From: Richard Rauschmeier, California Public Utilities Commission, Office of Ratepayer Advocates
Date: December 20, 2017
RE: Aaron Rothschild, Rothschild Financial Consulting
To Whom It May Concern:
My name is Richard Rauschmeier and for the last 10 years, I have worked as the Program and Project Supervisor of the water policy branch of California Public Utilities Commission’s Office of Ratepayer Advocates (ORA). We are statutorily mandated with representing the interests of ratepayers in major rate cases before the California Public Utilities Commission. Since joining ORA, I have participated in most major water rate cases litigated before the Commission. I have supervised or sponsored testimony in four separate Cost of Capital proceedings and overseen the work of consultants and expert witnesses hired by ORA.
In 2017, ORA contracted the services of Mr. Rothschild to provide analysis and expert testimony pertaining to authorized rates of return for California’s four largest investor-owned water utilities. Throughout his engagement, Mr. Rothschild proved indispensable to my office’s efforts. His insightful financial analysis and high-quality work products enabled us to present the Commission with well-supported recommendations that best represented the ratepayers of California.
In both his pre-filed written testimony and his oral testimony before the Commission, Mr. Rothschild was able to deliver highly technical analysis presented in a format that could be understood by the necessary decision makers in the proceeding. Mr. Rothschild presented and successfully defended this analysis under rigorous challenges and cross-examination by multiple parties in the proceeding. Although a final decision in this proceeding is still pending at the time of this writing, I am certain that the outcomes reached for the ratepayers of California in this proceeding will have been significantly aided by his efforts.
Should you require any additional information, please do not hesitate to contact me.
Amongst the three witnesses, Consumer Affairs Rothschild’s approach was unique in that he included the use of both historical and forward-looking, market-based data in his analysis. Based on the testimony and facts presented, the Commission therefore adopts the recommended ROE of 7.46% proposed by witness Rothschild. This ROE allows Blue Granite to raise the capital it needs to provide safe and reliable service to its customers.
The Commission finds that analysis and testimony provided by Consumer Affairs witness Rothschild is credible, compelling, unbiased and without prejudice in balancing the interests of the consumer and the utility by allowing the utility the opportunity to earn a 7.46% return on equity. See, Tr. pp. 672.8-672.10.
Consumer Affairs proposed the option and analysis for the ROE of 7.46% with witness Rothschild. We conclude that the weight of the evidence, including witnesses’ testimony and the credibility of Rothschild analysis which demonstrated flawed ROE calculations based upon non-utility business by Blue Granite witness DeStefano, support the 7.46% ROE and OM of 10.54% for Blue Granite as determined
by the Commission.
Rothschild Financial Consulting has worked for us in multiple rate cases. Each time they have provided thorough and detailed analysis and recommendations based on facts and realistic comparables. When sticking to the facts rather than unproven theories or assumptions, our position both legally and at the negotiation table is much stronger. I have been very pleased with their competency and attention to detail. Would be happy to work with them in the future.