From: Roy, Robin [mailto:rroy@nrdc.org] 

Sent: Friday, November 11, 2011 7:26 PM 

To: Saint, Robert D.; Robert Berman 

Cc: Corkran, Jerry L; Bolduc Christopher; Anderson Richard; Ballo Timothy; Beck Scott R.; Caskey John. 

F; Cymbalsky John; adelaski@standardsasap.org; Tom; Fernstrom Gary; Gaytan Carlos; Greeson Robert; 

bruce.r.hirsch@bge.com; Hodge Gerald R.; Hyland Michael J.; Millure David; Nadel Steven; Patterson 

Wesley F.; Petersen Eric; Polinski Raymond; artrosenfeld@gmail.com; Rosenstock Steven J.; Simmons 

Charles E.; Cohen Dan; Coulter Greg; Creevy Jim; ahofmann@publicpower.org; Kumar Puesh; Mauer 

Joanna; Aaron Meyers; jrossetti@mlgw.org; Ryan Paul; Schoen Jerry W.; bsmith@federalpacific.com; 

Waltner, Meg; Brian Coffey; Coughlin Katie; brenda.edwards@ee.doe.gov; 

jeremiah.freeman@ee.doe.gov; Caitlin Johnson; Zhimei Luo; emily.marchetti@ee.doe.gov; Michael 

Rivest; Rosenquist Gregory; Drexler Charles R.; Phil Hopkinson; James.Lass@cleco.com; Sampat Mahesh 

P.; DYoung@energy-solution.com; chad.kennedy@us.schneider-electric.com; eduardorobles@eaton.com; 

vijay.tendulkar@onyxpower.com; Kenneth Winder; thomas.patzner@us.schneider-electric.com; 

carlosgsiqueiros@eaton.com; Raba Jim; Parker Richard 

Subject: RE: Cost of Capital to Electric Utilities 

Thanks Bob,

Is the 6.22% rate of return real or nominal?   

If it’s 6.22% nominal, then with cpi currently at ~3.9% the real rate is around 2.2%, which suggests 7% is

high.   

Cheers, Robin

From: Saint, Robert D. [mailto:robert.saint@nreca.coop] 

Sent: Friday, November 11, 2011 4:03 PM 

To: Robert Berman 

Cc: Corkran, Jerry L; Bolduc Christopher; Anderson Richard; Ballo Timothy; Beck Scott R.; Caskey John. 

F; Cymbalsky John; adelaski@standardsasap.org Delaski; Tom; Fernstrom Gary; Gaytan Carlos; Greeson 

Robert; bruce.r.hirsch@bge.com Hirsch R; Hodge Gerald R.; Hyland Michael J.; Millure David; Nadel 

Steven; Patterson Wesley F.; Petersen Eric; Polinski Raymond; artrosenfeld@gmail.com Rosenfeld; 

Rosenstock Steven J.; Roy, Robin; Simmons Charles E.; Cohen Dan; Coulter Greg; Creevy Jim; 

ahofmann@publicpower.org Hofmann; Kumar Puesh; Mauer Joanna; Aaron Meyers; jrossetti@mlgw.org

Rossetti; Ryan Paul; Schoen Jerry W.; bsmith@federalpacific.com Smith; Waltner, Meg; 

brian.coffey@navigant.com Coffey; Coughlin Katie; brenda.edwards@ee.doe.gov Edwards; 

jeremiah.freeman@ee.doe.gov Freeman; Johnson Caitlin; zhimei.luo@navigant.com Luo; 

emily.marchetti@ee.doe.gov; mrivest@navigant.com Rivest; Rosenquist Gregory; Drexler Charles R.; Phil 

Hopkinson; James.Lass@cleco.com Lass; Sampat Mahesh P.; DYoung@energy-solution.com Young; 

chad.kennedy@us.schneider-electric.com Kennedy; eduardorobles@eaton.com Robles; 

vijay.tendulkar@onyxpower.com Tendulkar; Kenneth Winder; thomas.patzner@us.schneider-electric.com

Patzner; carlosgsiqueiros@eaton.com Siquieros; Raba Jim; Parker Richard 

Subject: RE: Cost of Capital to Electric Utilities 

Robert—

After much discussion within NRECA and consultation with a major supplemental lender for

distribution cooperatives, we have come up with median Rate of Return on Total Capitalization

of  6.22% for electric cooperatives.  So, the 7% figure being used is well within the ball park.   
Bob Saint  

Principal Distribution Engineer, Energy and Power Division  

National Rural Electric Cooperative Association (NRECA)  

4301 Wilson Blvd  

Arlington, VA 22203  

Phone: (703) 907-5863  

Cell: (703) 283-5078  

From: Robert Berman [mailto:bermaneconomics@gmail.com] 

Sent: Monday, November 07, 2011 5:47 AM 

To: Parker Richard 

Cc: Robert Berman; Corkran, Jerry L; Bolduc Christopher; Anderson Richard; Ballo Timothy; Beck Scott 

R.; Caskey John. F; Cymbalsky John; adelaski@standardsasap.org Delaski; Tom; Fernstrom Gary; Gaytan 

Carlos; Greeson Robert; bruce.r.hirsch@bge.com Hirsch R; Hodge Gerald R.; Hyland Michael J.; Millure 

David; Nadel Steven; Patterson Wesley F.; Petersen Eric; Polinski Raymond; artrosenfeld@gmail.com

Rosenfeld; Rosenstock Steven J.; Roy Robin; Saint, Robert D.; Simmons Charles E.; Cohen Dan; Coulter 

Greg; Creevy Jim; ahofmann@publicpower.org Hofmann; Kumar Puesh; Mauer Joanna; Aaron Meyers; 

jrossetti@mlgw.org Rossetti; Ryan Paul; Schoen Jerry W.; bsmith@federalpacific.com Smith; Waltner 

Meg; brian.coffey@navigant.com Coffey; Coughlin Katie; brenda.edwards@ee.doe.gov Edwards; 

jeremiah.freeman@ee.doe.gov Freeman; Johnson Caitlin; zhimei.luo@navigant.com Luo; 

emily.marchetti@ee.doe.gov; mrivest@navigant.com Rivest; Rosenquist Gregory; Drexler Charles R.; Phil 

Hopkinson; James.Lass@cleco.com Lass; Sampat Mahesh P.; DYoung@energy-solution.com Young; 

chad.kennedy@us.schneider-electric.com Kennedy; eduardorobles@eaton.com Robles; 

vijay.tendulkar@onyxpower.com Tendulkar; Kenneth Winder; thomas.patzner@us.schneider-electric.com

Patzner; carlosgsiqueiros@eaton.com Siquieros; Raba Jim 

Subject: Cost of Capital to Electric Utilities 

Richard and All, 

For those interested in the current cost of money to investor owned electric utilities, the weighted 

average cost of capital appears to be a little over 5%. This is composed of about 7% equity and 

4% debt. See attached for full list of sector costs. As noted in my earlier email to Ken, rural 

electric coops and municipals typically borrow from RUS at rates pegged to long-term treasuries 

-- currently about 3%. Links also included her for convenience. 

 http://www.rurdev.usda.gov/UEP_Rates.html 

and http://www.rurdev.usda.gov/UEP_Loans_Grants.html

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