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Water and Wastewater

We have worked with both investor- and municipal-owned water and waste-water utilities on regulatory matters such as the appropriate cost of capital, recovery of infrastructure costs, and cost benefits of water plant investments. Our work has included drought-prone areas in the Southwest and Western U.S., as well as environmentally sensitive areas such as Alaska. We have assisted equity investors to assess the ability of water and waste-water utilities to earn the allowed return on equity, evaluate conditions on mergers or acquisitions, and analyze other factors that may impact the economics of an acquisition.

Because water is exceptionally capital-intensive, the assessment of any water industry investment must consider the need for future capital investments. Evaluating water infrastructure projects also requires careful consideration of safety-related capital expenditures given the environmental impact of both water consumption and waste-water release.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Water and Wastewater practice.

Cost of capital testimony
For both investor-owned and municipal-owned water utilities, Brattle has provided cost of capital testimony in several U.S. states, including Alaska, Arizona, California, New Mexico, Tennessee, and West Virginia.
Analysis of capital structure
In connection with the sale of certain water assets in the Southwest U.S., Brattle advised the seller regarding the capital structure of the operating entities and the need to restructure debt.
Study of acquisition and regulatory treatment
On behalf of equity investors seeking to acquire operating water utilities, Brattle undertook a study of recent acquisitions and examined the acquisition premium and the regulatory treatment of various transaction-specific items such as deferred income taxes, goodwill, and the retirement of debt. We also surveyed the conditions imposed on acquirers by regulatory entities.
Clean water valuation
For a state government agency, Brattle estimated the value of clean water to residents of a Midwestern community. A survey was fielded to residents of the community to estimate their valuation of a cleaner resource. This analysis is part of on-going litigation between the state and an alleged polluter.
Economic analysis of the Bay Delta Conservation Plan

The Brattle Group is leading the economic analysis of the Bay Delta Conservation Plan, which considers the benefits and costs of reconfiguring the way California exports water from the Sacramento-San Joaquin Delta. To complete the analysis, four categories of benefits are evaluated including urban water supply reliability, agricultural water supply reliability, water quality impacts, and reductions in seismic risks. These benefits are weighed against project costs.

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