Cost of Capital Expert Witness: Rate Filing of Vermont Gas Systems, Inc.

REQUEST FOR PROPOSAL For Cost of Capital Expert Witness: Rate Filing of Vermont Gas Systems, Inc. Issue Date: March 2, 2023 Response Due Date: March 10, 2023 at 4:30 PM Department Contact: Erin Brennan Special Counsel Vermont Department of Public Service 112 State Street Montpelier, VT 05620-2601 Phone: (802) 522-6301 Email: Erin.Brennan@vermont.gov Vermont Department of Public Service Cost of Capital Expert Witness RFP March 2, 2023 Page 2 of 8 VERMONT DEPARTMENT OF PUBLIC SERVICE REQUEST FOR PROPOSALS Cost of Capital Expert Witness The Vermont Department of Public Service (“Department”), which represents the public interest in utility cases before the Vermont Public Utility Commission (“Commission”), is soliciting proposals, through this Request for Proposals (“RFP”), from qualified experts in utility finance to review and make recommendations on the appropriate cost of capital and capital structure of Vermont Gas

Systems, Inc. (“Vermont Gas”), for use in a tariff and rate adjustment filing made by Vermont Gas with the Commission on February 15, 2023. The work primarily involves the provision of expert witness services to provide an independent assessment of the appropriate cost of Vermont Gas’s debt and equity and a determination of Vermont Gas’s appropriate capital structure The work is anticipated to take place primarily from March through October, 2023. The contract period will begin when a contract is executed and end one year from that date. Proposals are due by 4:30 p.m., Friday, March 10, 2023, with the goal of finalizing a contract as soon as practicable during March, 2023. The selected respondent should be available to start immediately thereafter. A signed original, one (1) hard copy, and one (1) electronic copy of the proposal must be delivered to the Department. Proposals and questions should be addressed to: Erin Brennan Special Counsel Vermont Department of Public Service 112 State Street Montpelier, VT 05620-2601 Phone: (802) 522-6301 Erin.Brennan@vermont.gov Scope of Services The Department anticipates that the Respondent hired in connection with this RFP will support the legal, consumer affairs, and technical staff of the Department by providing expertise and technical assistance regarding cost-of-service ratemaking. The selected Respondent is expected to provide assistance to the Department and participate in a contested administrative proceeding before the Commission, which has ultimate authority over whether to approve Vermont Gas’s proposed rates. The selected respondent’s preparation for and participation in the contested proceeding is expected to include preparing discovery questions and responses, drafting prefiled testimony to be submitted to the Commission, and offering live testimony to the Commission. Vermont Department of Public Service Cost of Capital Expert Witness RFP March 2, 2023 Page 3 of 8 Respondent will review and provide an assessment of Vermont Gas’s cost of capital and capital structure proposal. Respondent will also conduct an independent examination assessing and recommending an appropriate return on equity and capital structure for Vermont Gas’s regulated operations under traditional regulation pursuant to traditional discounted cash flow, capital asset pricing model, and risk premium methodologies. Respondent will be experienced in analyzing the cost of capital of regulated utility companies for the purpose of setting just and reasonable rates, and have knowledge of general and utility- specific finance principles and current developments. Respondent shall be qualified and prepared to prepare and render expert testimony, and be cross-examined, with respect to all of the issues addressed in this RFP, and which are likely to arise in a rate proceeding seeking cost recovery for the Project. Respondent shall be qualified and prepared to prepare and render expert testimony, and be cross- examined, with respect to all of the issues addressed in this RFP. Deliverables The final deliverables and work product of the respondent chosen through this RFP will consist of a written report (to be prepared in the form of written prefiled testimony), including supporting detail, covering the review and examination of Vermont Gas’s proposed cost of capital to be used in setting just and reasonable rates. The review should document the scope of the consultant’s review, and should specify areas of inquiry, responses, and resolution (if any). The report will be expected to include: include (1) a determination of the appropriate cost of debt to be used for setting rates for Vermont Gas; (2) a cost of equity study to estimate the cost of equity of Vermont Gas for use in setting rates; (3) a determination of the appropriate cost of capital to apply to rate base to provide Vermont Gas the opportunity to earn income sufficient to maintain its financial integrity and attract capital when efficiently managed; (4) an evaluation of Vermont Gas’s bond rating/credit position; (5) a recommendation as to an appropriate fair value rate of return for application to the fair value rate base. The following items will be required, as necessary, through the course of litigation: 1. Preliminary assessment of issues and preparation of a work plan within the schedule set by the Commission; 2. Discovery requests and evaluation of responses, including assistance with preparation for depositions if necessary; 3. Written testimony presenting a description of the review methods, materials reviewed, conclusions, and recommendations with supporting analysis; 4. Responses to discovery relating to the written testimony; 5. Cross-examination testimony and assistance with cross-examination of opposing witnesses; Vermont Department of Public Service Cost of Capital Expert Witness RFP March 2, 2023 Page 4 of 8 6. Proposed findings of fact and other assistance with initial and reply briefs in support of the Department's case.