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ti <br />THAT THE RETAINED EARNINGS FIGURE PRESENTED AT THE PREVIOUS RATE <br />HEARING WAS $124,000, AND THIS HAS DECLINED DUE TO THE LOSSES THAT <br />HAVE OCCURRED IN THE LAST FOUR YEARS. <br />ATTORNEY GATLIN ASKED IF THE CORRECTION IN THE RETAINED <br />EARNINGS FIGURE NECESSITATED MAKING CORRECTIONS IN OTHER EXHIBITS. <br />MR. LANG STATED THAT IT DID, AND THE REVISED EXHIBITS ARE <br />INCLUDED IN EXHIBIT 13. ALSO ATTACHED TO -THIS EXHIBIT IS INTERROGA- <br />TORY 2 WHICH SETS OUT A BREAKDOWN OF GENERAL AND ADMINISTRATIVE EX- <br />PENSES FOR MID -FLORIDA FOR 1976. MR. LANG EXPLAINED THAT IN REGARD <br />TO AN ANALYSIS OF HOW INTEREST EXPENSE WAS CALCULATED, THIS IS SET <br />OUT ON REVISED EXHIBIT H AND IS BASED BACK TO THE PARENT COMPANY. <br />AS TO THE RATE BASIS OF THE FACILITIES IN INDIAN RIVER COUNTY, MR. <br />LANG NOTED THAT ON EXHIBIT B AS of 12/31/76, THE WATER PLANT IS SET <br />FORTH AS $516,533, WHICH IS THE ORIGINAL'COST PLUS THE ADDITIONS <br />THROUGH THE YEARS SINCE IT WAS ACQUIRED. HE FURTHER NOTED THAT THE <br />STATE REQUIRES A COST STUDY BE DONE TO DETERMINE THE ORIGINAL COST. <br />THE BOARD THEN DISCUSSED THE BREAKDOWN OF ADMINISTRATIVE <br />COSTS CHARGED AGAINST MID -FLORIDA AS SET OUT IN INTERROGATORY 2 OF <br />EXHIBIT 13, AND COMMISSIONER LOY ASKED WHAT "OUTSIDE SERVICES" MEAN. <br />MR. LANG EXPLAINED THAT THERE ARE OUTSIDE SERVICES TO MID - <br />FLORIDA SUCH AS FROM THE MANAGEMENT COMPANY IN ORLANDO, AND ACCOUNT- <br />ING SERVICES, LEGAL, ENGINEERING, ECT., AND THESE.ALL FALL UNDER THE <br />GENERIC TERM "OUTSIDE SERVICES." <br />COMMISSIONER SIEBERT DISCUSSED THE ADMINISTRATIVE `& GENERAL <br />EXPENSE SHOWN ON REVISED EXHIBIT E ($16,975) AND ASKED IF THIS HAS <br />i <br />TO DO WITH THE COST OF THE RATE CASE PREPARATION. <br />MR. LANG STATED THAT THERE ARE SEVERAL THINGS THAT GO INTO <br />THAT FIGURE, BUT THE LARGEST ITEM IS Ro.7 OF EXHIBIT F, REGULATORY <br />COMMISSION EXPENSE, $14.375. <br />COMMISSIONER SIEBERT NOTED THAT THE $14,375 IS AMORTIZED <br />OVER TWO YEARS AND ASKED IF THE PRO FORMA STATEMENT WAS EXTENDED <br />BEYOND JUST THE NEXT YEAR, WOULD NOT THAT HAVE A SIGNIFICANT AFFECT. <br />MR. LANG AGREED THAT THE AMORTIZED AMOUNT WOULD DECLINE <br />IN THE THIRD YEAR. HE EXPLAINED THAT DUE TO INFLATIONARY IMPACTS, ; <br />THEY FIND THEMSELVES COMING BACK ON AN AVERAGE OF EVERY TWO TO TWO <br />4 <br />}it <br />2 <br />t <br />SEP 271977 Af- <br />