meters 2,206,135 220,116 (28,723) 2,397,528
11 334 Meters-Flow Meters 47,625 13,000 60,625
12 335 Hydrants 82,832 5,040 87,872
13 339 Other Plant and Misc Equip 155,825 1,952 157,777
14 340 Office Equipment 353,716 12,298 366,014
15 340 Office Equipment-Other 20,577 - 20,577
16 341 Transportation Equipment 290,960 10,000 300,960
17 343 Tools&Equipment 144,537 - 144,537
18 345 Power Operated Equipment 174,728 220,904 395,632
19 348 Other Intangible Plant 661,275 - 661,275
20
21 Total Plant in Service 18,516,936 1,448,629 19,936,842
22
23 Less Accumulated Depreciation (2,805,335) (28,497) (564,973) (3,398,805)
24 Net Plant in Service 15,711,601 16,538,037
25
26 Less Contributions in Ad of Construction
27 Gross Contributions(9/30/20024) 2,806,099 (19,475) 2,786,624
28 Less Accumulated Amortization (9/30/2024) (1,009,922) 12,730 (997,192)
29 Net Contributions in Aid of Construction 1,796,177 1,796,177
30
31 Deferred Tax Asset/(Liability) 102,811
32 Working Capital(1/8 of Operation and Maintenance Expense) 259,266
33
34 Total Rate Base 15,103,936
'Includes accepted Staff adjsutments,see Exh 1(D)RB Adj

FALLS WATER COMPANY Reply Comments
EXHIBIT 1 (D)
Rate Base Adjsutments
Test Year End 9/30/2023
Adjustements Annual
Proposed per Reply Expected In Service Account Service Depreciation Accumulated
Description Amount Filing Comments Amount Date No. Life Expense Depreciation
Company Updated Amounts (28,723) (28,723) 334 25 (1,149) (574)
Water Rights(21.5 Acres x$16,500 including Fees) 354,750 1,309 356,059 3/30/2025 303 0 - -
Replacement Well for Morning View's Wells 1 &2 305,000 58,856 363,856 2/15/2025 307 25 14,554 7,277
Net of Morning View Well Pump and Pump Motor moved from Fixed
Assets to Inventory 2,000 2,000 2/15/2025 311 20 100 50
Sand Separate for Morning View Well 15,000 15,000 2/15/2025 320 20 750 375
Meter Replacement Program 221,700 (46,861) 174,839 5/15/2025 334 25 6,994 3,497
Replace 2 Flow Meters 13,000 13,000 1/31/2025 334.1 10 1,300 650
Replaced Fire Hydrant 5,040 5,040 10/1/2024 335 30 168 84
Miscellaneous Software&Hardware upgrades 12,298 12,298 4/30/2025 340 5 2,460 1,230
Purchase Skidsteer and Backhoe 230,000 (9,096) 220,904 3/31/2025 345 10 22,090 11,045
Replacement of Water Service Lines 52,000 (22,186) 29,814 4/30/2025 331 50 596 298
Reroute Iona Rd Mainline at Bridges for Street Widening 100,000 100,000 4/30/2025 331 50 - -
Backup Generator&Transfer Switch @ Well 5 and Office 155,000 (155,000) - 4/30/2025 310 25 - -
Fencing and Paving at wellsites&Office 98,591 98,591 4/30/2025 304 25 3,944 1,972
Morning View Meters 74,000 74,000 4/30/2025 334 25 2,960 1,480
Repair Dump Truck Engine 10,000 10,000 2/28/2025 341 10 1,000 500
Replace Spring on Overhead Garage Door at Office 1,952 1,952 11/30/2024 339 25 78 39
TOTAL 1,650,330 (201,701) 1,448,629 56,994 28,497

FALLS WATER CO., INC.
CASE No. FLS-W-24-02
REPLY COMMENTS
EXHIBIT 2

FALLS WATER COMPANY Reply Comments
EXHIBIT 2
Income Statement
Test Year End 9/30/2024
Accepted
Staff
(A) (B) (C) (D) (E) (F) (G) (H) Adjustments
Test Year 2024 Rate Increased Miscellaneous Depreciation Income Rate Case and Company
12 Months Ending Increase Labor Utility Cost Operating Costs Expense Tax Expense Reply Adjusted
9/30/2024 Costs* &Shared Services Expense Adjustments Totals
Revenue
1 461 Metered Water Service $ 3,430,308 153,073 3,583,381
2 464 Other Water Sales 11,772 (11,772) (0)
3 Total Revenue 3,442,080 3,583,381
4
5
6 Expenses
7 408.1 Regulatory Fee $ - -
8 601.2 601.2-Bonus Expense 11,580 719 12,299
9 601.5 601.5-Labor Field 435,250 33,414 (7,091) 461,573
10 601.8 601.8-Labor Office 96,028 12,756 108,784
11 601.9 601.9-Admin-Labor 125,680 16,702 142,382
12 602 602-Capitalized Labor (42,263) 4,770 (37,493)
13 604 604 Employee Benefits 139,333 10,514 149,847
14 615 615 Electrical Power 335,722 57,773 (5,000) 388,495
15 618 618 Chemicals 1,686 8,256 (2,052) 7,890
16 620.2 620.2-Source M&S 20,766 20,766
17 620.5 620.5-Safety 1,449 1,449
18 620.6 620.6-Distribution M&S 17,505 17,505
19 620.7 620.7-Postage 39,476 7,385 46,861
20 620.8 620.8-Office 38,141 38,141
21 620.81-Telephone Expense 12,664 12,664
22 620.82-Bank service charges 32,435 32,435
23 620.83-Office Utilites Expense 4,686 4,686
24 631.1-Engineering 9,753 9,753
25 631.3-Attorney 12,606 12,606
26 631.4 631.4-Payroll Services 16,212 16,212
27 634.1 634.1-NWN Shared Services 233,520 27,402 (27,402) 233,519
28 635 635-Testing 15,869 7,119 22,988
29 636.3-Trash 1,662 1,662
30 636.4-Outsourced Bad Debt Collection 144 144
31 636.7-Data Processing 152,103 7,057 159,160
32 642-Rental of Equipment 1,224 1,224
33 645-Lease Rent Exp-Interest 809 809
34 646-Lease Rent Exp-Depreciation 4,917 4,917
35 650-Transportation Expense 44,905 44,905
36 656 656-Insurance Expense 104,885 104,885
37 656.1 656.10-Capitalized Labor Insurance (614) (614)
38 666 Amortization of Rate Case Expense - 10,000 (3,288) 6,712
39 670 670-Bad Debt Expense 14,347 638 4,054 19,039
40 675.1 675.1 Training Expenses 3,075 3,075
41 675.2 675.2 Dues&Publications 4,763 4,763
42 675.2 675.4-IDHW Fee Expense 20,085 20,085
43 675.5 675.5-Deferral Amortization 119,691 63,229 182,920
44 408.12 408.12-Payroll Taxes 52,401 5,888 58,289
45 408.5 408.5 Capitalized LaborPayroll Taxes (3,365) (3,365)
46 408.11 408.11-Property Taxes 40,406 40,406
47 680 680 Income Tax Expense 127,930 90,055 217,984
48 403 Depreciation Expense(Net)** 501,393 56,994 558,387
49 Total Expenses 2,748,858 3,128,748
50
51 Operating Income 693,222 454,633
*The Payroll Tax amount in Column C is adjsuted for Staffs adjsutment to Seasonal Labor.

FALLS WATER CO., INC.
CASE No. FLS-W-24-02
REPLY COMMENTS
EXHIBIT 3

FALLS WATER COMPANY Reply Comments
EXHIBIT 3
Capital Structure
Test Year End 9/30/2024
(A) (B) (C) (D)
Percent of Total
Line No. Description Amount Capital Cost Component
1 Long Term Debt $0 45.00% 4.70% 2.12%
2 Common Equity 0 55.00% 9.95% 5.47%
3 Total 0 100.00% 7.59%

FALLS WATER CO., INC.
CASE No. FLS-W-24-02
REPLY COMMENTS
EXHIBIT 4

FALLS WATER COMPANY Reply Comments
EXHIBIT 4
Revenue Requirement
Test Year End 9/30/2024
1 Rate Base $ 15,103,936
2 Required Rate of Return 7.59%
3 Net Operating Income Requirement $ 1,146,011
4 Net Operating Income Realized $ 454,633
5 Net Operating Income Deficiency $ 691,378
6
10 Net Operating Income Deficiency 691,378
11 Gross up Factor 1.346744
12 Total Incremental Revenue Requirement 931,109
13
15 Revenues at existing rates $ 3,583,381
16 Total Revenue Requirement $ 4,514,490
17
18 Percent Increase Required 25.98%
Falls Water Company, Inc.
Net to Gross Multiplier
Total Gross Revenues 1.000000
Less Uncollectibles(percentage) 0.005260
Less 2024 Regulatory Fees(percentage) 0.002223
Less Bank Service Charge Fees(percentage) -
Net Revenue 0.992517
State Income Tax Rate 5.300% 0.052603
Federal Income Tax Base 0.939914
Federal Income Tax Rate 21.000% 0.197382
Net Operating Revenue 0.742532
Net Income to Gross Revenue Multiplier 1.34674

FALLS WATER CO., INC.
CASE No. FLS-W-24-02
REPLY COMMENTS
EXHIBIT 5

FALLS WATER COMPANY Reply Comments
EXHIBIT 5(Page 1 of 3)
Rate Design
Test Year End 9/30/2024
Monthly Minimum Charges
Current Rates Proposed Rates
Monthly Gallons Monthly Gallons
Minimum Included in Minimum Included in
Water System: Meter Size Charge Minimum Charge Minimum
Falls and Taylor Mountain 5/8" NA NA 22.50 6000
Falls and Taylor Mountain 3/4" 22.50 8,000 22.50 6000
Falls and Taylor Mountain 1" 31.68 11,000 31.68 9000
Falls and Taylor Mountain 1.5" 40.86 15,000 41.00 13000
Falls and Taylor Mountain 2" 51.96 19,000 52.00 17000
Falls and Taylor Mountain 3" NA NA 72.50 19000
Falls and Taylor Mountain 4" 92.82 33,000 93.00 21000
Falls and Taylor Mountain 6" NA NA 374.96 25200
Morningview 5/8" NA NA 22.50 6000
Morningview 3/4" NA NA 22.50 6000
Morningview 1" NA NA 31.68 9000
Morningview 1.5" NA NA 41.00 13000
Morningview 2" NA NA 52.00 17000
Morningview 3" NA NA 72.50 19000
Morningview 4" NA NA 93.00 21000
Morningview 6" NA NA 374.96 25200
Current Rates Proposed Rates
Minimum Gallons Minimum Gallons
Lot Size Charge Based Included in Charge Based Included in
(Acres) on Lot Size Minimum on Lot Size Minimum
Morningview 0.250 50.00 11,000 NA NA
Morningview 0.500 60.00 11,000 NA NA
Morningview 1.000 65.50 11,000 NA NA

EXHIBIT 5(Page 2 of 3)
Commodity Rates
Present Rate Proposed Rate Present Rate Proposed
Tier Upper Limit Tier Upper Per 1,000 Rate Per
Meter Size Gallons Limit Gallons Gallons 1,000 Gallons
Falls and Taylor Mountain 5/8" Tier 1 8000 6000 $ - $ -
Tier 2 24000 15000 0.64 0.95
Tier 3 >24000 >15000 1.44 2.14
Falls and Taylor Mountain 3/4" Tier 1 8000 6000 - -
Tier 2 24000 15000 0.64 0.95
Tier 3 >24000 >15000 1.44 2.14
Falls and Taylor Mountain 1" Tier 1 11000 9000 - -
Tier 2 33000 27000 0.64 0.95
Tier 3 >33000 >27000 1.44 2.14
Falls and Taylor Mountain 1.5" Tier 1 15000 13000 - -
Tier 2 45000 39000 0.64 0.95
Tier 3 >45000 >39000 1.44 2.14
Falls and Taylor Mountain 2" Tier 1 19000 17000 - -
Tier 2 57000 51000 0.64 0.95
Tier 3 >57000 >51000 1.44 2.14
Falls and Taylor Mountain 3" Tier 1 NA 19000 NA -
Tier 2 NA 57000 NA 0.95
Tier 3 NA >57000 NA 2.14
Falls and Taylor Mountain 4" Tier 1 33000 21000 - -
Tier 2 99000 63000 0.64 0.95
Tier 3 >99000 >63000 1.44 2.14
Falls and Taylor Mountain 6" Tier 1 NA 21000 NA -
Tier 2 NA 63000 NA 0.95
Tier 3 NA >63000 NA 2.14

EXHIBIT 5(Page 3 of 3)
Present Rate Proposed Rate Present Rate Proposed
Tier Upper Limit Tier Upper Per 1,000 Rate Per
Meter Size Gallons Limit Gallons Gallons 1,000 Gallons
Morningview 5 8" Tier 1 11000 6000 -
Tier 2 33000 15000 0.64 0.95
Tier 3 >33000 >15000 1.44 2.14
Morningview 3/4" Tier 1 11000 6000 - -
Tier 2 33000 15000 0.64 0.95
Tier 3 >33000 >15000 1.44 2.14
Morningview 1" Tier 1 11000 9000 - -
Tier 2 33000 27000 0.64 0.95
Tier 3 >33000 >27000 1.44 2.14
Morningview 1.5" Tier 1 11000 13000 - -
Tier 2 33000 39000 0.64 0.95
Tier 3 >33000 >39000 1.44 2.14
Morningview 2" Tier 1 11000 17000 - -
Tier 2 33000 51000 0.64 0.95
Tier 3 >33000 >51000 1.44 2.14
Morningview Y Tier 1 11000 19000 NA -
Tier 2 33000 57000 NA 0.95
Tier 3 >33000 >57000 NA 2.14
Morningview 4" Tier 1 11000 21000 - -
Tier 2 33000 63000 0.64 0.95
Tier 3 >33000 >63000 1.44 2.14
Morningview 6" Tier 1 11000 21000 NA -
Tier 2 33000 63000 NA 0.95
Tier 3 >33000 >63000 NA 2.14

FALLS WATER CO., INC.
CASE No. FLS-W-24-02
REPLY COMMENTS
EXHIBIT 6

FALLS WATER COMPANY Reply Comments
EXHIBIT 6
Bill Impact
Test Year End 9/30/2024
Customer Median Usage Current Bill at Median Proposed Bill at
Water System: I Meter Size Count 1(1,000 Gallons) I Usage I Median Usage $Increase %Increase
Falls and Taylor Mountain 5/8" 26 6.50 22.50 22.98 0.48 2%
Falls and Taylor Mountain 3/4" 4,365 7.00 22.50 23.45 0.95 4%
Falls and Taylor Mountain 1" 2,170 6.00 31.68 31.68 0.00 0%
Falls and Taylor Mountain 1.5" 48 3.00 40.86 41.00 0.14 0%
Falls and Taylor Mountain 2" 80 11.00 51.96 52.00 0.04 0%
Falls and Taylor Mountain 4" 6 67.00 114.58 141.45 26.87 23%
Mourningview(.25 Acre) 3/4" 10 4.00 50.00 22.50 -27.50 -55%
Mourningview(.25 Acre) 1" 21 5.00 50.00 31.68 -18.32 -37%
Mourningview(.5 Acre) 3/4" 13 0.00 60.00 22.50 -37.50 -63%
Mourningview(.5 Acre) 1" 51 0.00 60.00 31.68 -28.32 -47%
Mourningview(1 Acre) 3/4" 14 5.00 65.50 22.50 -43.00 -66%
Mourningview(1 Acre) 1" 29 0.00 65.50 31.68 -33.82 -52%

FALLS WATER CO., INC.
CASE No. FLS-W-24-02
REPLY COMMENTS
EXHIBIT 7

Falls Water LLC Docket FLS-W-24-02
Cost of Capital Reply Comments Exhibit 7a
Calculation of WACC
Weighted Average Cost of Capital (WACC)
Cost Weight Weighted Cost
Equity 9.95% 50% 4.98%
Debt 4.70% 50% 2.35%
WACC 7.33%

Falls Water LLC Docket FLS-W-24-02
Cost of Capital Reply Comments Exhibit 7b
Calculation of Cost of Equity
Model Range Average
Comparable Earnings 9.2%to 13.1% 10.71%
DCF 8.9%to 12.9% 10.71%
CAPM 11.00%to 12.3% 11.68%
Average 11.03
Company Recommendation 10.20%
Staff Recommendation 9.70%

Falls Water LLC Docket FLS-W-24-02
Cost of Capital Reply Comments Exhibit 7c
Comparable Earnings Analysis
PROXY GROUP--COMPARABLE EARNINGS ANALYSIS
Line
No 5-Year
1 5-Year 5-Year Combined
2 Historical ROEs Projected ROEs Historical Projected Historical&
3 2028- Average Average* Projected
4 Company 2020 2021 2022 2023 I 2024 2025 2026 2030 2020-2024 2025-2030 Average
5
6 AWR American State 13.5% 13.8% 11.0% 16.1% 13% 12.5% 12.5% 13.0% 13.5% 12.7% 13.1%
7 AWK American Wate 11.0% 17.3% 10.7% 9.6% 10.2% 10.5% 10.5% 10.0% 11.8% 10.3% 11.0%
8 WTRG Essential Utiliti 6.1% 8.3% 8.7% 8.5% 9.6% 11.0% 11.0% 10.5% 8.2% 10.8% 9.5%
9 ARTNA Artesian Resou 9.9% 9.5% 9.6% 7.2% 8.5% NA NA NA 8.9%
10 CWT California Wat( 10.5% 8.6% 7.3% 3.6% 11.7% 10.0% 10.0% 10.0% 8.3% 10.0% 9.2%
11 MSEX Middlesex Wat 11.1% 9.9% 10.6% 7.4% 9.9% 10.5% 11.5% 13.0% 9.8% 11.7% 10.7%
12 YORW York Water 11.6% 11.1% 9.5% 10.7% 8.8% NA NA NA 10.3%
13 Average 10.5% 11.2% 9.6% 9.0% 10.2% 10.9% 11.1% 11.3% 10.1% 11.1% 10.71%
14
15 Source: Value Line Investment Survey July,2025 *Projected ROEs are no longer available for ARTNA and YORW from Value Line.
16

Falls Water LLC Docket FLS-W-24-02
Cost of Capital Reply Comments Exhibit 7d
Discounted Cash Flow:Dividend Yield
PROXY GROUP--DIVIDEND YIELD
Line 4/25/2025-7/25/25
No Proxy Group Companies DPS High Low Average Yield
1 AWR American States Water Co. $1.86 $81.11 $74.75 $78.36 2.38%
2 AWK American Water Works Co.,Inc. $3.31 $149.20 $133.82 $142.76 2.32%
3 WTRG Essential Utilities,Inc. $1.30 $41.39 $36.78 $38.67 3.37%
4 ARTNA Artesian Resources Corp. $1.23 $35.52 $32.54 $34.04 3.61%
5 CWT California Water Service Gp. $1.20 $50.65 $44.67 $47.44 2.53%
6 MSEX Middlesex Water $1.36 $63.12 $53.38 $57.99 2.35%
7 YORW York Water Company $0.88 $35.40 $31.21 $33.09 2.65%
8 Average 2.74%
9
10 References:
11 Column(A)-Value Line Investment Survey(July 2025)
12 (Reflects annualization of most recent quarterly dividend)
13 Columns(B),(C), and(D)-Yahoo Finance
14

Falls Water LLC Docket FLS-W-24-02
Cost of Capital Reply Comments Exhibit 7e
Discounted Cash Flow: Growth Rates
PROXY GROUP -- PER SHARE GROWTH RATES
5-Year Compound Average Annual
Line Historical Growth
No Proxy Group Companies EPS DPS BVPS Average
1 AWR American States Water Co. 8.0% 9.0% 7.0% 8.0%
2 AWK American Water Works Co. 10.5% 9.5% 8.5% 9.5%
3 WTRG Essential Utilities,Inc. 11.0% 7.0% 10.0% 9.3%
4 ARTNA Artesian Resources Corp. 3.5% 10.0% 5.5% 6.3%
5 CWT California Water Service Gp. 8.0% 7.0% 10.5% 8.5%
6 MSEX Middlesex Water 4.5% 6.5% 8.5% 6.5%
7 YORW York Water Company 7.0% 4.0% 9.5% 6.8%
8 Average 7.86%
9
10 Reference:
11 Value Line Investment Survey(July 2025)

Falls Water LLC Docket FLS-W-24-02
Cost of Capital Reply Comments Exhibit 7f
DCF Results
PROXY GROUP--DCF ANALYSIS
Current
Dividend Historical Dividend
Line Yield Per Share Yield DCF
No Proxy Group Companies (Dn/Pp) Growth Rates (D,/Pp) Rates
1 AWR American States Water Co. 2.38% 8.0% 2.5% 10.5%
2 AWK American Water Works Co.,Inc 2.32% 9.5% 2.4% 11.9%
3 WTRG Essential Utilities,Inc. 3.37% 9.3% 3.5% 12.9%
4 ARTNA Artesian Resources 3.61% 6.3% 3.7% 10.1%
5 CWT California Water Service Group 2.53% 8.5% 2.6% 11.1%
6 MSEX Middlesex Water 2.35% 6.5% 2.4% 8.9%
7 YORW York Water Company 2.65% 6.8% 2.7% 9.6%
8 Mean 2.74% 7.86% 2.85% 10.71%
9

Falls Water LLC Docket FLS-W-24-02
Cost of Capital Reply Comments Exhibit 7g
CAPM Risk Premium
STANDARD&POOR'S 500 COMPOSITE
20-YEAR U.S.TREASURY BOND YIELDS
RISK PREMIUMS
[Al [Bl [C] [D] [E]
Line 20-YEAR RISK
No. Year EPS BVPS ROE T-BOND PREMIUM
1 1977 $79.07
2 1978 $12.33 $85.35 15.00% 7.90% 7.10%
3 1979 $14.86 $94.27 16.55% 8.86% 7.69%
4 1980 $14.82 $102.48 15.06% 9.97% 5.09%
5 1981 $15.36 $109.43 14.50% 11.55% 2.95%
6 1982 $12.64 $112.46 11.39% 13.50% -2.11%
7 1983 $14.03 $116.93 12.23% 10.38% 1.85%
8 1984 $16.64 $122.47 13.90% 11.74% 2.16%
9 1985 $14.61 $125.20 11.80% 11.25% 0.55%
10 1986 $14.48 $126.82 11.49% 8.98% 2.51%
11 1987 $17.50 $134.07 13.42% 7.92% 5.50%
12 1988 $23.75 $141.32 17.25% 8.97% 8.28%
13 1989 $22.87 $147.26 15.85% 8.81% 7.04%
14 1990 $21.73 $153.01 14.47% 8.19% 6.28%
15 1991 $16.29 $158.85 10.45% 8.22% 2.23%
16 1992 $18.86 $149.74 12.22% 7.26% 4.96%
17 1993 $21.89 $180.88 13.24% 7.17% 6.07%
18 1994 $30.60 $193.06 16.37% 6.59% 9.78%
19 1995 $33.96 $216.51 16.58% 7.60% 8.98%
20 1996 $38.73 $237.08 17.08% 6.18% 10.90%
21 1997 $39.72 $249.52 16.33% 6.64% 9.69%
22 1998 $37.71 $266.40 14.62% 5.83% 8.79%
23 1999 $48.17 $290.68 17.29% 5.57% 11.72%
24 2000 $50.00 $325.80 16.22% 6.50% 9.72%
25 2001 $24.70 $338.37 7.44% 5.53% 1.91%
26 2002 $27.59 $321.72 8.36% 5.59% 2.77%
27 2003 $48.73 $367.17 14.15% 4.80% 9.35%
28 2004 $58.55 $414.75 14.98% 5.02% 9.96%
29 2005 $69.93 $453.06 16.12% 4.69% 11.43%
30 2006 $81.51 $504.39 17.03% 4.68% 12.35%
31 2007 $66.18 $529.59 12.80% 4.86% 7.94%
32 2008 $14.88 $451.37 3.03% 4.45% -1.42%
33 2009 $50.97 $513.58 10.56% 3.47% 7.09%
34 2010 $77.35 $579.14 14.16% 4.25% 9.91%
35 2011 $86.95 $613.14 14.59% 3.82% 10.77%
36 2012 $86.51 $666.97 13.52% 2.46% 11.06%
37 2013 $100.20 $715.84 14.49% 2.88% 11.61%
38 2014 $102.31 $726.96 14.18% 3.41% 10.77%
39 2015 $86.53 $740.29 11.79% 2.55% 9.24%
40 2016 $94.55 $768.98 12.53% 2.30% 10.23%
41 2017 $109.88 $826.52 13.77% 2.65% 11.12%
42 2018 $132.39 $851.62 15.78% 3.11% 12.67%
43 2019 $139.47 $914.49 15.79% 2.40% 13.39%
44 2020 $94.13 $927.52 10.22% 1.35% 8.87%
45 2021 $197.84 $1,008.02 20.44% 1.98% 18.46%
45 2022 $172.75 $1,024.56 17.00% 3.30% 13.70%
46 2023 $192.43 $1,106.21 18.06% 4.26% 13.80%
2024 $212.83 $1,174.51 18.66% 4.50% 14.16%
2025 Q1 $223.15 $1,188.21 18.89% 4.76% 14.13%
Average 14.17% 5.51% 8.66%
[A]:Diluted earnings per share on the S&P 500 Composite Index.
[B]:Book value per share on the S&P 500 Composite Index.
[C]:Average of current-and prior year[B]/current year[A].
[D]:Annual income returns on 20-year U.S.Treasury bonds.
[E]: [C]-[D]
Sources for[A]and[B]1978-2023:
Standard&Poor's 500 Earnings and Book Value Per Share:
https://Ycharts.com/indicators/reports/sp 500 earnings Quarterly data is annualized
https://vcharts.com/indicators/sandR 500 book value per share
Sources for[A]and[B]2024-2025:
Value Line
Source for[D]: U.S.Department of the Treasury
bqRs://www.treasury.gov/Pages/default.aspx

Falls Water LLC Docket FLS-W-24-02
Cost of Capital Reply Comments Exhibit 7h
CAPM Results
CAPITAL ASSET PRICING MODEL--PROXY COMPANY COST RATES
Line Risk Free Risk Beta X CAPM
No Proxy Group Companies Rate BETA Premium Risk Premium Rates
1 AWR American States Water Co. 4.94% 0.75 X 8.66% = 6.49% 11.43%
2 AWK American Water Works Co.,Inc. 4.94% 0.80 X 8.66% = 6.93% 11.86%
3 WTRG Essential Utilities,Inc. 4.94% 0.85 X 8.66% = 7.36% 12.30%
4 ARTNA Artesian Resources Corp. 4.94% 0.70 X 8.66% = 6.06% 11.00%
5 CWT California Water Service Gp. 4.94% 0.85 X 8.66% = 7.36% 12.30%
6 MSEX Middlesex Water 4.94% 0.75 X 8.66% = 6.49% 11.43%
7 YORW York Water Company 4.94% 0.75 X 8.66% = 6.49% 11.43%
8 Average 11.68%
9
10 Risk Free Rate:20 year Treasury Bonds
11 24-Jul-25 4.95%
12 24-Jun-25 4.83%
13 23-May-25 5.03%
14 Average 4.94%
15 20 Year T Bonds Source
16 https://home.treasury.gov/resource-center/data-chart-center/interest-rates/rextView?tvpe=daily treasury lone term rate&field tdr date value=2024
17 Beta:Value Line Reports July 2025