20031021Avera Exhibit 8.pdf

BEFORE THEIDAHO PUBLIC UTiliTIES COMMISSIONCASE NO. IPC-O3-IDAHO POWER COMPANY
EXHIBIT NO.
W. AVERA
Risk Premium Method - Authorized Returns
RISK PREMIUM APPROACH
(a)
(b)
Page 1 of 1ANALYSIS OF AUTHORIZED RATES OF RETURN ON EQUITYFOR ELECTRIC UTILITIES(a)(b)AVERAGEALLOWEDPUBLIC UTILITY RISKYEARROEBON D YIELD PREMIUM197413.100 270 830197513.200 880 320197613.100 170 930197713.300 580 720197813.200 220 980197913.500 10.390 11 %1980 14.230 13.150 080198115.220 15.620 400198215.780 15.330 450198315.360 13.31 %050198415.320 14.030 290198515.200 12.290 91 %1986 13.930 460 470198712.990 980 01 %1988 12.790 10.450 34 %1989 12.970 660 31 %1990 12.700 760 940199112.550 21 %34 %1992 12.090 570 520199311 .41 %560 850199411.340 300 040199511.550 91 %640
1996 11.390 740 650
1997 11.400 630 770
1998 11.660 000 660
1999 10.770 550 220
2000 11.430 090 34 %
2001 11.080 720 360
2002 11.160 530 630
Average 81 %080
Current Equity Risk Premium
Avg. Yield over Study Period 81%
Aug. 2003 Avg. Utility Bond Yield 79%
Change in Bond Yield 02%
Risk Premiumllnterest Rate Relationship 43.46%
Adjustment to Average Risk Premium 31%
Average Risk Premium over Study Period 08%
Adjusted Risk Premium 390
Regression Output
Constant
Std Err of Y Est
R Squared
No. of Observations
Degrees of Freedom
07343
00576
77401
X Coefficient(s)
Std Err of Coef.
0.43462
04520
Major Rate Case Decisions , Regulatory Focus , Regulatory Research Associates (January 22 , 2003
January 24 , 2001 & January 16 , 1990); UtilityScope Requlatorv Servic~ Argus (January 1986).
Moody Public Utility Manual(2001); Moody Credit Perspectives (various editions).
EXH BIIT NO.
CASE NO. IPC-03-
W. AVERA, IPCo
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