Total 100.00 100.00 100.00 100.00 (1) City St. No. 6 at 10, Sch. 1 (2) OCA St. No. 3 at 13 (3) OTS St. No. 1 at 7; OTS Ex. No. 1, Sch. 1 (4) Kellogg St. No. 1 at 2 As noted above, the City proposed a 50.00% debt/50.00% equity hypothetical capital structure for use in this proceeding (pro forma at December 31, 2010). City St. No. 6, Sch. 1. The other Parties proposed the use of the City’s actual capital structure as of December 31, 2009, of 83.8% debt/16.20% equity, with Kellogg’s slightly different actual capital structure likely due to rounding. OTS St. No. 1 at 12; OCA St. No. 3 at 13; Kellogg St. No. 1 at 6. Since Mr. Poulin apparently accepted the OCA cost of capital recommendations, he also by implication accepted the OCA recommended actual capital structure, from which these cost rates are derived. March 6 letter; OCA St. No. 3, Ex. JRW-1. The City proposed the use of a hypothetical capital structure due to the City’s atypical actual capital structure of 83.8% debt/16.20% equity as of 12/31/2009. The City asserted that its recommended 50.00% debt/ 50.00% equity hypothetical represented current water industry practice and was in line with Standard & Poor’s (S&P’s) implied ratios based upon published financial benchmarks. Lancaster contended that use of an industry standard eliminated the large cost rate adjustments resulting from differences in financial risk between the comparison group and the City. The City further noted that the Commission had used these more conventional ratios in past cases involving water utility systems. City St. No. 6 at 10-11. The City compared its hypothetical capital structure recommendation to the composite capital structure of its comparison group, the Water Group Followed by infra:
Total 100.00 100.00 100.00 100.00 (1) City St. No. 6 at 10, Sch. 1 (2) OCA St. No. 3 at 13 (3) OTS St. No. 1 at 7; OTS Ex. No. 1, Sch. 1 (4) Kellogg St. No. 1 at 2 As noted above, the City proposed a 50.00% debt/50.00% equity hypothetical capital structure for use in this proceeding (pro forma at December 31, 2010). City St. No. 6, Sch. 1. The other Parties proposed the use of the City’s actual capital structure as of December 31, 2009, of 83.8% debt/16.20% equity, with Kellogg’s slightly different actual capital structure likely due to rounding. OTS St. No. 1 at 12; OCA St. No. 3 at 13; Kellogg St. No. 1 at 6. Since Mr. Poulin apparently accepted the OCA cost of capital recommendations, he also by implication accepted the OCA recommended actual capital structure, from which these cost rates are derived. March 6 letter; OCA St. No. 3, Ex. JRW-1. The City proposed the use of a hypothetical capital structure due to the City’s atypical actual capital structure of 83.8% debt/16.20% equity as of 12/31/2009. The City asserted that its recommended 50.00% debt/ 50.00% equity hypothetical represented current water industry practice and was in line with Standard & Poor’s (S&P’s) implied ratios based upon published financial benchmarks. Lancaster contended that use of an industry standard eliminated the large cost rate adjustments resulting from differences in financial risk between the comparison group and the City. The City further noted that the Commission had used these more conventional ratios in past cases involving water utility systems. City St. No. 6 at 10-11. The City compared its hypothetical capital structure recommendation to the composite capital structure of its comparison group, infra: the Water Group Followed by
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