Services

Our primary activity is expert testimony in utility rate cases supporting the revenue requirement request as an advocate for maintaining and improving credit ratings. We also consult on transfer pricing matters. Testimony has been filed before FERC and in the following states: Arizona, California, Hawaii, Louisiana, Mississippi, New Mexico, New York, Texas, Virginia, Washington, and Wisconsin. Over 40% of our filings have been with clients who have engaged us for a second or third time. 

• A natural gas distribution utility with no credit rating requests a higher ROE based in part on a "size premium". Our rebuttal testimony supports the company's cost-of-equity witness by comparing the company to the utilities in Staff’s proxy group. We demonstrate the premium required by investors for assuming that risk is shown in the company's higher cost of debt and our estimated credit rating. Using rating agency criteria, we establish that its ratings would be lower than the peers in Staff’s proxy group, which supports the requested ROE. The Commission awards an authorized ROE that includes a size premium.

• A California utility exposed to significant wildfire risk requests an authorized ROE with a large risk premium. In conjunction with the cost-of-equity witnesses, we file testimony explaining how regulatory risk affects the credit analysis of utilities and the effect on utility credit quality of the legal doctrine of inverse condemnation as applied in California.  We show the possible consequences of wildfire risk to the company's ratings and cost of capital. Our credit analysis supports the higher requested ROE by showing how much financial metrics would need to improve to offset the greater regulatory risk from uncertainty surrounding wildfire cost recovery.   

We also get involved in other regulatory proceedings.

• A state's electric utilities are brought into a generic proceeding to examine and perhaps fundamentally change the regulatory framework. We participate in workshops and contribute to briefs to help parties understand the effect of regulatory reform on credit ratings and the importance of improving the utilities' ratings before embarking on major regulatory changes. Both major rating agencies upgraded the utility in the wake of the historic PUC regulatory reform decision.  

Other engagements employ our credit rating expertise outside a formal setting or for non-utility clients.

• A governmental agency in litigation with a corporation needs to establish a subsidiary's credit rating to help make its case. We contribute to an extensive and precise credit and capital market analysis exercise to identify what the rating and cost of debt would have been at a specific point in time.

• A utility is at risk of being forced to meet renewable energy requirements with long-term purchase agreements. We address a letter to a legislative leader on behalf of the utility explaining the credit rating implications of that kind of mandate. The legislation is averted.