Investor Presentaiton
How O&M Efficiency Translates to Investment Growth
Saving $1 in OpEx vs investing $8 in capital at allowed ROE,
Keeps customer rates neutral and can create $0.39 in sustainable earnings
$1
Expense Savings
=$8
Invested Capital
a) Revenue Requirement
$1.00
$1.00
Expense
O&M
0.96
Depreciation
Interest Expense
Property & General Taxes
0.04
0.20"
0.19
0.08
IV
b) Total Expenses
$1.00
$0.47
c) Operating Income (=a-b)
0.53V
d) Federal & State Income Taxes
e) Net Income to Shareholder (=c-d)
AMERICAN WATER
'Assumes 4% taxes on revenue (gross receipts e.g.)
"Assumes 2.5% depreciation expense
Il Assumes debt financing at 4.9%
IV Assumes property taxes on invested capital of 0.5% and revenue taxes of 4%
V Assumes effective income tax rate of 26.1%, based on federal tax rate of 21%
VI Assumes authorized weighted average ROE of 9.8%
0.14
$0.39
VI
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