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FINAL COLORADO ELECTRIC COST OF CAPITAL STUDY FOR TAX YEAR 2015
DIVIDEND (EARNINGS) GROWTH MODEL
ELECTRIC COMPANIES ALLETE Alliant Energy Amer. Elec. Power Ameren Corp. Avista Corp. Black Hills CenterPoint Energy Cleco Corp. CMS Energy Corp. Consol. Edison Dominion Resources DTE Energy Duke Energy Edison Int'l El Paso Electric Empire Dist. Elec. Entergy Corp. Exelon Corp. FirstEnergy Corp. G't Plains Energy Hawaiian Elec. IDACORP Inc. Integrys Energy MGE Energy NextEra Energy Northeast Utilities NorthWestern Corp. OGE Energy Pepco Holdings PG&E Corp. Pinnacle West Capital PNM Resources Portland General PPL Corp. Public Serv. Enterprise SCANA Corp. Sempra Energy Southern Co. TECO Energy UIL Holdings Vectren Corp. Westar Energy Wisconsin Energy Xcel Energy Inc.
TICKER ALE LNT AEP AEE AVA BKH CNP CNL CMS ED D DTE DUK EIX EE EDE ETR EXC FE GXP HE IDA TEG MGEE NEE NU NWE OGE POM PCG PNW PNM POR PPL PEG SCG SRE SO TE UIL VVC WR WEC XEL
Electrics: If DGM Equity rate, NMF or below 6.5 or above 14%; then CAPM used exclusively for Equity Rate
* - Please see attached pages for debt ratings. 2015 Final Electric Cost of Capital Study.xls Page 1
3/31/2015
COLORADO COST OF CAPITAL - STATISTICS PAGE
RISK PREMIUM CALCULATION EX ANTE MARKET RISK (Rm) (1) SAFE RATE (Rf) (2) EX ANTE RISK PREMIUM (Rp) (3) EX POST RISK PREMIUM (4) EX ANTE CAPM FORMULA EX POST CAPM FORMULA (1) (2) (3) (4)
2015 13.55% 3.28% 10.27% 7.00%
2015 EQUALIZATION FACTOR All Colorado State Assessed Properties
100.00%
3.28% + (beta x 10.27 %) 3.28% + (beta x 7.00 %)
Refer to page 5 of the narrative summary. 20-year constant maturity - Federal Reserve (5-Year Monthly Average). Difference between (1) - (2). Long-horizon expected equity risk premium - 2015 Ibbotson SBBI Market Report (Historical Page 16)
Reuters CORPORATE INDUSTRIAL BOND YIELD INDEX-BY RATING
YIELD AVERAGE - Annual Mo. Ave. (Long-Term)
Mergent Bond Guide CORPORATE BY RATINGS - Annual Mo. Average PUBLIC UTILITY BONDS INDUSTRIAL BONDS (Mergent Bond Guide, January 2015 - page 213)
Extremely Strong AAA 4.26%
Very Strong AA 4.54%
Strong Capacity A 4.77%
Adequate Capacity BBB 5.53%
Best
High
Upper-Med.
Medium
Quality Aaa 4.16% --4.16%
Quality Aa 4.22% 4.19% 4.25%
Grade A 4.34% 4.28% 4.40%
Grade Baa 4.85% 4.80% 4.91%
More Risk BB+ 6.49%
Not Applied
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2015 Final Electric Cost of Capital Study.xls
STATISTICS PAGE 2
3/31/2015
BOND RATING AND RATE ANALYSIS FOR TAX YEAR 2015 MERGENT
ELECTRIC COMPANIES ALLETE Alliant Energy American Electric Power Ameren Corp. Avista Corp. Black Hills Corporation CenterPoint Energy Cleco Corp. CMS Energy Corp. Consol. Edison Dominion Resources DTE Energy Duke Energy Edison Int'l El Paso Electric Empire Dist. Elec. Entergy Corp. Exelon Corp. FirstEnergy Corp. G't Plains Energy Hawaiian Elec. IDACORP Inc. Integrys Energy MGE Energy NextEra Energy Northeast Utilities NorthWestern Corp. OGE Energy Pepco Holdings PG&E Corp. Pinnacle West Capital PNM Resources Portland General PPL Corp. Public Serv. Enterprise SCANA Corp. Sempra Energy Southern Co. TECO Energy UIL Holdings Vectren Corp. Westar Energy Wisconsin Energy Xcel Energy Inc.
Public Services of Colorado
STANDARD AND POORS
BOND RATING A A Baa A A Baa Baa A Baa A Baa Baa A A Baa A A Baa Baa Baa Baa Baa A Aa Baa Baa A A Baa A Baa Baa A A Baa Baa Baa Baa Baa Baa A A A A
BOND RATING BBB A BBB BBB BBB BBB A BBB BBB A BBB BBB BBB BBB BBB BBB BBB BBB BBB BBB BBB A A AA A A BBB A BBB BBB A BBB BBB BBB BBB BBB BBB A BBB BBB A A A BBB
Bond rating, if rating unavailable - corresponding rating applied. Italics - if no rating available for a specific company, then the applicable rating is applied based on finan strength, if unknown then the industry average is applied.
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