SCEG OATT Formula Transmission Rate Filing.pdf - SCANA ...

20091231-0037 FERC PDF (Unofficia1) 12/29/2009
Direct Testimony of Michael J. Vilbert
AppendixB
Docket No. ERIO- -000
EXHIBIT NO. SeE-IS
Page B-II
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Value Line infonnation. 18 The components of the sustainable growth rate are calculated
as follows.
Retention Ratio (b): I follow the calculation in Opinion No. 445 19 to detennine the
retention ratio for each of the years, 2009, 2010, and 2013 20 and use the average for my
calculations. (See Workpaper #2, Table No. MJV-4).
Return on Equity (r): I again follow the calculation in Opinion No. 445. I calculate the
return on equity for each of the years 2009, 2010, and 2012-2014 using Value Line's
forecasted Earnings per Share ("EPS") and Book Value per Share ("BPS"). (See
Workpaper #3, Table No. MJV-4). The average return on equity for the three
years is adjusted using the formula provided in Opinion No. 445. 21 Thus, I
multiply the average return on equity by the following adjustment factor:
' D 2 x (I + Growth in Common Equity)
Ad gustment ,.actor = ---'----------~--"-".
2 + Growth in Common Equity
(B-6)
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The growth in common equity is calculated from the calculated common equity figures
for 2009 and in 2013. The common equity for 2009 and 2013 are detennined as the
common equity ratio for each year multiplied by the total capital for each corresponding
year. Data on the forecasted common equity ratio and total capital are obtained from
Value Line. (See Workpaper #4, Table No. MN-4)
Growth in Shares (s): I have not been able to find a specification for the calculation of
the external growth component ("s x v") of the sustainable growth rate in Opinion No.
445. However, I am able to calculate the growth in common shares from Value Line
infonnation on the expected number of shares outstanding in 2009 and in 2013.1 2 This
18 Value Line information is from June 26, 2009, August 7, 2009, and August 28,2009.
19 See Opinion No. 445, at 61,263.
20 Value Line currently reports forecasts for the years 2009, 20 I0, and for the 2012-14 period. I treat the Value
Line numbers reported for the 2012-14 period to be for the end of year 2013, the midpoint of the period.
21 See Opinion No. 445, n.38.
22 This calculation appears to be consistent with the calculation performed in Devon Power, LLC, 103 FERC ~
61,155 (2003) ("Devon Power").