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

Sent: Friday, November 11, 2011 7:03 PM

To: Robert Berman

Cc: Corkran, Jerry L; Bolduc Christopher; Anderson Ri chard; Ballo Timothy; Beck Scott R.; Caskey John. F; Cymbalsky John; adelaski@standardsasap.org Delas ki; Tom; Fernstrom Gary; Gaytan Carlos; Greeson Robert; bruce.r.hirsch@bge.com Hirsch R; Hodge Ge rald R.; Hyland Michael J.; Millure David; Nadel Steven; Patterson Wesley F.; Petersen Eric; Polin ski Raymond; artrosenfeld@gmail.com Rosenfeld; Rosenstock Steven J.; Roy Robin; Simmons Char les 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; Coughlin Katie; brenda.edwards@e e.doe.gov Edwards; jeremiah.freeman@ee.doe.gov Freeman; Caitlin Johnson; Zhimei Luo; emily.marchetti@ee.doe.gov; Mi chael 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 Christop her; 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 Charle s 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 UtilitiesRichard and All,

For those interested in the curren t cost of money to investor owne d electric utilities, the weighted average cost of capital a ppears to be a little over 5%. This is composed of about 7% equity and

4% debt. See attached for full li st of sector costs. As noted in my earlier email to Ken, rural electric coops and municipals typically borrow fr om 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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