Taxes

The differences in tax estimates between Cal-Ore and CD are due to differences in estimates of revenues and expenses. CD and Cal-Ore both utilized the same Corporate State Franchise Tax rate of 8.84% and a Federal Income Tax of 34.00%. CD's estimate of 2009 Intrastate Operating Taxes (including other taxes) of $382,938 is 4.07% lower than that computed by Cal-Ore due to the differences in estimated revenues and expenses for test year 2009. To calculate Total Company Deferred Taxes for test year 2009, CD used the ratio of -2.9468%, which CD calculated from the average 2002 to 2006 Deferred Taxes amounts divided by the average 2002 to 2006 TPIS amounts. CD arrived at a 2009 Deferred Taxes amount of <$820,263>. Cal-Ore used a higher ratio of <3.28%>, which was calculated by dividing its projected 2009 Deferred Taxes amount by its projected 2009 TPIS amount. CD feel that Cal-Ore's method does not accurately predict the Deferred Taxes amount as it has no historic component in its calculation, therefore CD recommends that its 2009 Total Company Deferred Taxes calculation of <$820,263> be included in rate base.