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Regulated Utility – Double Leverage Adjustments

2012 NOV 27 | Iowa Utilities Board. Regulated Utility – Double Leverage Adjustments. Iowa Industrial Energy Group. Rate Case Hearing. Rate Case Hearing. Rate Case Hearing. Rate Case Hearing. Statistically valid attention decrement (SVAD). Rate Case Hearing.

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Regulated Utility – Double Leverage Adjustments

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  1. 2012 NOV 27 | Iowa Utilities Board Regulated Utility – Double Leverage Adjustments Iowa Industrial Energy Group

  2. Rate Case Hearing

  3. Rate Case Hearing

  4. Rate Case Hearing

  5. Rate Case Hearing Statistically valid attention decrement (SVAD)

  6. Rate Case Hearing Cost of Capital witnesses are called! Statistically valid attention decrement (SVAD)

  7. General Industrial Customer Comments • New parent debt corresponds directly to utility cash infusion? (Extreme #1) • Utility forgoes otherwise cheaper financing from parent? (Extreme #2) • IUB traditionally applied WACC of parent to treatment of cash infusions to the utility (without additional adjustments accounting for other subsidiaries). • Are there advantages to parent as source of financing sometimes? • Other example parent-utility issue: Income tax rollup at the holding company – utility has in rates but parent may not have liability and may not pay. • ?

  8. Closing Comments • Look at aspects and any benefits of the utility and holding company relationship. Is there some underutilized benefit? • Otherwise, if industrial customers produce a Cost of Capital witness, that witness is likely to support a double leverage adjustment.

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