20051028Avera Exhibit 06.pdf

BEFORE TH IDAHO PUBLIC UTiliTIES COMMISSIONCASE NO. IPC-O5-IDAHO POWER COMPANY
EXHIBIT NO.
WilliAM E. AVERA
CAPITAL ASSET PRICING MODEL
HISTORICAL RISK PREMIUM
CAPITAL ASSET PRICING MODEL Exhibit WEA-Page 1 of 2HISTORICAL RISK PREMIUM - CURRENT ESTIMATEMarket Risk PremiumLong-Horizon Equity Risk Premium (a)Utility Proxy Group Beta 021Utility Proxy Group Risk Premium Plus: Risk-free Rate (QlLong-term Treasury Bond YieldImplied Cost of Equity (e)10.
(a) Arithmetic mean return on Large Company Stocks from 1926-2004 reported by Ibbotson
Associates, Stocks, Bonds, Bills, and Inflation, Valuation Edition, 2005 Yearbook, at 81.
(b) The Value Line Investment Survey (Aug. 12, 2005).
(c) (a) x (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).
EXHIBIT NO.
CASE NO. IPC-O5-
W. AVERA , IPC
Page 1 of 2
CAPITAL ASSET PRICING MODEL Exhibit WEA-Page 2 of 2HISTORICAL RISK PREMIUM - RATE YEAR ESTIMATEMarket Risk PremiumLong-Horizon Equity Risk Premium (a)Utility Proxy Group Beta 021Utility Proxy Group Risk Premium Plus: Risk-free Rate (QlLong-term Treasury Bond YieldImplied Cost of Equity (e)11.
(a) Arithmetic mean return on Large Company Stocks from 1926-2004 reported by Ibbotson
Associates, Stocks, Bonds, Bills, and Inflation, Valuation Edition, 2005 Yearbook, at 81.
(b) The Value Line Investment Survey (Aug. 12, 2005).
(c) (a) x (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).
EXHIBIT NO.
CASE NO. IPC-O5-
W. AVERA , IPC
Page 2 of 2