Carlyle Group Petitioned for 10% ROE in Mountain Water Rate Increase

The Carlyle Group's Mountain Water filed for its first rate increase under PEU ownership.  PEU is an abbreviation of private equity underwriter, my pet name for the greed and leverage boys.  The Independent Record reported:

Mountain Water is asking for 10 percent return on equity, with a rate of return of 9.29 percent.

John Alke, the Helena attorney representing Mountain Water, told commissioners the company isn’t willing to lower its rate-of-return request.

“We conceded to several adjustments, not rate of return,” he said.

Mountain Water testimony filed in the case said 10 percent return on equity is a standard measurement used by the commission to determine rate of return.

Carlyle's 10% return on equity is magnified by other common PEU moves, adding debt in order to pay their "sponsor" a PEU dividend, charging management fees for Carlyle's management expertise, and flipping the company for a multiple of the original purchase price from an outright sale or IPO.  As for Carlyle earning any Mountain Water management fee:

Mountain Water Executive Vice President Leigh Jordan said that Carlyle’s lack of experience running a water utility hasn’t allowed it to quickly make efficiency and money-saving measures that could potentially help keep rates down.

How much are customers of Mountain Water paying to school Carlyle Group executives?  At least 10% ROE if the rate increase is approved.  

Update 10-20-13:  The testimony on this rate hike is fascinating.