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Home My WebLink About20051028Avera Exhibit 05.pdfBEFORE TH IDAHO PUBLIC UTiliTIES COMMISSIONCASE NO. IPC-O5-IDAHO POWER COMPANY EXHIBIT NO. WilliAM E. AVERA CAPITAL ASSET PRICING MODEL FORWARD lOOKING CAPITAL ASSET PRICING MODEL Exhibit WEA-Page 1 of 2FORWARD-LOOKING RISK PREMIUM - CURRENT ESTIMATEMarket Rate of ReturnDividend Yield (a)Growth Rate (b)11.Market Return (c)13.Less: Risk-Free Rate (QlLong-term Treasury Bond YieldMarket Risk Premium liD.Utility Proxy Group Beta illUtility Proxy Group Risk Premium (glPlus: Risk-free Rate (Ql Long-term Treasury Bond Yield Implied Cost of Equity (h)12. (a) Weighted average dividend yield for the dividend paying firms in the S&P 500 from www.valueline.com (Oct. 7, 2005). (b) Weighted average of IBES and Value Line growth rates for the dividend paying firms in the S&P 500 based on data from Standard & Poor Earnings Guide (Sep. 2005) and www.valueline.com (Oct. 7, 2005).(c) (a) + (b) (d) Average of the daily yields on 20-year Treasury bonds for September 2005 reported by the S. Department of the Treasury at www.treas.gov. (e) (c) - (d). (f) The Value Line Investment Survey (Aug. 12, 2005). (g) (e) x (f). (h) (d) + (g). EXHIBIT NO. CASE NO. IPC-O5- W. AVERA , IPC Page 1 of 2 Exhibit WEA-Page 2 of 2CAPITAL ASSET PRICING MODELFORWARD-LOOKING RISK PREMIUM - RATE YEAR ESTIMATEMarket Rate of ReturnDividend Yield (a)Growth Rate (b)11.Market Return (c)13.Less: Risk-Free Rate (QlLong-term Treasury Bond YieldMarket Risk Premium liD.Utility Proxy Group Beta illUtility Proxy Group Risk Premium (glPlus: Risk-free Rate (Ql Long-term Treasury Bond Yield Implied Cost of Equity (h)12. (a) Weighted average dividend yield for the dividend paying firms in the S&P 500 from www.valueline.com (Oct. 7, 2005). (b) Weighted average of IBES and Value Line growth rates for the dividend paying firms in the S&P 500 based on data from Standard & Poor Earnings Guide (Sep. 2005) and www.valueline.com (Oct. 7, 2005).(c) (a) + (b) (d) Projected yield on 20-year Treasury bonds for 2006 based on interest rate forecasts reported by Gioballnsight The U.S. Economy: The 25- Year Focus (First Quarter 2005), Energy Information Administration Annual Energy Outlook (2005), and Blue Chip Financial Forecasts (Sep. 1 , 2005). (e) (c) - (d). (f) The Value Line Investment Survey (Aug. 12, 2005). (g) (e) x (f). (h) (d) + (g). EXHIBIT NO. CASE NO. IPC-O5- W. AVERA , IPC Page 2 of 2