CALIFORNIA AMERICAN WATER

1

• CALIFORNIA AMERICAN WATER CWP EXAMPLE OF RETURN
  DETERMINATION
• (standard PUC financing)
• (a) PLANT 100 M
• (b) CUSTOMER FUNDED 30 30 M
• COMPANY FUNDED 70 M 1) (a) (b)
• DEBT 60 42 M (c) 60
• (e) EQUITY 40 28 M (c) 40
• (f) AUTHORIZED RETURN _at_ 10.5 2.9 M (e)
  10.5
• (g) INTEREST EXPENSE _at_ 7 2.9 M (f) 7
• (h) TOTAL FINANCING COVERAGE 5.8 M (f)
  (g)
• (total capital cost in application was
  8.55 - it applies to only CAW funded portion)

2
This example is the normal utility financing
method other options might be available The
customers only pay for the project once it is
used and usefulCustomers only pay for the
Company funded portion of the Project not already
recovered (Rate Base)Rate Base equals total
Project cost less Customer Contributions less
Depreciation less Deferred TaxesRate Base
declines every year Prior to completion of the
project CAW has requested that the debt and
interest carrying costs be capitalized to the
Project