Utility Commissioners Wall Street Dialogue

1
Utility Commissioners / Wall Street Dialogue
The Investment Bankers Perspective on Regulation
and The Utility Business The Regulatory
Treatment of Risk Management by Utilities as it
Affects Cost of Capital Advantages from Cost of
Capital Standpoint of an Investment Grade Rating
May 6, 2004
John Thorndike, Vice Chairman of Investment
Banking Merrill Lynch Co. And Co-Chair of Wall
Street Advisory Group Edison Electric Institute
DRAFT
CONFIDENTIAL
2
Utility Commissioners / Wall Street Dialogue

• Regulatory Treatment of Risk Management by
  Utilities Outline of Points (1/8/2004)
• Regulatory Treatment of Risk Management by
  Utilities Remarks (1/8/2004)
• Regulatory Treatment of Risk Management by
  Utilities Select Transactions
• 4. Advantages of the Investment Grade Rating

3
Regulatory Treatment of Risk Management by
Utilities Outline of Points (1/8/2004)
4
Regulatory Treatment of Risk Management by
Utilities Remarks (1/8/2004)
5
Regulatory Treatment of Risk Management by
Utilities Select Transactions
6
Regulatory Treatment of Risk Management by
Utilities
Select Transactions
7
Advantages of the Investment Grade Rating
8
Advantages of the Investment Grade Rating
Baa rating versus Ba rating
1
9
Advantages of the Investment Grade Rating
Baa rating versus Ba rating
1
10
Advantages of the Investment Grade Rating
Historical Credit Spread Levels
11
Advantages of the Investment Grade Rating
Historical Yield to Maturity