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PUBLIC WORKS COMMITTEE – 8/06/2026 Meeting (Meets monthly on 1st Thursday at 5 p.m.) Page 1 of 4 *Attended virtually PUBLIC WORKS COMMITTEE MINUTES August 6, 2026 Regular Meeting The meeting was called to order by Councilor Ledin at 5:05 p.m. on August 6, 2026, in Government Center Room 204. COMMITTEE MEMBERS: Nick Ledin, Garner Moffat, Tylor Elm, Joe Radtke (alt.) 1. ROLL CALL Members Present: Nick Ledin, Garner Moffat, Tylor Elm, Joe Radtke City Staff Present: Kara Czapinski, Jim Paine, Steve Roberts, Frog Prell, Justin Bernacki, Mike Herrick, Jess McCullough Others Present: Shelley Nelson, Bill Fennesssey, Mark Liebaert, TS*, Jeff Knudson*, Jenny Van Sickle*, Melanie Johnson* 2. APPROVAL OF MINUTES 2.1. Public Works Committee (Meeting held July 8, 2026) MOTION by Elm, second by Moffat and carried to approve the minutes from July 8, 2026. 3. OLD BUSINESS 3.1. Discussion and recommendation of a report submitted by Raftelis Financial Consultants evaluating the acquisition of utilities operated by Superior, Water, Light & Power. Mayor Paine shared the appraisals from Raftelis Financial Consultants regarding the electric and natural gas utilities, highlighting their greater complexity in comparison to the water utility appraisal. Copies were provided to committee members, and these documents will be included in the meeting packet and accessible on the city’s website. During the discussion, the committee examined the city's debt capacity and the distinctions between general obligation bonds and enterprise fund financing for utility acquisitions. They concluded that acquiring all three utilities simultaneously would likely be impractical without innovative financing solutions or partnerships; however, the acquisition of any single utility appears feasible within the city's financial framework, subject to further rate analysis. The committee also raised questions about potential rate savings from municipal acquisition, drawing on earlier projections for the water utility. Mayor Paine clarified that a comprehensive rate analysis is necessary to determine savings for the electric and gas utilities, noting that municipal bonds generally provide lower interest rates than the existing rate base, which could lead to reduced rates for customers. 3.1.1 Recommendation of referendum and public meeting schedules. Mayor Paine introduced a referendum question for the April 6, 2027, ballot regarding the potential transition to a community-owned water utility, contingent upon the Public Service Commission's assessment of the purchase cost's affordability for the city. The legal team PUBLIC WORKS COMMITTEE – 8/06/2026 Meeting (Meets monthly on 1st Thursday at 5 p.m.) Page 2 of 4 *Attended virtually reviewed the question, with Frog Prell providing insights on statutory requirements and clarifying that the referendum is advisory and non-binding. Both Prell and Mayor Paine emphasized that the City Council retains the discretion to act based on financial viability and other considerations, while also discussing the amendment process, publication obligations, and possible legal challenges, confirming that the proposed language complies with legal standards. Mayor Paine suggested rescheduling a breakfast town hall to prevent conflicts with local events and highlighted upcoming public engagement initiatives, such as a happy hour at the Thirsty Pagan and additional library sessions. The committee evaluated the effectiveness of the public meeting format, with Mayor Paine indicating a willingness to adapt by including debates and visual aids for complex topics. They acknowledged the importance of anonymous questions and addressing misinformation, while also stressing the need for transparency by inviting representatives from coalition groups and Superior Water, Light, and Power to all meetings. Mayor Paine recognized the necessity for modern communication strategies and committed to exploring various outreach options, including summary videos, to engage residents who cannot attend in person. Justin Bernacki left the meeting at 5:38 p.m. Melanie Johnson left the meeting virtually at 5:42 p.m. Mark Liebaert left the meeting at 5:43 p.m. MOTION by Moffat, second by Ledin and carried to approve the referendum and to place a Water Utility Acquisition referendum question on the spring general election ballot – “Should the City transition to a community-owned water utility in the event the PSC determines the purchase cost to be a number within the City’s financial means?” Frog Prell, Mike Herrick and Bill Fennessey left the meeting at 6:08 p.m. 3.2 Discussion on City of Superior Ordinance 114-62(e) Hauled Waste Charges. Director Roberts provided a comprehensive memorandum that examined the existing hauled waste rate structure, comparing it with the rates for connected users and proposing various alternatives. These options included retaining the current rates, raising the fixed fee, or modifying the calculation methodology. During the discussion, committee members deliberated on the equity and impartiality of the current rates, with several indicating a desire to keep the existing system unless significant justification for change is presented. Ultimately, the committee resolved to defer any decision indefinitely. TS left the meeting virtually at 6:09 p.m. MOTION by Elm, second by Moffat and carried to hold item 3.2 indefinitely. PUBLIC WORKS COMMITTEE – 8/06/2026 Meeting (Meets monthly on 1st Thursday at 5 p.m.) Page 3 of 4 *Attended virtually 4. NEW BUSINESS 4.1. Recommendation to waive the bidding requirements for the repair of the SS Meteor’s cracked hull and awarding the work to Fraser Shipyards at a quoted cost of $29,900.00. Museum Director Jess McCullough detailed the identification of a structural crack in the SS Meteor, outlining the interim measures implemented and the pressing need for repairs prior to winter. Fraser Shipyards, the original builder and the sole qualified local contractor, submitted a proposal of $29,900, which was advised for approval. The committee deliberated on the available funding from Superior Public Museums and the potential for grant approval to alleviate the financial burden of the repairs on the city budget. Jenny Van Sickle left the meeting virtually at 6:14 p.m. MOTION by Moffat, second by Elm and carried to waive the bidding requirements for the repair of the SS Meteor’s cracked hull and awarding the work to Fraser Shipyards at a quoted cost of $29,900.00. 4.2. Recommendation to approve the 2026 Hot Mix Asphalt Proposals. MOTION by Elm, second by Moffat and carried to approve the 2026 Hot Mix Asphalt Proposals. Jess McCullough left the meeting at 6:26 p.m. 4.3. Recommendation to award the Engineering Design Contract for the North 28th Street Grade Separation Project to SRF Consulting Group. The committee examined the $2.4 million design contract with SRF Consulting Group, which entails a city contribution of $246,000, and noted the significant federal and railroad interest in the initiative. Members emphasized the project's critical role in enhancing transportation, fostering economic development, and ensuring public safety, particularly in mitigating frequent train-related congestion and improving access for pedestrians and cyclists. MOTION by Elm, second by Moffat and carried to award the Engineering Design Contract for the North 28th Street Grade Separation Project to SRF Consulting Group. 4.4. Notice of Fleet Vehicle Auction Removals – Received and filed PUBLIC WORKS COMMITTEE – 8/06/2026 Meeting (Meets monthly on 1st Thursday at 5 p.m.) Page 4 of 4 *Attended virtually 5. RECURRING BUSINESS 5.1 ESD Director’s Update – Received and Filed 5.2 Director Update 5.3 Future Agenda Items 5.2.1 Discussion and recommendation of a report submitted by Raftelis Financial Consultants evaluating the acquisition of utilities operated by Superior, Water, Light & Power. 5.3 Confirm the next meeting date as September 3, 2026, at 5:00 p.m. in Room 204 of the Government Center. 6. ADJOURNMENT Councilor Ledin announced the meeting adjourned at 6:37 p.m. Respectfully submitted by Kara Czapinski Superior Water, Light , & Power Company Superior , Wisconsin Electric and Natural Gas Appraisal Final Report / July 24, 2026 THIS PAGE INTENTIONALLY LEFT BLANK 800 Troy – Schenectady Road, Latham NY 12110 / www.raftelis.com July 24, 2026 Mr. Nicholas Rhinehart, Finance Director City of Superior 1316 North 14th Street, 2nd Floor Superior, WI 54880 Subject: Superior Water, Power, & Light – Electric and Natural Gas Systems Valuation Dear Mr. Rinehart: I have performed the valuation services provided in this valuation (“Valuation” or “Report”), as those terms are defined by the Uniform Standards of Professional Appraisal Practice (“USPAP”). This Report has been prepared in accordance with USPAP. The indication of value contained in this Report is expressed as a Conclusion of Value. This Valuation was performed for the purpose of a possible transfer of assets and should not be used for any other purpose or by any other party for any purpose. Based on my analysis, as described in this Report, my conclusion of the fair market value of the Electric System as a going concern as of June 30, 2026, is between: Ninety-seven Million and One-hundred Four Million Dollars ($97,000,000 and $104,000,000) In addition, based on my analysis, as described in this Report, my conclusion of the fair market value of the Natural Gas System as a going concern as of June 30, 2026, is: Forty Million and Fifty-five Million Dollars ($40,000,000 and $55,000,000) This Conclusion of Value is for the assets described in more detail in this Report and does not include any excess real property. Further, this conclusion is subject to the representations and certification found in Appendix A and to the statement of assumptions and limiting conditions (Appendix B). There is no obligation to update this Report or my Conclusion of Value for information that comes to my attention after the date of this Report. My experience and qualifications are detailed in Appendix C. Sincerely, Steven McDonald, CVA Principal/Chief Economist CVA® # 20639 THIS PAGE INTENTIONALLY LEFT BLANK 800 Troy – Schenectady Road, Latham NY 12110 / www.raftelis.com VALUATION SUMMARY Valuation Date: June 30, 2026 Date of Report: July 24, 2026 Appraisal Subject: SWL&P Electric and Natural Gas Systems Transaction Type: Asset Transfer Ownership Interest Valued: Majority (sole ownership), Marketable interest Restrictions, if any: None identified Purpose of Valuation: Potential Transaction (Sale of Subject Assets) Standard of Value: Fair Market Value Premise of Value: Going concern Type of Report: Appraisal Report Scope Limitations: Does not include a Real Property Appraisal Assumptions and Limitations: See Appendix B Valuation Methods Considered: Discounted Cash Flow analysis (Income); Capitalization analysis (Income); Replacement Cost New (Cost); Reproduction Cost New (Cost); Completed Transactions (Market); Public Company Guideline (Market) Selected Valuation Method(s): Reproduction Cost New (Cost), Capitalized Cash Flow (Income), and Public Company Guideline (Market) Valuation Conclusion: $97,000,000 to $104,000,000 (Electric System) $40,000,000 to $55,000,000 (Natural Gas System) THIS PAGE INTENTIONALLY LEFT BLANK SWL&P / Electric and Natural Gas Systems Appraisal Contents 1. Introduction ......................................................................................... 1 1.1. Subject of the Valuation/Appraisal ..............................................................................1 1.2. Intended Users ..............................................................................................................2 1.3. Purpose and Use of this Appraisal Report .................................................................2 1.4. Valuation Interest ..........................................................................................................3 1.5. Ownership and Control of the Subject Assets ...........................................................3 1.6. Date of Valuation ...........................................................................................................3 1.7. Standard of Value ..........................................................................................................4 1.8. Premise of Value ...........................................................................................................5 1.9. Appropriate Market and Hypothetical Willing Buyers ................................................7 1.10. Highest and Best Use ...................................................................................................7 1.11. Scope of Work ...............................................................................................................8 1.12. Principal Sources of Information .................................................................................8 1.13. Hypothetical Conditions & Extraordinary Assumptions ............................................8 1.14. Jurisdictional Exceptions .............................................................................................9 1.15. Reliance on Specialist(s) ..............................................................................................9 1.16. Assumptions and Limiting Conditions........................................................................9 1.17. Exclusions .....................................................................................................................9 1.18. Rounding of Estimated Values .................................................................................. 10 1.19. Definitions .................................................................................................................... 10 2. Subject Assets .................................................................................. 11 2.1. Company Background ................................................................................................ 11 2.2. SWL&P Customer Base and Demand........................................................................ 12 2.3. Real Property ............................................................................................................... 13 2.4. Form of Organization of Owner ................................................................................. 13 2.5. Restrictions on Sale of Subject Interest .................................................................... 14 2.6. Prior Related Ownership Transactions ..................................................................... 14 2.7. Competition ................................................................................................................. 14 3. Market and Economic Overview ....................................................... 15 3.1. Current National Economic Conditions .................................................................... 15 3.2. U.S. Electric and Natural Gas Markets ...................................................................... 20 SWL&P / Electric and Natural Gas Systems Appraisal 3.3. Systems Regulation .................................................................................................... 25 4. Valuation of the Subject Assets ........................................................ 27 4.1. Approaches and Methods Considered and Selected ............................................... 27 4.2. Cost Approach ............................................................................................................ 27 4.3. Income Approach ........................................................................................................ 33 4.4. Comparative Company or Sales (Market Approach) ................................................ 43 5. Adjustments ...................................................................................... 59 5.1. Adjustments for Control ............................................................................................. 59 5.2. Adjustments for Lack of Marketability ...................................................................... 59 5.3. Other Adjustments ...................................................................................................... 61 6. Reconciliation of Indicated Values .................................................... 63 6.1. Electric System Value ................................................................................................. 63 6.2. Natural Gas System Value .......................................................................................... 63 6.3. Reconciliation of Indications of Values..................................................................... 64 7. Conclusion of Value .......................................................................... 65 SWL&P / Electric and Natural Gas Systems Appraisal Tables Table 1-1: Rounding Estimated Values ................................ ................................ ................................ .. 10 Table 2-1: Wisconsin Electric IOU Market ................................ ................................ .............................. 12 Table 2-2: Wisconsin Natural Gas IOU Market ................................ ................................ ....................... 13 Table 3-1: US Economic Outlook ................................ ................................ ................................ ........... 18 Table 3-2: Key Barriers to Entry ................................ ................................ ................................ ............. 24 Table 4-1: Reproduction Cost Less Depreciation Calculation ................................ ................................ . 30 Table 4-2: Total Reproduction Cost ................................ ................................ ................................ ....... 33 Table 4-3: Comparison of Cash Flow ................................ ................................ ................................ ..... 35 Table 4-4: Alternative Discount Rate ................................ ................................ ................................ ...... 38 Table 4-5: Normalized Income ................................ ................................ ................................ ............... 41 Table 4-6: Cash Flow to Invested Capital ................................ ................................ ............................... 42 Table 4-7: Capitalized Cash Flow ................................ ................................ ................................ .......... 43 Table 4-8: Electric Market Metrics (as a Percentage of Gross Revenues) ................................ .............. 47 Table 4-9: Electric Market Enterprise Value Raw Multiples ................................ ................................ .... 48 Table 4-10: Guideline Public Company Adjustment Factors ................................ ................................ ... 49 Table 4-11: Electric Market Enterprise Value (EV) Adjusted Multiples ................................ .................... 50 Table 4-12: Subject Interest Indication of Value ................................ ................................ ..................... 51 Table 4-13: Natural Gas Metrics Share of Gross Revenues ................................ ................................ ... 54 Table 4-14: Natural Gas Market Enterprise Value Raw Multiples ................................ ........................... 55 Table 4-15: Guideline Public Company Adjustment Factors ................................ ................................ ... 56 Table 4-16: Natural Gas Market Enterprise Value (EV) Adjusted Multiples ................................ ............ 57 Table 4-17: Natural Gas Indication of Value ................................ ................................ ........................... 58 Table 5-1: DLOM Considerations ................................ ................................ ................................ ........... 60 Table 6-1: Reconciliation of Electric System Value ................................ ................................ ................ 63 Table 6-2: Reconciliation of Natural Gas System Value ................................ ................................ ......... 64 Figures Figure 1-1: Regional Location of Systems ................................ ................................ ................................ 2 Figure 3-1: Electric Power Industry Outlook ................................ ................................ ........................... 21 Figure 3-2: Concentration of Natural Gas Distribution ................................ ................................ ............ 23 SWL&P / Electric and Natural Gas Systems Appraisal Appendices Appendix A: Appraiser Certification Appendix B: Assumptions and Limiting Conditions Appendix C: Qualifications Appendix D: Cost, Income, and Market Analyses SWL&P / Electric and Natural Gas Systems Appraisal 1 2026© Raftelis Financial Consultants, Inc. 1. Introduction 1.1. Subject of the Valuation/Appraisal The subjects of this Valuation/Appraisal (“Valuation” or “Report”) are the electric supply and distribution system and natural gas supply and distribution system (“Subject Assets" or “Systems”)1 owned and operated by Superior Water, Light, and Power Company ("SWL&P" or “Owner” or “Seller”) located in Wisconsin (“State”). The Systems are located in the northwest corner of the State (see Figure 1-1), roughly 150 miles northeast of Minneapolis, Minnesota. The electric supply and distribution system (“Electric System”) and natural gas supply and distribution system (“Natural Gas System”) are public utilities2 regulated by the Public Service Commission of Wisconsin (“PSCW”) and provide services to retail and wholesale customers in the State, covering a service area that includes all of the City of Superior (“City”) and portions of unincorporated Douglas county (“County”) and other incorporated areas located in the County. The County is part of the Duluth MN-WI Metropolitan Statistical Area (“MSA” or “Region”). [Remainder of page intentionally blank] 1 Utility No. 5820, Class A 2 Municipally or investor-owned entities that are granted the exclusive right to serve customers in a defined territory, operate under a regulatory compact with the PSCW, must provide non-discriminatory service to all customers in their territory, and allow regulators access to their books and records to ensure just and reasonable rates. Chapter 196, Wisconsin Statutes SWL&P / Electric and Natural Gas Systems Appraisal 2 2026© Raftelis Financial Consultants, Inc. Figure 1-1: Regional Location of Systems The Systems, including both tangible and intangible assets, are part of a singularly owned, operated, and managed business enterprise authorized to provide services to properties within its delineated service areas. In addition, the Subject Assets are bundled with permits, operational rights, service area rights, and land rights that can be specifically identified with the operation of the Systems within their service areas. Finally, the Subject Assets currently have sufficient demand and available financial resources to create a going concern3 at the date of the Report. The Subject Assets are described in more detail in Section 2. 1.2. Intended Users This Valuation was requested by the City ("Client" or “Buyer”), and this Report is intended for the exclusive use of the Client and any other designated representatives of the Client. No reproduction, publication, distribution, or use of this Report for other than its stated purpose is authorized without prior consent of the Client and the undersigned appraiser of this Report. 1.3. Purpose and Use of this Appraisal Report This Report represents an Appraisal Report as defined by USPAP Standard 10 for the purpose of providing an opinion of the value (“Conclusion of Value” or “Opinion of Value”) of the Systems as business enterprises in 3 An ongoing operating business enterprise. International Glossary of Business Valuation Terms (2001). SWL&P / Electric and Natural Gas Systems Appraisal 3 2026© Raftelis Financial Consultants, Inc. conjunction with a possible ownership transfer (asset transaction) involving both tangible and intangible assets. Use of the Report is restricted to intended users, and this Report should not be used for any other purpose other than stated above. 1.4. Valuation Interest The interest in the Subject Assets considered in this Valuation is a majority (sole ownership), marketable interest of the Systems as business enterprises consisting of both tangible and intangible assets (“Subject Interest”). The interest in the Subject Assets included in this Report does not include equity ownership in any form of organization, company, or subsidiary, it is specifically for the transfer of ownership of the Subject Assets. Development of a Conclusion of Value of the Subject Interest contained in this Report meets the requirements of 2024 USPAP Standard 9. An intangible asset is generally described as an asset that lacks physical substance. Under most circumstances, a utility system is a monopoly and creates a special purpose property. A buyer for the Subject Assets would be acquiring the bundle of rights including operational rights, service area rights, and other permitted rights, which reflect intangible value. More importantly, in my opinion, there is no going concern value for the land, buildings, and equipment as a utility system or business enterprise independent of, or without the intangible rights to operate without competition and deliver an essential public use to a protected, defined service area. Without operational rights or service area rights or other permitted rights, a buyer would only value buildings and equipment at liquidation or scrap and would value land as-if vacant and marketable for a different use. The fair market value of operational rights, service area rights, and other permitted rights, however, is not contingent on the inclusion of an existing utility system in the form of land, buildings, and equipment. Based on past experience, and in my opinion, the total enterprise value in a utility system is a bundle of tangible and intangible and is contingent on the existence of specific operational rights, service area rights, and other permitted rights. It is not just the cost value of assets. This Valuation was performed for the Systems in ‘fee simple’, which includes all rights (the bundle of rights, for both tangible and intangible assets) that can be legally vested in an owner, subject to encumbrances whatever they may be. Fee simple ownership is the most comprehensive type of ownership since the owner may dispose of the property and rights in any manner they select. One possessing this property and rights has no restrictions or limitations upon ownership except those imposed by governmental entities with jurisdiction over the Subject Assets and those which were willfully created by agreement. 1.5. Ownership and Control of the Subject Assets The Subject Assets are currently wholly owned and operated by SWL&P. 1.6. Date of Valuation The date of valuation of the Subject Interest is June 30, 2026 (“Valuation Date”). Since the Valuation Date is an arbitrary date, for example, it is not an asset transfer date, or date of a filed intent to transfer assets, or date of agreement, or date of taking, or settlement date, or other agreement or court date, the appraiser reserves the right, at their discretion, to consider and evaluate any additional value influencing data or other pertinent factors that might become available between the date of the Report and a stipulated actual future date or historical date, if applicable, and to make any adjustments to the Report that may be required. This Report SWL&P / Electric and Natural Gas Systems Appraisal 4 2026© Raftelis Financial Consultants, Inc. was issued July 24, 2026 (“Report Date”). There is no obligation or responsibility to update this Report for events, circumstances, or information that becomes available subsequent to the Report Date. 1.7. Standard of Value The definition of value used in this Report is fair market value (“FMV”). This standard of value is consistent with State law (Wisconsin Statutes, Chapter 32 Eminent Domain Law), which requires just compensation to be paid to property owners based on the asset’s fair market value4. The definition of FMV contained in the International Glossary of Business Valuation5 is: “The price, expressed in terms of cash equivalents, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, each acting at arms- length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.” In the context of appraisal practice, FMV can be further defined, that is not inconsistent with Wisconsin Statutes or general definitions, but is critical in considering approaches, methods, and assumptions within this Report. Specifically, Internal Revenue Service (“IRS”) Revenue Ruling (“Rev. Rul.”) 59-60, 1959-1, C.B. 237, along with Treasury Regulations § 25.2512–1 and § 20.231-1 defines FMV as: “The value of the property is the price at which such property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of relevant facts.” IRS Rev. Rul. 59-60 further states… “…in addition, that the hypothetical buyer and seller are assumed to be able, as well as being willing, to trade and to be well informed about the property and concerning the market for such property.” FMV as defined for this Report therefore includes the following assumptions: 1. Both the buyer and seller were considered hypothetical parties; 2. Both buyer and seller are willing and able to enter into a transaction – implying a buyer has sufficient funds and seller has sufficient rights, but both absent any compulsion to buy or sell; 3. Both buyer and seller are presumed to be dedicated to achieving their individual maximum economic advantage; 4. The hypothetical buyer is prudent, implying a rational buyer, and is considered to be a “financial” and not a “strategic” buyer6. A financial buyer is motivated by the profit opportunity implicit in the subject on a stand-alone basis whereas a strategic buyer would potentially derive specific benefits from some component of tangible or intangible asset that no other buyer would enjoy; 4 Wisconsin Statutes, § 32, Subchapter I General Eminent Domain, 32.09 5 International Valuation Glossary – Business Valuation, Jointly published by the American Society of Appraisers, Chartered Business Valuators Institute, Royal Institution of Chartered Surveyors, and the Saudi Authority for Accredited Valuers, dated November 2021. 6 A strategic buyer in the context of FMV would be a single buyer which could be the only buyer to derive a strategic advantage from an acquisition. The “strategy” to acquire these types of systems to leverage capacity, economies of scale, management expertise, etc. that would accrue to any buyer is considered a financial motivation. SWL&P / Electric and Natural Gas Systems Appraisal 5 2026© Raftelis Financial Consultants, Inc. 5. Both parties are assumed to understand the industry and other economic conditions and their effects on the Subject Assets, as of the Valuation Date; 6. A hypothetical buyer is assumed to be an independent third party; and 7. A hypothetical sale will be for cash. FMV is considered the appropriate standard of value because it reflects the value of the Subject Assets as if traded freely in a competitive and open market between independent parties and therefore reflects an anticipated price of a market transaction that is in the interest of both the Seller and Buyer. In addition, FMV in this context would specifically exclude circumstances of the known Seller or known potential Buyer that would directly affect indications of value using accepted approaches and methods. 1.8. Premise of Value The Conclusion of Value for the Systems as an ongoing business activity provided in this Report assumes that the Subject Assets will continue to be operated, at minimum, serving current demand representing a current and future going concern (adjective). This Conclusion of Value as a going concern assumes there is no current planned or contemplated discontinuance of service or any liquidation of the Subject Assets. Therefore, the Conclusion of Value reflects an existing and future business activity including, if applicable, real property or easement rights, personal property and equipment, financial assets, and other intangible assets. According to USPAP7, an appraiser must, when necessary for credible assignment results, analyze the effect on value, if any, of past results, current operations, and future prospects of the business enterprise, as well as the effect on value, if any, of economic benefits of tangible and intangible assets [emphasis added]. Generally, the appropriate consideration of future prospects and economic benefits of the Subject Assets would be expected to involve concepts of “going concern” and “goodwill” because the indication of value included in this Report is for a bundle of tangible and intangible asset value for an ongoing business activity. According to the International Glossary of Business Valuation8, Going Concern and Goodwill are defined as follows: “Going Concern – an ongoing operating business enterprise.” “Going Concern Value – the value of a business enterprise that is expected to continue to operate into the future. The intangible elements of Going Concern Value result from factors such as having a trained workforce, an operational plant, and the necessary licenses, systems, and procedures in place.” “Goodwill – that intangible asset arising as a result of name, reputation, customer loyalty, location, products, and similar factors not separately identified.” 7 Standards Rule 9-4(b)iii and 9-4(b)vii. 8 NACVA, June 8, 2001; This glossary has been developed to provide guidance to business valuation practitioners by further memorializing the body of knowledge that constitutes the competent and careful determination of value and, more particularly, the communication of how that value was determined. Departure from this glossary is not intended to provide a basis for civil liability and should not be presumed to create evidence that any duty has been breached. SWL&P / Electric and Natural Gas Systems Appraisal 6 2026© Raftelis Financial Consultants, Inc. “Goodwill Value – the value attributed to goodwill.” Some confusion continues to exist with these concepts partly because of a widespread, but erroneous, belief that the concepts are synonymous, but mostly stemming from different uses and purposes (e.g., accounting regulations, income tax liability, appraisal, etc.). Both concepts, if applicable, do create an intangible asset and it is not uncommon for factors of Going Concern Value to be included in the list of indica of Goodwill because it is often used loosely as a catch-all for intangible assets; hence the confusion. However, the U.S. Treasury provides further clarification on the distinct difference between Going Concern Value and Goodwill as it relates to the allocation of the value of acquired assets. Specifically, the Electronic Code of Federal Regulations (“e-CFR”)9 defines these concepts as follows: “Going Concern Value – is the additional value that attaches to property because of its existence as an integral part of an ongoing business activity. Going concern value includes the value attributable to the ability of a trade or business (or a part of a trade or business) to continue functioning or generating income without interruption notwithstanding a change in ownership. It also includes the value that is attributable to the immediate use or availability of an acquired trade or business, such as, for example, the use of the revenues or net earnings that otherwise would not be received during any period if the acquired trade or business were not available or operational.” “Goodwill – is the value of a trade or business attributable to the expectancy of continued customer patronage. This expectancy may be due to the name or reputation of a trade or business or any other factor.” This Valuation utilizes Going Concern (adjective) to describe the expectations that the Subject Assets will continue to be used as an integral part of an ongoing business activity (i.e., premise of value). Conversely, if the proposed transaction included closing or ceasing the business activity, the premise of value for the Subject Assets would be “liquidation”, while the standard would remain FMV. Therefore, the indication of FMV for the Systems in this Report requires the consideration of the intangible value created as an ongoing business activity (i.e., Going Concern Value). An indication of value using a Cost Approach for the Subject Assets only represents the alternative cost of installing or constructing or acquiring similar assets. The Subject Assets, however, are not idle, but are actively used to provide service within a service area to a customer base as part of an ongoing business activity. As opposed to constructing a system, a purchaser acquiring a similar existing system or systems completely installed and operational with customers taking regular service immediately derives revenues and economic benefits from connected customers. If a purchaser were to alternatively construct, in a hypothetical situation, its own similar system or systems of assets, it would not have the ability to generate revenues or economic benefits until some future date, including incremental marginal growth of connected customers. This creates value that is attributable to the immediate use or availability of the Subject Assets and would generally be considered Going Concern Value. Generally, the FMV of the Systems functioning and identified as an ongoing business activity (i.e., going concern) would be considered as part of this Valuation in all approaches. By definition of the premise of value included in this Report, going concern value is inherently included in the Income and Market Approaches. 9 § 1.1060-1(b)(2)(ii), e-CFR SWL&P / Electric and Natural Gas Systems Appraisal 7 2026© Raftelis Financial Consultants, Inc. However, such items as going concern value or other intangible values would normally be added to the construction or acquisition costs of assets to account for the value of revenues or economic benefits immediately received. 1.9. Appropriate Market and Hypothetical Willing Buyers Considering the location of the Systems and existing concentrations of energy related (electric and natural gas) service providers in the Region, it is more likely that a hypothetical buyer could be an investor-owned utility (“IOU”). There are eighteen (18) IOUs regulated by the PSCW that are primarily engaged in providing electric and natural gas services. However, it is not improbable that a municipality, county, or other governmental district (e.g., municipal-owned utility or “MOU”) could also represent a hypothetical buyer. There are a significant number of MOUs regulated by the PSCW that are primarily engaged in providing potable water services. While it is not necessary for a system to be contiguous to or interconnected with an existing municipal authority, it is more likely that an IOU would consider the acquisition of a disparate utility systems as a potential part of a portfolio of owned and operated public utility systems. Therefore, the population of willing buyers for the Subject Assets could represent an IOU or an MOU. The willing buyers in this pool of market participants might expect to derive individual value from synergistic benefits, but those synergies and the influence they might have on value would not be recognized by all potential buyers and not included in FMV. 1.10. Highest and Best Use Highest-and-best-use (“HBU”) was considered collectively for the Subject Interest being valued, including both tangible and intangible assets. The most appropriate market sector for the Subject Assets under the FMV standard as a going concern for this Report is based upon a hypothetical sale of the sole interest to a hypothetical, financial buyer. The requirements associated with this Valuation were to determine FMV of the Subject Interest as if it were to be sold to an independent third party, which was determined equally likely to be a not-for-profit (“IOU) or for-profit (“MOU”) entity. Collectively, there is no other reasonable use for the Subject Assets other than public utility systems providing electric and natural gas services. The Subject Assets as utility systems would be considered a special purpose property, including real property. The existing functions of the Subject Assets are to supply electricity and natural gas to residential and non- residential connections. Since the combined assets are specifically designed, configured, and constructed solely as electric and natural gas systems, no alternate highest and best use should be considered for any component of tangible or intangible asset in developing a price for a possible transaction. In addition, ownership of this special purpose property would be expected to include a bundle of rights which could include (if applicable to the Subject Assets), but not limited to, physical assets, real property, operational permits or rights, service area rights, as well as other tangible and intangible assets. As a special purpose property, there is no going concern value for land, buildings, and equipment (“PP&E”) as a business enterprise independent of, or without the intangible rights and permits to provide services for a base of customers, operate without competition, and deliver an essential public purpose use to a protected, defined service area. It is assumed that with any purchase or acquisition of the Subject Assets, that those assets would continue to be substantially used for the purposes identified and they would continue to be renewed, replaced, and/or maintained for such purposes. SWL&P / Electric and Natural Gas Systems Appraisal 8 2026© Raftelis Financial Consultants, Inc. 1.11. Scope of Work This Report has been prepared in accordance with USPAP dated January 1, 2024. There are no general limitations to the scope of this Report. A site visit or visual inspection of the Systems was not included in the scope of work. Details on the scope of work performed and the research and analyses relied upon for the development of a Conclusion of Value are provided in more detail in Section 4. The scope of the assignment generally included gathering, analyzing, and applying relevant information necessary for appropriate valuation approaches, methods, and procedures to develop a Conclusion of Value of the Systems, expressed as a range or as a single dollar amount and included: a) Review of existing operational and financial performance of the Systems; b) Review of permits, agreements, or other intangible rights; c) Compiling detailed information of the Subject Assets, such as type, quantity, size, function, etc.; d) Interview relevant parties to evaluate quantity and quality of data received; e) Completion of independent research and analysis concerning the industry and economic environment in which the Subject Assets operate; f) Application of appropriate valuation approaches, methods, and procedures to obtain an indication of value of the Subject Interest. A listing of Assumptions and Limiting Conditions is provided in Appendix B, and a Statement of Appraiser Qualifications is included in Appendix C. 1.12. Principal Sources of Information The principal sources of information utilized for this assignment are referenced or noted throughout this Report. The Client or other individuals did not deny access to date and information and provided sufficient data and information deemed essential for this Report. Data collection for this Valuation involved a variety of public sources of information. Interviews with the Client and other analyses were used to confirm and/or cross-check the data and information provided. Comparisons of reports, and other comparisons of sources of information were diligently performed for this Valuation. 1.13. Hypothetical Conditions & Extraordinary Assumptions The analyses required to develop an indication of value rely on multiple values that are present today and assumed to continue to exist in the future that would be considered normal financial or operating assumptions. These normal financial or operating assumptions are generally referenced in the Report or included as metrics in the tables supporting each analysis. No assumptions were incorporated about the financial, operating, physical, legal, or economic characteristics of the Systems or about market trends that were subjectively intended to influence the Conclusion of Value in a positive or negative direction for the benefit of the Buyer or Seller. The Conclusion of Value contained in this Report did rely on several extraordinary assumptions. An extraordinary assumption presumes as facts, otherwise uncertain information about physical, legal, or economic characteristics of the Systems; or about conditions external to the Systems, such as market SWL&P / Electric and Natural Gas Systems Appraisal 9 2026© Raftelis Financial Consultants, Inc. conditions or trends; or about the integrity of data used in the analysis. A listing of Assumptions and Limiting Conditions containing general extraordinary assumptions is provided in Appendix B. The Conclusion of Value contained in this Report also relied on a specific hypothetical condition. A hypothetical condition is an assumption directly related to this appraisal assignment, which is contrary to what is known to exist on the Valuation Date but is used for the purpose of analysis. Specifically, within the Income Approach, it is assumed that the pool of hypothetical willing buyers would consider the economic benefits of cost reductions from economies of scale or equivalent increases in rate revenues, whether created from a purchase price adjustment approved by the PUCW or from the application of non-regulated rates. 1.14. Jurisdictional Exceptions The Subject Assets are governed by certain laws of the State and are currently financially regulated by the PUCW. A Jurisdictional Exception is an appraisal assignment condition established by applicable law or regulation, which precludes an appraiser from complying with a part of USPAP. There are no conditions for this assignment that, in my opinion, represent a Jurisdictional Exception. 1.15. Reliance on Specialist(s) The development of this Report did not rely on the work or opinions of another Appraiser. Certain conceptual and technical engineering information and opinions were provided by the Client with respect to financial, operating, and assets. 1.16. Assumptions and Limiting Conditions Assumptions and limiting conditions of this Report are provided in Appendix B. 1.17. Exclusions This Valuation has excluded the following aspects of the Systems, and those aspects are not included in the Conclusion of Value delineated herein: a) Any ownership or equity of a legal entity, parent company, or subsidiary; b) Cash and cash equivalents and deferred assets; c) Any excess real property; d) Income derived from leasing activities independent of the Systems (e.g., cell tower leases); e) Assumption of liabilities of the Systems; f) Other non-utility assets owned by other associated parties; and g) Activities, rights, and privileges of other associated parties. In other words, this Valuation is of the Subjects Assets as listed in Section 2 of this Report. In addition, this Report does not include efforts to conduct a detailed inventory or reconciliation of the Subject Assets, nor does it include a certified survey of the property underlying the Subject Assets. SWL&P / Electric and Natural Gas Systems Appraisal 10 2026© Raftelis Financial Consultants, Inc. 1.18. Rounding of Estimated Values Estimates of value derived from analyses contained in this Report have inherent variation and are not intended to reflect precise calculations. Table 1-1 provides guidelines for rounding estimates contained in this Report. Table 1-1: Rounding Estimated Values Amount Estimated Rounded to Nearest $0 – 5,000 $10 $5,001 - 50,000 $100 $50,001 – 500,000 $1,000 $500,001 – 5,000,000 $10,000 $5,000,001 – 50,000,000 $100,000 $50,000,001 – 500,000,000 $1,000,000 Over $500,000,000 $10,000,000 1.19. Definitions The terms used in this Report are used in the context of the definition of terms provided in USPAP and the International Glossary of Business Valuation Terms (https://www.nacva.com/glossary). Common abbreviations are provided at the beginning of this document. [Remainder of page intentionally blank] SWL&P / Electric and Natural Gas Systems Appraisal 11 2026© Raftelis Financial Consultants, Inc. 2. Subject Assets 2.1. Company Background SWL&P has served areas in the northwestern part of the State since 1889, providing electricity, water, and natural gas services to retail and wholesale customers. Currently, SWL&P serves approximately 15,000 electric customers, 14,000 natural gas customers, and 10,000 water customers. SWL&P was originally established to meet the energy and utility needs of a rapidly developing municipality, the City of Superior (“City”). The Company initially operated its own manufactured gas plant from 1889 to 1904, producing gas for lighting, heating, and cooking. The plant continued to store gas until 1959, after which it was decommissioned by the PSCW. The gas plant site, located along the St. Louis Bay waterfront, is now part of a larger industrial area. SWL&P is currently a wholly owned subsidiary of ALLETE, Inc. (“Parent Company”) after acquisition in 2025. The Parent Company is a diversified energy holding company headquartered in Duluth Minnesota, with a focus on delivering energy services and investing in essential transmission and clean energy infrastructure. Through its mix of regulated utilities and non-regulated energy businesses, the Parent Company plays a key role in meeting regional energy needs while advancing long-term decarbonization and renewable energy goals. The Parent Company’s regulated utility platform forms the backbone its business with its two business segments: - Minnesota Power: Incorporated in 1906, serves a 26,000-square-mile service territory in northern Minnesota. The utility provides electricity that is 50% renewable to approximately 150,000 customers, including 14 municipal systems and several of the nation’s largest industrial customers engaged in resource-intensive sectors such as taconite mining, paper production, and pipeline operations. - SWL&P: A fully regulated multi-utility serving the City and other parts of the unincorporated county. SWL&P provides integrated electric, water, and natural gas services to the City and surrounding areas and operates as a critical local energy and utility provider in the northern part of the State. Over the years, the Parent Company has also expanded its business operations through a set of clean-energy and infrastructure-focused subsidiaries including: - ALLETE Clean Energy (“ACE”): Develops, acquires, and operates renewable energy projects across North America. ACE targets mid-sized capital projects for utilities, cooperatives, municipalities, and large corporate customers, participating in both joint ventures and wholly owned developments. - New Energy Equity: A leading distributed solar development company operating in 26 U.S. states. New Energy Equity has completed more than 250 projects totaling over 425 MW, with in-house expertise spanning site origination, engineering, financing, and asset management. - ALLETE Renewable Resources: Provides operations and maintenance services for wind generation facilities, primarily in North Dakota, supporting ALLETE’s renewable energy portfolio. SWL&P / Electric and Natural Gas Systems Appraisal 12 2026© Raftelis Financial Consultants, Inc. - BNI Energy: The parent company of BNI Coal, LTD., which operates a lignite mine near Center, North Dakota. BNI supplies coal under long-term contracts to the adjacent Milton R. Young Station, operated by Minnesota Power and Square Butte Electric Cooperative. 2.2. SWL&P Customer Base and Demand 2.2.1. Electric Market The IOU market for providing electric services in the State is highly concentrated with the largest three (3) firms providing roughly 80% of customer demand (see Table 2-1). Table 2-1: Wisconsin Electric IOU Market Company Sales (MWh, 000's) Eff. Price (per kwh) Electric Sales Customers (000’s) Wisconsin Electric Power Company 23,090 $0.147 $3,390.3 1,158 Wisconsin Power And Light Company 10,974 0.123 1,353.8 480 Wisconsin Public Service Corporation 10,801 0.112 1,204.8 468 Northern States Power Company (WIS) 6,593 0.118 777.8 258 Madison Gas And Electric Company 3,154 0.153 483.8 168 Superior Water Light And Power Company 1,024 0.092 94.2 15 Consolidated Water Power Company 433 0.059 25.7 1 Northwestern Wisconsin Electric Co 178 0.123 21.9 15 Dahlberg Light And Power Company 105 0.134 14.1 13 North Central Power Company Inc 36 0.146 5.2 6 Pioneer Power And Light Company 30 0.082 2.5 2 Westfield Milling & Electric Light Company 12 0.146 1.8 1 Market Total 56,431 $0.131 $7,376.0 2,583 Source: PSCW; 2024 Annual Reports SWL&P ranks in the top six (6) of IOU firms with annual electric sales of roughly 1,024,000 MWh to slightly less than 15,000 customers, generating nearly $95 million in rate generated revenues. 2.2.2. Natural Gas Market The IOU market for providing natural services in the State is also highly concentrated with the largest three (3) firms providing roughly 74% of customer demand (see Table 2-2). SWL&P / Electric and Natural Gas Systems Appraisal 13 2026© Raftelis Financial Consultants, Inc. Table 2-2: Wisconsin Natural Gas IOU Market Company Retail Sales (Therms, 000's) Eff. Price (per therm) Natural Gas Sales Customers (000’s) Wisconsin Gas 774,263 0.824 $638.2 662 Wisconsin Electric Power Company 515,693 0.903 465.6 533 Wisconsin Public Service Corporation 384,535 0.782 300.5 365 Wisconsin Power and Light Company 218,494 0.915 200.0 222 Madison Gas and Electric Company 185,417 1.004 186.1 182 Northern States Power Company 133,916 0.939 125.8 106 Midwest Natural Gas Inc. 22,197 0.854 18.9 18 Superior Water, Light, & Power Company 17,974 0.823 14.8 14 St. Croix Valley Natural Gas 10,913 0.783 8.5 10 City Gas Company 7,146 0.789 5.6 6 Market Total 2,270,547 0.865 $1,964.1 2,117 Source: PSCW; 2024 Annual Reports SWL&P ranks in the top six (6) of IOU firms with annual electric sales of roughly 18,000,000 therms to slightly less than 14,000 customers, generating nearly $15 million in rate generated revenues. 2.3. Real Property Specific real property was not identified for the purpose of this Report. It is assumed that ownership in real property, lease agreements, or easements for the Systems do not include any excess real estate or interests in excess real estate. All property is assumed to be used and useful for the purpose of providing electric and natural gas services. In the context of the Income and Market Approach, it is assumed that all property rights required to operate the Systems would be included in the bundle of tangible assets valued. Generally, the cost of real property or easement rights would be added in the Cost Approach. However, land rights are considered de minimis when indicating value using the Cost Approach. 2.4. Form of Organization of Owner The Company is a Domestic corporation registered in the State10 in good standing and a wholly owned subsidiary of the Parent Company. The Parent Company is an energy company headquartered in Duluth and registered as an active Domestic corporation in Minnesota11. In addition to its electric utilities, Minnesota Power and SWL&P, the Parent Company owns ACE, based in Duluth, Minnesota; BNI Energy in Bismarck, North Dakota; and New Energy Equity, headquartered in Annapolis, Maryland; and has a minority equity interest in the American Transmission Company. In 2025, the Parent Company was acquired by a partnership between Canada Pension Plan Investment Board (“CPP Investments”) and Global Infrastructure 10 Entity ID 1S00346. Effective date of registration 9/28/1889. Wisconsin Department of Financial Institutions. www.apps.dfi.wi.gov. Accessed May 2026. 11 Corporation No. F06000002407. Filing date 8/8/2000. Minnesota Secretary of State. www.mblsportal.sos.mn.gov. Accessed May 2026 SWL&P / Electric and Natural Gas Systems Appraisal 14 2026© Raftelis Financial Consultants, Inc. Partners (“GIP”). The transaction converted the publicly traded utility into a wholly owned subsidiary of Alloy Parent, LLC, the acquisition vehicle for the two infrastructure funds. The FMV included in this Report does not include ownership or equity of a legal entity, parent, or subsidiary. 2.5. Restrictions on Sale of Subject Interest The Client did not identify any known restrictions for the potential sale of the Subject Assets for the purpose of this Report. All existing agreements for the operation of the Subject Assets or the purchase of wholesale electricity or natural gas supply are assumed to be transferable. Reorganization, the process of changing the Company's structure, operations, or ownership, or merger and acquisition of the Subject Assets is contingent on approval by the PSCW12. In the State, municipalities have statutory authority to acquire private utility systems, but the process is governed by specific statutes and subject to oversight by the PSCW. Any municipality may purchase any public utility or part thereof13. The purchase and terms must be approved by the PSCW after a hearing. State law requires that if a municipality acquires a plant under an indeterminate permit, it must bring an action in circuit court to adjudicate the necessity of the taking. The PSCW could deny a change in ownership of the Subject Assets if deemed not in the interest of the public. Any transaction of the Subject Assets shall be void unless the PSCW provides its consent and approval to the transaction in writing. 2.6. Prior Related Ownership Transactions The Parent Company acquired ownership of the Company in 2025. Prior to that transaction, portions of the existing Systems may have been acquired but the majority are assumed to be constructed and installed by SWL&P. 2.7. Competition Generally, direct competition in the distribution of electricity and natural gas services within the Systems’ service areas does not exist. The Systems have exclusive rights with respect to electricity and natural gas distribution services. However, alternative sources of energy are available to existing connections and directly compete with those services provided by the Subject Assets. [Remainder of page intentionally blank] 12 §196.79 and §196.80, Wisconsin Statutes (“Wis. Stat.”) 13 § 197, Wis. Stat. Imperial Irrigation District / Electric System Valuation 15 © 2025 Raftelis Financial Consultants, Inc. 3. Market and Economic Overview 3.1. Current National Economic Conditions In February 2020, the U.S. Economy ended its longest period of expansion since 1945, a consequence of the global response to the COVID-19 pandemic ("Great Lockdown"). The breadth and depth of the Great Lockdown was obvious - the worst economic downturn in employment and production since the Great Depression. Between March and April 2020, the U.S. economy lost nearly 23,000,000 non-farm payroll jobs, and national unemployment rates approached 15%. However, this recession was also the shortest in history, lasting only two months, and the U.S. economy officially began recovering in May 2020. While the economy grew between 2021 and 2023, a few factors continued to represent a drag on the economic outlook in the short run, including the impacts of historic inflation, major disruptions in global trade and domestic supply chain capacity, constraints on fiscal spending and stimulus, and rising income inequity. While many households welcomed government stimulus programs, the U.S. has added more than $11 trillion in debt since 2016, pushing the national debt burden to over $35 trillion in 2024. This Federal stimulus was a significant reason the economy rebounded so quickly in 2020. Some of the fallout of the COVID-19 induced recession can be viewed as positive. The economic response to the Great Lockdown has simply accelerated several market trends that existed pre-COVID-19, many of which created stronger productivity gains (e.g., online retail, remote workforce) in 2021 and 2022. Despite the headwinds, the U.S. economy remained fundamentally strong after the Great Lockdown through all of 2023. At the end of 2023, household and business income-to-debt balances were in relatively good shape, and consumers were sitting on a lot of accumulated savings. As well, Gross Domestic Product ("GDP") reached pre-pandemic levels, even though employment levels lagged immediately following the Great Lockdown. While labor shortages are not good, the strong growth in productivity (output per worker) was a very positive sign. Finally, the passage of the bipartisan infrastructure agreement supported the economy in the short term and would be expected to foster even greater productivity growth in the long run. Of notable concern beginning in 2021, however, was the rapid spike in prices, which continued in the first half of the year as a result of specific impacts from the COVID-19 induced recession, supply chain constraints, and energy process impacted by the situation in Ukraine. For the full year of 2022 and 2023, the consumer price index remained at a 40-year high, ending the year at 8% and 4% year-over-year growth, respectively. But, the blistering annual growth rate of GDP (real) continued after the Great Lockdown, finishing 2021 at 5.8% growth rate, before settling down to a normal 2%-2.5% annual rate. The majority of this growth was fueled by consumer demand from pandemic related savings and fiscal stimulus and partly contributed to price pressures. Despite our ability to point to specific problems driving commodity and producer prices (e.g., domestic supply chain), demand-side growth prompted the Federal Reserve to aggressively raise interest rates in an attempt to control the robust inflation in 2022-2023 and beyond. The upper target of the Federal Funds rate was increased from 0.25% at the end of 2021 to 5.50% through August 2024 (peak). Beginning in September, the Federal Funds rate has been reduced by 100 basis points, where it has currently been held at 4.50% since December 2024. Imperial Irrigation District / Electric System Valuation 16 © 2025 Raftelis Financial Consultants, Inc. Many economic experts considered a recession in 2023 more than a 50% probability starting the year, primarily driven by serious concerns of continued supply chain issues and the expectation of significant interest rate increases required to tame inflation. By the end of 2023 and throughout 2024 and into 2025, however, no recession materialized and the progress of the economic recovery from the recession created by COVID-19 continues into its 65th month. While some aspects could be improved, the overall economy has generally performed much better than expected. Recent notable economic news includes: - U.S. economic output (GDP) finished 2024 stronger than expected, up 2.8% from the prior year. While growth slowed in the 1st quarter of 2024 as expected (1.4%), real GDP posted strong annualized growth rates particularly in the 2nd and 3rd quarters of 2024. - Volatility and uncertainty created by a revised focus on trade policies, however, is responsible for slower growth than expected in the 1st quarter of 2025, with real GDP declining 0.5%. The 2nd quarter posted a relatively robust 3.3% growth rate; however, the pace of growth for the balance of the year is expected to be slower with a softening of employment. - Payroll employment broke its streak of growth at 53 months, posting a decline of 13,000 jobs in June 2025 and has continued to post slow growth through August. In total, the U.S. economy has added more than 2.0 million jobs during 2024 and only 600,000 in the first eight (8) months of 2025. - While inflation remains above a 2% target, consumer prices in June 2024 experienced the first significant decline since 2020 before trending up in the balance of the year. However, 2024 finished with prices up 3.0% over the prior year and have only recently begun to slow (April 2025) with lower than expected growth in GDP. Inflation remains above 2.5% over the prior year through July 2025. - While labor participation still has room to recover, the point is that the vast majority of people looking to work are working with unemployment rates recently increasing to 4.3% (August 2025). - Levels of consumer spending are expected to remain afloat from significant households' savings created after the Great Lockdown. Personal consumption expenditures in July 2025 were 2.1% above the prior year. - Retail sales slowed around June 2024 but picked up in the balance of the year, finishing 2.3% above the prior year and are currently up 3.7% (July 2025). While household savings are lower heading into 2025 and higher interest rates are discouraging the use of revolving credit to some degree, credit card debt increased significantly in 2024 (up 6.8% over the prior year) and continues to increase in 2025. There are still a few headwinds as the economy continues to grow in 2025. Regardless of positive news or the ability to find some level of positive outcomes from negative economic news, U.S. consumers remain relatively pessimistic compared with prior economy recoveries. Consumer confidence by the middle of 2024 (July) was 25% lower from the start of the recovery despite four years of consecutive growth and adding more than 28,000,000 payroll jobs (560,000 monthly average). While confidence has experienced moderate gains through 2024, in July 2025, it remains 40% below its pre-COVID-19 peak. In addition, housing demand Imperial Irrigation District / Electric System Valuation 17 © 2025 Raftelis Financial Consultants, Inc. slowed significantly in 2022 and 2023 from rising interest rates, finishing more than 3% and 8% down from the prior year, respectively. In July 2024, national single-family housing starts were down 16% from the prior year, after posting modest year-over-year gains earlier in the year and did not recover for the balance of 2024, finishing almost 4% down. Housing prices and interest rates remaining at current levels are strong contributors to the significant slowing in housing starts. Finally, the U.S. debt burden is more than $36 trillion in the 2nd quarter of 2025, and consumer revolving credit is up 46% since the end of 2020. Concerns for a near-term U.S. economic recession has generally increased in 2025. The economy performed better than expected in 2023 and continued that trend in 2024 despite significant challenges; however, significant uncertainty as a result of stubborn inflation and a recent policy shift towards imposing significant U.S. tariffs are generating real concern. The planned, sharp increase in interest rates in 2024 has proved to provide the necessary adjustments to slow aggregate demand and employment growth and bring inflation under control in 2024, enough such that the Federal Reserve lowered rates towards the end of 2024. The Federal Reserve recently passed on additional declines in interest rates in December and expected to stay on course with the Federal Funds rate at 4.5% for the near term. The next possible decrease could come in September 2025. We have clear experiences from the 1970's and 1980's that indicate if the pressure to reduce inflation is removed too soon, the problem will come back stronger. Real gross domestic product growth slowed only slightly to 2.8% in 2024 and is expected to slow further to 1.5% to 2.0% in 2025. Under a best-case scenario (and most likely), the economy could fend off a recession altogether in 2025 with softer growth taking pressure off inflation while maintaining modest employment gains. Under the next best-case scenario, a relatively short economic recession at the end of 2025, followed by recovery early in 2026 would be expected to slow gross domestic product for 2025 to 0.5% to 1.0%, providing an opportunity for >2.5% growth in 2026. Despite most of the positive signs heading into 2025, the main concern is how consumers feel today - the opposite of irrational exuberance. Once the full impact of Federal employment cuts begins to filter into monthly employment and unemployment reports, it is not likely to improve consumer confidence or the uncertainty around economic growth in 2025. The seemingly unplanned start-and-stop tariff programs are also not adding to confidence among consumers. In addition, this outlook for 2025 is generally contingent on sufficient continued reduction in inflation that would allow the Federal Reserve to ease interest rates by 100 to 150 basis points in 2025 and 2026. It is not likely consumers will regain post-pandemic confidence until inflation is back to "normal" in the 2% range. The expectation of increasing prices from tariffs is not going to improve this situation. The following table provides estimated economic performance through 2025 and projection for 2026. [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 18 © 2025 Raftelis Financial Consultants, Inc. Table 3-1: US Economic Outlook Component Actual 2023 Actual 2024 Actual 2025 Estimated 2026 Gross Domestic Product ($, bil) 27,721 29,185 30,539 31,834 Chain-weighted Price Deflator (2017=100) 122.3 125.2 128.5 131.6 Real Gross Domestic Product ($, bil) 22,671 23,305 23,771 24,187 Real Gross Domestic Product (% chg) 2.9 2.8 2.0 1.8 Industrial Production (IP) Index (2017=100) 102.9 102.6 103.6 103.5 IP: U.S. Oil and Gas Extraction Index (2017=100) 141.0 144.7 148.8 150.0 Real Disposable Personal Income ($, bil) 17,052 17,517 17,850 18,100 Ratio; DPI to GDP (%) 75.2 75.2 75.1 74.8 Real Disposable Personal Income (% chg) 5.1 2.7 1.9 1.4 Real Consumer Spending (% chg) 2.5 2.8 2.2 1.8 Retail Sales (% chg) 2.4 2.3 3.7 2.5 Food Service and Drinking Place Sales (% chg) 11.5 4.8 5.0 3.5 Federal Surplus/(Deficit) Share of GDP (%) (6.4) (7.0) (5.4) (5.0) Total Debt ($, bil) 32,740 35,275 36,923 38,514 Total Debt Share of GDP (%) 118.1 120.9 120.9 121.0 Consumer Price Index (%, chg) 4.1 3.0 2.6 2.5 Wage and Salary Employment Cost Index (%, chg) 4.6 3.9 3.6 3.3 Average Monthly Employment Change (thousands) 216 168 110 100 Average Monthly Unemployed (thousands) 6,077 6,761 7,250 7,500 Unemployment rate (%) 3.6 4.0 4.3 4.5 Employment-to-Population (%) 60.3 60.1 59.5 59.5 Housing Starts, Privately-owned (thousands) 1,421 1,371 1,395 1,350 U.S. Housing Prices (% chg) 5.5 5.8 4.5 4.0 Personal Consumption: Rental Price Index (% chg) 7.9 6.7 5.0 3.5 30-Year Fixed Mortgage Interest Rate (%) 6.80 6.72 6.55 6.25 Federal Funds Effective Rate (%) 5.02 5.14 4.15 3.80 Federal Funds Upper Limit (%, year-end) 5.50 4.50 4.43 4.00 10-year Treasury Note Yield (%) 3.96 4.21 4.30 3.42 Source: US Federal Reserve Data; Accessed June 2026. The U.S. economy has demonstrated resilience through 2025 and into 2026, but looks weaker now than it did three months ago, according to the Second Quarter 2026 Survey of Professional Forecasters published by the Federal Reserve Bank of Philadelphia on May 15, 2026.14 Gross Domestic Product (“GDP”) growth reached approximately 2% in 2025 despite major policy shifts and a government shutdown in the fourth quarter, supported by strong productivity. Inflation was broadly flat as tariff-driven goods inflation offset declining 14 Federal Reserve Bank of Philadelphia, Survey of Professional Forecasters, Second Quarter 2026 (released May 15, 2026). Imperial Irrigation District / Electric System Valuation 19 © 2025 Raftelis Financial Consultants, Inc. services inflation; the fiscal deficit narrowed slightly, though debt and the current account deficit remained elevated. Looking ahead, the forecasters expect real GDP to expand 2.2 percent in 2026 on an annual-average basis, down 0.3 percentage points from the previous survey estimate of 2.5 percent, with growth decelerating through the second half of the year to a low of 1.6 percent in Q4 2026 before partially recovering to 1.9 percent in early 2027. The forecasters have also lowered their estimates of the probability that real GDP growth will be 2.5 percent or higher in 2026, and mean probabilities of a negative quarter have risen to 25.1 percent and 24.5 percent for Q3 and Q4 2026, respectively. This reflects a meaningful, though not dominant, downside risk to the growth outlook over the near-term portion of the valuation horizon. Labor markets have softened from the tightness of prior years but remain functional. The unemployment rate stood at 4.4 percent in Q2 2026 and is forecast to increase modestly to 4.5 percent by Q1 2027, with the annual-average unemployment rate expected to hold in the range of 4.4 to 4.5 percent over each of the next four years. On the employment side, nonfarm payroll job gains are forecast at 68,900 per month in the current quarter, slightly above the previous estimate, but the projections for the following three quarters show downward revisions, with an annual-average monthly gain of only 34,600 in 2026, well below the prior estimate of 48,500. Layoffs have remained historically low, leaving the labor market in a low-hire, low-fire equilibrium that, while softer than prior years, does not indicate near-term recessionary stress. On the capital markets side, the Federal Reserve reduced the federal funds rate three times in 2025, and with the policy rate now close to neutral, further room for cuts in 2026 is limited, particularly given the sharp near- term rise in inflation. The forecasters project the 3-month Treasury bill rate to average 3.6 percent in 2026, stepping down to 3.2 percent in 2027 as conditions normalize. The 10-year Treasury bond yield is expected to hold at 4.3 percent through 2026, declining gradually to 4.1 percent by 2029. Moody's Baa corporate bond yield is forecast at 6.10 percent in Q2 2026 and 6.05 percent on an annual basis for the full year, implying a spread over the 10-year Treasury of approximately 179 basis points. These rate levels establish the prevailing risk-free rate and investment-grade borrowing cost benchmarks as of the Valuation Date and are directly relevant to the discount rate selection in the income approach applied to the Subject Assets. The inflation outlook has shifted materially upward in the near term. The forecasters expect current-quarter headline Consumer Price Index (“CPI”) inflation to average 6.0 percent at an annual rate, up sharply from the prior survey estimate of 2.7 percent, with core CPI at 3.2 percent for the same quarter. This near-term spike is expected to moderate: on a fourth-quarter over fourth-quarter basis, headline CPI is forecast at 3.5 percent for full-year 2026 before returning to 2.5 percent in 2027. Over the longer term, the forecasters project 10-year annual-average headline CPI inflation of 2.40 percent for the period 2026 to 2035, with the corresponding Personal Consumption Expenditure (“PCE”) estimate at 2.22 percent. The 5-year median for 2026 to 2030 is somewhat higher at 2.60 percent (CPI) and 2.48 percent (PCE), reflecting residual near-term price pressure before longer-term expectations reassert themselves. Since the pandemic, consumers across much of the U.S. have experienced rapid increases in electricity prices, with most states seeing electricity costs rise well above overall inflation, a trend consistent with the current forecast trajectory and directly relevant to the valuation of any facility producing electricity or offsetting purchased power costs. The current near-term inflation outlook suggests this assumption may prove conservative through at least 2026 and 2027, though the longer-term 10-year median of 2.40 percent is Imperial Irrigation District / Electric System Valuation 20 © 2025 Raftelis Financial Consultants, Inc. broadly consistent with the 2.5 percent escalation rate used in the Stantec analysis over its full 27-year horizon. As grid electricity prices continue their upward trend in North Carolina and nationally, the avoided- cost benefit of the Subject Assets, and by extension their income-based value, will be increasingly sensitive to the rate trajectory actually realized over the valuation horizon. The macroeconomic environment as of the Valuation Date reflects moderating but below-prior-trend GDP growth, a softening labor market, elevated near-term inflation, and interest rates that remain well above the low levels of the prior decade. This combination of conditions generally supports the ongoing economic value of operating renewable energy assets capable of offsetting grid electricity purchases. 3.2. U.S. Electric and Natural Gas Markets 3.2.1. Electric Market Overview The U.S. Electric Power Transmission industry (NAICS code 22112) is valued at nearly $505 billion and employs nearly 401,000. Establishments in this industry transmit and distribute electricity from power generators to distribution centers, other electric utilities and customers. The Electric Power Transmission industry is highly capital intensive. This is because of the high cost of transmission infrastructure, including poles, wires, cables, power transformers, substations, and meters. In addition, utilities require various computer systems to operate and monitor the power grid. Conversely, utilities also rely heavily on skilled labor from electricians and engineers, which results in relatively high wages. This industry has a low level of market concentration, and a majority of electric power transmission systems serve local and regional markets. However, there has been some industry consolidation in regional markets through mergers and acquisitions by large private diversified energy companies. The apparent motivation from consolidating local and regional electric services is to increase the scale of operations and take advantage of economies to scale to increase profitability. Additionally, in areas with strong population growth, economic expansion to meet consumer demand has also contributed to growth in electric demand from commercial and industrial customers and an interest in for-profit investments. Industry revenue growth has declined in 2020 as a result of COVID-19 but is expected to rebound as the economy continues to recover and create more needs for electric transmission. For the industry as a whole, products and services are well-segmented, stable, and have end-user demand across all sectors of the economy. Over the long-term, need for electric services is expected to continue to grow modestly (see Figures 3-2). Revenue and profit growth for U.S. firms in this industry are expected to experience annual growth over the next 5 years of 2.5%. From an individual firm perspective, stable demand from residential and commercial customers, expected to rebound significantly from 2020, along with a low industry concentration and relatively high barriers to entry is expected to provide a positive outlook over the next five years for existing firms with a base of current customers and protected service areas. Imperial Irrigation District / Electric System Valuation 21 © 2025 Raftelis Financial Consultants, Inc. Figure 0-2: Electric Power Industry Outlook Imperial Irrigation District / Electric System Valuation 22 © 2025 Raftelis Financial Consultants, Inc. 3.2.2. Policy Environment Federal policy continues to provide meaningful support for existing and new hydropower assets. The One Big Beautiful Bill Act, enacted in July 2025, preserves key federal tax incentives, including Section 45Y production tax credits and Section 48E investment tax credits, for hydropower and pumped storage hydropower projects through 2033. These incentives are applicable to both new construction and modernization projects meeting the 80/20 upgrade rule, with additional credit adders for domestic content and projects located in designated energy communities.15 3.2.3. GHG Profile From a carbon and sustainability perspective, hydropower provides various ancillary grid services and, compared to its share of installed capacity, punches above its weight regarding provision of frequency regulation and reserves. As documented in the Stantec Report, the regional electricity grid (SRVC subregion) is composed of approximately 49.5% fossil fuel generation, meaning that every kilowatt-hour of hydroelectric generation that offsets grid electricity purchases provides a meaningful reduction in associated greenhouse gas emissions compared to the grid average.16 This characteristic contributes to the intangible value of the Subject Assets in a market that increasingly assigns value to renewable generation attributes. 3.2.4. Natural Gas Market Overview The Utilities sector is identified within the North American Industry Classification System (“NAICS”) (NAICS 22)17 to include a wide range of utility systems engaged in providing electric power, natural gas, water supply, steam supply, and sewage removal. The Natural Gas Distribution (NAICS 2212) industry group (“Natural Gas Industry”) is part of the Utilities sector and is valued at more than $200 billion, employing more than 115,000. The majority of companies in this industry group manage gas distribution systems consisting primarily of gas mains and meters that transport gas to residential and commercial end- users. Other companies engaged within this industry group are gas marketers that buy gas directly from producers and sell to a distribution system, while others are gas brokers or agents that arrange for gas to be sold via distribution systems operated by other companies. Companies engaged within the Natural Gas Industry are generally responsible for either maintaining natural gas distribution systems that connect residential, industrial and commercial users downstream a citygate or arranging sales to end markets over industry-specific networks. The industry has largely benefited from the enormous growth of natural gas availability that has occurred in the U.S. since the early 2000s as a result of the growing prevalence of advanced drilling techniques employed by upstream producers in the Oil Drilling and Gas Extraction industry (NACIS 211). Natural gas is used to generate electricity, produce useful thermal output, and as an industrial feedstock. Many commercial and industrial end-users, particularly electric power 15 National Hydropower Association, How Hydro Shaped the Reconciliation Bill and Secured the Win, Hydro.org (July 7, 2025), available at https://hydro.org/powerhouse/article/how-hydro-shaped-the-reconciliation-bill-and-secured-the-win. 16 The Stantec Report, supra citation 4. 17 Does not include operations or government-owned facilities providing similar services. Imperial Irrigation District / Electric System Valuation 23 © 2025 Raftelis Financial Consultants, Inc. plants, have been encouraged by the U.S. to transition into utilizing this fuel source in lieu of others, such as coal, due to its increased affordability and comparatively lower environmental impact. Because natural gas demand and consumption primarily depend on the number of households and weather, industry establishments are generally concentrated in states with the largest populations or colder weather locations such as the northeast (see Figure 3-2). Figure 3-3: Concentration of Natural Gas Distribution Source: EIA Texas has the highest concentration of companies engaged in the Natural Gas Industry, accounting for nearly 9% of all establishments. This concentration is primarily due to its vast underground natural gas reserves, particularly in formations like the Permian Basin and Eagle Ford Shale. Combined with these natural gas reserves and advancements in drilling techniques like hydraulic fracturing allow for large-scale extraction of natural gas, Texas is the leading producer of natural gas in the U.S. California has the second largest concentration of establishments at nearly 6.7%, reflective of its large population. Collectively, the northeast and Great Lakes regions account for nearly 29% of all establishments engaged in the Natural Gas Industry, primarily due to a combination of population and weather. Companies engaged in the Natural Gas Industry generally have near monopolies and operate at a local or regional level with minimal threats from competitors. In addition, very high barriers to entry and heavy regulation make it very difficult for new entrants to become established and compete with existing companies. In fact, many state regulated markets provide exclusive rights to a services area, making it impossible for new Imperial Irrigation District / Electric System Valuation 24 © 2025 Raftelis Financial Consultants, Inc. entrants to directly compete with existing companies. The Natural Gas Industry does experience external market competition from alternative sources of energy. From an end-user perspective, natural gas is one of several commodities competing for a share of the energy market such as electric heating. Providers of electric power generally compete with the Natural Gas Industry on the basis of price, convenience and individual consumer preferences. Overall, competition in the Natural Gas Industry is not expected to shift dramatically in the short term, particularly with the nature of state regulated markets and existing barriers to entry (see Table 3-2). Table 3-2: Key Barriers to Entry Amount Estimated Rounded to Nearest Legal Regulatory requirements at both the federal and state level can deter would-be industry participants, requiring industry-specific expertise and knowledge of industry structure. Entry into certain states' natural gas distribution markets is limited to existing companies, at least for some classes of customers. Start-up Costs A major barrier to entry is posed by the large sums of capital and considerable expertise required to Differentiation successfully establish an enterprise. Barriers to entry are not expected to shift dramatically as a result of the Labor Intensity COVID-19 outbreak; but barriers to success are expected to rise in a poor operating environment. Given the key barriers to entry, Companies engaged in the Natural Gas Industry are generally focused on the following factors driving market penetration, competitive advantages, and long-term profit stability: - Commodity Prices – Industry revenue is highly correlated with natural gas supply prices. The price of natural gas is expected to range between $2.50 and $3.90 per MMBtu in 2025 and between $3.50 and $4.40 per MMBtu in 2026 as LNG exports increase18. - Industrial Production – Industrial activity trends actively set the overall level of demand for energy, including natural gas. So as activity increases and manufacturers increase production, demand for natural gas will also rise. The industrial production index is expected to rise in 2023, representing a potential opportunity for the industry. - Electric Power Generation – Increased demand from electricity generators positively influences industry revenue. Electricity generators purchase natural gas from distributors and use it to generate electricity. Electric power consumption is expected to rise in 2023. - Housing Starts – Housing starts indicate the number of new residential homes under construction. An increase in housing starts heightens demand for natural gas distribution because many new houses connect to the industry's gas lines. Housing starts are expected to fall in 2023. 18 EIA Short-term Energy Outlook Imperial Irrigation District / Electric System Valuation 25 © 2025 Raftelis Financial Consultants, Inc. - Trade Weighted Index – The trade-weighted index (“TWI”), also known as the real broad index, measures the strength of the US dollar relative to the currencies of the nation's trading partners. While the industry is not directly affected by global trade, the TWI is indicative of the overall buying power of the US dollar on the international stage, signaling any volatility in the United States' economy. The TWI is expected to rise in 2023. This Natural Gas Industry has a relatively low level of market concentration, and a majority of natural gas distribution establishments serve local and regional markets. The fragmentation of the retail market for natural gas makes it difficult for firms to dominate the market, however, there has been some industry consolidation in regional markets through mergers and acquisitions by large natural gas distribution companies or large diversified energy companies. The apparent motivation for consolidating local and regional natural gas distribution is to increase the scale of operations and take advantage of economies to scale to increase profitability. For the industry as a whole, products and services are well-segmented, stable, and have end-user demand across all sectors of the economy. Over the long-term, demand for natural gas products and services is expected to grow as it replaces the U.S.’s dominant fuel source – coal. From an individual firm perspective, stable demand from residential and commercial customers along with a low industry concentration and relatively high barriers to entry is expected to provide a positive outlook over the next five years for existing firms with a base of current customers and protected service areas. 3.3. Systems Regulation 3.3.1. Regulatory Structure The Natural Gas Industry is subject to significant state and federal governmental regulations. These regulations significantly influence the general operating environment of companies engaged within this industry and may affect the ability to recover certain costs from customers and cause companies to incur substantive compliance and other costs. Changes in regulations, interpretations of regulations, or the imposition of new regulations significantly affect companies engaged within this industry. The primary aspects of company operations impacted by governmental regulation include, but are not limited to, 1) retail and wholesale rates; 2) the rate of return (“ROR”) on investment in capital; 3) construction and operation of facilities and distribution systems; 4) participation in the interstate natural gas pipeline capacity market; 5) standards of service; 6) short-term debt obligations; and 7) billing practices. Failure to comply with any applicable rules or regulations may lead to imposed refunds, penalties, and other payments. 3.3.2. State Regulation The PSCW has general supervisory and regulatory powers over the Company including, but not limited to, approval of retail utility rates and standards of service, mergers, affiliate transactions, location and construction of natural gas facilities, and certain other additions and extensions to utility facilities. The PSCW also regulates security and debt issuances. Retail rates approved by the PSCW are designed to provide the Company with the opportunity to generate revenues to recover all prudently-incurred costs, along with a return on investment sufficient to pay interest on debt and provide a reasonable ROE. Imperial Irrigation District / Electric System Valuation 26 © 2025 Raftelis Financial Consultants, Inc. The Company is also subject to the Wisconsin Holding Company Act. Under the Holding Company Act, the sum of certain assets of all non-utility affiliates in a holding company system generally may not exceed 25% of the assets of all public utility affiliates in the system, subject to certain exemptions for energy-related assets. In addition, the Holding Company Act precludes the acquisition of 10% or more of the voting shares of a holding company of a Wisconsin public utility unless the PSCW has first determined that the acquisition is in the best interests of utility customers, investors, and the public. 3.3.3. Federal Regulation The primary federal agency regulating natural gas distribution, particularly the safety of interstate natural gas pipelines, is the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), which is part of the Department of Transportation (“DOT”); while the Federal Energy Regulatory Commission (“FERC”) regulates the interstate transmission and sale of natural gas, including pipeline construction and rates for services. FERC primarily regulates the interstate transportation of natural gas, including pipeline construction, operation, and pricing for services on interstate pipelines. PHMSA oversees the safety of natural gas pipelines, including construction, operation, and maintenance standards, ensuring compliance through inspections and enforcement actions. FERC regulates interstate natural gas transmission, while state agencies typically regulate intrastate distribution. The primary federal law governing natural gas regulation is the Natural Gas Act of 1938. 3.3.4. Implications for Value The near-term trajectory of electricity and natural gas rates is a significant determinant of the income-based value of the Subject Assets. The upward pressure on retail electricity and natural gas rates, combined with the longer-term trend of rate escalation driven by grid modernization investment, supports a favorable outlook for the economic value of the Subject Assets. This sensitivity is acknowledged in the Income and Market Approaches discussion in Section 4. [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 27 © 2025 Raftelis Financial Consultants, Inc. 4. Valuation of the Subject Assets 4.1. Approaches and Methods Considered and Selected An Opinion of Value for the Subject Interest was developed considering industry standard approaches and methods of valuation covering the following concepts: 1) Cost Approach (net assets), 2) Income Approach, and 3) Market Approach. These approaches analyze various aspects of the Subject Assets, including the expected physical conditions of the existing assets, the potential economic benefits or cash flows or income anticipated to be generated by the Subject Assets in the future, and financials or transactions related to the prices for the acquisition of similar assets or systems or equity in the same. None of these approaches may be considered ideal on a standalone basis since each evaluates a particular facet of the Subject Assets. The consideration of all three approaches and various methods provides valuable input when considering other factors and the use of judgment and opinion in indicating FMV of the Subject Interest. The context and applicability of each approach and various methods was considered in the reconciliation of a Conclusion of Value provided in Section 6.0. 4.2. Cost Approach The methodology selected for use in the Cost Approach for valuation of the Subject Assets was reproduction cost new less depreciation (“RCNLD”). This method is commonly utilized in the indication of value of public utilities or systems and has been an accepted method involving the acquisition of utility systems throughout the U.S. for a significant period of time. This approach is based on an appraisal theory of substitution and the prevailing concept that an investor or hypothetical buyer may not consider paying more for an interest in assets than the cost to replace or reproduce the same assets or system components with the exact same or similar configuration and characteristics. The reproduction cost was derived from reported value of investment in the Subject Assets, compiled from multiple public sources and applying cost escalation to assets based on specific characteristics of assets (e.g., type, size, capacity). This cost approach does not include the consideration of any future capital cost requirements that would expand the capacity of the Subject Assets after the Date of Valuation. The RCNLD using a reproduction cost method reflects the value of tangible assets in place as of the Valuation Date or that would be expected to be in place and included in an Asset Purchase Agreement (“APA”). 4.2.1. Replacement Costs versus Reproduction Costs There is a difference between the reproduction cost method and the replacement cost method of utility assets when considering the Cost Approach. The reproduction cost method is a duplication of exactly the same facilities in the same manner as originally installed and is derived by escalating project costs from original installation values. This method escalates all costs incurred at installation which may include multiple start- and-stop cost, restoration costs, overages as a result of defective assets or improper installation, legal and management conflicts, etc. Imperial Irrigation District / Electric System Valuation 28 © 2025 Raftelis Financial Consultants, Inc. In contrast, the replacement cost method is the provision of facilities that would be available today with their improved efficiencies and more effective cost, utilizing commercially available materials, equipment, etc. In addition, the installation of assets in a replacement cost analysis is assumed to be completed as one single construction project and obtaining the economy of scale of a larger project versus the incremental addition of assets from multiple smaller projects. The replacement cost method assumes that the most economical and efficient outcome of construction and installation is achieved. This means that the cost of restoration, impacts of conflicts, and cost overages, etc. are not included. In addition, only one (1) start up and shut down cost is included. Similarly, any premiums or overtime costs or special procurement or special mobilization or demobilization costs are not included other than for the single construction project. Thus, the reproduction Cost Approach generally includes excess capital which an investor or hypothetical buyer might not consider paying for the existing facilities already in-place and in-service. 4.2.2. Depreciation There are three (3) components to the overall depreciation considered in the Cost Approach, whether utilizing a replacement or reproduction cost method. The first component of depreciation, and the first to be applied, is the physical depreciation of each asset line item using each asset’s date of installation19 and an average expected lifecycle in years. Depreciation has been taken on a straight-line basis using average service lives (“ASL”) for each asset, system component, or group of components where appropriate. The utilization of ASL values in any Cost Approach reflects expected physical depreciation on an “average” basis, meaning all system components are likely to be required to be replaced earlier or later than the exact year as assumed using an ASL. For the purpose of estimating the probable remaining reproduction value considering physical depreciation, however, an approach assuming components are required to be replaced on average at the same time would result in the same value if each component’s actual future date of failure is known. Therefore, the fact that some components or assets will remain used and useful after its ASL would be balanced with components or assets of the same asset class that need to be replaced earlier. These ASLs can be derived from prior work experience in utility system valuation, utility system design and construction, utility impact fee analyses and utility cost of service rate analyses. This type of information can be assembled through public and private clients over many years and generally represents a proprietary source of information available to an appraiser. Based on my education, training, and experience, ASL values used in the Cost Approach for this Report are reasonable. The second consideration is the possibility of functional obsolescence or depreciation of the existing assets. Functional obsolescence is associated with the facilities themselves and is inherent in the existing Subject Assets, being derived from construction, configuration, operation, management, and administration inefficiencies that are not reflected in physical depreciation. For example, a poor or inefficient design that has been newly installed would have minimal physical depreciation but could have substantive functional depreciation. These functional inefficiencies are not intentional and are generally recognized after years of operating a utility system. Functional obsolescence can be considered as a whole or specific to one or more aspects of the Subject Assets. 19 The reproduction cost analysis also uses an average age or average date of installation for groups of assets. Imperial Irrigation District / Electric System Valuation 29 © 2025 Raftelis Financial Consultants, Inc. The final component is external obsolescence or economic depreciation. External obsolescence accrues from all external factors impacting the Subject Assets and includes the impact of federal, state, and local regulation, customer acceptance of financial requirements or perceptions of service quality and reliability, historical rate and charge regulation, the ability to generate excess revenues sufficient to support the physical asset value or improvements to physical assets, market conditions, development conditions, and many other factors external to the system itself. Economic depreciation is generally considered for the Subject Assets as a whole and should reflect the impacts considered in the principle of contribution. In appraisal practice, the principle of contribution states that an asset’s specific value is no more than what it contributes to total value, not what the asset costs to acquire or construct or install. 4.2.3. Design, Engineering, Site Work and Indirect Costs In the development of a Cost Approach for a utility system, design, engineering, other indirect costs (expected to include legal costs; insurance costs and other related items; licenses, permits, and fees;) and site work (generally including grading, site access, mobilization, demobilization) are inherently included in the original cost basis (reproduction) of the Subject Assets and are assumed to generally reflect the addition of approximately 13% to 25%20 of plant and equipment construction and installation costs. In a replacement cost method, design, engineering, indirect costs, and site work would be specifically added to the value of unit costs used to derive an indication of value for the Subject Assets. An appropriate design, engineering, and indirect cost factor for a single construction project should include the impact of scale. Therefore, for the purpose of indicating value in this Report, a design, engineering, and indirect cost factor of 20% on aggregated reproduction cost new (“RCN”) was assumed included in the reproduction calculation. 4.2.4. Reproduction Cost Less Depreciation Tables 4-1 provides a summary of the resulting current reproduction costs for the Systems’ plant and equipment of the Subject Assets in-place and in-service on the Valuation Date as described in Section 2 (see Appendix D). [Remainder of page intentionally blank] 20 Indirect costs from our historical research of final bid tabulations for utility systems was found to range from 13% to 25%. Imperial Irrigation District / Electric System Valuation 30 © 2025 Raftelis Financial Consultants, Inc. Table 4-1: Reproduction Cost Less Depreciation Calculation Component Electric System Natual Gas System Original Cost New (OCN) $ 93,907,201 $ 49,451,948 Cumulative Depreciation (46,393,383) (27,436,960) Net Original Cost (OCNLD) 47,509,818 22,104,498 % Depreciated 49.4% 55.5% Reproduction Cost New (RCN) 289,500,000 167,800,000 Physical Depreciation (128,700,000) (83,600,000) Net Reproduction Cost (RCNLD) 160,800,000 84,200,000 % Depreciated 44.5% 49.8% RCNLD Adjusted to Valuation Date $ 164,500,000 $ 86,000,000 Source: 2024 SWL&P Annual Report, Raftelis The estimated reproduction cost value of existing combined Systems’ plant and equipment of the Subject Assets is $457,300,000 (rounded). The total physical depreciation of these assets is $212,300,000 (rounded) using the Valuation Date. The remaining RCNLD is $250,500,000 (adjusted to the Valuation Date). Based on the RCN analysis and reasonable average service life values, the total weighted average physical depreciation of the existing combined Systems combined is estimated at 46% (see Appendix D). 4.2.5. Original Costs Original cost new (“OCN”) of the combined Systems’ components of Subject Assets are reported21 at $143,359,149 with reported accumulated financial depreciation totaling $73,830,343 or 52% of original costs, resulting in a probable net book value (“OCNLD”) of $69,614,316. The calculated RCN value of the combined Systems reflects a compounded annual increase in asset costs of 4.9% based on average installation dates. 4.2.6. Land and Land Rights Any fee-simple interest in real property or agreements for property leases or easements being utilized by the Subject Assets are assumed to be transferred and included as a component of the Subject Assets with respect to the indication of value from Income Approach and Market Approach. Real property fee-simple or lease or easement value is added as a line-item cost in the Cost Approach. The real property or easements are assumed used and useful by the Systems in their entirety, in other words, it’s assumed that they do not provide any 21 SWL&P 2024 Annual Report Imperial Irrigation District / Electric System Valuation 31 © 2025 Raftelis Financial Consultants, Inc. excess real property that would have additional value to a hypothetical buyer for a different HBU. An allowance of ten percent (10%) was included for the value of real property and interests in property rights. 4.2.7. Consumables, Equipment, and Records Consumables and inventory is generally considered at approximately three (3) months of spending on chemicals and other materials and supplies. All other inventory, including vehicles, equipment, and tools would generally be included at cost. Engineering drawings, GIS data, customer data and billing systems, reports, and other rights to documentation or information associated with the Systems would also generally be included at costs. Additional details on the combined value of consumables, equipment, and records was not available. Therefore, an allowance of one and one percent (1.5%) of the depreciated value for the Subject Assets is estimated for this Report. 4.2.8. Deficiencies and Deferred The issue of deficiencies and deferred in the context of the business valuation of a utility system is relatively subjective. For example, a typical average service life of a natural gas distribution line ranges between 40-75 years (actual observed useful life of gas mains can exceed 75 years) depending on material and operating characteristics of a system. Assets that continue to be used long after their average service life is not an indication of “deferred” replacement or maintenance. There are many procedures and processes that can extend as well as reduce the useful life or an asset. The impact on value for the Systems as a result of management practices of deferring typical maintenance or operating with observed and unobserved deficiencies should be considered as a whole. A site visit and inspection of the Systems was not included in the scope of work for this Report. With the likelihood that a significant portion of any identified deferred costs may be a result of physical depreciation of assets, which has already been deducted, no additional allowance for deficiencies and deferred maintenance was applied to those assets. 4.2.9. Functional Depreciation Functional obsolescence or depreciation is associated with the specific facilities themselves and is inherent to the Systems, being derived from certain construction, configuration, operation, management, and administration. However, these issues could also be related to deficit or deferred maintenance and should not be double counted. Current issues that are assumed to not be corrected by normal planned or future capital expenditure requirements included in the Report or those that corrective measures are unknown, warrant consideration for a deduction for functional depreciation. Functional depreciation is not generally considered in the Income or Market Approaches. To the degree that assets are inherently obsolete or not functioning as intended, those impacts would be reflected in those approaches. Again, the RCN analysis applied significant physical depreciation to the value of the Subject Assets. Based on the allowance related to depreciated costs and other information provided in the process of data collection and due diligence, no additional deduction of the RCNLD was included for a functional depreciation allowance. 4.2.10. External Depreciation External (economic) obsolescence or depreciation accrues from all external factors impacting the Systems. The impact of future regulation, customer acceptance of ownership changes, historical rate and charge Imperial Irrigation District / Electric System Valuation 32 © 2025 Raftelis Financial Consultants, Inc. regulation or lack thereof, the ability to generate excess revenues sufficient to support the physical asset value or improvements to physical assets, market conditions, development conditions, and many other factors external to the Systems. External depreciation is not generally considered in the Income or Market Approaches. To the degree that external factors are, in fact, impacting the ability to generate income or are causing an increase in operating costs, those impacts would be reflected in those approaches. An informed, hypothetical buyer is assumed to maximize their economic advantage from a potential transaction and would consider certain external factors, such as those described above, as potential risks. These risks would be reflected in an indication of value using an Income Approach or the prices of completed transactions. A buyer of the combined Systems would be subject to future rate regulation by the PUCW, and a common measure of potential economic depreciation can be reflected in the variance between asset costs and indications of value from an Income or Market Approach. Again, based on the appraisal principle of contribution, an asset’s value is no more than its contribution to value, not its cost to acquire or construct. The potential future rate base (possibly its purchase price) within a regulated market can have a material effect on value for a hypothetical buyer. However, while PUCW regulation protects a reasonable ROR on an approved rate base, there are still potential limits. The limits of perceived FMV relative to a Cost Approach are clearly illustrated in completed acquisitions of systems in states providing a purchase premiums. Buyers of systems with allowable purchase price adjustments (i.e., FMV) reflect actual purchase prices below the estimated value of replacing those systems at the time of acquisition. Therefore, an allowance for economic depreciation of forty-five percent (45%) applied to total net RCNLD has been included to account for external risk related to future regulation, customer acceptance of ownership changes, historical rate and charge regulation or lack thereof, the ability to generate excess revenues sufficient to support the physical asset value or improvements to physical assets, market conditions, development conditions, and many other factors external to the Systems. 4.2.11. Going Concern The value of a business property, including a utility system, is more than the mere cost to reproduce or replace less depreciation. Going concern value is an enhancement to the structure physical asset value because these assets are in use. Elements of going concern value include, but are not limited to, the time and cost of building the business, the establishment of services and customers, the exercise of managerial skill, the efficiency of the work force, and the records of the fully functioning, organized business. A going concern value of comparable systems generally ranges from zero to fifteen (0 to 15) percent of net assets. An alternative indication of going concern could be expressed as three (3) to six (6) months of net income, reflecting the time required to fully replace or reproduce the System and begin operating as a going concern. It is common to add going concern value to the Cost Approach. Therefore, an adjustment of fifteen (15%) of net costs was added to reflect a going concern value as used in the Cost Approach to indicate value of the Systems. 4.2.12. Total Indication of Value Using Cost Approach The summary of the RCNLD with additions, deductions, and allowances is shown on Table 4-2 (see Appendix D). Imperial Irrigation District / Electric System Valuation 33 © 2025 Raftelis Financial Consultants, Inc. Table 4-2: Total Reproduction Cost Component Electric System Natual Gas System RCNLD (Table 4.1) $ 164,500,000 $ 86,000,000 Land and Land Rights (10%) 16,450,000 8,600,000 Consumables, equipment, records (1.5%) 2,470,000 1,290,000 Deficiencies and Deferred - - Functional Depreciation - - Subtotal 183,420,000 95,890,000 External Depreciation (45%) (82,540,000) (43,150,000) Subtotal 100,880,000 52,740,000 Going Concern (15%) 15,130,000 7,910,000 Total $ 116,010,000 $ 60,650,000 Source: Raftelis Using a Cost Approach indicates a value of the combined Subject Interest at $176,660,000 and rounds to $177,000,000. The value indicated by this method is on a “control” and “marketable” basis with respect to the Subject Assets. Discounts for a lack of control (“DLOC”) and a DLOM reflected in the Subject Interest of this valuation will be considered and applied in a later section. 4.3. Income Approach The Income Approach is based on an appraisal principal of anticipation and the premise that the value of a property is the present value (“PV”) of the anticipated future economic benefits of owning the property22. The underlying principle in this approach is that buyers invest in or acquire ownership of assets with the expectation of receiving anticipated future economic benefits. This approach is relevant when the property being valued generates or is anticipated to generate economic benefits in the form of net income, profits, or cash flows that benefit a future owner. It is assumed (hypothetical) that future ownership of the Subject Assets as a going-concern would include revenues generated from the generation and delivery of electricity and provide economic benefits in the form of net income, profits, or cash flows. 22 Hitchner, James R. Financial Valuation: Applications and Models, 2011, 3rd Edition Imperial Irrigation District / Electric System Valuation 34 © 2025 Raftelis Financial Consultants, Inc. 4.3.1. Methods of Income Approach The Income Approach generally provides an indication of value by measuring a hypothetical buyer's risk against the potential economic benefits of an asset or system of assets, either tangible or intangible. When valuing a business enterprise, two methods are commonly used to provide an indication of value including 1) net income capitalization and 2) discounting future cash flow. Both methods use a formula to calculate the present value of a business enterprise based on future earning capacity or income or profits (i.e., economic benefits). Relevant to this assignment, a business enterprise’s total value (i.e., Enterprise Value) can be defined as the sum of total equity and total long-term debt23. In its simplest form, the capitalization method basically divides an expected single-period annual cash flow at the discretion of an owner as defined above by an appropriate capitalization rate (capitalization of cash flow or “CCF”). CCF provides a relatively non-complex method to use for valuing assets based on expected cash flow available to a hypothetical buyer. A comparatively lower capitalization rate would indicate less risk associated with an investment and a comparatively higher cap rate for a property might indicate more risk. A CCF method for income valuation reflects an approach based on historical revenue and expense performance trends, normalized or adjusted to reflect expected future financial performance24 . The discounting method is consistent but developed differently than the capitalization method. First, the income stream as defined above is projected over some future period of time, usually measured in years. Next, the discount rate, which reflects the risk of realizing this income over time, is developed using generally accepted methods. In addition to the income over time, a calculation is made to estimate what the asset or system of assets may be worth at the end of the projection period. This end-of-period value is also known as a reversion value, or residual value, or terminal value. The summation of these discounting calculations provides an indication of present value of what the owner interest in economic benefits is worth today (discounted cash flow or “DCF”). A DCF method reflects a specific set of conditions and assumptions into the future25 based on a continuation of current or historical financial performance. Neither method is more accurate but may be more appropriate depending on the stage of growth or life-cycle of the business enterprise. In fact, if growth of the economic benefits is constant, zero, or negligible, the results of a DCF or CCF method would be identical. When short-term and long-term growth are measurably different or annual rates of growth are expected to oscillate significantly, a DCF is capable of reflecting different growth rates annually. A capitalization method tends to be favored in a mature, low growth or low change environment. A DCF method tends to be more favored in a high growth or change environment. 4.3.2. Appropriate Economic Benefits Cash flow is generally recognized as a more appropriate measure of earning capacity when an indication of value should reflect the economic benefits available to owners as a return on their investment26. This is 23 Corporate Finance Institute 24 A single-period normalized pro forma may not reflect actual current or historical financial performance. 25 Multi-year projected pro forma. 26 Understanding Business Valuation: A Practical Guide to Valuing Small to Medium Sized Businesses, 2017, 5th Edition, AICPA Imperial Irrigation District / Electric System Valuation 35 © 2025 Raftelis Financial Consultants, Inc. particularly relevant when the subject of valuation is a controlling interest and the owner is able to effect changes in cash flow. It is important to note that the definition of “cash flow” in the context of valuation and appraisal differs from traditional accounting definitions27. Commonly accepted measures of economic benefit that can be capitalized or measured and discounted as cash flow over time include either cash flow to equity or cash flow to invested capital. Cash flow to equity measures the benefit specifically available to equity owners only after meeting all obligations to debt holders and reinvestment needs. Cash flow to invested capital represents the total after-tax cash flow available to all capital providers; that is stockholders (equity) and creditors (debt). Table 4-3 provides a comparison of the differences between net cash flow to equity and net cash flow to invested capital. Table 4-3: Comparison of Cash Flow Equity Cash Flow Invested Capital Cash Flow Gross Revenues Gross Revenues less Cost of Sales less Cost of Sales less Operating Expenses less Operating Expenses = Operating Income (EBIT) = Operating Income (EBIT) less Interest Expense = Pre-tax income less Income Taxes less Taxes on EBIT = Net Income = Net Operating Profit After Tax (NOPAT) plus Depreciation & Amortization plus Depreciation & Amortization = Gross Cash Flow = Gross Cash Flow + or - Working Capital + or - Working Capital less Capital Expenditures less Capital Expenditures + or - Change in Debt Principal = Equity Net Cash Flow = Invested Capital Net Cash Flow Because the purpose of this Valuation is the FMV of the total Subject Interest or Enterprise Value of the Subject Assets, the appropriate measure of economic benefit for the Income Approach is considered net cash flow to invested capital, which is defined as follows28 : Net Cash Flow = (EBIT x (1-Tax Rate)) + depreciation and amortization + changes in working capital requirements - capital expenditures 27 FASB Statement No. 95, Statement of Cash Flows 28 American Society of Appraisers, BV202: Introduction to Business Valuation – Income approach, ©2014 Imperial Irrigation District / Electric System Valuation 36 © 2025 Raftelis Financial Consultants, Inc. The value of tax adjusted EBIT is also referred to as Net Operating Profit After Tax (“NOPAT”). NOPAT represents a financial construct that measures a company’s profitability from its core operating activities after deducting income taxes but excluding the effects of financing decisions such as interest expense from debt29. 4.3.3. Appropriate Discount Rate (CCF and DCF) Discount rates and capitalization rates are related and are both a reflection of the relative risk and uncertainty of receiving a stream of economic benefits in the future. The difference between the two rates is the capitalization rate equals the discount rate less the expected growth rate (perpetual) of the stream of economic benefits. Because the economic benefits typically being measured are based on invested capital and include those available to pay back equity and debt (i.e., capital), discount rates can be closely aligned with “cost of capital” concepts, but they are not synonymous. Cost of capital refers to the required rate of return necessary to attract sufficient equity or debt for a specific investment. A discount rate is a concept of risk that is used to reflect the value of future cash flows to determine if they are greater than the cost30 of an investment made in the present day. Therefore, the cost of capital is the minimum rate required for investors and creditors, where the discount rate is a rate that meets or exceeds the cost of capital31, required to reflect future uncertainty. In other words, the market required returns on invested capital (i.e., equity and debt)32 generally reflect a current accepted level of anticipated risk but may not reflect the perceived uncertainty for a yet to be determined amount of invested capital or the ability of an investment to generate the economic benefits as expected. The cost of equity and debt, together with a distribution of equity and debt (i.e., capital structure) represents a weighted average cost of capital (“WACC”). Risk and uncertainty associated with the amount, timing, or both, of the economic benefits of an asset or system of assets, either tangible or intangible, are key considerations when measuring FMV because a hypothetical buyer is presumed to be reasonably risk-averse and would demand an adjustment to value for bearing the uncertainty inherent in potential future economic benefits. An indication of FMV should include a risk premium reflecting the amount that market participants would demand as compensation for the uncertainty inherent in the economic benefits. In some cases, determining the appropriate risk premium might be difficult or rely on subjective judgement. However, the degree of difficulty or subjectivity are not sufficient reasons to exclude a risk premium. Because the indication of FMV of the Subject Interest reflects total Enterprise Value of the Subject Assets, an appropriate discount rate to be applied using the Income Approach for this assignment was considered using both an industry standard approach of a WACC and an alternative risk assessment of the future economic benefits generated from invested capital. Most importantly, because we are considering FMV of the subject Assets from the perspective of a hypothetical buyer, it is not appropriate to use a specific WACC of the current owner or that is unique to a specific buyer. 29 NOPAT is also referred to as debt free cash flow 30 Total cost, including overhead, profit, and contingency. 31 Harvard Business Review: A Refresher on Cost of Capital, April 30, 2015 32 If the appropriate economic benefit is cash flow to equity, the discount rate should reflect the cost of equity (at minimum) and if the appropriate economic benefit is cash flow to invested capital, the discount rate should reflect the cost of equity and debt (at minimum) Imperial Irrigation District / Electric System Valuation 37 © 2025 Raftelis Financial Consultants, Inc. 4.3.4. WACC Consideration A discount rate considering WACC is comprised of long-term debt and common equity capital and the corresponding cost rates for debt and equity. The combination of a capital structure (i.e., share of equity and debt) and the appropriate cost rates of long-term and common equity generates an overall rate of return that would indicate a reasonable discount rate. It is generally accepted that allowable rates of return for regulated companies can be viewed as a reasonable benchmark for a minimum boundary of the overall cost of capital33. PUCW regulation is intended to provide the public with protection against unreasonable rates but at the same time provide investors with a reasonable return on capital investment. However, an approved ROR or WACC does not guarantee a utility will achieve relative earnings; rather, the approved ROR only allows for the opportunity to produce a fair return for its shareholders, maintain its facilities and service, and compete in the marketplace for capital. Actual earnings can vary significantly from approved earnings. Rates and charges approved by the PUCW required to generate net income only reflect a maximum ROR that a utility can achieve but is not guaranteed to realize. Regulated utility markets (i.e., water, wastewater, electric, natural gas) are not perfectly efficient. The process of applying for approval for increases of rates and charges is lengthy, complicated, and costly; and actual versus estimated future usage and consumption, fixed and variable expenses, capital needs, and interest rates can create significant variation in future financial performance after rates and charges are approved. As a result, it is more common that regulated utilities achieve an actual ROR that differs from approved rates – it is common that regulated utilities achieve an ROR exactly as approved. In addition, most publicly traded, investor-owned utility companies manage a portfolio of systems and can generally balance financial results relative to approved ROR across diverse financial performance. Based on my experience, education, and training, it is my opinion that a reasonable WACC for a utility system in the hands of a hypothetical buyer would include a distribution of 50% equity and 50% debt34. Using a reasonable return to equity of 9.75% and a 6.25% rate for long-term debt35 results in a general WACC of 8.00%, representing a reasonable indication of an appropriate discount rate. 4.3.5. Alternative Discount Rate Consideration An alternative discount rate for the purpose of this Report is estimated using a build-up method and is represented by the sum of 1) a risk-free market rate of return, 2) a futures risk discounting the value of the US dollar, 3) an industry risk based on industry specific betas, and 4) a specific risk for the Electric System or Natural Gas System. Table 4-4 provides a summary of the discount rate calculation. 33 Valuing a Business, Pratt, supra citation 125, p.248. 34 Actual distribution of equity and debt can vary widely among regulated and non-regulated public utility systems. It is generally accepted that a maximum debt ratio of 60% reflects a financially prudent investment. 35 Aaa Corporate Bond Yield plus 75 basis points (December 2025); St. Louis Federal Reserve Bank Imperial Irrigation District / Electric System Valuation 38 © 2025 Raftelis Financial Consultants, Inc. Table 4-4: Alternative Discount Rate Company Electric System Natural Gas System Notes Risk Free 4.91% 4.91% 30-year Treasury constant maturity yield Futures Risk 0.57% 0.57% Difference between 10-year and 3-month Treasury constant maturity Industry Risk 2.62% 2.74% Sum of risk-free, futures, and specific multiplied by Beta of 0.31 (Electric) or 0.47 (Natural Gas) Specific Risk 0.25% 0.50% Risk specific to the Subject Assets considering multiple factors Total 7.51% 8.79% Source: U.S. Federal Reserve Data A risk-free market rate of return is generally measured using long-term US Treasury yields on actively traded non-inflation-indexed issues adjusted to constant maturities. The yield on a 30-year Treasury constant maturity on June 30, 2026, was 4.91% and was used to reflect a risk-free market rate of return. Futures risk is reflected in the difference between long-term and short-term Treasury yields. The numerical difference in yields (constant maturity) between 10-year and 3-month Treasury issues was 0.57% on June 30, 2026. Industry risk is represented by the sum of the risk-free market rate of return, futures risk, and specific risk multiplied by an industry-specific Beta. A Beta value of less than 1.0 reflects low industry risk, and vice versa. As of January 2025, the Stern School of Business at New York University estimated Beta value for the Utility industry is 0.47 and specifically for Electric companies is 0.31. Finally, specific risk is an adjustment that requires significant professional judgment to capture the risk associated with, but not limited to the following factors: a) Future financial risk of the business enterprise b) Pricing risk for commodities used for production c) Operational characteristics of the business enterprise d) Key management and employee risk e) Size premium or discount of the business enterprise f) Market barriers or lack of service projection risk An individual business enterprises’ risk profile is unique and could change over time. Generally, specific risk of a utility system engaged in water and wastewater activities, in my opinion, would be considered in the range of 0% to 3.0%. As of the Valuation Date, based on my experience, education, and training, a specific risk of 0.25% was used to reflect consideration of risk specific to the Electric System and 0.50% was used to reflect consideration of risk specific to the Natural Gas System. Imperial Irrigation District / Electric System Valuation 39 © 2025 Raftelis Financial Consultants, Inc. 4.3.6. Selected Discount Rate Following the Great Lockdown, there was upward pressure on discount rates as a result of rising market interest rates. Beginning 2025, the risk-free rate alone has increased by roughly 380 basis points since 2020. The theory of discounting and risk would suggest that the market is reflecting higher levels of future risk and therefore would require higher rates of return for the same investment. A negative value of futures risk (i.e., an inverted yield curve) also suggests a higher probability of recession in the near-term. While a reduction of a market discount rate on the same cash flow would increase capitalized value, the inverted yield curve implies that the market expects a near-term decline in economic activity – reflecting the likelihood of lower cash flow or economic benefits on the same investment. Upward movement in market rates would be expected to reduce an enterprises’ market value, holding all else constant. However, because firms can strategically change the mix of equity and debt, it would be reasonable for WACC rates to remain constant in the short-term as market interest rates continue to rise. In addition, the market for equity in water-related stock remains above 2020 levels while there continues to be indications companies are underperforming approved return on investment. Therefore, considering both a WACC and a build-up of potential risks and uncertainty in future economic benefits and based on my experience, education, and training, a discount rate of seven and one-half percent (7.50%) was considered most appropriate for the Electric System and a discount rate of eight percent (8.00%) was considered most appropriate for the Natural Gas System, using general and specific market risk assumptions as of the Valuation Date. 4.3.7. Normalized Pro Forma While a hypothetical buyer may consider future alternative rates and charges for operating the Systems, current levels of economic benefit derived from operating the Subject Assets would likely be a minimum indication of value in a competitive market. For example, an MOU buyer is likely to adopt their existing rates and charges (if any), even if lower than the System’s current tariff structure. Where an IOU buyer is likely to, at minimum, keep existing rates or request higher tariffs. However, the motivations of an MOU or IOU buyer are strategic and should not affect an indication of FMV for the Seller, particularly by lowering rates and revenues after a transfer of the Subject Assets. For purposes of this analysis, a CCF method was utilized to reflect the current value of future economic benefits generated by the Systems. Expected revenues and expenses were adjusted (i.e., normalized) based on my training and experience, to include developing expected hypothetical cash flow to invested capital as discussed earlier. The development of the Income Approach using the CCF method required certain assumptions and considerations with regard to financial, economic, and operational conditions that may occur in the future. Although such assumptions and considerations are applied based on current and historical data pertaining to the Systems, to the extent that actual future conditions differ from those utilized herein, the results may vary from those in the analysis. The principal assumptions and considerations utilized in the CCF are summarized as follows: a) The Systems would be expected to generate normal economic benefits consistent with industry standards using selected Public Guideline Companies (see Appendix D), including economies of scale. Imperial Irrigation District / Electric System Valuation 40 © 2025 Raftelis Financial Consultants, Inc. b) A likely buyer would expect to either create economies-of-scale in operating the Systems or secure additional rate increases, or some combination of both, that allows for a reasonable rate of return from the Systems’ profitability. c) Gross revenues reflect an expected effective rate for electricity and natural gas consistent with historical trends. d) The long-term connection growth rate of the Systems is only one percent (1.00%) annually. e) The appropriate discount rates for the Electric System and Natural Gas System are 8.00% and 8.50%, respectively. Therefore, the appropriate capitalization rate for calculation of the terminal value is 6.50% for electric and 7.00% for natural gas. f) The Systems, if sold, would be expected to continue providing service to existing customers, with all current inherent efficiencies and inefficiencies. g) It is assumed that such average demand from existing customers will remain relatively constant and new customer growth in the future is consistent with recent historical periods. h) Annual depreciation expenses are based on 2.5% of the indication of value derived from the CCF, plus annual capital expenses. i) Interest costs on long-term debt are based on an equal distribution of equity and debt at 6.25%. j) The effective income tax rate is 15% of pre-tax income. k) Capital expenditure requirements are expected to equal 125% of annual depreciation. It has been assumed that the purchase of the Systems will generate economies of scale and create fixed cost efficiencies. The scale economies that are achievable in the operation of the Systems could arise from different aspects of utility operations such as increased customer rates, direct reduction of operating costs, more efficient management, allocation of future system costs across a larger base of customers, access to capital at lower costs, or lower rate or return incentives versus a rate of margin incentive. Holding all else constant, the hypothetical condition of reduced fixed cost efficiencies would be expected to result in a consistent indication of value regardless of how a hypothetical buyer achieves beneficial economies of scale (see Appendix D). [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 41 © 2025 Raftelis Financial Consultants, Inc. Table 4-5: Normalized Income Financial Component Electric System Natural Gas System Total Gross Revenues $100,360,000 $23,416,500 Operating Expenses 89,817,600 18,355,200 EBITDA 10,542,400 5,081,300 Depreciation and Amortization 3,412,500 1,912,500 EBIT $7,129,900 $3,168,800 Source: Raftelis Based on the assumptions listed above, the Systems would be expected to generate annual normalized net income or earnings before interest and taxes (“EBIT”) of $7,129,900 for the Electric System and $3,168,800 for the Natural Gas System, either created by cost reductions from operating efficiencies or future increases in customer rates (see Appendix D). 4.3.8. Cash Flow to Invested Capital The Income Approach is based on the premise that value of a financial resource is equal to the present value of the future cash flow and future reversionary value of the same. A widely practiced approach in business valuation is to adjust net operating profit after taxes (“NOPAT”) by adding back depreciation, amortization, interest, and deducting requirements for future capital expenditures and working capital, reflected cash flow to invested capital. The resulting net cash flow represents a benefit stream available to an owner with a controlling interest (whether equity or debt) in the business enterprise and total enterprise value can be calculated using a capitalization rate which is equal to the discount rate less future growth in economic benefits. Table 4-6 provides a summary of normalized (hypothetical) annual financial performance of the Systems (see Appendix D). [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 42 © 2025 Raftelis Financial Consultants, Inc. Table 4-6: Cash Flow to Invested Capital Company Electric System Natural Gas System EBIT (Table 4-4) $7,129,900 $3,168,800 (less): Income Tax Provision (1,499,900) (668,000) NOPAT 5,630,000 2,500,000 plus: Depreciation and Amortization 3,412,500 1,912,500 (less): Working Capital (111,600) (23,600) (less): Capital Investment (4,359,000) (2,391,000) plus: Interest Expenses (net of taxes) 2,689,000 1,088,000 Net Cash Flow (Debt Free) $7,080,900 $3,085,900 Source: Raftelis For the purpose of this Report, normalized NOPAT was adjusted by adding and subtracting specific items. It is standard to add values for depreciation and amortization and deduct requirements for working capital and for ongoing capital expenditures to maintain existing service. Finally, long-term debt interest payments were added to reflect the value of invested capital. 4.3.9. Capitalized Cash Flow Table 4-7 provides an indication of value based on a CCF method for the Subject Assets. Applying an appropriate capitalization rate on normalized cash flow implies a combined enterprise value of $153,021,218. No adjustment would be made for functional or external depreciation. Net economic benefits would be realized with all inherent efficiencies or inefficiencies, including those described in the allowance for functional or external depreciation. Capital expenditures used to adjust operating income are considered normal and no additional adjustment for deficiencies and deferred maintenance is required. Therefore, the CCF method indicates a value of the Subject Interest at $153,000,000 (rounded). [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 43 © 2025 Raftelis Financial Consultants, Inc. Table 4-7: Capitalized Cash Flow Company Electric System Natural Gas System Normalized Cash Flow After Adjustments $7,080,900 $3,085,900 Capitalization Rate 6.50% 7.00% Capitalized Value to Invested Capital 108,936,932 44,084,286 (less)/plus: Additional Adjustments - - Total Indication of Value $109,000,000 $44,000,000 Source: Raftelis. The value indicated by this method is on a “control” and “marketable” basis with respect to the net cash flow available to an owner of the Subject Assets. DLOC and a lack of marketability DLOM reflected in the Subject Interest of this valuation will be considered and applied in a later section. 4.4. Comparative Company or Sales (Market Approach) There are two methods for the Market Approach that are generally utilized when indicating the enterprise value of a business to include, 1.) the Completed Transactions Method and 2.) the Guideline Public Company Method. These methods are used to indicate value for both intangible and tangible assets or total enterprise value of a business based on the pricing multiples observed for similar assets or businesses that were sold (merger or acquisition) or have shares (fractions of ownership) of equity traded in a public stock exchange (e.g., NYSE, NASDAQ). The Completed Transactions Method is similar to the Guideline Public Company Method with respect to selecting a set of comparable assets or businesses as a basis of indicating a value for the Subject Assets. However, this method evaluates observed purchase prices at a specific transaction date of recent acquisitions or transactions36. Where the set of companies using the Public Company Method are only publicly traded, the set of comparable assets or businesses for the Completed Transactions method can reflect both publicly traded and privately held companies. 4.4.1. Completed Transactions Method The market for utility systems or asset investment and mergers and acquisitions (i.e., transactions) can include a variety of circumstances that affect observed enterprise values or purchase prices. The type of ownership (e.g., municipal-owned, investor-owned) between buyer and seller is a major factor that can affect both financial expectations and perceived market value. In appraisal practice, FMV is generally considered in the future and in the hands of the buyer, unless otherwise defined. Therefore, considering the economic 36 USPAP requires that comparable transactions be relevant and credible but does not establish time limits on considering transactions. Imperial Irrigation District / Electric System Valuation 44 © 2025 Raftelis Financial Consultants, Inc. motivation of the buyer in the future versus the seller in the past is an important part of applying the Completed Transactions Method. An IOU buyer will have different expectations about future value, and therefore what they are willing to pay for that value, than an MOU is currently performing or has performed in the past. The premise of the Completed Transactions Method is that transaction prices in fact are a reflection of the buyer’s perceived value in the future. However, when the seller, for example, is an MOU and a buyer is an IOU or vice versa, applying the market method must carefully consider the different economic and individual self-interests that likely affects a transaction value. Even in circumstances involving an MOU to MOU or IOU to IOU transaction, a buyer’s motivation or expectations about future value may not align with current or past performance. The most challenging aspect of applying the Completed Transactions Method is adjusting or normalizing transaction prices to account for a buyer’s strategic motivations. Under the FMV standard, a buyer is assumed to be a “financial” and not a “strategic” buyer37. A financial buyer is motivated by the economic benefits implicit in a transaction and available to any future owner; whereas a strategic buyer would potentially derive some specific benefit from a component of tangible or intangible asset that no other buyer would enjoy. 4.4.2. Guideline Public Company Method The Guideline Public Company Method evaluates the prices paid for publicly traded equities as the basis to indicate the value of the Subject Assets. The financial data available from public sources has been audited by registered independent accountants and prepared according to Generally Accepted Accounting Principles (“GAAP”). As a result, the information is reliable, consistent, and independently verified. This is a significant advantage since the alternative (Completed Transactions Method) is not generally subjected to the same transparency. The basic principle of the Guideline Public Company Method is that the prices of an individual share of stock (fraction of ownership) indicate the market value of the equity when applied to all outstanding shares (i.e., capitalized value). Capitalized value added to total long-term debt would indicate total enterprise value. Credible application of this method relies on the assumption that the selection of public companies is similar to the Subject Assets. Because the multiples are based on the market’s expectation of value in the equity pricing of a set of comparable companies as of the Valuation Date, the multiples produced are therefore indicative of the perceived FMV and risk associated with the Subject Assets. This limits adjustments to the multiples based on differences in size, risk, liquidity, and marketability of the selected public companies and economic activity, industry outlook, or regulatory factors inherent in the overall market. The overall market is assumed to rationally respond to economic, industry, and regulatory factors and therefore these issues are factored into the equity pricing. Adjustments for company size, risk, liquidity, and marketability are applied to raw financial multiples (see Sections 4.4.3 and 4.4.6) 37 A strategic buyer in the context of FMV would be a single buyer which could be the only buyer to derive a strategic advantage from an acquisition. The “strategy” to acquire these types of systems to leverage capacity, economies of scale, management expertise, etc. that would accrue to any buyer is considered a financial motivation. Imperial Irrigation District / Electric System Valuation 45 © 2025 Raftelis Financial Consultants, Inc. While the set of comparable companies used in the Guideline Public Company Method differ from the Subject Assets in their respective stages of development and size, they have comparable operational models and financial risks. Current performance from an equity value perspective also reflects the economic conditions of the industries in which the Subject Assets operate. Thus, the comparative analysis to the Subject Assets is based on the performance and characteristics of the sample as a whole rather than on any individual guideline company selected. 4.4.3. Electric Market Guideline Public Companies Selected Publicly traded companies operating primarily in the Electric supply market (NAICS 2211)38 that were selected for this method include the following: Evergy, Inc. (EVGR) Evergy, Inc., together with its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity in the United States. The company generates electricity through coal, landfill gas, uranium, and natural gas and oil sources, as well as solar, wind, and other renewable sources. It serves residences, commercial firms, industrials, municipalities, and other electric utilities. The company was incorporated in 2017 and is headquartered in Kansas City, Missouri. Duke Energy Corp. (DUK) Duke Energy Corporation, through its subsidiaries, operates as an energy company in the United States. The company operates through two segments: Electric Utilities and Infrastructure (EU&I); and Gas Utilities and Infrastructure (GU&I). The EU&I segment generates, transmits, distributes, and sells electricity to customers in the Southeast and Midwest regions. It generates electricity through coal, hydroelectric, natural gas, oil, renewables, and nuclear fuel. This segment also engages in the wholesale of electricity to municipalities, electric cooperative utilities, and other load-serving entities. The GU&I segment distributes natural gas to customers in the residential, commercial, industrial, and power generation natural gas sectors; and invests in pipeline transmission projects, renewable natural gas projects, and natural gas storage facilities. The company was formerly known as Duke Energy Holding Corp. and changed its name to Duke Energy Corporation in April 2006. Duke Energy Corporation was founded in 1904 and is headquartered in Charlotte, North Carolina. Dominion Energy (D) Dominion Energy, Inc. provides regulated electricity and natural gas services in the United States. It operates through Dominion Energy Virginia, Dominion Energy South Carolina, and Contracted Energy segments. The Dominion Energy Virginia segment engages in the generation, distribution, and transmission of electricity to approximately 2.8 million residential, commercial, industrial, and governmental customers in Virginia and North Carolina. The Dominion Energy South Carolina segment generates, transmits, and distributes electricity to approximately 0.8 million customers in the central, southern, and southwestern portions of South Carolina; and distributes natural gas to approximately 0.5 million residential, commercial, and industrial customers in South Carolina. The Contracted Energy segment is involved in the nonregulated 38 NAICS 2211 is part of the Utilities sector (NAICS 22) and includes businesses involved in the generation of electric energy, transmission of electricity from generation facilities to distribution systems, and distribution to end consumers Imperial Irrigation District / Electric System Valuation 46 © 2025 Raftelis Financial Consultants, Inc. long-term contracted renewable electric generation fleet and renewable natural gas facilities. As of December 31, 2025, the company's portfolio of assets included approximately 30.7 GW of electric generating capacity, 10,800 miles of electric transmission lines, and 80,400 miles of electric distribution lines. The company was formerly known as Dominion Resources, Inc. Dominion Energy, Inc. was incorporated in 1983 and is headquartered in Richmond, Virginia. Edison International (EIX) Edison International, through its subsidiaries, engages in the generation and distribution of electric power. The company supplies and delivers through its electrical infrastructure to an approximately 50,000 square- mile area of southern, central, and coastal California. It serves residential, commercial, industrial, public authorities, agricultural, street lighting, and other sectors. The company's distribution network consists of approximately 13,000 circuit-miles of lines ranging from 55 kV to 500 kV and approximately 80 transmission substations; and approximately 38,000 circuit-miles of overhead lines, approximately 32,000 circuit-miles of underground lines, and approximately 730 distribution substations. Edison International was founded in 1886 and is based in Rosemead, California. FirstEnergy Corp. (FE) FirstEnergy Corp., together with its subsidiaries, engages in the generation, distribution, and transmission of electricity in the United States. It operates through Distribution, Integrated, and Stand-Alone Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, wind, and solar power generating facilities. The company operates 252,959 distribution line miles and 24,157 transmission line miles, including overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits. The company serves customers in Ohio, Pennsylvania, New Jersey, West Virginia, Maryland, and New York. FirstEnergy Corp. was incorporated in 1996 and is headquartered in Akron, Ohio. NextEra Energy, Inc. (NEE) NextEra Energy, Inc., through its subsidiaries, generates, stores, transmits, distributes, and sells electric power to retail and wholesale customers in North America. It operates through Florida Power & Light Company (FPL) and NEER segments. The company generates electricity from wind, solar, nuclear, natural gas, and other clean energy assets. It also invests in generation, storage, transmission, and distribution facilities; owns, develops, constructs, manages, and operates generation facilities, including renewables, nuclear and natural gas, and battery storage facilities in the wholesale energy market in the United States and Canada, as well as electric and gas transmission assets, and natural gas pipelines; provides full energy and capacity requirement services; markets and trades in energy-related commodities; and participates in the production of natural gas, natural gas liquids, and oil. As of December 31, 2025, the company had approximately 35,963 megawatts of net generating capacity; approximately 93,000 circuit miles of transmission and distribution lines; and 932 substations. It serves approximately 12 million people through approximately 6 million customer accounts on the east and lower west coasts of Florida. The company was formerly known as FPL Group, Inc. and changed its name to NextEra Energy, Inc. in 2010. NextEra Energy, Inc. was founded in 1925 and is headquartered in Juno Beach, Florida. Imperial Irrigation District / Electric System Valuation 47 © 2025 Raftelis Financial Consultants, Inc. OGE Energy Corp. (OGE) OGE Energy Corp., through its subsidiaries, generates, transmits, distributes, and sells electric energy in the United States. It owns and operates coal-fired, natural gas-fired, wind-powered, and solar-powered generating assets. The company also provides retail electric services to approximately 913,000 customers that covers a service area of approximately 30,000 square miles. Additionally, it offers bill payment and electric construction services for residential and business sectors. OGE Energy Corp. was founded in 1902 and is based in Oklahoma City, Oklahoma. Portland General Electric Co. (POR) Portland General Electric Company, an integrated electric utility company, engages in the generation, wholesale purchase, transmission, distribution, and retail sale of electricity in the state of Oregon. It operates six thermal plants, four wind farms, and seven hydroelectric facilities. As of December 31, 2025, the company owned an electric transmission system consisting of 1,744 circuit miles, including 287 circuit miles of 500 kilovolt line, 414 circuit miles of 230 kilovolt line, and 577 miles of 115 kilovolt line; 466 miles of 57 kilovolt line; and served 960 thousand retail customers in 51 cities. It also has 29,251 circuit miles of distribution lines. Portland General Electric Company was founded in 1889 and is headquartered in Portland, Oregon. 4.4.4. Electric Industry Financial Profile Using 10-K Annual Reports (2025), Table 4-8 provides a summary of financial operating performance for the publicly traded Electric Industry companies selected: Table 4-8: Electric Market Metrics (as a Percentage of Gross Revenues) Metric EVRG DUK D EIX FE NEE OGE POR AVG Equity 57% 52% 55% 43% 51% 66% 63% 54% 55% EBITDA 45% 45% 39% 53% 25% 52% 42% 32% 46% EBIT 26% 26% 25% 36% 14% 29% 24% 16% 28% Income Tax 1% 2% 3% 7% 2% -3% 3% 2% 7% Interest 10% 11% 12% 8% 8% 16% 7% 7% 12% NOPAT 23% 23% 22% 32% 13% 25% 22% 14% 24% Depreciation 20% 19% 14% 17% 11% 24% 17% 16% 19% Capital -23% -23% -16% -20% -13% -28% -21% -20% -22% Net Cash Flow 19% 19% 19% 28% 10% 21% 18% 10% 21% Source: SEC, 10-K Reports (2025) While financial performance among the selected Guideline Public companies is relatively consistent, particularly operating profit (e.g., EBITDA, EBIT), annual results illustrate the benefits of using NOPAT as Imperial Irrigation District / Electric System Valuation 48 © 2025 Raftelis Financial Consultants, Inc. the basis for measuring economic benefits using the Income Approach. NOPAT (Net Operating Profit After Tax) represents the theoretical profit a company would generate from its core operations if it carried zero debt. Thus, by excluding interest expenses and the effects of financing decisions, NOPAT allows for an apples-to-apples comparisons between companies with different capital structures and provides a clearer view of operational performance. As Table 4-9 illustrates, most variance in financial performance is related to income tax liability and interest expenses. 4.4.5. Electric Industry Multiples Table 4-9 provides a summary of the raw financial multiples for the publicly traded Electric Industry companies selected: Table 4-9: Electric Market Enterprise Value Raw Multiples Electric Company Net Utility Plant (2) Gross Revenues Customers EBITDA EBIT Evergy (EVRG) 1.5x 6.0x 20,900x 13.2x 23.2x Duke Energy Corp (DUK) 1.5x 5.7x 18,080x 12.7x 22.1x Dominion Energy (D) 1.4x 6.2x 14,412x 15.9x 24.5x Edison International (EIX) 1.1x 3.6x 14,229x 6.9x 10.0x Firstenergy Corp (FE) 1.3x 3.5x 9,068x 14.1x 24.7x Nextera Energy (NEE) 1.8x 9.9x 45,757x 18.8x 34.2x OGE Energy Corp (OGE) 1.2x 4.8x 17,063x 11.5x 19.5x Portland General Electric Co (POR) 1.0x 3.0x 11,108x 9.4x 19.1x Weighted Average (1) 1.5x 6.0x 19,699x 13.6x 22.9x Source: SEC, 10-K Reports (2025). Notes: (1) Weighted average. (2) Net book value. The raw valuation multiples (Table 4-8) are derived using the stock prices of publicly traded companies on the Valuation Date that reflect operational and financial characteristics of the Electric Industry. However, the raw multiples may not be directly applicable for indicating value of the Subject Assets of the Electric System due to key differences in size, risk, liquidity, and marketability. As a result, a normalizing adjustment to the raw valuation multiples using the Guideline Public Company Method should be considered before applying to the characteristics of the Subject Assets for the Electric System. For the purpose of this Report, it is assumed that the major differences between the Subject Assets and selected Guideline Public Company performance relative to size, risk, liquidity, and marketability would be reflected in individual capitalization rates. Based on the Income Approach, a capitalization rate of six percent (6.0%) was identified as appropriate for the Subject Assets of the Electric System. To the degree that Guideline Public Company market values are a function of differences in size (total revenues), risk, liquidity, Imperial Irrigation District / Electric System Valuation 49 © 2025 Raftelis Financial Consultants, Inc. or marketability, it is reasonable to assume that these differences would be reflected in capitalization rates from the same NOPAT formula used to derive an indication of value for the Subject Assets for the Electric System. Table 4-10 provides a summary of the calculated adjustment factors for each Guideline Public Company. Table 4-10: Guideline Public Company Adjustment Factors Electric Company MVIC (1) (mils) Equity (2) Cash Flow (3) Implied Cap Rate (4) Adjustment Factor (5) Evergy (EVRG) $35,531 57% $1,110 3.1% 1.9 Duke Energy Corp (DUK) 189,839 52% 6,252 3.3% 1.8 Dominion Energy (D) 108,090 55% 3,387 3.1% 1.9 Edison International (EIX) 71,145 43% 5,577 7.8% 0.8 Firstenergy (FE) 54,407 51% 1,587 2.9% 2.1 Nextera Energy (NEE) 274,544 66% 5,717 2.1% 2.9 OGE Energy (OGE) 15,583 63% 588 3.8% 1.6 Portland General Electric (POR) 10,616 54% 368 3.5% 1.7 Source: SEC, Raftelis Notes: (1) In millions. Market Value to Invested Capital. (2) Equity share of capital structure. (3) NOPAT with adjustments. (4) Cash flow divided by MVIC. (5) Used to adjust raw multiples. Adjusting multiples in Guideline Public Company Method is essential to ensure an indication of value reflects the Subject Assets for the Electric System by removing potential distortions that occur as a result of differences in size, risk, liquidity, and marketability. Without these adjustments, the indication of value could be misleading. Table 4-11 provides a summary of adjusted multiples for the publicly traded Electric Industry companies selected. [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 50 © 2025 Raftelis Financial Consultants, Inc. Table 4-11: Electric Market Enterprise Value (EV) Adjusted Multiples Electric Company Net Utility Plant (2) Gross Revenues Customers EBITDA EBIT Evergy (EVRG) 0.8x 3.1x 10,885x 6.9x 12.1x Duke Energy Corp (DUK) 0.8x 3.1x 9,924x 7.0x 12.1x Dominion Energy (D) 0.7x 3.2x 7,527x 8.3x 12.8x Edison International (EIX) 1.5x 4.7x n/a 9.0x 13.1x Firstenergy Corp (FE) 0.6x 1.7x 4,407x 6.8x 12.0x NextEra Energy (NEE) 0.6x 3.4x n/a 6.5x 11.9x OGE Energy Corp (OGE) 0.8x 3.0x 10,729x 7.2x 12.3x Portland General Electric Co (POR) 0.6x 1.7x 6,423x 5.4x 11.1x Weighted Average (1) 0.8x 3.2x 5,744x 7.4x 12.3x Source: SEC, 10-K Reports (2025). Notes: (1) Weighted average. (2) Net book value. The multiples for EV based on customer counts for Edison International and NextEra Energy were considered extreme outliers that influenced the weighted average multiple and were excluded. All other adjusted multiples were considered reasonable and included in the indication of value for the Market Approach. 4.4.6. Indication of Value Using Electric Market Multiples Using the Guideline Public Company analysis indicates a total enterprise value of the Subject Interest of the Electric System of $122,372,377 and rounds to $122,000,000 (see Table 4-12). Calculated values ranged between $78,000,000 and $325,000,000 (rounded). [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 51 © 2025 Raftelis Financial Consultants, Inc. Table 4-12: Subject Interest Indication of Value Company Subject Assets EV Multiple Implied Value Gross Revenues $100,360,000 3.24x $325,166,400 Net Plant (Book Value) $48,100,000 0.79x $37,999,000 Customers (1) 14,471 5,744x $83,121,424 EBITDA $10,542,400 7.36x $77,592,064 EBIT $7,129,900 12.34x $87,982,996 Total Implied Value (2) $122,372,377 Source: Raftelis; Notes: (1) Customer counts from 2024 Annual Report. (2) Simple average. It is my opinion that excluding for the highest and lowest values or weighting the indication of values would provide a more appropriate indication of value. The Electric System currently buys wholesale energy from related companies that own and operate large energy generation facilities in different states. The resulting variable cost of wholesale energy to supply retail demand for the Electric System is relatively high compared with comparable electric systems. As a result, gross revenues do not likely reflect an appropriate metric to be used with Guideline Public Company multiples. Therefore, it is my opinion the only adjustments, whether weighting or excluding values, would be to exclude the indication of value using gross revenues and net book. Adjusting the implied value under this method results in an average $83,000,000 (rounded). Because equity ownership in publicly traded companies reflects fractional ownership, the value indicated by this method is on a minority control, marketable basis with respect to the Subject Assets. DLOC and a lack of marketability DLOM reflected in the Subject Interest of this valuation will be considered and applied in a later section. 4.4.7. Natural Gas Market Guideline Public Companies Selected Publicly traded companies operating primarily in the Natural Gas supply market (NAICS 2212)39 that were selected for this method include the following: Southwest Gas Holdings, Inc. (SWX) Southwest Gas Holdings, Inc., through its subsidiary, Southwest Gas Corporation, purchases, distributes, and transports natural gas for residential, commercial, and industrial customers in Arizona, Nevada, and California in the United States. The company offers tariff sales and transportation services. It also operates a pipeline transmission system, including an LNG storage facility. As of December 31, 2025, the company 39 NAICS 2212 is a 4-digit industry group under the broader Utilities sector (NAICS 22), specifically focused on the distribution of natural gas to residential, commercial, and industrial customers. This code encompasses companies that operate one or more domestic establishments engaged primarily in delivering natural gas through a network of pipelines. Imperial Irrigation District / Electric System Valuation 52 © 2025 Raftelis Financial Consultants, Inc. served approximately 2,281,000 customers with 1,224,000 in Arizona, 849,000 in Nevada, and 208,000 in California. Southwest Gas Holdings, Inc. was founded in 1931 and is headquartered in Las Vegas, Nevada. RGC Resources, Inc. (RGCO) RGC Resources, Inc., through its subsidiaries, operates as an energy services company. It sells and distributes natural gas to residential, commercial, and industrial customers in Roanoke, Virginia, and the surrounding localities. It operates approximately 1,184 miles of transmission and distribution pipeline; and a liquefied natural gas storage facility, as well as owns and operates eleven metering stations. The company also produces biogas. RGC Resources, Inc. was founded in 1883 and is based in Roanoke, Virginia. ONEOK, Inc. (OKE) ONEOK, Inc. operates as a midstream service provider of gathering, processing, fractionation, transportation, storage, and marine export services in the United States. It operates in four segments: Natural Gas Gathering and Processing; Natural Gas Liquids; Natural Gas Pipelines; and Refined Products and Crude. The company owns natural gas gathering pipelines and processing plants in the Mid-Continent, Permian Basin, North Texas, Gulf Coast region, and Rocky Mountain regions; and provides midstream services to producers of NGLs. It also owns NGL gathering and distribution pipelines, fractionation, terminal and storage facilities; and transports refined products, including gasoline, diesel fuel, aviation fuel, kerosene, and heating oil. In addition, the company transports and stores natural gas through regulated interstate and intrastate natural gas transmission pipelines, and natural gas storage facilities; it owns and operates a parking garage in downtown Tulsa, Oklahoma; and leases buildings, warehouses, office space, land, and equipment, including pipeline equipment, pipeline capacity, rail cars, and information technology equipment. Further, the company transports, stores, and distributes refined products, purity NGLs, and crude oil, as well as conducts commodity-related activities, including liquids blending and marketing activities. It serves integrated and independent exploration and production companies; other NGL and natural gas gathering and processing companies; crude oil and natural gas production companies; utilities; industrial companies; natural gasoline distributors; propane distributors; municipalities; ethanol producers; petrochemical, refining, and marketing companies; and diluent users, refineries, and exporters. ONEOK, Inc. was founded in 1906 and is headquartered in Tulsa, Oklahoma. Chesapeake Utilities Corp (CPK) Chesapeake Utilities Corporation operates as an energy delivery company in the United States. It operates through two segments: Regulated Energy and Unregulated Energy. The Regulated Energy segment engages in the natural gas distribution operations in central and southern Delaware, Maryland's eastern shore, and Florida; regulated natural gas transmission in the Delmarva Peninsula, Ohio, and Florida; and regulated electric distribution in northeast and northwest Florida. Its Unregulated Energy segment is involved in the propane operations in the Mid-Atlantic region, North Carolina, South Carolina, and Florida; unregulated natural gas transmission/supply operation in central and eastern Ohio; generation of electricity and steam; provision of compressed natural gas, liquefied natural gas, and renewable natural gas transportation and pipeline solutions primarily to utilities and pipelines in the United States; and sustainable energy investments. This segment also engages in the provision of other unregulated energy services, such as energy-related merchandise sale and heating, ventilation and air conditioning, and plumbing and electrical services. Chesapeake Utilities Corporation was founded in 1859 and is headquartered in Dover, Delaware. Imperial Irrigation District / Electric System Valuation 53 © 2025 Raftelis Financial Consultants, Inc. ONE Gas, Inc. (OGS) ONE Gas, Inc., together with its subsidiaries, operates as a regulated natural gas distribution utility company in the United States. The company offers natural gas distribution services. As of December 31, 2025, it owned 43,200 miles of distribution pipelines and 2,200 miles of transmission pipelines. The company serves approximately 2.3 million residential, commercial, industrial, transportation, and wholesale customers in Oklahoma, Kansas, and Texas. ONE Gas, Inc. was founded in 1906 and is headquartered in Tulsa, Oklahoma. Atmos Energy Corp. (ATO) Atmos Energy Corporation, together with its subsidiaries, engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through two segments, Distribution, and Pipeline and Storage. The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately 3.4 million residential, commercial, public authority, and industrial customers; and owned 76,000 miles of underground distribution and transmission mains. The Pipeline and Storage segment engages in the pipeline and storage operations. This segment transports natural gas for third parties and manages five underground storage facilities in Texas; provides ancillary services customary to the pipeline industry, including parking arrangements, lending, and inventory sales; and owned 5,700 miles of gas transmission lines. Atmos Energy Corporation was founded in 1906 and is based in Dallas, Texas. New Jersey Resources Corp. (NJR) New Jersey Resources Corporation, an energy services holding company, distributes natural gas. The company operates through four segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services, and Storage and Transportation. The Natural Gas Distribution segment offers regulated natural gas utility services to residential and commercial customers in Burlington, Middlesex, Monmouth, Morris, Ocean, and Sussex counties in New Jersey; provides capacity and storage management services; and participates in the off-system sales and capacity release markets. The Clean Energy Ventures segment invests in, owns, and operates clean energy projects, including commercial and residential solar installation situated in New Jersey, Rhode Island, New York, Connecticut, Michigan, Indiana, and Pennsylvania. The Energy Services segment maintains and transacts natural gas transportation and storage capacity contracts, as well as provides physical wholesale energy, retail energy and energy management services. The Storage and Transportation segment invests in energy-related ventures. It provides home services and other operations, such as heating, ventilation, and cooling services; sales and installation of appliances; electrical and generator service and installations; and plumbing repair and installation services, as well as holds commercial real estate properties. The company also offers shared administrative and financial services; and natural gas storage and transmission assets services. New Jersey Resources Corporation was founded in 1922 and is headquartered in Wall, New Jersey. UGI Corp. (UGI) UGI Corporation, together with its subsidiaries, engages in the distribution, storage, transportation, and marketing of energy products and related services in the United States and internationally. The company operates through four segments: Utilities, Midstream & Marketing, UGI International, and AmeriGas Propane. It distributes propane to approximately 801 million residential, commercial/industrial, motor fuel, Imperial Irrigation District / Electric System Valuation 54 © 2025 Raftelis Financial Consultants, Inc. agricultural, and wholesale customers. The company distributes liquefied petroleum gases (LPG) to residential, commercial, industrial, agricultural, wholesale and automobile fuel customers; and provides logistics, storage, and other services to third-party LPG distributors. In addition, it engages in the retail sale of natural gas, liquid fuels, and electricity to approximately 10,800 residential, commercial, and industrial customers. Further, the company distributes natural gas to approximately 694,000 customers in eastern and central Pennsylvania counties through its distribution system of approximately 12,700 miles of gas mains; and supplies electricity to approximately 62,900 customers in northeastern Pennsylvania through 2,700 miles of lines and 14 substations. Additionally, it operates electric generation facilities; natural gas liquefaction, storage, and vaporization facility; propane storage and propane-air mixing stations; and rail transshipment terminals. It manages natural gas pipeline and storage contracts; develops, owns, and operates pipelines, gathering infrastructure, and gas storage facilities. UGI Corporation was incorporated in 1882 and is headquartered in King of Prussia, Pennsylvania. 4.4.8. Natural Gas Market Operating Profile and Multiples Using 10-K Annual Reports (2025), Table 4-13 provides a summary of financial operating performance for the publicly traded Natural Gas companies selected: Table 4-13: Natural Gas Metrics Share of Gross Revenues Metric SWX RGCO OKE CPK OGS ATO NJR UGI AVG EBITDA 41% 30% 21% 37% 32% 47% 30% 22% 28% EBIT 24% 19% 17% 28% 19% 32% 21% 14% 20% Income Tax 5% 4% 3% 6% 2% 3% 3% 0% 3% Interest 10% 7% 5% 8% 6% 2% 3% 6% 6% NOPAT 19% 15% 13% 22% 15% 25% 17% 11% 16% Depreciation 17% 12% 5% 10% 13% 15% 9% 8% 9% Capital -26% -18% -7% -15% -20% -23% -13% -11% -14% Net Cash Flow 19% 14% 15% 23% 13% 19% 15% 12% 16% Source: SEC, 10-K Reports (2025). Notes: (1) Weighted average. (2) Interest on long-term debt. (3) Net Operating Profit After Taxes. (4) Annual depreciation and amortization expense. (5) Annual capital spending. Table 4-14 provides a summary of the raw financial multiples for the publicly traded Natural Gas Industry companies selected: [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 55 © 2025 Raftelis Financial Consultants, Inc. Table 4-14: Natural Gas Market Enterprise Value Raw Multiples Electric Company Net Utility Plant (2) Gross Revenues Customers EBITDA EBIT Southwest Gas Holdings (SWX) 1.0x 4.5x 3,838x 10.9x 18.5x RGC Resources (RGCO) 1.4x 3.7x 5,851x 12.2x 19.8x Oneok (OKE) 1.7x 2.4x 120,062x 11.0x 13.9x Chesapeake Utilities Corp (CPK) 1.6x 4.9x 9,714x 13.1x 17.8x One Gas (OGS) 1.1x 3.3x 3,524x 10.4x 17.6x Atmos Energy Corp (ATO) 1.5x 7.3x 10,508x 15.5x 22.8x New Jersey Resources Corp (NJR) 1.4x 3.8x 14,011x 12.9x 18.3x UGI Corp (UGI) 1.7x 2.0x 7,585x 9.2x 14.1x Weighted Average (1) 1.5x 3.0x 13,648x 11.6x 16.0x Source: SEC, 10-K Reports (2025). Notes: (1) Weighted average. (2) Net book value. The raw valuation multiples (Table 4-14) are derived using the stock prices of publicly traded companies on the Valuation Date that reflect operational and financial characteristics of the Natural Gas Industry. However, the raw multiples may not be directly applicable for indicating value of the Subject Assets for the Natural Gas System due to key differences in size, risk, liquidity, and marketability. As a result, a normalizing adjustment to the raw valuation multiples using the Guideline Public Company Method should be considered before applying to the characteristics of the Subject Assets for the Natural Gas System. For the purpose of this Report, it is assumed that the major differences between the Subject Assets for the Natural Gas System and selected Guideline Public Company performance relative to size, risk, liquidity, and marketability would be reflected in individual capitalization rates. Based on the Income Approach, a capitalization rate of seven percent (7.0%) was identified as appropriate for the Subject Assets of the Natural Gas System. To the degree that Guideline Public Company market values are a function of differences in size (total revenues), risk, liquidity, or marketability, it is reasonable to assume that these differences would be reflected in capitalization rates from the same NOPAT formula used to derive an indication of value for the Subject Assets for the Natural Gas System. Table 4-15 provides a summary of the calculated adjustment factors for each Guideline Public Company. [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 56 © 2025 Raftelis Financial Consultants, Inc. Table 4-15: Guideline Public Company Adjustment Factors Electric Company MVIC (1) (mils) Equity (2) Cash Flow (3) Implied Cap Rate (4) Adjustment Factor (5) Southwest Gas Holdings (SWX) $8,755 62% $367 4.2% 1.8 RGC Resources (RGCO) $366 60% $14 3.8% 2.0 Oneok (OKE) $79,241 58% $5,103 6.4% 1.2 Chesapeake Utilities Corp (CPK) $4,557 64% $212 4.7% 1.6 One Gas (OGS) $8,038 58% $312 3.9% 1.9 Atmos Energy Corp (ATO) $35,642 75% $939 2.6% 2.8 New Jersey Resources Corp (NJR) $8,252 56% $314 3.8% 2.0 UGI Corp (UGI) $15,002 53% $872 5.8% 1.3 Source: SEC, Raftelis Notes: (1) In millions. Market Value to Invested Capital. (2) Equity share of capital structure. (3) NOPAT with adjustments. (4) Cash flow divided by MVIC. (5) Used to adjust raw multiples. Adjusting multiples in Guideline Public Company Method is essential to ensure an indication of value reflects the Subject Assets for the Natural Gas System by removing potential distortions that occur as a result of differences in size, risk, liquidity, and marketability. Without these adjustments, the indication of value could be misleading. Table 4-16 provides a summary of adjusted multiples for the publicly traded Natural Gas Industry companies selected. [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 57 © 2025 Raftelis Financial Consultants, Inc. Table 4-16: Natural Gas Market Enterprise Value (EV) Adjusted Multiples Electric Company Net Utility Plant (2) Gross Revenues Customers EBITDA EBIT Southwest Gas Holdings (SWX) 0.6x 2.5x 2,147x 6.1x 10.3x RGC Resources (RGCO) 0.7x 1.9x 2,960x 6.2x 10.0x Oneok (OKE) 1.4x 2.0x n/a 9.4x 11.9x Chesapeake Utilities Corp (CPK) 1.0x 3.0x 6,040x 8.2x 11.1x One Gas (OGS) 0.6x 1.7x 1,827x 5.4x 9.1x Atmos Energy Corp (ATO) 0.5x 2.6x 3,689x 5.5x 8.0x New Jersey Resources Corp (NJR) 0.7x 1.9x 7,109x 6.5x 9.3x UGI Corp (UGI) 1.4x 1.6x 5,876x 7.2x 11.0x Weighted Average (1) 1.0x 2.0x 3,450x 7.9x 10.9x Source: SEC, 10-K Reports (2025). Notes: (1) Weighted average. (2) Net book value. The multiples for EV based on customer counts for Oneok were considered extreme outliers that influenced the weighted average multiple and were excluded. All other adjusted multiples were considered reasonable and included in the indication of value for the Market Approach. 4.4.9. Indication of Value Using Natural Gas Market Multiples Using the Guideline Public Company analysis (weighted average of multiple value) indicates a total enterprise value of the Subject Interest of $38,617,805 and rounds to $38,600,000 (see Table 4-17). Calculated values ranged between $23,200,000 and $47,700,000 (rounded). [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 58 © 2025 Raftelis Financial Consultants, Inc. Table 4-17: Natural Gas Indication of Value Company Subject Assets EV Multiple Implied Value Gross Revenues $23,416,500 2.03x $47,568,547 Net Plant (Book Value) $22,500,000 1.03x $23,238,752 Customers 13,821 3,450x $47,679,386 EBITDA $5,081,300 7.90x $40,151,204 EBIT $3,168,800 10.87x $34,451,135 Total Implied Value (1) $38,617,805 Source: Raftelis It is my opinion that excluding for the highest and lowest values or weighting the indication of values would not materially change the indication of value. There is less than 10% difference in the average indication of value when excluding the minimum and maximum values. Therefore, it is my opinion that additional adjustments, whether weighting or excluding values, do not materially affect the reasonableness of this method. Because equity ownership in publicly traded companies reflects fractional ownership, the value indicated by this method is on a minority control, marketable basis with respect to the Subject Assets. DLOC and a lack of marketability DLOM reflected in the Subject Interest of the Natural Gas System of this valuation will be considered and applied in a later section. [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 59 © 2025 Raftelis Financial Consultants, Inc. 5. Adjustments 5.1. Adjustments for Control The Subject Interest of this Report is the majority, marketable interest of the Subject Assets. Minority shareholding or ownership interests that lack the ability to control a business enterprise are considered to have less value on a pro rata basis than a controlling, majority interest. The only adjustment or DLOC is warranted for the Guideline Public Company Method since the basis for the indication of value is equity shares (minority control) of those enterprises included. Generally, a control premium can range from 20% to 40% resulting in a discount for lack of control equal to DLOC = 1 − 1 (1+𝑐𝑜𝑛𝑡𝑟𝑜𝑙 𝑝𝑟𝑒𝑚𝑖𝑢𝑚) or 16.7% to 28.6%. In my opinion, given the size of the transaction, an assumed control premium of 30% is reasonable to adjust the Guideline Public Company indication of value resulting in an implied DLOC of 23% using the Guideline Public Company Method. The balance of methodologies selected (i.e., Cost, Income, and Completed Transactions) reflect values on a controlling basis. In those analyses, net cash flow, net assets, and transfer of both tangible and intangible assets through acquisition are at the discretion of the owner and therefore reflect control of the business enterprise. 5.2. Adjustments for Lack of Marketability Ownership of a majority or minority interest in a closely held private company (such as the Company) or for assets or a system of assets in a special purpose market are not readily marketable and a DLOM may be appropriate for the determination of a Conclusion of Value of the Subject Assets. The IRS has addressed the issue of discounts for a lack of marketability in Revenue Ruling 77-287, by stating: “Securities traded on a public market are generally worth more to investors than those that are traded on a private market.” Theoretically, the use of a discount for a lack of marketability arises from the risks associated with a potential sale of the Subject Assets and the cost, effort, and time it takes to effectuate a transaction. This risk can generally be categorized in the following categories40: a) Uncertain time horizon to complete sale b) Cost to prepare for and execute sale c) Risk as to eventual sale price and future expenses d) Non-cash and deferred transaction proceeds e) Inability to borrow against the estimated value of assets 40 Chapter 7: Valuation Discounts and Premiums. Fundamentals, Techniques, & Theory. NACVA. 1995-2012 Imperial Irrigation District / Electric System Valuation 60 © 2025 Raftelis Financial Consultants, Inc. These categories can be viewed as the absence of a ready or existing market for the sale or purchase of the Subject Assets in contrast to publicly traded stock. Some common factors that have been identified as impacting marketability41 and applicable to the Subject Assets are as follows (see Table 5-1): Table 5-1: DLOM Considerations Subject Company Factor Observation (1) Dividend-paying history Not available Dividend Yield Not available Attractiveness of subject business Good Attractiveness of industry Very Good (stable industry demand and earnings) Prospects for a sale or public offering Very Good (current buyer has agreed to sale) Number of identifiable buyers Good Availability of access to reliable information Good- (limited transparency) Existing Management Good+ Earnings (relative to investor market) Very Good Revenue Good- Financial condition Good (as presented) Percent of share held by insiders 100% Percent of independent directors None (0%) Business risk Moderate Ease of transfer of assets Good+ The application of a DLOM in a Valuation is relatively subjective and can range from zero (0) to forty (40) percent. There are relative degrees of marketability that depend on a number of factors (as noted above) and circumstances for each valuation engagement and applied to each value methodology considered. Based on 41 Discount for Lack of Marketability: Job Aid for Valuation Professionals. IRS. September 2009 Imperial Irrigation District / Electric System Valuation 61 © 2025 Raftelis Financial Consultants, Inc. my training, prior valuation experience, and opinion, a DLOM of 10% was determined to be appropriate for this Valuation. 5.3. Other Adjustments Other adjustments, including the loss of key persons or thin management, were considered but not found appropriate for the Conclusion of Value. [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 62 © 2025 Raftelis Financial Consultants, Inc. THIS PAGE INTENTIONALLY LEFT BLANK Imperial Irrigation District / Electric System Valuation 63 © 2025 Raftelis Financial Consultants, Inc. 6. Reconciliation of Indicated Values 6.1. Electric System Value An Opinion of Value for the Subject Assets for the Electric System was indicated considering industry standard methods of valuation. These approaches analyze various aspects of the Subject Assets for the Electric System and even though none of these approaches or methods may be considered ideal on a standalone basis, the consideration of all three provides valuable input when considering other factors and the use of judgment in indicating value of the Subject Interest. Table 6-1 provides a summary of the indications of value for the Electric System considering the approaches and methods utilized in this Report and applying discounts for control and marketability. Table 6-1: Reconciliation of Electric System Value Valuation Method Approach Value Indicated (Rounded) DLOC DLOM Adjusted Value (Rounded) Reproduction Costs Cost $116,000,000 0% 10% $104,000,000 Capitalized Cash Flow (CCF) Income $109,000,000 0% 10% $98,000,000 Guideline Public Company Market $83,000,000 23% 10% $97,000,000 Source: Raftelis The indications of value for the Electric System derived in this Report are based on the scope of work as described, the nature of the Subject Assets, the Subject Interest being valued, the application of each valuation approach and method, and my experience, education, and training. 6.2. Natural Gas System Value An Opinion of Value for the Subject Assets for the Natural Gas System was also indicated considering industry standard methods of valuation. These approaches analyze various aspects of the Subject Assets for the Natural Gas System and even though none of these approaches or methods may be considered ideal on a standalone basis, the consideration of all three provides valuable input when considering other factors and the use of judgment in indicating value of the Subject Interest. Table 6-2 provides a summary of the indications of value for the Natural Gas System considering the approaches and methods utilized in this Report and applying discounts for control and marketability. [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 64 © 2025 Raftelis Financial Consultants, Inc. Table 6-2: Reconciliation of Natural Gas System Value Valuation Method Approach Value Indicated (Rounded) DLOC DLOM Adjusted Value (Rounded) Reproduction Costs Cost $61,000,000 0% 10% $55,000,000 Capitalized Cash Flow (CCF) Income $44,000,000 0% 10% $40,000,000 Guideline Public Company Market $38,600,000 23% 10% $45,100,000 Source: Raftelis The indications of value for the Natural Gas System derived in this Report are based on the scope of work as described, the nature of the Subject Assets, the Subject Interest being valued, the application of each valuation approach and method, and my experience, education, and training. 6.3. Reconciliation of Indications of Values In my opinion, an additional quantitative step of weighting the indications of value provided by each approach or method is not warranted. Based on the data and analyses contained in this Report, there is no indication that any one method provides a more precise indication of value from the perspective of a competitive market. Also, in my opinion, the quality and quantity of data available for each approach and method is sufficient to indicate FMV of the Electric System and each approach and method is relevant for the intent of this Report. It is also my opinion that a hypothetical seller and hypothetical buyer could rationally conclude that the Electric System has a FMV that ranges between $97,000,000 and $104,000,000 and that the Natural Gas System has a FMV that ranges between $40,000,000 and $55,000,000. The fact that a potential buyer would prefer the lower value and the seller would prefer the higher value would be a result of individual self-interest. Therefore, it is my opinion that a FMV for the Electric System portion of the Subject Assets is between $97,000,000 and $105,000,000, considering the indications of value provided by the approaches and methods described in this Report. Further, it is my opinion that a FMV for the Natural Gas System portion of the Subject Assets is between $40,000,000 and $55,000,000, considering the indications of value provided by the approaches and methods described in this Report. [Remainder of page intentionally blank] Imperial Irrigation District / Electric System Valuation 65 © 2025 Raftelis Financial Consultants, Inc. 7. Conclusion of Value I have performed the valuation services provided in this Valuation, as those terms are defined in USPAP and Report has been prepared in accordance with USPAP. The indications of value contained in this Report are expressed as a Conclusion of Value. This valuation was performed for the purpose of a potential transfer of assets and should not be used for any other purpose or by any other party for any purpose. Based on my analysis, as described in this Report, the Conclusion of Value of the Electric System portion of the Subject Assets as a going concern as of June 30, 2026, is between: Ninety-five Million and One-hundred Four Million Dollars ($97,000,000 and $104,000,000) In addition, based on my analysis, as described in this Report, the Conclusion of Value of the Natural Gas System portion of the Subject Assets as a going concern as of June 30, 2026, is between: Forty Million and Fifty-five Million Dollars ($40,000,000 and $55,000,000) This Conclusion of Value is for the Subject Assets described in more detail in this Report and does not include any excess real property. A real property appraisal was not included as a part of the scope of work for this Report. Further, these conclusions are subject to representations and certification found in Appendix A and to the Statement of Assumptions and Limiting Condition found in Appendix B. There is no obligation to update this Report or my Conclusion of Value for information that comes to my attention after the date of this Report. My experience and qualifications are detailed in Appendix C. Imperial Irrigation District / Electric System Valuation 66 © 2025 Raftelis Financial Consultants, Inc. THIS PAGE INTENTIONALLY LEFT BLANK SWL&P / Electric and Natural Gas Systems Appraisal A-1 2026© Raftelis Financial Consultants, Inc. APPENDIX A: Appraiser Certification SWL&P / Electric and Natural Gas Systems Appraisal A-2 2026© Raftelis Financial Consultants, Inc. THIS PAGE INTENTIONALLY LEFT BLANK SWL&P / Electric and Natural Gas Systems Appraisal A-3 2026© Raftelis Financial Consultants, Inc. Pursuant to USPAP Standards Rule 10-3 I certify that, to the best of my knowledge and belief: - The statements of fact contained in this Report are true and correct. - The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions (see Appendix B), and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. - I have no present of prospective interest in the Subject Assets and no personal interest with respect to the parties involved. - I have performed no services, as an appraiser or in any other capacity, regarding the Subject Assets within the three-year period immediately preceding acceptance of this engagement. - I have no bias with respect to the Subject Assets or the parties involved with this engagement. - Acceptance of this engagement was not contingent upon developing or reporting predetermined results. - My compensation for this Report is fee-based and is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the Conclusion of Value, or the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this Appraisal. - My analyses, opinions and conclusions were developed, and this Report has been prepared, in accordance with USPAP. - I have not made a personal inspection of the Subject Assets. I relied on the Consulting Engineer to conduct an inspection of the Subject Assets. - I did rely on work and opinions from an independent valuation specialist during the Appraisal engagement to include the Property Appraisal. In addition, Steven McDonald, CVA provided significant business and/or intangible asset appraisal assistance. Steven McDonald, CVA Principal/Chief Economist CVA® # 20639 SWL&P / Electric and Natural Gas Systems Appraisal A-4 2026© Raftelis Financial Consultants, Inc. THIS PAGE INTENTIONALLY LEFT BLANK SWL&P / Electric and Natural Gas Systems Appraisal B-1 2026© Raftelis Financial Consultants, Inc. APPENDIX B: Assumptions and Limiting Conditions SWL&P / Electric and Natural Gas Systems Appraisal B-2 2026© Raftelis Financial Consultants, Inc. THIS PAGE INTENTIONALLY LEFT BLANK SWL&P / Electric and Natural Gas Systems Appraisal B-3 2026© Raftelis Financial Consultants, Inc. Historical Impact of COVID-19 The development of this Report and the Conclusion of Value is based on observations that include an historical period that was significantly impacted by COVID-19. References to the impacts on historical financial and operating performance are included as necessary. In March 2020, the World Health Organization (“WHO”) declared the disease first detected in 2019 caused by the novel strain of coronavirus (“COVID-19”) a pandemic. The impact of COVID-19, from a social and economic perspective, was severe and reached every population around the world. As of the date of this Report, efforts to mitigate the impacts of COVID-19 have progressed significantly with a majority of the adult U.S. population receiving a vaccine, including multiple vaccine boosters, which have largely mitigated the severity of health impacts. However, a general consensus among health experts continues to indicate that the ease with which COVID-19 is transmitted, the emergence of new variants of COVID-19 both globally and domestically, and unequal access to vaccines in large parts of the world will likely result in COVID-19 shifting from a pandemic disease to an endemic one. An endemic disease remains persistently present but is generally manageable from a health perspective (e.g., seasonal flu virus). The analyses contained in this Report are therefore based on an assumption of a COVID-19 endemic existing today and in the future. Under this scenario, the presence of a COVID-19 endemic is not expected to create additional severe social and economic restrictions in the U.S. similar to the events responsible for the recession in 2020. Effective vaccinations available to the entire population in the U.S. are expected to continue and certain market trends accelerated during the COVID-19 pandemic are expected to remain, such as in-store pickup, contactless delivery, and remote work arrangements, which will continue to mitigate the potential for future impacts of COVID-19 as experienced in 2020. The proactive response within many consumer industries (e.g., retail, entertainment, food and beverage), including both operational and financial, are expected to continue to mitigate severe COVID-19 impacts. Even with a COVID-19 endemic remaining in the future, there is a reasonable expectation that social and economic functions will remain “normal”, with the possible exception of a continued presence of voluntary masks in public and certain operational and capacity modifications remaining permanent in some industries. All of which would not be expected to disrupt ongoing business, holding everything else constant. “Normal” activity implies that COVID-19 would be a manageable health issue. However, the expected performance of national, state, and local economies would be materially impacted in the event of a future recurrence of the severe social and economic restrictions that occurred in 2020, which could material affect the Conclusion of Value included in this Report. Additional Assumptions and Limiting Conditions include: 1. The Conclusion of Value contained in this Report did rely on a hypothetical condition (see Section 1.16). 2. All other assumptions are listed in the description of the analyses used to indicate value in the Subject Assets, some of which are extraordinary assumptions. SWL&P / Electric and Natural Gas Systems Appraisal B-4 2026© Raftelis Financial Consultants, Inc. 3. No responsibility is assumed for legal matters, nor is any opinion on the title rendered herewith. It is assumed that the title to the property is good and marketable. 4. All existing liens and encumbrances, if any, have been disregarded and it is assumed that the property is free and clear. 5. The appraiser has made no survey of the property and, unless specifically stated, assumed there are not encroachments involved. 6. The sketches and maps in this Report are included to assist the reader in visualizing the property and are not necessarily to scale or depict all items above or below ground. 7. It is assumed that the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless non-compliance is stated, defined, and considered in this Report. 8. It is assumed that all applicable zoning and land use regulations and restrictions have been complied with, unless non-conformity has been stated, defined, and considered in this Report. 9. It is assumed that all required permits, licenses, certificates of occupancy, consents, easements, and other legislative or administrative authority from any local, state, or national government or public entity or organization have been or can be obtained or renewed and transferred with minimal effort for any use on which the value estimate in this Report is based. 10. Proposed improvements, if any, on or off-site, as well as any repairs required, are considered for purposes of this appraisal to be completed in a good and workmanlike manner. 11. Furnishings, mobile equipment, tools, or business furniture and utility management items indicated and typically considered as part of real estate and/or major personal property items have been aggregated and valued as general plant. 12. Responsible ownership and competent management are assumed. 13. It is assumed that there are no hidden or unapparent conditions of the property, soil, or structures which would render it more or less valuable. Further, unless otherwise stated in this Report, the existence of hazardous material or any other environmental problems or conditions, which may or may not be present on the property, was not observed or disclosed. We have no knowledge of the existence of such materials or conditions on or in such close proximity that it would cause a loss in value. We, however, did not search to detect such substances or conditions. The presence of substances such as asbestos, urea formaldehyde foam insulation, radon, or other potentially hazardous materials which could have an adverse effect on the value of the property were not observed or detected in our inspections. The value estimate is predicated on the assumption that there is no such material or condition on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or knowledge required to discover them. 14. No responsibility is assumed for the absence or presence of any endangered species on this property. This appraisal assumes that there are no endangered species which would prevent, restrict, or adversely affect any transfer, development, or improvement of the Subject Assets. 15. No impact studies and/or special market, or feasibility analysis or studies have been required or made unless otherwise specified. We reserve the right to alter, amend, revise, or rescind any of the statements, findings, opinion, value estimates, or conclusions contained herein if any of these studies require it. SWL&P / Electric and Natural Gas Systems Appraisal B-5 2026© Raftelis Financial Consultants, Inc. 16. Certain data used in compiling this report was furnished from sources which we consider reliable; however, we do not guarantee the correctness of such data, although so far as possible, we have checked and/or verified the same and believe it to be accurate. 17. We have accepted as correct and reliable all information provided by the owner and owner’s counsel, or the owner’s agents, which was used in the preparation of this Report. All data came from sources deemed reliable, but no liability is assumed for omissions or inaccuracies that subsequently may be disclosed in any data used in the completion of the appraisal. 18. Possession of this Report, or copy thereof, does not carry with it the right of publication, nor may it be used for any purpose by anyone except for the client without the prior written consent of the client and in any event, only in it’s entirely and with proper qualification. 19. Neither all nor any part of the contents of this report shall be conveyed to the public through advertising, public relations, news, sales, or other media without the written consent and approval of the author excepting appropriate Freedom of Information Act requests. 20. All applicable agreements, customer agreements, developer agreements or other utility-related agreements are assumed to be fully disclosed or provided and therefore have been considered as part of this Report. 21. Acceptance of, and/or use of, this Report constitutes acceptance of the above conditions and assumptions. [Remaining page intentionally blank SWL&P / Electric and Natural Gas Systems Appraisal B-6 2026© Raftelis Financial Consultants, Inc. ] THIS PAGE INTENTIONALLY LEFT BLANK SWL&P / Electric and Natural Gas Systems Appraisal D-1 2026© Raftelis Financial Consultants, Inc. APPENDIX C: Qualifications SWL&P / Electric and Natural Gas Systems Appraisal D-2 2026© Raftelis Financial Consultants, Inc. THIS PAGE INTENTIONALLY LEFT BLANK SWL&P / Electric and Natural Gas Systems Appraisal D-3 2026© Raftelis Financial Consultants, Inc. Statement of Qualifications Steven McDonald, CVA, Principal/Chief Economist, Raftelis Mr. McDonald is an Economist, Researcher, and Strategist with nearly 35 years of experience, almost equally divided between consulting assignments and corporate roles. He specializes in quantitative and qualitative research and analysis to include Business Valuation and Appraisal (CVA©#20639), economic analyses and econometrics, cost-benefit analyses, market analysis, and short- and long-term financial analyses. Over this time, Mr. McDonald has developed a high degree of technical expertise balanced with strategic management experience from high-profile, innovative projects, both domestically and internationally, focused on economic and financial issues across a broad range of industries. Altogether, corporate roles and consulting assignments, along with managing work efforts across no less than four business cycles, have provided Mr. McDonald the opportunity to develop strong expertise in the field of economics and understanding of enterprise business value. Mr. McDonald strives to maintain active participation as a member of the NACVA and is currently the President of the NACVA Florida North Chapter and chairman of the NACVA Ethics Oversight Board (EOB). Mr. McDonald has also been an Adjunct Instructor in Economics for more than 10 years. Specialties: - Business Valuation and Appraisal - Economic and Fiscal Impact Analysis - Market and Financial Modeling and Analysis - Economic Forecasting - Cost-Benefit Analysis Professional History: - Principal/Chief Economist, Raftelis (2021-present) - Chief Economist, GAI Consultants (2012-2021) - Manager, Revenue Management, The Disney Company (2008-2012) - Economist, RERC (2004–2008) - Economist, Burton & Associates (2002–2004) - Director, FP&A, CHEP International (1999–2002) - Manager, Quantitative Analysis, The Disney Company (1996–1999) - Economist, Fishkind & Associates (1990–1996) Education: - Bachelor of Arts in Public Policy – University of Central Florida (1988) - Master of Arts in Applied Economics – University of Central Florida (1990) Professional Affiliations: - National Association of Certified Valuators and Analysts (NACVA) - Chairman NACVA EOB - President, NACVA Florida North Chapter - Prasada Trust Administrative Agent Business Valuation Experience: Business Valuation services have been provided for purposes of insurance, litigation, and purchase and sale transactions (M&A), generally resulting in a detailed, summary, or oral appraisal or value reports. A Business Valuation, as defined by Uniform Standards of Professional Appraisal Practice (USPAP) Standard 9, provides a specific value based on purpose and use of the appraisal or calculation. All valuation services provided SWL&P / Electric and Natural Gas Systems Appraisal D-4 2026© Raftelis Financial Consultants, Inc. conform with the Professional Standards of the NACVA. Professional experience with providing Business Valuation services has included the following: - Florida MOU (Service Area), 2025 – Asset Transaction - Arizona MOU (Water), 2025 – Asset Transaction - Wisconsin IOU (Water, Natural Gas, Electric), 2025 – Asset Transaction - California IOU (Electric), 2025 – Asset Transaction - North Carolina IOU (Water and Wastewater), 2025 – Asset Transaction - Texas IOU (Water and Wastewater), 2025 – Asset Transaction - Wisconsin IOU (Natural Gas), 2024 – Asset Transaction - Waste Disposal Company (Waste-to-Energy), 2024 – Asset Transaction - Florida IOU (Water/Sewer), 2024 – Asset Transfer - South Carolina Public Utility (Water/Sewer), 2024 – Asset Transaction - Alabama Water Rights, 2024 – Lender Collateral - Florida Public Utility (Water), 2024 – Asset Transaction - Tennessee Public Utility (Water), 2023 – Asset Transaction - Florida Public Utility (Waste-to-Energy), 2023 – Asset Transaction - Florida IOU (Water), 2023 – Asset Transaction - Florida Public Utility (Propane), 2023 – Asset Transaction - Tennessee Public Utility (Water), 2023 – Asset Transaction - California Public Utility (Water), 2023 – Asset Transaction - California Public Utility (Solid Wate), 2023 – Asset Transaction - North Carolina Public Utility (Water), 2023 – Asset Transaction - Texas IOU (Water), 2023 – Asset Transaction - South Carolina Public Utility (Electric), 2023 – Asset Transaction - South Carolina Public Utility (Water), 2023 – Asset Transaction - South Carolina Public Utility (Sewer), 2023 – Asset Transaction - Texas IOU (Water), 2023 – Asset Transaction - North Carolina IOU (Sewer), 2022 – Asset Transaction - North Carolina IOU (Sewer), 2022 – Asset Transaction - Florida Public Utility (Service Area Rights), 2022 – Asset Transaction - Florida IOU (Water), 2022 – Asset Transaction - Arizona (7 systems) Utility, 2022 (Water) – Asset Transaction - South Carolina Utility, 2022 (Water) – Asset Transaction - Virginia Public Utility, 2022 (Water and Sewer) – Divestiture - South Carolina Public Utility, 2022 (Water) – Asset Transaction - North Carolina Public Utility, 2022 (Water) – Asset Transaction - Ohio Public Utility, 2022 (Water) – Asset Transaction - South Carolina Public Utility, 2021 (Wastewater) – Asset Transaction - Florida Public Utility, 2021 (Water) – Asset Transaction - Florida Public Utility, 2021 (Natural Gas) – Asset Transaction - Pennsylvania Public Utility, 2021 (Sewer) – Asset Transaction - Texas IOU (Water), 2021 – Asset Transaction - Florida Public Utility, 2021 (Service Area) – Litigation - Pennsylvania Public Utility, 2021 (Sewer) – IOU Acquisition - California Water Market, 2021 (Credits) – Asset Transaction - Pennsylvania Public Utility, 2021 (Sewer) – IOU Acquisition - Florida Public Utility, 2020 (Water) – Asset Transaction - Florida Public Utility, 2020 (Water) – Foreclosure - Florida Public Utility, 2019 (Water and Wastewater) –Business Damages SWL&P / Electric and Natural Gas Systems Appraisal D-5 2026© Raftelis Financial Consultants, Inc. - Florida Public Utility, 2019 (Water and Wastewater) –Acquisition - Florida Public Utility, 2018 (Chilled Water) – Acquisition - California Private Discharge Capacity, 2018 (Wastewater) –Acquisition - Tennessee Public Utility, 2018 (Electric) – Acquisition - Florida IOU, 2017 (Water-Sewer) – Acquisition - Florida IOU, 2017 (Electric) – Tangible Property Tax - Ohio IOU, 2017 (Water) – Financing - Florida Public Utility, 2017 (Water Storage) – Acquisition - South Carolina Public Utility, 2016 (Water) – Acquisition - Ohio Public Utility, 2016 (Water-Sewer) – Acquisition - Mississippi Certificate of Public Conveyance and Necessity, 2016 (Water) – Acquisition - Florida IOU, 2016 (Electric) – Tangible Property Tax - Florida IOU, 2015 (Electric) – Acquisition Revenue Study and Public Bond Annual Reports: Multiple revenue feasibility studies and economic analyses supporting public and private debt financing have been provided for a wide range of existing and new developments. In total, this experience is directly associated with more than $2 billion in public financial debt proceeds used to support various infrastructure investments in multiple states. Recent experience with providing Bond Revenue Reports has included the following: - Erie (PA) CRIZ Revenue Study - Lake Martin (AL) Improvement District Revenue Study - Mattoon Illinois Phase II Retail Bond Revenue Study - Michigan (Confidential) TIF Bond Revenue Study - Provo Utah (Confidential) TIF Bond Revenue Study - Missouri (Confidential) CID (Sales Tax), TID (Sales Tax), and TIF Bond Revenue Study - Alabama (Confidential) Improvement District Assessment Bond Revenue Study - Allentown (PA) ANIZDA Revenue Study - Muskegon Michigan Property Tax bond Revenue Study - Mattoon Illinois Retail Bond Revenue Study - Prasada Retail Bond Revenue Study - FGUA – Lehigh Acres Bond Indenture Report - FGUA – North Fort Myers Bond Indenture Report - Lincoln Nebraska Annual Report - Bellmont Promenade Bond Revenue Study - Outlets at Sparks Bond Revenue Study - Hutto Bond Revenue Study - Southpointe Pavilion Bond Revenue Study - Dodge City Bond Revenue Study - Pavilion at Durbin Park Bond Revenue Study - FGUA – Consolidated Bond Indenture Report - Village West Bond Revenue Study - Bay Laurel Center CDD – Annual Report - Village West-American Royal Revenue Study - Prairie Center Development Revenue Bonds - The Pinnacle Sales Tax Revenue Study - MidCities Special Revenue Bonds - Belton Gateway Bond Revenue Study - The Pinnacle Bond Revenue Study SWL&P / Electric and Natural Gas Systems Appraisal D-6 2026© Raftelis Financial Consultants, Inc. Economic and Fiscal Analysis Experience: Economic Development as a concept is measured in jobs and income but most importantly reflects a community’s overall quality of life that is only maintained with sufficient public (fiscal) resources to meet existing and future needs. Therefore, understanding economic and fiscal outcomes assists communities with assessing the potential benefits on concepts of an overall “quality of life” – cost-benefit, employment growth, the nature of jobs, economic welfare, community income and wealth, and public infrastructure and services. Economic and Fiscal Analyses and services have been provided for more than 30 years; experience has included the following: - Economic Impact of Charlote Water - Economic Impact of Columbus Power and Water - Virgin Islands Environmental User Fee Economic Impact Analysis, U.S. Virgin Islands - Economic Impact of Protecting the Florida Manatee - U.S. Rental Car Economic and Market Demand, National Car Rental - Gulf War Economic Impact on Rental Car Industry, National Car Rental - European Banana Economic and Market Demand, CHEP Europe - Orlando Parks and Recreation Economic Benefits - SED (Florida) Community Impacts - St Lucie (Florida) Water Reclamation Facility Economic Impacts - Rose Arts (Florida) Fiscal Impacts - Miami New Drama Economic Impact Analysis - Miami-Dade Pike Transit Oriented Development Economic Impact Analysis - Economic and Fiscal Impact Analyses (continued) - Apopka (Florida) Economic and Fiscal Analysis - Marion County (Florida) Aquatics Center Economic and Fiscal Analysis - Reunion Resort (Florida) Fiscal Impact Analysis - Amelia Island (Florida) Development Economic and Fiscal Impact Analysis - Neptune Road (Florida) Economic and Fiscal Impact Analysis - IOC Pompano Beach (Florida) Economic Impact - Sorrento Pines (Florida) Fiscal Impact Analysis - New Smyrna (Florida) Beach Fiscal Analysis - Downtown Daytona (Florida) Fiscal Impact Analysis - Tohoqua (Florida) Fiscal Impact Analysis - Albert Whitted (Florida) Airport Economic Benefit Analysis - Gaylord Palms (Florida) Fiscal Impact Analysis - North End Charlotte (North Carolina) Economic and Fiscal Impact Analysis - Maitland West (Florida) Fiscal Impact Analysis - River District (North Carolina) Fiscal Impact Analysis - Florida Hospital Fiscal & Economic Analysis - Kendall Town Center (Florida) Economic Analysis - Miami (Florida) Icebox Café Economic Analysis - Osceola (Florida) Fiscal Impact Analysis - Melbourne (Florida) Economic Impact Analysis - Kansas State University Economic Impact Analysis - Miami-Dade (Florida) Fiscal Analysis - CEMEX (Florida) Facility Economic Analysis - University of Central Florida Downtown Economic Impact Analysis - US 17-92 Flyover (Florida) Modification Economic Analysis - Miami Uptown (Florida) Economic Analysis SWL&P / Electric and Natural Gas Systems Appraisal D-7 2026© Raftelis Financial Consultants, Inc. - Ocean Cadillac (Florida) Economic Analysis - Economic Impact of Spring Training Facility, New York Yankees (Florida) - Biomedical Cluster Economic and Fiscal Impacts at Lake Nona, Tavistock (Florida) - Economic Development Analysis, Piedmont Triad and City of Havelock (North Carolina) Market Studies and Financial Analyses Financial modeling and pro forma development have been provided across a broad range of concepts with the common goals of understanding financial feasibility, profit maximization, or estimating expected return on investment. Professional experience with providing Financial Modeling and Analyses has included the following: - Cocoa Hotel Market Study - St Cloud Annexation Analysis - Financial Modeling – Power System Agreement, City of St Cloud - Zephyrhills Development Pro Forma and Financial Modeling - SR-200 Development Pro Forma and Financial Modeling, Nassau County - LaVilla Development Pro Forma and Financial Modeling, Jacksonville - Fly Ash Pro Forma and Financial Modeling, Dominion Power, Virginia - Kissimmee CRA Long-term Financial Modeling - Santa Fe Hospital Development Financial Modeling - Affordable Housing Linkage Fee Financial Modeling, City of Orlando - Bonus Density Incentives and Financial Modeling; Affordable Housing, City of Orlando - Annexation Analysis and Financial Impact Model, City of Bradenton - Inclusionary Zoning and Financial Modeling; Workforce Housing, Miami-Dade County - Public Safety Financial Modeling, Putnam County and City of Palatka - Optimal Development and Profitability Modeling, Miami-Dade County - Scrub Jay Mitigation Financial Modeling, Brevard County - Beach Restoration Financial Model, Amelia Island Plantation - Fire Impact Fees and Financial Modeling, Osceola County - Orlando/Orange County Fire Territorial Agreement and Financial Modeling, City of Orlando - Price and Inventory Optimization, Walt Disney - Price Elasticity Analysis and Profit Optimization Modeling, Walt Disney - Environmental User Fee and Financial Modeling, U.S. Virgin Islands SWL&P / Electric and Natural Gas Systems Appraisal D-8 2026© Raftelis Financial Consultants, Inc. THIS PAGE INTENTIONALLY LEFT BLANK SWL&P / Electric and Natural Gas Systems Appraisal D-1 2026© Raftelis Financial Consultants, Inc. APPENDIX D: Cost, Income, and Market Approaches SWL&P / Electric and Natural Gas Systems Appraisal D-2 2026© Raftelis Financial Consultants, Inc. THIS PAGE INTENTIONALLY LEFT BLANK SWL&P / Electric and Natural Gas Systems Appraisal D-3 2026© Raftelis Financial Consultants, Inc. Reproduction Cost Approach ELECTRIC NATURAL GAS TOTAL Original Cost (OC) 2008 35,209,584$ 21,381,584$ 56,591,168$ Net Change 58,697,617 28,159,874 86,857,491 2024 93,907,201$ 49,541,458$ 143,448,659$ CAGR 6.3% 5.4% 6.0% Depreciation 2008 16,609,333$ 11,707,166$ 28,316,499$ Net Change 29,788,050 15,729,794 45,517,844 2024 46,397,383$ 27,436,960$ 73,834,343$ Net Cost (OCLD) 2008 18,600,251$ 9,674,418$ 28,274,669$ Net Change 28,909,567 12,430,080 41,339,647 2024 47,509,818$ 22,104,498$ 69,614,316$ CAGR 6.0% 5.3% 5.8% Annual Cost Escalation 5.25% 5.00% Reproduction Cost (RCN) 289,500,000$ 167,800,000$ 457,300,000$ Depreciation (128,700,000) (83,600,000) (212,300,000) RCNLD 160,800,000$ 84,200,000$ 245,000,000$ RCNLD (Valuation Date Adjustment) 164,500,000$ 86,000,000$ 250,500,000$ Land 16,450,000 8,600,000 25,050,000 Consumables, etc. 2,470,000 1,290,000 3,760,000 Subtotal 183,420,000 95,890,000 279,310,000 Economic Obsolescence (82,540,000) (43,150,000) (125,690,000) Subtotal 100,880,000 52,740,000 153,620,000 Going concern 15,130,000 7,910,000 23,040,000 Net Total 116,010,000$ 60,650,000$ 176,660,000$ SWL&P / Electric and Natural Gas Systems Appraisal D-4 2026© Raftelis Financial Consultants, Inc. Electric System Income (CCF) Approach Line No. Electric Capitalized Cash Flow (CCF) Normalized Share 1 System Revenues 2 Charges for Services 96,500,000$ 96.2% 3 Miscellaneous Services 3,860,000 4.0% 4 Total 100,360,000$ 100.0% 5 6 Expenses 7 Fixed Operating 8,925,000$ 8.9% 8 Variable Operating 80,325,000 80.0% 9 Fixed cost efficiencies (2,945,000) -2.9% 10 Taxes Other Than Income 3,512,600 3.5% 11 Depreciation and amortization 3,412,500 3.4% 12 Total 93,230,100 92.9% 13 Net Operating Income (EBIT) 7,129,900$ 7.1% 14 15 Net Operating Profit After Taxes (NOPAT) 5,630,000 5.6% 16 plus: Depreciation and amortization 3,412,500 3.4% 17 plus/less: Additions to working capital (111,600) -0.1% 18 less: Capital expenditures (4,539,000) -4.5% 19 plus: Interest expense (tax adjusted) 2,689,000 2.7% 20 Equity net cash flow 7,080,900 7.1% 21 22 Discount Rate 7.500% 23 Long-term growth (explicit + perpetual) 1.000% 24 Capitalization rate 6.500% 25 26 Total Enterprise Value 108,940,000$ 27 Customers 14,471 28 Equity value per customer 7,528$ 29 30 Revenue Multiple 1.1 SWL&P / Electric and Natural Gas Systems Appraisal D-5 2026© Raftelis Financial Consultants, Inc. Natural Gas System Income (CCF) Approach Line No. Natural Gas Capitalized Cash Flow (CCF) Normalized Share 1 System Revenues 2 Charges for Services 23,300,000$ 99.5% 3 Miscellaneous Services 116,500 0.5% 4 Total 23,416,500$ 100.0% 5 6 Expenses 7 Fixed Operating 3,024,000$ 12.9% 8 Variable Operating 15,876,000 67.8% 9 Fixed cost efficiencies (998,000) -4.3% 10 Taxes Other Than Income 433,200 1.8% 11 Depreciation and amortization 1,912,500 8.2% 12 Total 20,247,700 86.5% 13 Net Operating Income (EBIT) 3,168,800$ 13.5% 14 15 Net Operating Profit After Taxes (NOPAT) 2,500,000 10.7% 16 plus: Depreciation and amortization 1,912,500 8.2% 17 plus/less: Additions to working capital (23,600) -0.1% 18 less: Capital expenditures (2,391,000) -10.2% 19 plus: Interest expense (tax adjusted) 1,088,000 4.6% 20 Equity net cash flow 3,085,900 13.2% 21 22 Discount Rate 8.000% 23 Long-term growth (explicit + perpetual) 1.000% 24 Capitalization rate 7.000% 25 26 Total Enterprise Value 44,080,000$ 27 Customers 13,821 28 Equity value per customer 3,189$ 29 30 Revenue Multiple 1.9 SWL&P / Electric and Natural Gas Systems Appraisal D-6 2026© Raftelis Financial Consultants, Inc. Guideline Public Company Multiples Market Approach Net Utility Plant(2) Gross Revenues Customers EBITDA EBIT Public Service Enterprise Group (PEG) 1.6x 5.3x 14,985x 15.0x 21.2x Avista Corp (AVA) 1.0x 3.2x 7,665x 9.7x 17.6x WEC Energy Group (WEC) 1.5x 5.8x 11,887x 15.2x 25.2x Alliant Energy Corp (LNT) 1.6x 6.5x 19,676x 15.2x 27.7x Consolidated Edison (ED) 1.2x 3.7x 9,282x 11.8x 21.2x PG&E Corp (PCG) 1.0x 3.9x 9,514x 10.4x 20.6x NiSource (NI) 1.3x 5.4x 9,496x 12.0x 19.7x Unitil Corp (UTL) 1.0x 3.2x 8,058x 9.1x 17.1x CMS Energy Corp (CMS) 1.4x 4.6x 10,719x 13.1x 23.0x Ameren Corp (AEE) 2.9x 5.4x 13,891x 13.1x 23.3x Northwestern Energy Group (NWE) 1.0x 4.6x 8,914x 12.8x 22.7x Chesapeake Utilities Corp (CPK) 1.6x 4.9x 9,714x 13.1x 17.8x Duke Energy Corp (DUK) 1.4x 5.6x 17,064x 12.0x 20.8x Centerpoint Energy (CNP) 1.4x 5.2x 6,871x 13.3x 22.9x DTE Energy Co (DTE) 1.6x 3.4x 14,327x 12.4x 21.9x Eversource Energy (ES) 1.3x 4.1x 11,883x 10.2x 18.4x Wisconsin Electric Power Co (WELPM) 0.8x 2.6x 6,800x 6.4x 9.9x PPL Corp (PPL) 1.4x 4.9x 10,312x 12.9x 20.9x Sempra (SRE) 1.9x 6.8x 7,257x 18.6x 38.2x Weighted Average (1) 1.4x 4.8x 10,971x 12.6x 22.0x Company (Symbol) Enterprise Value Multiple per… August 6, 2026 Public Works Committee Agenda: August 6, 2026 TO: Public Works Committee Members FROM: Mayor Jim Paine RE: Recommendation to place a Water Utility Acquisition referendum question on the spring general election ballot. Recommendation: I recommend that the Public Works Committee and City Council place the following question on the April 6, 2027 spring ballot to authorize the city’s acquisition of the water utility through the statutory process: Should the City transition to a community-owned water utility in the event the PSC determines the purchase cost to be a number within the City’s financial means? Office of the Mayor Jim Paine, Mayor Justin Bernacki, Chief of Staff to the Mayor Phone: (715) 395-7212 E-mail: mayor@superiorwi.gov 1316 North 14th Street, #301 Superior, WI 54880 Website: www.superiorwi.gov