Images de page
PDF
ePub

Representative Mavroules

6

August 20, 1985

they are actually incurred. This allows the firm to recover its equity investment more rapidly. Finally, for profitable projects, the IRR is not sensitive to changes in revenues that occur far into the future. Indeed, this is one reason that a front loaded tariff makes sense for both the TAPS owners and landowners like the State of Alaska and the federal government.

The IRR on total assets, however, does show greater sensitivity to the tariff profiles. In nominal terms it drops from 20.6 percent to 11.8 to 15.5 percent. The real IRR drops from 13 percent to 4 to 7.2 percent. The return on total assets is more sensitive to the tariff profiles because it is not based on debt

leveraging or on the way that income taxes are computed. The returns calculated here, 11.8 to 15.5 percent in nominal terms, and 4 to 7.2 percent in real terms, are healthy when compared to other regulated industries, or even when compared to manufacturing industries in general. It is important to keep in mind that these returns are for a project that was financed in the 1970's when the real cost of debt was often negative.

I hope these calculations will prove useful to you and your Subcommittee. I appreciated the opportunity to provide testimony on June 18, 1985 and look forward to working with you

in the future.

to contact me.

If I can be of further assistance do not hesitate

Sincerely,

James P. Love

[merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small]

(f) sinking fund for expense of dismantling and removing pipeline in 2011

(g) straight line depreciation based on 35 year economic life as stipulated in FERC proceeding

(h) estimates for debt and interest provided by DR

(j) current taxes based on single company return paying taxes at full statutory rate. Timing differences due to accelarated depreciation.

Current taxes are adjusted for carryforward of

[blocks in formation]

(a) based on norealized income taxes [rather than "current taxes which are the taxes which would actually be paid by on a stand alone basis]

(n) the undepreciated book value value of capitalized TAPS investment

(o) estigated by DR based on FERC filings

(p) cumulative sum of deferred income taxes as a source of capital

(q) the amount of the book value of total assets financed by shareholder equity

(r) the rate of return on total assets is the sum of pre-tax profits and interest paysents divided by the book value of total assets

(s) the after tax rate of return to equity is column (a) divided by coluan (q)

FEDERAL INCOME TAX CALCULATIONS

STATE AND FED INCOME TAX

DD&R, prp tx,

fed

op cost

fed

year

rev & intr

dep

tax

st txble inc

fed ITC

cur add to normal Cu fed tx defrd ized defrd fed w/loss fed state fed tax cry fw tax tax tax

curr add to nora defrd income defrd inc inc tax tax tax tax

cua

[merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small]
[merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][subsumed][merged small][merged small][merged small][merged small][merged small][subsumed][merged small][merged small][merged small][merged small][subsumed][merged small][merged small][merged small][merged small][merged small][subsumed][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][subsumed][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small]

(c) tariffs that will result under the proposed TAPS Settlement Methodology (TSM] (d) product of coluan (b) and (c)

(f) sinking fund for expense of dismantling and removing pipeline in 2011

FEDERAL INCOME TAX CALCULATIONS

STATE AND FED INCOME TAX

[blocks in formation]

(g) straight line depreciation based on 35 year economic life as stipulated in FERC proceeding (h) estimates for debt and interest provided by the Alaska Department of Revenue [DR]

77

845 581

423

0

-159 790 -863

0

136

136

136

0

164

164

164

(j) current taxes based on single company return paying taxes at full statutory rate. Tiaing differences due to accelarated depreciation.

[merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small]

(a) based on normalized income taxes rather than 'current' taxes which are the taxes which would actually be paid by on a stand alone basis]

82 3557 1073 644 157
83 3545 1001 610 166 1768
84 341B 919 574 167 1759
85 3256 886 530 159 1681

1684

5

769

769

173

942 1183

926

224 1149 1283

6

809

808 156

964 1345

974

203 1177 1486

3

906

806 139

946 1484

973

182 1155 1668

[merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small]

(q) the amount of the book value of total assets financed by shareholder equity

(r) the rate of return on total assets is the sum of pre-tax profits and interest payments divided by the book value of total assets

(s) the after tax rate of return to equity is column (a) divided by column (q)

[blocks in formation]

77 181.5 6.5 97 8.87 6.21 78 195.4 7.7 396 6.28 6.21

79 217.4 11.3 467 5.70 6.21

107 1226.7

861 1540
2486 4130
2561 3972
80 246.8 13.5 552 5.59 6.21 3087 4061
81 272.4 10.4 551 6.11 6.21 3367 4012
82 289.1 6.1 588 6.05 6.11
83 298.4 3.2 598 5.93 6.13
84 311.5 4.4 607 5.63 6.01
85 324.6 4.2 613 5.31 6.01
86 339.S 4.6 621 5.06
87 355.5 4.7 653 4.78
88 375.0 5.5 641 4.56
89 395.7 5.5 604 4.44
90 417.4 5.5 557 4.44
91 440.4 5.5 518 4.43
92 467.7 6.2 476 4.46
93 496.7 6.2 409 4.48
94 527.5 6.2 403 4.45
95 560.2 6.2 394 4.33
96 594.9 6.2 380 4.22
97 635.4 6.8 347 4.15
98 578.6 6.8 321 4.02
99 724.7 6.8 299 4.40
100 774.0 6.8 301 4.66
101 826.6 6.8 285 5.08
102 882.8 6.8 266 5.57
103 942.9 6.8 235 6.28
104 1007.0 6.8 215 6.98
105 1075.5 6.8 197 7.71
106 1148.6 6.8 184 8.52
6.8 158 9.83
108 1310.1 6.8 136 11.41
109 1399.2 6.8 105 14.47
110 1494.4 6.8 78 19.02
111 1596.0 6.8

3557 3994
3545 3857
3418 3562 443
3256 3256 446
3142 3004 467
3121 2850 502
2923 2530 500
2682 2200 488
2473 1923 478
2295 1691 481
2123 1473 493
1629 1195 500
1793 1104 516
1706 989 536
1604 875 557
1440 736 579
1290 617 599
1316 589 627
1403 583 660
1448 569 692
1482 545 727
1476 508 760
1501 494 798

224
450
398
463
471
470
452

-29 -18
-167 -163
-507 -525 18
2626 7536 6406 0.85 551 2563
-614 -615 1
1011 8871 7234 0.82 627 828 0.007 65 -810 -372 199
154 8961 7234 0.81 627 0 0.030 268 -782 339 916
98 8791 7234 0.82 627 0 0.036 320 -726 501 1045
106 8577 7234 0.84 627 0 0.045 383 -734
48 8242 6933 0.84 599 -301 0.047 385 -948
55 7912 6525 0.82 559 -408 0.052 413 -1021
60 7559 5917 0.78 505 -608 0.056 424 -1173

-11
-4

-26

-50 -122

73

22

0.9

-3

5.0

-15 -18

-8 -931 -2047

74

96

16.8

93.1

-137 -163

[blocks in formation]

713 1178

1550 2519 3313

80

3087 43.7

463

627

309

1.9

716

10.6

560

713

901 1046
999 1055
1062 859
27 7162 5018 0.70 432 -900 0.060 432 -1358 1088 529
10 6741 4676 0.69 396 -342 0.065 437 -748 1050 1012
10 6314 4470 0.71 376 -206 0.070 443 -592 1000 1083
10 5881 4085 0.69 341 -385 0.079 467 -736 946 938
10 5424 3839 0.71 317 -246 0.085 459 -573 872 977
10 4975 3593 0.72 293 -246 0.087 433 -549 774 871
10 4552 3346 0.74 269 -247 0.088 400 -526
10 4161 3099 0.74 245 -247 0.090 373 -502
10 3798 2843 0.75 220 -256 0.091 344 -486
10 3464 2579 0.74 195 -264 0.085 296 -469
10 3178 2383 0.75 176 -196 0.092 293 -382
10 2895 2211 0.76 160 -172 0.099 287 -342
10 2618 2039 0.78 145 -172 0.106 278 -327

[merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][merged small][ocr errors]

file: DOCVTSM

TARIFFS

TABLE 4

COMPARISON OF TARIFFS AND REVENUE REQUIREMENTS UNDER PROPOSED SETTLEMENT [TSM] AND DOC METHODOLOGY

Depreciated Original Cost

[blocks in formation]
[blocks in formation]
[blocks in formation]

12.34 11.39 10.45
6.60 6.12 5.64
5.89 5.41 4.93
5.25 4.83 4.41
4.59 4.28 3.97
3.71 3.52 3.34
3.17 3.05 2.93
2.97 2.86 2.74
2.72 2.62 2.53
2.53 2.45 2.36
2.29 2.23 2.17
2.15 2.09 2.04
2.03 1.98 1.93
1.95 1.91 1.87
1.90 1.87 1.84
1.92 1.89 1.86
2.05 2.02 2.00
2.01 1.99 1.97
2.00 1.99 1.98
2.05 2.04 2.03
2.22 2.21 2.20
2.37 2.37 2.36
2.57 2.57 2.56
2.62 2.62 2.61
2.83 2.83 2.82
3.10 3.10 3.10
3.60 3.60 3.60
4.07 4.07 4.07
4.56 4.56 4.56
5.11 5.11 5.11
6.21 6.20 6.20
7.53 7.53 7.53
10.38 10.38 10.38
14.62 14.62 14.62
18.28 18.28 18.28

(2.87) (1.92) (0.97)
0.19 0.68 1.18
0.20 0.71 1.22
0.62 1.08 1.54
1.72 2.07 2.43
2.52 2.74 2.96
2.90 3.04 3.19
2.69 2.84 2.99
2.55 2.68 2.81
2.40 2.52 2.64
2.29 2.39 2.49
2.12 2.22 2.32
2.04 2.13 2.22
2.02 2.11 2.19
1.99 2.07 2.15
1.92 2.00 2.08
1.71 1.79 1.87
1.70 1.77 1.84
1.56 1.63 1.69
1.38 1.44 1.50
1.09 1.15 1.22
0.78 0.84 0.90
0.94 1.00 1.05
1.18 1.23 1.27
1.39 1.43 1.47
1.61 1.65 1.68
1.81 1.84 1.88
2.05 2.08 2.11
2.30 2.33 2.35
2.59 2.61 2.62
2.81 2.83 2.84
3.09 3.09 3.10
3.31 3.32 3.32
3.63 3.63 3.63
5.85 5.84 5.83

(3.47) (2.52) (1.58)
(0.32) 0.16 0.64
(0.19) 0.29 0.77
0.34 0.76 1.18
1.52 1.83 2.14
2.34 2.53 2.71
2.76 2.88 3.00
2.66 2.77 2.89
2.59 2.69 2.78
2.53 2.61 2.70
2.49 2.55 2.61
2.41 2.47 2.52
2.41 2.46 2.51
2.49 2.53 2.57
2.53 2.56 2.59
2.54 2.57 2.60
2.43 2.46 2.48
2.44 2.46 2.48
2.33 2.34 2.35
2.17 2.18 2.19
1.93 1.94 1.95
1.65 1.65 1.66
1.83 1.83 1.84
2.04 2.04 2.05
2.25 2.25 2.26
2.47 2.47 2.47
2.68 2.68 2.68
2.91 2.91 2.91
3.15 3.15 3.15
3.41 3.41 3.41
3.62 3.63 3.63
3.88 3.88 3.88
4.09 4.09 4.09
4.40 4.40 4.40
6.72 6.72 6.72

[blocks in formation]

TOTALS:

24532 26507 28481

[ocr errors]

1565 1639
1563 1628

1590 1649 1707
1572 1623 1674
1623 1664 1706

1424 1285 1339

1485

1546 1582 1618

1175 1221

1457 1486 1514 1385 1407 1429

1129
1662 1808
1885 1980
2075
1701 1796 1891
1562 1642 1722
1426 1496 1567
1367 1427 1487
1179 1232 1286
1010 1054 1098
877 913 950

1362 1595

996

1201 1407

1955

1544

1668 1791

1794

1871 1949

1680 1753
1590
1503 1552
1482 1520
1338 1369 1400

1826
1649 1707
1600
1557

[blocks in formation]

1072 1112

1308 1325 1342

760 790 820

964

977 989

[blocks in formation]
« PrécédentContinuer »