Acquisitions Are Here Now what Danny Kermode CPA Assistant Director of Water amp Transportation Washington Utilities and Transportation Commission 2 DISCLAIMER The opinions expressed in this presentation are my personal opinions ID: 798156
Download The PPT/PDF document "now that Fair Value" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
now that Fair Value Acquisitions Are Here…
Now what?
Danny Kermode CPAAssistant Director of Water & Transportation Washington Utilities and Transportation Commission
Slide22
DISCLAIMERThe opinions expressed in this presentation are my personal opinions,
they do not necessarily reflect the opinions of the Washington Utilities and Transportation Commission, its commissioner or other staff.
Slide33
Pry Vet Water Company
Municipal Water Company
Target
26,000 Customers
480,000 Customers
Slide44
Pry Vet Water Company
26,000 Customers
480,000 Customers
Muni System – Pry Vet Co.
Slide55
Pry Vet Water Company
Muni System – Pry Vet Co.
26,000 Customers
480,000 Customers
Issue – Should the cost of the excess purchase price be borne by
all
customers or just those that receive benefits of the purchase?
Discussion:
Using STP - Socialize
(All
customers pay)
Cost
Causers/Benefit
Recipient
Standard Approach
-
Single
Tariff Pricing
(STP) aka Uniform Rates
Slide66
Pry Vet Water Company
Muni System – Pry Vet Co.
26,000 Customers
480,000 Customers
Slide77
Pry Vet Water Company
Muni System – Pry Vet Co.
26,000 Customers
480,000 Customers
Use of STP – Uniform rates
Economies of Scale
Private
vs Public target
Gain for ratepayers
Slide8Recovery
Period of Acquisition Adjustment
Regulatory [legislative] Asset,Allocation of purchase price to assets – Not Allowed under USoA,
FASB – GAAP follows regulatory treatment
ASC 980-350-35-1
Suggestion - Match life of Water/Waste water plant in general (40+ years).
Slide9Cost of Capital
The acquisition adjustment has a different risk profile than normal utility-plant-in-service, which should result in a lower equity return.
Slide10Slide11The logical solution [to getting the acquisition price right is to] Limit
the acquisition premium
…to the cost savings promised by the consolidation. - Scott
Hempling
2019
Thank you