Edward C. Bodmer
Senior Associate
Spectrum Economics, Inc.

GENERAL

Mr. Bodmer is a Senior Associate at Spectrum Economics, Inc. He provides consulting services on economic and financial issues in the electric utility industry. He has taught energy finance and pricing throughout the world, formulated significant government policy and corporate strategy in the Midwestern United States and created innovative forward pricing and investment valuation software for a wide variety of consulting clients. Mr. Bodmer’s teaching and project finance activities have included lectures and development of course materials on energy finance and electricity pricing for clients in North America, South America, Africa and Asia. He has constructed project finance software and taught courses for bankers, utility companies, government officials and power plant developers. Mr. Bodmer’s involvement in energy policy has included advising officials on de-regulation, testifying on the economics of "delivery services" and simulating the financial impacts of legislative alternatives. He has negotiated rates for major electricity users such as the City of Chicago street lights and transit authority and he has implemented new tax policies associated with de-regulation of electricity. The analytical tools for forward pricing and investment valuation that Mr. Bodmer has created include software development and consulting reports for utility companies, municipal power agencies, financial institutions and independent power producers. He has constructed a unique framework for electricity price forecasting and valuation using production cost modeling techniques combined with option price theory and Monte Carlo simulation.

WORK HISTORY

Senior Associate, Spectrum Economics, Inc.

Senior Financial Analyst, Taylor, DeJohngh, Inc.

Vice President, First National Bank of Chicago

Senior Financial Analyst, Union Tank Car Company

Accounts and Finance Division, Illinois Commerce Commission

EDUCATION

MBA, University of Chicago, Chicago, Illinois, March 1986, specialization in Econometrics and Finance; earned 3.85/4.0 GPA; elected to Beta Gamma Sigma honorary business fraternity.

B.S. in Finance, University of Illinois, Urbana, Illinois, May 1979; earned 5.0/5.0 GPA, recipient of Bronze Tablet, and earned the equivalent of an economics degree.

AREAS OF SPECIALIZATION

Project Finance, Merchant Plant Valuation, and Forward Price Analysis

• Project finance models and debt sizing analysis with complex financial structures
• Equity valuation of projects using alternative financial methods including hourly production simulation and options pricing models
• Merchant plant valuation and credit analysis using forward price analysis and monte carlo simulation
• Marginal cost pricing for electric utility companies including distribution, generation transmission and administrative functions
• Productivity analysis of cost structure using regression analysis that reflects service territory constraints and plant characteristics
• Forward electricity price analysis using production simulation and options pricing models

Specialized training courses

• Project Finance modeling for energy, utilities, mining and other projects
• Marginal cost measurement and electricity rate design
• Taxation of Electric Utility companies

ARTICLES AND PAPERS

"Valuation of Electric Generating Plants," with Phillip O’Connor – Edison Electric Institute, December 1998.

"Benefits of Distributed Generation in a De-Regulated Environment," July 1997.

"Impacts of Western Area Power Administration's Power Marketing Alternatives on Retail Electricity Rates and Utility Financial Viability," with R. E. Fisher and R. C. Hemphill, Argonne National Laboratory, January 1994.

"Statistical Study of Costs and Rates in New Zealand," New Zealand Electricity Supply Association, 1992.

"Recommendations from University of Chicago Conference on Utility Regulation," with George Tolley and Peter Griffes, Resources and Energy, 1992.

"Utility Rate Comparisons and Management Efficiency," with George Tolley, Public Utilities Fortnightly, 1990.

"Tax and Financial Implications of ERC Leasing by Electric Utilities," with Roger Raufer, November 1985.

"The Capital Investment Recovery Model; An alternative to the AFUDC/CWIP in Rate Base Controversy," with Robert Bussa, Midwest Finance Association, St. Louis, Missouri, April 1983.

"Some Consequences of the Tax Act of 1981," with Charles Stalon, Proceedings from the 13th Annual Conference of the Institute of Public Utilities, Williamsburg, Virginia, December 1982.

"Alternatives to Case by Case Rate Base Regulation," Proceedings from the Second Biennial Regulatory Information Conference, Columbus, Ohio, August 1982.

SEMINARS AND SPEECHES

"Risk Management and Bulk Electric Power," First Chicago Electric and Gas Conference, September, 1994.

"Economic Trends and Energy Costs," Stuart School of Business Energy Conference presented by the Institute of Technology and the Building Owners and Managers Association of Chicago, June 1994.

"Modeling Performance of Electric Utility Companies," UDI Information Advantage Conference, November 1991.

"Regulatory and Tax Incentives for Clean Coal Technology," Illinois Economics Association, October 1991.

"Government Policy and Incentives to Invest in Capital Intensive Projects," Chicago Energy Economics, 1989.

"Cost of Capital and Cash Flow Analysis for Natural Gas Company," Institute of Gas Technology, 1988.

ASSOCIATIONS AND MEMBERSHIPS

Phi Beta Kappa honorary fraternity at University of Chicago for graduating in top 10% of class.

President of Chicago Energy Economists

Board of Directors for CEC lighting company and Energy Exchange of Chicago.

REPRESENTATIVE CLIENTS/PROJECTS FOR THE PAST THREE YEARS

First National Bank of Chicago – Developed forward electricity price models using hourly supply and demand; constructed capacity pricing models using option theory, and analyzed credit for limited recourse electricity projects. (1996-1999)

City of Chicago – Advised City officials and the Speaker of the Illinois House of Representatives on issues associated with de-regulation of electricity that resulted in the 1997 legislation. Testified for the City on rate design and cost of service for distribution facilities. Developed aggregation programs and negotiated new rates for transit, street lighting and municipal buildings. (1996-1999)

PriceWaterhouseCoopers: Used production simulation model to measure value of merchant plant strategies and the decision of whether to proceed with limited recourse project financing. (1998-1999)

Massachusetts Municipal Electric Company: Wrote and installed software for forward price estimation and used the price projections in valuing limited recourse projects, supporting pipeline construction, and measuring stranded investment. (1996-1999)

Detroit Edison Company: Analyzed the value of generation asset portfolio using forward price models and assisted with stranded investment testimony. (1997-1999)

NICOR, Inc.: Constructed valuation analysis for a proposed merchant plant investment using hourly market price modeling together with monte carlo simulation. The analysis was used by the board of directors in deciding whether or not to make an equity investment of $50 million. (1998)

State of Maine Public Utilities Commission: Advised the Commission and prepared reports on generating plant and power contract divestitures of Central Maine Power, Maine Public Service Company and Bangor Hydro Electric Company. The project involved valuation of generating plants, assessment of market power and evaluation the terms for replacement power purchase contracts. (1998-1999)

Specialized Training courses (1995-1999):

• For a major international commercial bank, created and taught hands on projects finance modeling course to lending officers and credit analysts in Brazil and Venezuela that included case studies on alternative types of mining, energy and telecommunications projects.
• For USAID, lecturer and financial models simulation consultant on infrastructure finance course in Egypt.
• For Trinidad and Tobago Electricity Commission, originated and taught a course on marginal cost pricing and electricity pricing.
• For the New York Institute of Finance, created a project modeling course for Gulf Investment Corporation using case studies.
• For the Argonne National Laboratory’s electric system expansion course, lectured on power sector restructuring, valuation and forward prices.
• For the New Mexico State University Center for Regulatory Studies, created and taught course on valuation of electricity generating facilities including valuation exercises and lectures on forward price curves
• For over 100 municipalities in Illinois, produced a workshop on electric utility taxes in a competitive environment.
• For a large Electric Utility Company, developed a framework for options pricing applications to electricity pricing.

 EXPERIENCE RECORD

Financial Analysis, Project Finance and Merchant Activities:

• Senior financial analyst for a 220 MW dual-fired power plant. Reviewed and supervised the financial model and performed sensitivity analyses.
• Directed consulting analysis and create software to evaluate impacts of changes in the operation of hydro generating facilities on the rates for cooperative and municipal utilities in the western U.S. The project included forecasting power costs, other operating costs, and financing of more than fifty municipal and cooperative systems.
• Managed Business development, organization structure, marketing plans, and consulting services for an electric brokering and marketing company. Negotiated contracts with investor owned, municipal, and co-operative utility companies and independent power producers. Created database and analytical software to evaluate the economics of bulk power transactions and quantifies the economics of alternative power contracts
• Presented expert testimony on the financing of a proposed acquisition by a utility company of an independent power producer. The testimony included evaluation of the financial structure of individual power projects and the financial capability of an investor owned utility company to complete an acquisition transaction.

Electricity Utility Restructuring and Market Clearing Prices:

• Developed forward electricity pricing framework including equilibrium analysis, option pricing methods and hourly marginal costs to value generating assets and compute investment. The pricing and valuation framework has been used by utility companies, municipal systems, customer groups and public utility commissions.
• Evaluated and assisted in drafting proposed electric utility restructuring legislation in Illinois on behalf of the City of Chicago including analysis of revenue impacts, financial impacts on utility companies and long-term price projections by customer class. Presented findings to key decision makers including legislative leaders and City officials.
• Created analysis of regional bulk electricity pricing though development of an hourly chronological production cost modeling system. Applied the market pricing framework together with modern financial theory to valuation of generating assets, measurement of stranded investment, resource planning, and quantification of differences in risk associated with alternative supply additions.

Pricing Analysis:

• Directed marginal cost-of-service analysis of a large electric utility company including energy cost, capacity cost, and customer costs of transmission, distribution, and generating facilities. Evaluated load research for customer class segments and developed methodology to compute area-based marginal distribution cost.
• Evaluated and assisted a utility company in the construction of a real time pricing system for buy back rates of qualifying facilities. The study included evaluation of power pool marginal costs and simulation of bulk power transactions.
• Developed regional cost of service model for evaluating cross subsidies between different areas of an electric utility company on a marginal and embedded cost basis. Used the model as the basis for testimony on the regional pricing and taxation issues.

Acquisition Analysis:

• Evaluated the benefits and costs of alternative merger and acquisition options for four utility companies. The work included valuing potential cost savings, measuring strategic benefits and exposures, computing the value of business segments (including stranded investment) and projecting earning on a consolidated basis.
• Performed a comprehensive cost/benefit analysis to evaluate options associated with expiration of a major municipal franchise. The project included rate and financial projections under alternative scenarios and an in-depth study of rate structure, load growth, usage patterns, and regional cost-of-service differences.
• Conducted competitor study for a larger Midwest utility company, which encompassed evaluation of load growth, customer mix, reliability, administrative and distribution cost, transmission positioning, and a plant by plant analysis of generating resources. Analyzed cost competitiveness using a statistical benchmark methodology and presented strategic implications from financial simulations to senior management.

Efficiency Studies and Productivity Analysis:

• Created database and econometric models to quantify cost of service performance for electric utility companies. Used the statistical models in testimony on performance based regulations for West Cost electric utilities; evaluation of the structure of the electricity industry in New Zealand; and performance measurement of utility companies in the United States.
• Developed regression models of actual and expected costs for component of electricity cost of service and used the model to measure relative efficiency of utility companies. Applied results of the model to testimony in valuing assets for purposes of setting rates.
• Analyze the potential cost of savings arising from the merger of two electric utility companies through a function by function review of cost reductions, an "even study" of savings achieved from actual merger and statistical model of potential efficiency. Used the analysis in testimony on the policy benefits and costs of the proposed merger.

1986 - 1990 -- First National Bank of Chicago, Vice President (Chicago, IL) Industry Specialist/Electric and Gas Division: Directed financial advisory projects to evaluate electric utility financial issues including mergers and acquisitions, complex credit structuring, competitive position analysis, lease versus buy evaluations, and project finance. Created techniques to value the equity of utility companies, developed credit screens for investor-owned, municipal and co-operative electric utility systems, and built financial and operating data bases specific to the utility industry. Presented Expert testimony on the value of regulatory options to customers and the cost and benefits associated with a proposed settlement agreement to "spin-off" three nuclear plants. The testimony included rate and financial simulation models of numerous sensitivity cases for 30 years in a regulated and a deregulated environment, and incorporated probabilistic decision analysis to measure the value of regulatory options.

Team Leader/Corporate Financial Services Department: Managed a team of twelve professionals analyzing the energy industry, including all credit and corporate finance analysis for utility companies, petroleum companies and mining companies. Responsibilities entailed gaining knowledge of all aspects of the energy business including oil and gas reserves, refining margins, coal mining issues and commodity pricing. Decided on promotion, salary levels and bonuses; interviewed new applicants; taught courses in the training program; chaired a bank-wide committee on personal computers and established management systems for the team.

1983-1986 -- Union Tank Car Company, Senior Financial Analyst (Chicago, IL) Conducted economic and financial analysis on complex lease deals, capital investment decisions, acquisition candidates, pricing policies and taxation issues. Created new economic research techniques and computer programs for pricing and financial analysis, and developed computer programs on both micro and mainframe computers to mechanize the annual budgeting process. Completed analysis and reports on the economic and financial impacts of deregulating certain Interstate Commerce Commission regulations; the process of deciding whether to scrap a tank car; statistical determination of portions of fixed and variable administrative expenses; railcar price indices; and steel scrap price forecasts.

1979-1983 -- Illinois Commerce Commission, Accounts and Finance Division (Chicago, IL) Conceptually designed, programmed, and implemented computer simulation models and financial forecasts to evaluate regulatory issues from accounting, economic, and financial perspectives. Developed computer systems used to streamline accounting analysis in utility rate cases. Presented expert testimony involving emergency rate requests, rate projections, cost of capital, construction financing, financial ratio analysis, capacity expansion, debt versus equity financing and income tax accounting.

PUBLICATIONS

• Valuation of Electric Generating Plants. Bodmer, Edward, Phillip O’Connor – Edison Electric Institute, December 1998
• Benefits of Distributed Generation in a De-Regulated Environment. Bodmer, Edward – July 1997
• Impacts of Western Area Power Administration’s Power Marketing Alternatives on Retail Electricity Rates and Utility Financial Viability. Bodmer, Edward, R.E. Fisher, and R.C. Hemphill – Argonne National Laboratory, January 1994
• Statistical Study of Costs and rates in New Zealand. Bodmer, Edward – New Zealand Electricity Supply Association 1992.
• Recommendations from University of Chicago Conference on Utility Regulations. Bodmer, Edward, George Tolley and Peter Griffes – Resources and Energy 1992.
• Utility Rate Comparisons and Management Efficiency. Bodmer, Edward and George Tolley – Public Utility Fortnightly 1990
• Tax and Financial Implications of ERC Leasing by Electric Utilities. Bodmer, Edward and Roger Raufer – November 1985
• The Capital Investment Recovery Model; An Alternative to the AFUDC/CWIP in Rate Base Controversy. Bodmer, Edward and Robert Bussa – Midwest Finance Association, St. Louis, Missouri April 1983
• Some Consequences of the Tax Act 1981. Bodmer, Edward and Charles Stalon – Proceedings from the 13^th Annual Conference of the Institute of Public Utilities, Williamsburg, Virginia December 1982
• Alternatives to Case by Case Rate Base Regulation. Bodmer, Edward, Proceedings from the Second Biennial Regulatory Information Conference, Columbus, Ohio August 1982

EXPERT TESTIMONY

• On behalf of the City of Chicago before the Illinois Commerce Commission, 1999. Testimony on the economics of delivery charges and transition charges for Commonwealth Edison Company.
• On behalf of Enron Corporation and New Energy Ventures, LLC before the Illinois Commerce Commission, 1999. Testimony on the economics of unbundling billing and metering services.
• On behalf of the Maine Public Utilities Commission, 1999. Testimony on market power and other issues associated with the divestiture of generating assets by Maine Public Service Company.
• On behalf of the Maine Public Utilities Commission, 1998. Testimony on issues associated with the divestiture of generating assets by Central Maine Power Company.
• On behalf of the Massachusetts Municipal Wholesale Electric Company, 1997. Deposition on forward pricing and valuation of nuclear power plants.
• On behalf of the Minnesota Department of Public Service, 1996. Testimony on the cost savings from the proposed Primergy merger.
• On behalf of Indianapolis Power and Light before the Indiana Public Utilities Commission, 1995. Direct and rebuttal testimony on measurement of productivity through regression analysis on comparative cost data.
• On behalf of the City of Chicago before the Illinois Commerce Commission, 1994. Testimony on marginal cost of service and the appropriate rate design for residential customers of Commonwealth Edison Company.
• On behalf of the City of Chicago before the Illinois Commerce Commission, 1993. Testimony on the regional cost of service as between the City of Chicago and other areas served by Commonwealth Edison Company.
• On behalf of the Governor of Illinois, the Cook County States Attorney and the Illinois Attorney General before the Illinois Commerce Commission, 1988. Testimony on the cost and benefits of a proposal by Commonwealth Edison Commission to "spin-off" three nuclear units. The testimony included rating options to deregulate the nuclear units.
• Before the Connecticut Department of Utility Control,1984. Testimony on the prudence of Northeast Utility Company in delay in construction of a nuclear plant based on financial concerns.
• On behalf of the Illinois Commerce Commission Staff, Docket #81-0026. Recommendations on capital structure, revenue levels, expense levels, and a "Negative CWIP" plan for Commonwealth Edison Company.
• On behalf of the Illinois Commerce Commission Staff, Docket #80-0044. Testimony on the cost of common equity capital including an application of the discounted cash flow model, and financial ratio analysis for Union Electric Company.
• On behalf of the Illinois Commerce Commission Staff, Docket #80-0167. Testimony on the Application of a variable rate of return model to construct work in progress for Illinois Power Company.