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Home My WebLink About20050118Hadaway Exhibits.pdfCase No. P AC-O5- Exhibit No. Witness: Samuel C. Hadaway BEFORE THE IDAHO PTJBLIC UTILITIES COMMISSION ACIFICORP Exhibit Accompanying Direct Testimony of Samuel C. Hadaway Summary of Qualifications Resume January 2005 PacifiCorp Exhibit No.1 page 1 of 8 CASE NO. PAC-O5- Witness Samuel C. Hadaway SAMUEL C. HADAWAY FINANCO, Inc. Financial Analysis Consultants 3520 Executive Center Drive, Suite 124 Austin, Texas 78731 (512) 346-9317 SUMMARY OF OUALIFICA TIONS . Principal, Financial Analysis Consultants (FINAN CO, Inc. . Ph.D. in Finance and Econometrics. Extensive expert witness testimony in court and before regulatory agencies. Management of professional research staff in academic and regulatory organizations. Professional presentations before executive development groups, the National Rate of Return Analysts' Forum, and the New York Society of Security Analysts. Financial Management Association, Vice President for Practitioner Services. EDUCA TION The University of Texas at Austin Ph.D., Finance and Econometrics January 1975 The University of Texas at Austin MBA, Finance June 1973 Southern Methodist University , Economics June 1969 OTHER EXPE RIEN University of Texas at Austin Adjunct Finance Professor Texas State University San Marcos Associate Professor of Finance Public Utility Commission of Texas Chief Economist and Director of Economic Research Division August 1980-August 1983 Assistant Professor of Finance Texas Tech University July 1978-July 1980 University of Alabama January 1975-June 1978 Dissertation: An Evaluation of the Original and Recent Variants of the Capital Asset Pricing Model. Thesis: The Pricing of Risk on the New York Stock Exchange. Honors program. Departmental distinction. Corporate Financial Management Investments and Integrative Cases. Graduate and undergraduate courses in Financial Management, Managerial Economics, and Investment Analysis. Lead fmancial witness. Supervised Commission staff in research and testimony on rate of return, financial condition, and economic analysis. Member of graduate faculty. Conducted Ph.D. seminars and directed doctoral dissertations in capital market theory. Served as consultant to industry, church and governmental organizations. FINANCIAL AND ECONOMIC TESTIMONY IN REGULA TORYPROCEEDINGS (Client in parenthesis) Cost of Money Testimony: Utah Public Service Commission, Docket No. 04-2035- , August 4, 2004 (PacifiCorp ). Oklahoma Corporation Commission, Cause No. PUD-200400187, July 2 2004(CenterPoint Energy Arkla). Minnesota Public Utilities Commission, Docket No. G-008/GR-04-90 I , July 2004 (CenterPoint Energy Minnegasco). Washington Utilities and Transportation Commission, Docket ,UE-032065/General Rate Case, December 2003 (PacifiCorp). Washington Utilities and Transportation Commission, Docket , UG-031885November 2003 (Northwest Natural Gas Company. Wyoming Public Service Commission, Docket No. 20000-ER-03-198, May 2003 (PacifiCorp ). Public Service Commission of Utah, Docket No. 03-2035-, May 2003 (PacifiCorp)Public Utility Commission of Oregon, Case. UE-147, March 2003 (PacifiCorp) Wyoming Public Service Commission, Docket No. 20000-ER-00-162, May 2002 (PacifiCorp ). Public Utility Commission of Oregon, UG-152, November 2002 (Northwest Natural). Massachusetts Department of Telecommunications and Energy, D.E. 02-24/24 May 2002 (Fitchburg Gas and Electric Light Company). . New Hampshire Public Utilities Commission, Docket No. DE 01-247, January 2002 (Unitil Corporation). Washington Utilities and Transportation Commission, Docket UE-011569 UG- 011571 , November 2001 (Puget Sound Energy, Inc. California Public Utilities Commission, Docket No. 01-03-026 , September and December 2001 (PacifiCorp). . New Mexico Public Regulation Commission, Docket No. 3643, July 200 I (Texas-New Mexico Power Company). Texas Natural Resources Conservation Commission, Docket No. 2001-1074/5-URCMay 200 I (AquaSource Utility, Inc. Massachusetts Department of Telecommunications and Energy, Docket No. 99-118May 200 I (Fitchburg Gas and Electric Light Company). Public Service Commission of Utah, Docket No. 01-035-, January 2001 (PacifiCorp ) Federal Energy Regulatory Commission, Docket No. ER-01-651 , January 2001 (Southwestern Electric Power Company). Wyoming Public Service Commission, Docket No. 20000-ER-00-162, December 2000 (PacifiCorp). Public Utility Commission of Oregon, Case. UE-116, November 2000 , (PacifiCorp)Public Utility Commission of Texas, Docket No. 22344, September 2000, (AEP Texas Companies, Entergy Gulf States, Inc., Reliant Energy HL&P, Texas-NewMexico Power Company, TXU Electric Company) Public Utility Commission of Oregon, Case UE-111 , August 2000, (PacifiCorp)Texas Public Utility Commission, Docket Nos. 22352 , March 2000 (Central Power and Light Co., Southwestern Electric Power Co., West Texas Utilities Co. Texas Public Utility Commission, Docket No. 22355, March 2000 (Reliant Energy, Inc. Texas Public Utility Commission, Docket No. 22349, March 2000 (Texas-New Mexico Power Co. Texas Public Utility Commission, Docket No. 22350, March 2000 (TXU Electric). Washington Utilities and Transportation Commission, Docket UE-991831 , November1999 (PacifiCorp). Public Service Commission of Utah, Docket No. 99-035-, September 1999 (PacifiCorp ) Louisiana Public Service Commission Docket No. U-23029, August 1999 (Southwestern Electric Power Company) PacifiCorp Exhibit No.1 page 2 of 8 CASE NO. P AC-O5- Witness Samuel C. Hadaway YaC1I\\..,orp Exhibit No.1 page 3 of 8 CASE NO. PAC-O5- Witness Samuel C. Hadaway Wyoming Public Service Commission, Docket No. 2000-ER-99-145 , July 1999 January 2000 (PacifiCorp, dba Pacific Power and Light Company). Texas PUC Docket No. 20150, March 1999 (Entergy Gulf States, Inc. Federal Energy Regulatory Commission Docket No. ER-98-3177-, May and December 1998 (Southwestern Electric Power Company). Public Service Commission of Utah, Docket No. 97-035-, June 1998 (PacifiCorp, dba Utah Power and Light Company). Massachusetts Dept. of Telecommunications and Energy, Docket No. DTE 98- May 1998, (Fitchburg Gas and Electric Light Company, a subsidiary ofUnitil Corp. Texas PUC, Docket No. 18490, March 1998 , (Texas Utilities Electric Company) Texas PUC Docket No. 17751 , March 1998 and July 1997 (Texas-New Mexico Power Company). Federal Energy Regulatory Commission Docket No. RP-, February 1998 and May 1997 (Koch Gateway Pipeline Company). Federal Energy Regulatory Commission Docket No. ER-97-4468-000, December 1997 (Puget Sound Power & Light). Oklahoma Corporation Commission, Cause No. PUD 960000214, August 1997 (Public Service Company of Oklahoma). Oregon Public Utility Commission Docket No. UE-, April 1996, (PacifiCorp). Texas PUC Docket No. 15643, May and September 1996, (Central Power and Light and West Texas Utilities Company). Federal Energy Regulatory Commission Docket No. ER-, April 1996 (Puget Sound Power & Light). Federal Energy Regulatory Commission Docket No. ER96, February 1996, (Central and South West Corporation). Washington Utilities & Transportation Commission Docket No. UE-95 1270 November 1995 (Puget Sound Power & Light). Texas PUC Docket No. 14965, November 1995 , (Central Power and Light). Texas PUC Docket No. 13369, February 1995 (West Texas Utilities). Texas PUC Docket No. 12065 , July and December 1994, (Houston Lighting & Power). Texas PUC, Docket No. 12820, July and November 1994, (Central Power and Light). Texas PUC Docket No. 12900, March 1994, and New Mexico PUC Case No. 2531 August 1993, (TNP Enterprises). Texas PUC, Docket No. 12815, March 1994, (Pedernales Electric Cooperative). Florida Public Service Commission, Docket No. 930987-, December 1993 , (TECO Energy). Iowa Department of Commerce, Docket No. RPU-93-, December 1993 , (US West Communications ). Texas PUC Dkt. No. 11735 , May and September 1993, (Texas Utilities Electric Company) Oklahoma Corporation Commission, Cause No. PUD 001342, October 1992 (Public Service Company of Oklahoma). Texas PUC Dkt. No. 9983, November 1991 , (Southwest Texas Telephone Company). Texas PUC Dkt. No. 9850, November 1990, Houston Lighting & Power Company). Texas PUC Dkt. Nos. 8480/8482, January 1989; City of Austin Dkt. No. I , August 1988 and July 1987, (City of Austin Electric Department). Missouri Public Service Commission Case No. ER-90-IOl , July 1990 (UtiliCorp). Texas PUC Dkt. No. 9945 , December 1990; Texas PUC Dkt. No. 9165, November 1989, (EI Paso Electric Company). Texas PUC Dkt. No. 9427 , July 1990, (Lower Colorado River Authority Association of Wholesale Customers). Oregon Public Utility Commission, March 1990, (Pacific Power & Light Company). Utah Public Service Commission, November 1989, (Utah Power & Light Company). Texas PUC Dkt. No. 5610, September 1988 , (GTE Southwest). Iowa State Utilities Board, September 1988, (Northwestern Bell TelephoneCompany). PacifiCorp Exhibit No.1 page 4 of 8 CASE NO. P AC-O5- Witness Samuel C. Hadaway Texas Water Commission, Dkt. Nos. RC-022 and RC-023, November 1986, (City of Houston Water Department). Pennsylvania PUC Dkt. Nos. R-842770 and R-842771 , May 1985, (Bethlehem Steel). Capital Structure Testimony: Federal Energy Regulatory Commission Docket No. RP-, May 1997 (Koch Gateway Pipeline Company). Illinois Commerce Commission Dkt. No. 93-0252 Remand, July 1996, (Sprint). California PUC (Appl. No. 92-05-004) April 1993 and May 1993, (Pacific Telesis). Montana PSC, Dkt. No. 90.12., November 1991 , (US West Communications). Massachusetts PUC Dkt. No. 86-, June 1987, (New England Telephone Company).Maine PUC Dkt. No. 85-159, February 1987, (New England Telephone Company).. New Hampshire PUC Dkt. No. 85-181 , September 1986, (New England TelephoneCompany). Maine PUC Dkt. No. 83-213, March 1984, (New England Telephone Company). Regulatory Policy and Other Regulatory Issues: . New Hampshire PUC Docket No. DE 03-086, May 2003, (Unitil Corporation). Texas PUC Docket No. 26194, May 2003 (EI Paso Electric Company) Texas PUC Docket No. 22622, June 15 2001 (TXU Electric) Texas PUC Docket No. 20125 , November 1999 (Entergy Gulf States, Inc. Texas PUC Docket No. 21112, July 1999 and New Mexico Public Regulation Commission Case No. 3103, July 1999 (Texas-New Mexico Power Company) Texas PUC Docket No. 20292, May 1999 (Central Power and Light Co. Texas PUC Docket No. 20150, November 1998 (Entergy Gulf States, Inc. . New Mexico PUC Case No. 2769, May 1997, (Texas-New Mexico Power Company). Texas PUC Dkt. No. 15296, September 1996, (City of College Station, Texas). Texas PUC Dkt. No. 14965 Competitive Issues Phase, August 1996 (Central Power and Light Company). Texas PUC Dkt. No. 12456, May 1994, (Texas Utilities Electric Company). Texas PUC, Dkt. No. 12700/12701 and Federal Energy Regulatory Commission Docket No. EC94-000, January 1994, (EI Paso Electric Company). Florida Public Service Commission Generic Purchased Power Proceedings, October 1993 (TECO Energy). Texas PUC, Docket No. 11248, December 1992 (Barbara Faskins). Texas PUC Dkt. No.1 0894, January and June 1992, (Gulf States Utilities Company). State Corporation Commission of Kansas, Dkt. No. 175 456-, August 1991 (Utili Corp United). Texas PUC Dkt. No. 9561 , May 1990; Texas PUC Dkt. Nos. 6668/8646, July 1989 and February 1990, (Central Power and Light Company). Texas PUC Dkt. No. 9300, April 1990 and June 1990, (Texas Utilities Electric Co. Texas PUC Dkt. No. 10200, August 1991 , (Texas-New Mexico Power Company). Texas PUC Dkt. No. 7289, May 1987, (West Texas Utilities Company). Texas PUC Dkt. No. 7195, January 1987, (North Star Steel Texas). . New Mexico PSC Case No. 1916, April 1986, (Public Service Company of New Mexico ). Texas PUC Dkt. No. 6525 , March 1986, (North Star Steel Texas). Texas PUC Dkt. No. 6375 , November 1985 , (Valley Industrial Council). Texas PUC Dkt. No. 6220, April 1985 , (North Star Steel Texas).Texas PUC Dkt. No. 5940, March 1985 , (West Texas Municipal Power Agency). Texas PUC Dkt. No. 5820, October 1984, (North Star Steel Texas).Texas PUC Dkt. No. 5779, September 1984, (Texas Industrial Energy Consumers). Texas PUC Dkt. No. 5560, April 1984, (North Star Steel Texas).Arizona PSC Dkt. No. U-1345-83-155 , January 1984 and May 1984 (Arizona Public Service Company Shareholders Association). PacifiCorp Exhibit No.1 page 5 of 8 CASE NO. PAC-O5- Witness Samuel C. Hadaway Insurance Rate Testimony: Texas Department of Insurance, Docket No. 2394, November 1999, (Texas Title Insurance Agents). Senate Interim Committee on Title Insurance of the Texas Legislature, February 6 1998 Texas Department of Insurance, Docket No. 2279, October 1997, (Texas Title Insurance Agents). Texas Department of Insurance, January 1996, (Independent Metropolitan Title Insurance Agents of Texas). Texas Insurance Board, January 1992, (Texas Land Title Association). Texas Insurance Board, December 1990, (Texas Land Title Association). Texas Insurance Board, November 1989, (Texas Land Title Association). Texas Insurance Board, December 1987, (Texas Land Title Association). Testimony On Behalf Of Texas PUC Staff: Texland Electric Cooperative, Dkt. No. 3896, February 1983 EI Paso Electric Company, Dkt. No. 4620, September 1982. Southwestern Bell Telephone Company, Dkt. No. 4545, August 1982. Central Power and Light Company, Dkt. No. 4400, May 1982. . Texas-New Mexico Power Company, Dkt. 4240, March 1982. Texas Power and Light Company, Dkt. No. 3780, May 1981. General Telephone Company of the Southwest , ' Dkt. No. 3690, April 1981. . Mid-South Electric Cooperative, Dkt. No. 3656, March 1981. West Texas Utilities Company, Dkt. No. 3473 , December 1980. Houston Lighting & Power Company, Dkt. No. 3320, September 1980. ECONOMIC ANALYSIS AND TESTIMONY Antitrust Litigation: Marginal Cost Analysis of Concrete Production/Predatory Pricing (Stiles) Analysis of Lost Business Opportunity due to denial of Waste Disposal Site Permit (Browning-Ferris Industries, Inc. Analysis of Electric Power Transmission Costs in Purchased Power Dispute (City of College Station, Texas). Contract Litigation: Analysis of Cogeneration Contract/Economic Viability Issues(Texas-New Mexico Power Company) Definition of Electric Sales/Franchise Fee Contract Dispute (Reliant Energy HL&P) Analysis of Purchased Power Agreement/Breach of Contract (Texas-New Mexico Power Company) Regulatory Commission Provisions in Franchise Fee Ordinance Dispute (Central Power & Light Company) Analysis of Economic Damages resulting from attempted Acquisition of Highway Construction Company (Dillingham Construction Corporation). Analysis of Economic Damages due to Contract Interference in Acquisition of Electric Utility Cooperative (PacifiCorp). Analysis of Economic Damages due to Patent Infringement of Boiler Cleaning Process (Dowell-Schlumberger/The Dow Chemical Company). Lender Liability/Securities Litigation: ERISA Valuation of Retail Drug Store Chain (Sommers Drug Stores Company). PacifiCorp Exhibit No.1 page 6 of 8 CASE NO. PAC-O5- Witness Samuel C. Hadaway Analysis of Lost Business Opportunities in Failed Businesses where Lenders Refused to Extend or Foreclosed Loans (FirstCity Bank Texas, McAllen State Bank, General Electric Credit Corporation). Usury and Punitive Damages Analysis based on Property Valuation in Failed Real Estate Venture (Tomen America, Inc. Personal InjurylWrongful Death/Lost Earnings Capacity Litigation: Analysis of Lost Earnings Capacity and Punitive Damages due to Industrial Accident (Worsham, Forsythe and Wooldridge). Analysis of Lost Earnings Capacity due to Improper Termination (Lloyd Gosselink Ryan & Fowler). Present Value Analysis of Lost Earnings and Future Medical Costs due to Medical Malpractice (Sierra Medical Center). Product Warranty/Liability Litigation: Analysis of Lost Profits due to Equipment Failure in Cogeneration Facility (WF Energy/Travelers Insurance Company). Analysis of Economic Damages due to Grain Elevator Explosion (Degesch Chemical Company). Analysis of Economic Damages due to failure of Plastic Pipe Water Lines (Western Plastics, Inc. Analysis of Rail Car Repair and Maintenance Costs in Product Warranty Dispute (Youngstown Steel Door Company). Property Tax Litigation: Evaluation of Electric Utility Distribution System (Jasper-Newton Electric Cooperative). Evaluations of Electric Utility Generating Plants (West Texas Utilities Company). Valuations of Closely Held Business in Domestic Affairs Proceedings and for Federal Estate Tax Planning. PROFESSIONAL PRESENTATIONS Fundamentals of Financial Management and Reporting for Non-Financial Managers Austin Energy, July 2000. Fundamentals of Finance and Accounting," the IC2 Institute, University of Texas at Austin, December 1996 and 1997. Fundamentals of Financial Analysis and Project Evaluation " Central and South West Companies, April, May, and June 1997. Fundamentals of Financial Management and Valuation " West Texas Utilities Company, November 1995. Financial Modeling: Testing the Reasonableness of Regulatory Results " University Texas Center for Legal and Regulatory Studies Conference, June 1991. Estimating the Cost of Equity Capital " University of Texas at Austin Utilities Conference, June 1989, June 1990. Regulation: The Bottom Line " Texas Society of Certified Public Accountants, Annual Utilities Conference, Austin, Texas, April 1990. PacifiCorp Exhibit No.1 page 7 of 8 CASE NO. PAC-O5- Witness Samuel C. Hadaway Alternative Treatments of Large Plant Additions -- Modeling the Alternatives University of Texas at Dallas Public Utilities Conference, July 1989. Industrial Customer Electrical Requirements " Edison Electric Institute Financial Conference, Scottsdale, Arizona, October 1988. Acquisitions and Consolidations in the Electric Power Industry," Conference on Emerging Issues of Competition in the Electric Utility Industry, University Texas at Austin, May 1988. The General Fund Transfer - Is It A Tax? Is It A Dividend Payout? Is It Fair?" The Texas Public Power Association Annual Meeting, Austin, May 1984. Avoiding 'Rate Shock' - Preoperational Phase-In Through CWIP in Rate Base " Edison Electric Institute, Finance Committee Annual Meeting, May 1983. A Cost-Benefit Analysis of Alternative Bond Ratings Among Electric Utility Companies in Texas " (with B.L. Heidebrecht and J.L. Nash), Texas Senate Subcommittee on Consumer Affairs, December 1982. Texas PUC Rate of Return and Construction Work in Progress Methods " New York Society of Security Analysts, New York, August 1982. In Support of Debt Service Requirements as a Guide to Setting Rates of Return for Subsidiaries " Financial Forum, National Society of Rate of Return Analysts Washington, D., May 1982. PUBLICATIONS Institutional Constraints on Public Fund Performance " (with B.L. Hadaway) Journal of Portfolio Management Winter 1989. Implications of Savings and Loan Conversions in a Deregulated World " (with B. Hadaway) Journal of Bank Research Spring 1984. Regulatory Treatment of Construction Work in Progress " abstract, (with B. Heidebrecht and J. L. Nash), Rate Regulation Review Edison Electric Institute December 20, 1982. Financial Integrity and Market-to-Book Ratios in an Efficient Market " (with W. L. Beedles), Gas Pricing Ratemaking, December 7, 1982. An Analysis of the Performance Characteristics of Converted Savings and Loan Associations " (with B.L. Hadaway) Journal of Financial Research Fall 1981. Inflation Protection from Multi-Asset Sector Investments: A Long-Run Examination of Correlation Relationships with Inflation Rates " (with B.L. Hadaway), Review of Business and Economic Research Spring 1981. Converting to a Stock Company-Association Characteristics Before and After Conversion " (with B.L. Hadaway), Federal Home Loan Bank Board Journal October 1980. A Large-Sample Comparative Test for Seasonality in Individual Common Stocks (with D.P. Rochester), Journal of Economics and Business Fall 1980. Diversification Possibilities in Agricultural Land Investments Appraisal Journal October 1978. PacifiCorp Exhibit No.1 page 8 of 8 CASE NO. P AC-O5- Witness Samuel C. Hadaway Further Evidence on Seasonality in Common Stocks " (with D.P. Rochester), Journal of Financial and Quantitative Analysis March 1978. Case No. P AC-05- Exhibit No. Witness: Samuel C. Hadaway BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION ACIFICORP Exhibit Accompanying Direct Testimony of Samuel C. Hadaway Historical Capital Market Costs January 2005 Pa c i f i C o r p I d a h o Hi s t o r i c a l C a p i t a l M a r k e t C o s t s 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 20 0 0 20 0 1 20 0 2 20 0 3 20 0 4 * Pr i m e R a t e 8. 4 % 8. 4 % Co n s u m e r P r i c e I n d e x 3. 4 % Lo n g - Te r m T r e a s u r i e s 5. 4 % Mo o d y s A v g U t i l i t y D e b t Mo o d y s A U t i l i t y D e b t 7. 4 % Pr i m e R a t e a n d L o n g - Te r m T r e a s u r i e s t h r o u g h O c t o b e r ; C o n s u m e r P r i c e I n d e x a n d M o o d y s U t i l i t y D e b t t h r o u g h S e p t e m b e r SO U R C E S : Pr i m e I n t e r e s t R a t e - F e d e r a l R e s e r v e B a n k o f S t . L o u i s w e b s i t e Co n s u m e r P r i c e I n d e x - F e d e r a l R e s e r v e B a n k o f S t . L o u i s w e b s i t e Lo n g - Te r m T r e a s u r i e s - F e d e r a l R e s e r v e B a n k o f S t . L o u i s w e b s i t e Mo o d y s A v e r a g e U t i l i t y D e b t - M o o d y s ( M e r g e n t ) B o n d R e c o r d Mo o d y s B a a U t i l i t y D e b t - M o o d y s ( M e r g e n t ) B o n d R e c o r d (" ) tT 1 ' i : I ;J : . ~ g m Er . ; : ; . : (1 ) t T 1 c : r - . ~ Z ~. ( " ) r/ J O e: . 0 " 0 "' d t v ;J: . 2 n - g I ( J Q tT J ( 1 ) :: r : : b - ~ V I 0 g- ~ . . . , .J : : o '- : : PacifiCorp Exhibit No.2 page 2 of 4 CASE NO. PAC-O5- Witness Samuel C. Hadaway PacifiCorp Idaho Three-Month Average Moody s Utility Bond Yields MOODY'MOODY' SINGLE-A UTILITY AVERAGE UTILITY MONTH BOND YIELD BOND YIELD Oct-94%95% Nov-95%97% Dec-970/0 980/0 AVERAGE 950/0 970/0 Source: Mergent Bond Record c: : I .. . . '" "f',::s!f Ec o n o m i c I n d i c a t o r s Se a s o n a l l y A d j u s t e d A n n u a l R a t e s Do l / a r F i g u r e s i n B i l l i o n s . " " " " " " " " " " " " " " ' ." " " . . . . " " . . ' . . . " ' .. 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Gr o s s D o m e s t i c P r o d u c t $1 1 00 4 . 0 $ 1 1 73 5 . 7 $ 1 2 , 41 2 . 0 4 . 9 6 . 6 5 . GD P l c u r r e n t d o l l a r s ) $ 1 1 65 7 . 5 $ 1 1 81 0 . 0 $ 1 2 , 00 2 . 7 $ 1 2 , 18 7 . 3 $ 1 2 , 34 0 . 5 $ 1 2 , 4 8 6 . 5 $ 1 2 63 3 . 5 $ 1 2 , 80 0 . 9 6 . 6 5 . An n u a l r a t e o f i n c r e a s e ( % ! 6 . 6 5 . 3 6 . 7 6 . 3 5 . 1 4 . 8 4 . 5. 4 0 4 . 5 3 . An n u a l r a t e o f i n c r e a s e - r e a l GD P ( % ) 3 . 3 3 . 4. 4 3 . 3. 4 3 . 1 2 . 9 3 . 1. 8 2 . 1 2 . An n u a l r a t e o f i n c r e a s e - GO P d e f l a t o r ( % ) 3 . 1. 3 2 . 2. 7 1 . 1. 7 1. 9 2 . .. . . . , . . . . , . . . . . . . . . . . . . , . . . . , . . . . . . . . . . . " " . ' . " . . . , . . . . . . , .. . . . . . . . . . . . . . . , . " . " . , . . , . . , . . . . , . , . . . . . , . . . . . , . . . . . . . . , . . , . ... . . . , . . . . ' . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . , .. . . . , . , . . . . . . . . . . . . . . . . . . . . . . . . . . . ' . , . , . . , . . . . . . . , . . . . , . . . . . . . , . . . . . . . . . . , . . . . . . . . . . '. " " " " " " " " " " " . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . .. . . . . . . . Co m p o n e n t s o f R e a l G D P $7 , 35 6 . 0 $ 7 62 9 . 4 $ 7 , 86 6 . 7 3 . 3 3 . 7 3 . Pe r s o n a l c o n s u m p t i o n e x p e n d i t u r e s $ 7 , 57 2 . 4 $ 7 , 66 6 . 8 $ 7 , 73 5 . 5 $ 7 , 7 8 5 . 0 $ 7 , 84 3 . 9 $ 7 , 89 4 . 6 $ 7 , 94 3 . 5 $ 8 , 00 0 . 3 3 . 7 3 . % c h a n g e 1 . 6 5 . 1 3 . 6 2 . 6 3 . 1 2 . 6 2 . 5 2 . 03 0 . 6 1 09 7 . 2 1 13 0 . 7. 4 6 . 5 3 . Du r a b l e g o o d s 1 07 4 . 7 1 11 8 . 2 1 , 12 0 . 3 1 12 2 . 0 1 13 0 . 6 1 13 1 . 9 1 13 9 . 1 1 15 2 . 11 2 . 3 2 , 20 5 . 8 2 27 6 . 7 3 . 7 4 . 4 3 . No n d u r a b l e g o o d s 2 18 8 . 0 2 21 3 . 7 2 23 4 . 1 2 25 1 . 5 2 26 9 . 4 2 , 28 5 . 9 2 , 29 9 . 9 2 , 31 6 . 22 0 . 3 4 33 9 . 6 4 47 2 . 5 2 . 2 2 . 8 3 . Se r v i c e s 4 32 0 . 0 4 , 35 1 . 0 4 39 5 . 8 4 , 4 2 5 . 3 4 , 4 5 7 . 8 4 , 48 9 . 6 4 , 51 7 . 4 4 , 54 6 . 11 0 . 8 1 , 22 8 . 1, 3 5 1 . 3 3 . 3 1 0 . 6 1 0 . No n r e s i d e n t a l f i x e d i n v e s t m e n t 1 , 20 7 . 9 1 , 24 5 . 3 1 , 28 9 . 6 1 , 30 8 . 4 1 , 33 9 . 1 1 , 36 6 . 2 1 39 1 . 5 1 , 4 1 1 . 3 1 0 . 6 1 0 . % c h a n g e 1 2 . 4 1 3 . 0 1 5 . 0 6 . 0 9 . 7 8 . 3 7 . 6 6 . 87 9 . 2 9 9 6 . 9 1 10 4 . 6. 4 13 . 4 1 0 . Pr o d u c e r s d u r a b l e e q u i p m e n t 9 7 5 . 5 1 01 5 . 0 1 , 05 3 . 6 1 , 06 7 . 4 1 , 09 4 . 7 1 , 11 9 . 2 1 13 8 . 0 1 , 15 4 . 50 3 . 0 5 5 2 . 3 5 4 6 . 2 8 . 8 9 . (1 . 1 ) Re s i d e n t a l f i x e d i n v e s t m e n t 5 5 4 . 6 5 5 6 . 8 5 6 4 . 1 5 6 2 . 7 5 5 4 . 2 5 3 9 . 52 8 . 7 5 1 9 . 8 9 . (1 . 1 ) % c h a n g e 16 . 7 1. 6 5 . (1 . 0 ) ( 6 . 0) ( 1 0 . 3) ( 7 . 61 1 6 . (0 . 7) 46 . 4 4 9 . Ne t c h a n g e i n b u s i n e s s i n v e n t o r i e s 61 . 1 3 5 . 9 4 8 , 7 5 3 . 51 . 7 51 . 1 4 3 . 3 3 6 . )~ i " " " 90 9 . 4 1 94 9 . 6 1 , 9 9 3 . 9 2 . 8 2 . 1 2 . 3 G o v t p u r c h a s e s o f g o o d s & s e r v i c e s 1 , 94 6 . 5 1 , 95 2 . 4 1 , 96 3 . 7 1 97 6 . 2 1 98 8 . 3 2 , 00 0 . 1 2 , 01 0 . 8 2 , 02 0 . 68 9 . 6 7 2 2 . 7 7 4 5 . 8 6 . 6 4 . 8 3 . Fe d e r a l 7 1 8 . 1 7 2 6 . 4 7 3 3 . 2 7 3 8 . 7 7 4 4 . 1 7 4 8 . 3 7 5 2 . 4 7 5 6 . 21 9 . 8 1 , 22 6 . 8 1 , 24 7 . 0. 7 0 . 1. 7 St a t e & l o c a l 1 , 22 8 . 3 1 , 22 5 . 9 1 23 0 . 4 1 , 23 7 . 5 1 , 24 4 . 1 1 , 25 1 . 8 1 , 25 8 . 4 1 , 26 4 . 15 1 8 . 5) ( 5 8 3 . 11 ( 5 8 3 . 8) Ne t e x p o r t s ( 5 8 0 . 3) ( 5 8 8 . 0) ( 6 1 3 . 8) ( 6 0 0 . 6) (5 9 4 . 4 1 ( 5 7 8 . 91 (5 6 1 . 3 1 ( 5 3 9 . 03 1 . 8 1 , 12 3 . 3 1 23 2 . 1. 9 8 . 9. 7 Ex p o r t s 1 , 11 4 . 8 1 , 13 2 . 1 1 , 15 0 . 9 1 , 17 9 . 3 1 , 21 4 . 4 1 , 25 0 . 9 1 , 28 6 . 5 1 , 32 3 . 55 0 . 2 1 , 70 6 . 3 1 81 6 . 6 4 . 4 1 0 . 1 6 . Im p o r t s 1 , 69 5 . 1 1 , 72 0 . 1 1 , 76 4 . 7 1 , 77 9 . 9 1 , 80 8 . 9 1 , 82 9 . 8 1 84 7 . 7 1 , 86 2 . .. . . . . .. . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . ... . . . .. . . . .. . . . . . . . . . . . ,. . . . . . . . . .. . . . . " " "" " " " " " " " " " ' " .,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . .. . . . . , . . . . . . . . . . . . . . . . ** I n c o m e & P r o f i t s $9 , 16 2 . 0 $ 9 , 65 0 . 8 $ 1 0 15 9 . 9 3 . 2 5 . 3 5 . Pe r s o n a l i n c o m e $ 9 , 59 2 . 7 $ 9 , 67 1 . 7 $ 9 , 89 4 . 0 $ 9 , 95 0 . 3 $ 1 0 , 09 3 . 0 $ 1 0 , 23 3 . 6 $ 1 0 , 36 2 . 9 $ 1 0 , 52 5 . 16 0 . 0 8 , 62 0 . 3 9 , 03 5 . 3 4 . 2 5 . 6 4 . Di s p o s a b l e p e r s o n a l i n c o m e 8 , 56 2 . 1 8 , 62 7 . 4 8 , 85 3 . 2 8 , 87 5 . 4 8 , 99 3 . 5 9 , 08 9 . 7 9 , 18 2 . 5 9 , 31 8 . 1. 4 1. 1 0 . Sa v i n g s r a t e ( % ) 1 . 3 0 . 5 1 . 7 0 . 7 0 . 8 0 . 8 0 . 1.0 87 4 . 5 1 00 5 . 0 1 36 6 . 7 15 . 4 1 4 . 9 3 6 . Co r p o r a t e p r o f i t s b e f o r e t a x e s 9 8 8 . 3 9 6 4 . 3 1 10 5 . 0 1 40 5 . 0 1 , 36 5 . 6 1 , 35 3 . 1 1 34 3 . 0 1 , 33 8 . 63 9 . 73 1 . 2 9 8 6 . 11 . 4 1 4 . 3 3 5 . Co r p o r a t e p r o f i t s a f t e r t a x e s 7 1 7 . 1 7 0 3 . 0 7 9 8 . 8 1 , 01 7 . 1 9 8 6 . 0 9 7 6 . 1 9 6 8 . 2 9 6 4 . "" " . ~~ . . . . . ... . ~~ . 4~ . . . . . . . . . . ?~ ' ~~ . . . . . ... . . . . . 2~ : ~.. . . . . . . ~.. . . . . . . . . . ~~ ~ ~ . . ' p . ~~ . !~ ~ ~ . ~~ ~ . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~~ . . ? ~ . . . . . . . . . . . ~? : ~? . . . . . . . . . ~: ~ ~ . . . . . . . . . ~: ~ ~ . . . . . . . . . . . . ~~ . . . . . . . . . . ~~ : ~. . . . . . . . . . ~~ : ~~ . . . . . . . . . . tP r i c e s & I n t e r e s t R a t e s 3 2 . 7 2 . Co n s u m e r p r i c e i n d e x 4 . 1. 9 3 . 0 2 . 1. 8 1. 7 1 . 1.5 1. 0 1. 4 3 . Tr e a s u r y b i l l s 1. 1 1. 5 2 . 0 2 . 5 2 . 9 3 . 3 3 . 7 3 . ~ ( ) tT J " ' C 0 4 . 3 4 . - 1 0 - yr n o t e s 4 . 6 4 . 3 4 . 3 4 . 5 4 . 7 5 . 0 5 . 2 5 . ~f ~ ~ ~ . 1 5 . 1 5 . - 3 0 - yr b o n d s 5 . 4 5 . 1 5 . 0 5 . 1 5 . 3 5 . 5 5 . 7 5 . tT J g " , .. . . 5, 1 . . . ... . . . . . . . . . . . " " " " " ~" " " " , , , , ~u " " " " ' ~. . "" " ' r i l : : ~ : i : ~ i : : ; o r ~ t ~ b ~ n d S :~ . . . u :~ . . . . . 6~ . :~ u u i ~ ~ , 3 85 0 . 0 1 , 95 8 . 7 1 , 81 5 . 1 8 . 3 5 . 7 ( 7 . 3) Ho u s i n g s t a r t s ( 1 , 00 0 u n i t s S A A R ) 1 , 91 9 . 7 1 , 96 9 . 3 2 , 00 2 . 7 1 89 5 . 2 1 84 0 . 9 1 79 3 . 6 1 , 73 0 . 5 1 69 8 . ~ ( ) 16 . 6 1 6 . 8 1 7 . 0 ( 0 . 91 0 . 8 1 . Au t o & t r u c k s a l e s ( 1 , OO O , OO O u n i t s l 1 6 . 5 1 7 . 1 1 6 . 9 1 6 . 8 1 7 . 1 1 7 . 0 1 6 . 9 1 6 . 0t T 1 ~ 0 5 . 5 5 . Un e m p l o y m e n t r a t e (% 1 5 . 6 5 . 5. 4 5 . 3 5 . 2 5 . 2 5 . 3 5 . ~ ~ ~ (1 2 . 21 ( 8 . 3) ( 9 . 3) - ~ U . S. d o l l a r 1 3 . 4 ( 6 . 81 ( 2 0 . 61 (1 3 . 7 1 ( 3 . 9) ( 4 . 61 ( 5 . 0) ( 4 . 4) Er ~ I\) No t e : A n n u a l c h a n g e s a r e f r o m p r i o r y e a r a n d q u a r t e r l y c h a n g e s a r e f r o m p r i o r q u a r t e r . R g u r e s m a y n o t a d d t o t o t a l s b e c a u s e o f r o u n d i n g . A - Ad v a n c e d a t a . P - Pr e l i m i n a r y . E - Es t i m a t e d . R - Re v i s e d . * 19 9 6 C h a i n - w e i g h t e d d o l l a r s . "" ' Cu r r e n t d o l l a r s . : ! T r a i l i n g 4 q u a r t e r s . t A v e r a g e f o r p e r i o d . ~ Q u a r t e r l y % c h a n g e s a t q u a r t e r l y r a t e s . T h i s f o r e c a s t p r e p a r e d b y S t a n d a r d & P o o r ' s . PacifiCorp Exhibit No.2 page 4 of 4 CASE NO. P AC-O5- Witness Samuel C. Hadaway PAGE 1996 VALUE LINE SELECTION & OPINION NOVEMBER 26.2004___.-.-m_ ___- - ----.-.---------..------------.-------------------.----------------.-.--------------------.--------..---.----..-.--- - - . ...---_._-.---. ---- ---..- --------- Value Line Forecast for the U.S. Economy ACTUAL ESTIMA TED 2004:2 2004:3 2004:4 2005:1 2005:2 2005:3 2005:4 2006: 1 GROSS DOMESTIC PRODUCT AND ITS COMPONENTS ( 2000 CHAIN WEIGHTED $) BilLIONS OF DOllARS Final Sales 10722 10834 10941 11022 11109 11191 11274 11358 Total Consumption 7572 7659 7716 7773 7831 7879 7928 7977 Nonresidential Fixed Investment 1208 1242 1278 1299 1331 1357 1380 1400 Structures 242 242 250 256 259 262 265 268 Equipment & Software 976 1010 1039 1049 1075 1098 1117 1133 Residential Fixed Investment 564 568 572 568 562 555 548 547 Exports 1115 1129 1147 1172 1202 1232 1259 1288 Imports 1695 1727 1752 1767 1794 1816 7832 1848 Federal Government 718 726 733 739 746 750 754 757 State & Local Governments 1228 1227 1236 1242 1249 1256 1262 1267 Gross Domestic Product 11658 11804 11969 12133 12295 12450 12607 12766 Real GDP (2000 Chain Weighted $)10785 10883 10977 11064 11157 11251 11342 11432 PRICES AND WAGES-ANNUAL RATES OF CHANGE GDP Detlator 3.2 1.8 CPI-AII Urban Consumers PPI-Finished Goods 1.3 EmploymentCostfndex-Total Camp. Productivity PRODUCTION AND OTHER KEY MEASURES Industrial Prod. (% Change. Annuali zed) Factory Operating Rate (%)76.76.77.0 77.2 77.77.4 77. Nonfarm hwen. Ch9. (2000 Chain Weighted $)58.47.48.48.44_44.38.0 30. Housing Starts (Mill. Units)1.97 Existing House Sales (Mill. Units)6.25 6.20 Total Light Vehicle Sales (Mill. Units)16.77.17.0 16.17.17.0 17.0 17. National Unemployment Rate (%) 5.4 5.4 5.4 5.4 Federal Budget Surplus (Unified. FY, $Bill)25.85.90.95.55.75.70.70. Price ot Oil ($Bbl., U.S. Refiners' Cmt)34.39.45.45.44.39.36.34. MONEY AND INTEREST RATES Month Treasury Bill Rate (%) Federal Funds Rate tW.1.4 10-Year Treasury Note Rate (%)4.4 Long-Term Treasury Bond Rate (%)5.4 AM Corporate Bond Rate ('Yo)5.4 Prime Rate (%)4.4 Case No. PAC-05- Exhibit No. Witness: Samuel C. Hadaway BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION ACIFICORP Exhibit Accompanying Direct Testimony of Samuel C. Hadaway Discounted Cash Flow Analysis January 2005 Pa c i f i C o r p I d a h o Di s c o u n t e d C a s h F l o w A n a l y s i s Su m m a r y O f D C F M o d e l R e s u l t s Tr a d i t i o n a l Co n s t a n t G r o w t h Lo w N e a r - Te r m G r o w t h Co n s t a n t G r o w t h DC F M o d e l Tw o - St a g e G r o w t h Co m p a n y DC F M o d e l Lo n q - T e r m G D P G r o w t h DC F M o d e l 1 A m e r e n 12 . 11 . 2 C H E n e r g y G r o u p 11 . 4 % 10 . 3 C l e c o C o r p o r a t i o n 11 . 10 . 4 C o n . E d i s o n 12 . 11 . 5 D T E E n e r g y C o . 11 . 10 . 6 E m p i r e D i s t r i c t 11 . 12 . 11 . 7 E n t e r g y C o r p . 8 F P L G r o u p , I n c . 10 . 10 . 9 M G E E n e r g y , I n c . 10 . 10 . 10 . 10 N o r t h e a s t U t i l i t i e s 10 . 10 . 10 . 4 % 11 N S T A R 9. 4 % 11 . 10 . 12 P r o g r e s s E n e r g y 12 . 11 . 13 S C A N A C o r p . 10 . 10 . 14 S e m p r a E n e r g y 9. 4 % 9. 4 % 15 S o u t h e r n C o . 11 . 4 % 11 . 16 V e c t r e n C o r p . 10 . 11 . 4 % 11 . 17 W i s c o n s i n E n e r g y 18 X c e l E n e r g y I n c . 11 . 11 . 4 % GR O U P A V E R A G E 11 . 10 . GR O U P M E D I A N 9. 4 % 11 . 4 % 10 . :: E ( " ) tT 1 ' " 0 ;. . . x ~ g ( / ) ~ : : . . : (i ) tT 1 c r " . . . . . ~ z ;: : ; . ( " ) CIJ 0 z ~ 3 . 9 " 0 s: : ' " 0 w (i ) ; . . . " 0 - ( j I:' 0 r n ~ :: e e - l: ' V I 0 g. , : " " " " :: e IIJ Pa c i f i C o r p I d a h o Di s c o u n t e d C a s h F l o w A n a l y s i s Tr a d i t i o n a l C o n s t a n t G r o w t h DC F M o d e l (1 ) (2 ) (3 ) (4 ) (5 ) (6 ) (7 ) (8 ) (9 ) (1 0 ) (1 1 ) (1 2 ) (1 3 ) (1 4 ) Pr o j e c t e d G r o w t h R a t e A n a l y s i s Ne x t Ye a r 2 0 0 8 " BR " G r o w t h R a t e C a l c u l a t i o n Av e r a g e RO E Re c e n t Ye a r s D i v i d e n d Re t e n t i o n Va l u e GD P Gr o w t h K= D i v Y l d + G Co m p a n y Pr i c e ( P O ) D i v ( D 1 ) Yi e l d DP S EP S Ra t e ( B ) NB V RO E ( R ) Gr o w t h Za c k s Li n e Gr o w t h (C o l s 12 ) (C o l s 3+ 1 3 ) 1 A m e r e n 46 . 4 8 5. 4 7 % 16 . 72 % 32 . 28 % 55 % 00 % n/ a 60 % 72 % 2 C H E n e r g y G r o u p 45 . 77 % 21 . 4 5 % 32 . 8. 4 6 % 82 % n/ a 50 % 60 % 97 % 3 C l e c o C o r p o r a t i o n 17 . 14 % 40 . 00 % 12 . 12 . 00 % 80 % n/ a 00 % 60 % 13 % 4 C o n . E d i s o n 42 . 5. 4 1 % 19 . 31 % 31 . 19 % 77 % 80 % n/ a 60 % 72 % 5 D T E E n e r g y C o . 41 . 4 0 98 % 44 . 00 % 38 . 74 % 29 % 90 % 00 % 60 % 70 % 6 E m p i r e D i s t r i c t 20 . 22 % 14 . 67 % 15 . 52 % 1 . 4 0 % 00 % 50 % 60 % 87 % 11 . 7 E n t e r g y C o r p . 60 . 15 % 56 . 36 % 49 . 10 . 06 % 67 % 20 % 00 % 60 % 12 % 8 F P L G r o u p , I n c . 68 . 15 % 39 . 15 % 51 . 4 5 11 . 37 % 4. 4 5 % 60 % 50 % 60 % 04 % 9 M G E E n e r g y , I n c . 31 . 29 % 1. 4 0 40 . 4 3 % 18 . 13 . 06 % 5. 2 8 % n/ a 00 % 60 % 96 % 10 . 10 N o r t h e a s t U t i l i t i e s 19 . 50 % 58 . 60 % 22 . 75 % 71 % 60 % 10 . 00 % 60 % 73 % 10 . 11 N S T A R 48 . 72 % 37 . 50 % 32 . 12 . 31 % 62 % 70 % 00 % 60 % 73 % 9. 4 % 12 P r o g r e s s E n e r g y 42 . 60 % 21 . 88 % 36 . 80 % 93 % 70 % n/ a 60 % 08 % 13 S C A N A C o r p . 37 . 12 % 45 . 23 % 28 . 11 . 4 0 % 16 % 50 % 50 % 60 % 5. 4 4 % 14 S e m p r a E n e r g y 35 . 82 % 73 . 33 % 31 . 12 . 00 % 80 % 90 % 00 % 60 % 58 % 9. 4 % 15 S o u t h e r n C o . 30 . 1. 4 5 78 % 2. 4 5 33 . 4 7 % 17 . 13 . 88 % 65 % 4. 4 0 % 00 % 60 % 16 % 16 V e c t r e n C o r p . 24 . 78 % 32 . 82 % 16 . 11 . 93 % 91 % 6. 4 0 % 00 % 60 % 5. 4 8 % 10 . 17 W i s c o n s i n E n e r g y 32 . 71 % 66 . 67 % 29 . 10 . 34 % 90 % 30 % 00 % 60 % 6. 4 5 % 18 X c e l E n e r g y I n c . 17 . 02 % 33 . 33 % 14 . 10 . 17 % 39 % 3. 4 0 % 50 % 60 % 97 % GR O U P A V E R A G E 53 % 23 % 63 % 70 % 60 % 99 % GR O U P M E D I A N 77 % 9. 4 % NO T E : S E E P A G E 5 O F TH I S S C H E D U L E F O R F U R T H E R E X P L A N A T I O N O F E A C H C O L U M N ('J tT 1 " " C _. ) - ~ ~ r:/ J _ . 5 1 tT 1 s r . : : : . . en z "" ' J r: / J 0 z , a "" C w s: : ) - ' d !! . ( ' J ~ () I O ' C I t'T 1 ~ :: I : ~ V I 0 0. I ... . . , ~ - So u r c e s : V a l u e L i n e I n v e s t m e n t Su r v e y , E l e c t r i c U t i l i t y ( E a s t ) , S e p 3 . 2 0 0 4 ; ( C e n t r a l ) , O c t 1 , 2 0 0 4 ; ( W e s t ) , N o v 1 2 , 2 0 0 4 Pa c i f i C o r p I d a h o Di s c o u n t e d C a s h F l o w A n a l y s i s Co n s t a n t G r o w t h DC F M o d e l Lo n g - Te r m G D P G r o w t h (1 5 ) (1 6 ) (1 7 ) (1 8 ) (1 9 ) Ne x t RO E Re c e n t Ye a r ' s D i v i d e n d GD P K = D i v Y l d + G Co m p a n y Pr i c e ( P O ) D i v ( D 1 ) Yi e l d Gr o w t h (C o l s 17 + 1 8 ) 1 A m e r e n 46 . 4 8 5. 4 7 % 60 % 12 . 2 C H E n e r g y G r o u p 45 . 77 % 60 % 11 . 4 % 3 C l e c o C o r p o r a t i o n 17 . 14 % 60 % 11 . 4 C o n . E d i s o n 42 . 5. 4 1 % 60 % 12 . 5 D T E E n e r g y C o . 41 . 4 0 98 % 60 % 11 . 6 E m p i r e D i s t r i c t 20 . 22 % 60 % 12 . 7 E n t e r g y C o r p . 60 . 15 % 60 % 8 F P L G r o u p , I n c . 68 . 15 % 60 % 10 . 9 M G E E n e r g y , I n c . 31 . 29 % 60 % 10 . 10 N o r t h e a s t U t i l i t i e s 19 . 50 % 60 % 10 . 11 N S T A R 48 . 72 % 60 % 11 . 12 P r o g r e s s E n e r g y 42 . 60 % 60 % 12 . 13 S C A N A C o r p . 37 . 12 % 60 % 10 . 14 S e m p r a E n e r g y 35 . 82 % 60 % 9. 4 % 15 S o u t h e r n C o . 30 . 1. 4 5 78 % 60 % 11 . 4 % 16 V e c t r e n C o r p . 24 . 78 % 60 % 11 . 4 % 17 W i s c o n s i n E n e r g y 32 . 71 % 60 % 18 X c e l E n e r g y I n c . 17 . 02 % 60 % 11 . GR O U P A V E R A G E 53 % 60 % 11 . GR O U P M E D I A N 77 % 11 . 4 % NO T E : S E E P A G E 5 O F TH I S S C H E D U L E F O R F U R T H E R E X P L A N A T I O N O F E A C H C O L U M N ~ n tT P t i ;t : . ~ ~ 3' C l J 2 " . tT 1 9 ' : ; : : . . . '" Z - ' J Cl J o z, a ~. 0 3" , ~ I'i i ; t : . - o -n ~ I ( J Q tT 1 ~ :: r : : 6 ~ ~ V I 0 0. I .. . , ~ - :: ; : V I '.. : So u r c e s : V a l u e L i n e I n v e s t m e n t Su r v e y , E l e c t r i c U t i l i t y ( E a s t ) , S e p 3 , 2 0 0 4 ; ( C e n t r a l ) , O c t 1 , 2 0 0 4 ; ( W e s t ) , N o v 1 2 , 2 0 0 4 Pa c i f i C o r p I d a h o Di s c o u n t e d C a s h F l o w A n a l y s i s Lo w N e a r - Te r m G r o w t h Tw o - St a g e G r o w t h D C F M o d e l (2 0 ) (2 1 ) (2 2 ) (2 3 ) (2 4 ) (2 5 ) (2 6 ) (2 7 ) (2 8 ) (2 9 ) (3 0 ) Ne x t An n u a l CA S H F L O W S RO E = l n t e r n a l Ye a r 20 0 8 Ch a n g e Re c e n t Ye a r 1 Ye a r 2 Ye a r 3 Ye a r 4 Ye a r 5 Ye a r 5 - 15 0 Ra t e o f R e t u r n Co m p a n y Di y Di y to 20 0 8 Pr i c e Di v Di y Di y Di v Di v D i y G r o w t h (Y r s 0 - 15 0 ) Am e r e n 46 . 4 8 60 % 11 . 2 C H En e r g y G r o u p 45 . 60 % 10 . Cl e c o C o r p o r a t i o n 17 . 60 % 10 . Co n . E d i s o n 42 . 2. 4 9 60 % 11 . 5 D T E En e r g y C o . 41 . 4 0 60 % 10 . Em p i r e D i s t r i c t 20 . 60 % 11 . En t e r g y C o r p . 60 . 60 % FP L G r o u p , I n c . 68 . 60 % 10 . 9 M G E En e r g y , I n c . 1. 4 0 31 . 1. 4 0 1. 4 9 60 % 10 . No r t h e a s t U t i l i t i e s 19 . 60 % 10 . 4 % NS T A R 48 . 2. 4 3 60 % 10 . Pr o g r e s s E n e r g y 42 . 2. 4 2 2. 4 6 60 % 11 . 13 S C A N A Co r p . 37 . 60 % 10 . 14 S e m p r a E n e r g y 35 . 60 % 15 So u t h e r n C o . 1. 4 5 30 . 1. 4 5 60 % 11 . 16 Ve c t r e n C o r p . 24 . 1. 4 0 60 % 11 . 17 W i s c o n s i n En e r g y 32 . 60 % 18 X c e l En e r g y I n c . 17 . 60 % 11 . 4 % GR O U P A V E R A G E 10 . GR O U P M E D I A N 10 . NO T E : S E E P A G E 5 O F TH I S S C H E D U L E F O R F U R T H E R E X P L A N A T I O N O F E A C H C O L U M N :: E ( " ) tT 1 ' " C _. ~ & ~ g e n _. 5 tT 1 s : (" ) en z en o z. a 3 . ? s: : " ' 1 : I w ~ ~ " O - ( ) II J (" ) I O'Q tT 1 ~ ::t .J : o . II J U 1 0 Q. . I ... . , II J - V I :I E II J '.. . : So u r c e s : V a l u e L i n e I n v e s t m e n t Su r v e y , E l e c t r i c U t i l i t y ( E a s t ) , S e p 3 , 2 0 0 4 ; ( C e n t r a l ) , O c t 1 20 0 4 ; ( W e s t ) , N a v 1 2 , 20 0 4 Pa c i f i C o r p I d a h o Di s c o u n t e d C a s h F l o w A n a l y s i s DC F A n a l y s i s Co l u m n D e s c r i p t i o n s Co l u m n 1 : T h r e e - m o n t h A v e r a g e P r i c e p e r S h a r e ( A u g - Oc t 2 0 0 4 ) Co l u m n 1 7 : C o l u m n 1 6 Di v i d e d b y C o l u m n 1 5 Co l u m n 2 : E s t i m a t e d 2 0 0 5 Di v i d e n d s p e r S h a r e f r o m V a l u e L i n e Co l u m n 1 8 : S e e A v e r a g e G r o w t h Ra t e s h o w n a t t h e Bo t t o m o f C o l u m n 1 2 Co l u m n 3 : C o l u m n 2 D i v i d e d b y Co l u m n Co l u m n 5 : E s t i m a t e d 2 0 0 8 E a r n i n g s p e r S h a r e f r o m Va l u e L i n e Co l u m n 1 9 : Co l u m n 1 7 P l u s C o l u m n 1 8 Co l u m n 2 0 : Se e C o l u m n 2 Co l u m n 2 1 : Se e C o l u m n 4 Co l u m n 4 : E s t i m a t e d 2 0 0 8 Di v i d e n d s p e r S h a r e f r o m V a l u e L i n e Co l u m n 6 : O n e M i n u s ( C o l u m n 4 Di v i d e d b y C o l u m n 5 ) Co l u m n 2 2 : ( C o l u m n 2 1 M i n u s Co l u m n 2 0 ) D i v i d e d b y T h r e e Co l u m n 7 : E s t i m a t e d 2 0 0 8 N e t Bo o k V a l u e p e r S h a r e f r o m V a l u e L i n e Co l u m n 8 : C o l u m n 5 D i v i d e d b y Co l u m n 7 Co l u m n 2 3 : Se e C o l u m n Co l u m n 2 4 : Se e C o l u m n 2 0 Co l u m n 2 5 : Co l u m n 2 4 P l u s C o l u m n 2 2 Co l u m n 9 : C o l u m n 6 Mu l t i p l i e d b y C o l u m n 8 Co l u m n 1 0 : " Ne x t 5 Y e a r s " C o m p a n y G r o w t h E s t i m a t e a s Re p o r t e d b y Z a c k s . co m Co l u m n 2 6 : C o l u m n 2 5 P l u s C o l u m n 2 2 Co l u m n 1 1 : " Es t ' D 0 1 - 03 T o 0 7 - 09 " E a r n i n g s G r o w t h a s Re p o r t e d b y V a l u e L i n e . Co l u m n 2 7 : C o l u m n 2 6 P l u s C o l u m n 2 2 Co l u m n 1 2 : A v e r a g e o f G D P G r o w t h Du r i n g t h e L a s t 1 0 y e a r , 20 y e a r , 3 0 y e a r , a n d 4 0 y e a r g r o w t h p e r i o d s . Co l u m n 2 8 : C o l u m n 2 7 I n c r e a s e d b y t h e Gr o w t h Ra t e S h o w n i n C o l u m n 2 9 Co l u m n 1 3 : Av e r a g e o f C o l u m n s 9 - Co l u m n 1 4 : Co l u m n 3 P l u s C o l u m n 1 3 Co l u m n 1 5 : Se e C o l u m n Co l u m n 1 6 : Se e C o l u m n 2 Co l u m n 2 9 : S e e A v e r a g e G r o w t h R a t e sh o w n a t t h e Bo t t o m o f C o l u m n 1 2 Co l u m n 3 0 : T h e I n t e r n a l R a t e o f R e t u r n o f t h e C a s h F l o w s in C o l u m n s 2 3 - 28 a l o n g w i t h t h e D i v i d e n d s fo r t h e Y e a r s 6 - 15 0 I m p l i e d b y t h e G r o w t h Ra t e s s h o w n i n C o l u m n 2 9 :E n t'T 1 " t : I -. ~ ~ ~ s- r / J _ . : 3 i t'T 1 8 " . ;; ; '" z - r/ J O z, a I\ ) . :3 " t : I ~ c: : ) . " ' d ~n l \ ) (' ) I (J C I t'T 1 C 1 ) :I : O V l I\ ) V I 0 g. ~ - ' :E I\) -. . : : Case No. PAC-OS- Exhibit No. Witness: Samuel C. Hadaway BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION ACIFICORP Exhibit Accompanying Direct Testimony of Samuel C. Hadaway Risk Premium Analysis January 2005 PacifiCorp Idaho Risk Premium Analysis MOODY'S AVERAGE PUBLIC UTILITY BOND YIELD 1980 13.150/01981 15.62%1982 15.33% 1983 13.31%1984 14.03%1985 12.29%1986 9.46%1987 9.98%1988 10.450/01989 9.66%1990 9.76%1991 9.21%1992 8.57%1993 7.56%1994 8.30%1995 7.910/01996 7.74%1997 7.63%1998 7.00%1999 7.55%2000 8.14%2001 7.720/02002 7.53%2003 6.61 % 9/2004 28% AVERAGE 9.63% AUTHORIZED ELECTRIC RETURNS 14.23% 15.22% 15.78% 15.36% 15.32% 15.20% 13.93% 12.99% 12.79% 12.97% 12.70% 12.55% 12.09% 11.41% 11.34% 11 .55% 11 .39% 11 .40% 11.66% 10.77% 11.43% 11.09% 11 .16% 10.97% 10.57% 12.630/0 INDICATED COST OF EQUITY PROJECTED AVG UTILITY BOND YIELD MOODY'S AVG ANNUAL YIELD DURING STUDY INTEREST RATE DIFFERENCE INTEREST RATE CHANGE COEFFICIENT ADUSTMENT TO AVG RISK PREMIUM BASIC RISK PREMIUM INTEREST RATE ADJUSTMENT EQUITY RISK PREMIUM PROJECTED AVG UTILITY BOND YIELD INDICATED EQUITY RETURN Sources: (1) Moody s Investors Service (2) Regulatory Focus. Regulatory Research Associates, Inc. INDICATED RISK PREMIUM 080/0 0.40% 45% 05010 29% 91 % 4.470/0 01 % 340/0 31 % 94% 340/0 52% 850 04% 640/0 65% 770/0 660/0 220/0 29% 370/0 63% 360/0 29% 000/0 700/0 63% 930/0 -41 .800/0 23% 00% 23% 23% 70% 10.90/0 PacifiCorp Exhibit No.4 page I of2 CASE NO. PAC-O5- Witness Samuel C. Hadaway ~ 3% .:.:: 2 PacifiCorp Idaho Risk Premium Analysis PacifiCorp Exhibit No.4 page 2 of2 CASE NO. P AC-OS- Witness Samuel C. Hadaway Authorized Equity Risk Premiums vs. Utility Interest Rates (1980-9/2004) y = - 4180x + 0.0703 2 = 0.8393 10%12% Average Utility Interest Rates 14%16%