With regard to the municipal ownership scenario under the DCF method, Aqua argues that the proposed adjustment that the 2.66 percent discount rate be OCA’s discarded is borne out of a lack of understanding of the difference between a discount rate and a capitalization rate. at 13-14. Aqua avers that Gannett did not use a 2.66 Id. percent discount rate but only used the 3.66 percent discount rate under the municipal ownership market multiple DCF. According to Aqua, Gannett could only use the 3.66 percent discount rate because the market multiple DCF uses only discount rates and not capitalization rates. Aqua further notes that because 2.66 percent is a capitalization rate, Gannett could not use it. at 14. Id. Finally, Aqua asserts that unlike the zero growth assumption, OCA’s one percent growth projection was based on substantial evidence in the record. Gannett’s According to Aqua, New Garden is one of the fastest growing areas in the Commonwealth of Pennsylvania and that Gannett reasonably concluded in its appraisal that of the higher than average projected population “[t]he combination Township’s growth and the domestic growth resulting from failing on-lot septic system owners switching over to Sewer System service indicates appreciably higher future growth for the Sewer at 14 (quoting Aqua Exh. U at 7-10). Aqua further states that Id. System.” growth assessment is also based on independent population growth projections Gannett’s published by the Delaware Valley Regional Planning Commission (DVRCP). According to Aqua, the potential for septic system conversions is based on life span DEP’s 25-year of an on-lot septic system coupled with the fact that 72 percent of the homes Township’s were built before the year 2000. at 15 (citing Aqua Stmt. 3R at 6). Aqua references Id. various sections of documents in its Application including New Chapter 94 Garden’s Report for 2015, New Act 537 Plan, and several other exhibits in the Garden’s Application to support its growth projections and its decision to subtract 100-basis points from the capitalization of earnings method based on 2.66 percent municipal bond yield. Aqua R. Exc. at 15-17 (citing Aqua Exh. 1; Aqua Exh. U at 10).
With regard to the municipal ownership scenario under the DCF method, Aqua argues that the OCA’s proposed adjustment that the 2.66 percent discount rate be discarded is borne out of a lack of understanding of the difference between a discount rate and a capitalization rate. Id. at 13-14. Aqua avers that Gannett did not use a 2.66 percent discount rate but only used the 3.66 percent discount rate under the municipal ownership market multiple DCF. According to Aqua, Gannett could only use the 3.66 percent discount rate because the market multiple DCF uses only discount rates and not capitalization rates. Aqua further notes that because 2.66 percent is a capitalization rate, Gannett could not use it. Id. at 14. Finally, Aqua asserts that unlike the OCA’s zero growth assumption, Gannett’s one percent growth projection was based on substantial evidence in the record. According to Aqua, New Garden is one of the fastest growing areas in the Commonwealth of Pennsylvania and that Gannett reasonably concluded in its appraisal that “[t]he combination of the Township’s higher than average projected population growth and the domestic growth resulting from failing on-lot septic system owners switching over to Sewer System service indicates appreciably higher future growth for the Sewer System.” Id. at 14 (quoting Aqua Exh. U at 7-10). Aqua further states that Gannett’s growth assessment is also based on independent population growth projections published by the Delaware Valley Regional Planning Commission (DVRCP). According to Aqua, the potential for septic system conversions is based on DEP’s 25-year life span of an on-lot septic system coupled with the fact that 72 percent of the Township’s homes were built before the year 2000. Id. at 15 (citing Aqua Stmt. 3R at 6). Aqua references various sections of documents in its Application including New Garden’s Chapter 94 Report for 2015, New Garden’s Act 537 Plan, and several other exhibits in the Application to support its growth projections and its decision to subtract 100-basis points from the capitalization of earnings method based on 2.66 percent municipal bond yield. Aqua R. Exc. at 15-17 (citing Aqua Exh. 1; Aqua Exh. U at 10).