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Brown, Williams, Moorhead & Quinn, Inc.

The Discounted Cash Flow (or “DCF”) method is the primary FERC-adopted tool for calculating the return on equity based on market observations for the proxy group of comparable companies. At its most basic level, the DCF method implies that the ROE for a given proxy company is equivalent to the dividend yield plus the expected growth in future dividends. Brown Williams assists a multitude of clients in the adoption of the DCF method and the challenges that arise from using this method, as well as alternative means of estimating the return on equity.