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.r - <br />a DEC 111979 <br />BOO 42 PAGE, <br />The marginal reserve factor is determined by taking <br />the average annual percent of growth for the past <br />2`1/4 years (1977, 1978, and three months of 1979) <br />and multiplying it be a time lag factor of 1.5. <br />The 1.5 represents 1 1/2 years or 18 months, the <br />minimum time necessary to construct plant <br />additions for increased capacity. This now gives <br />us a marginal reserve percent. The marginal reserve <br />represents that portion of the plant that must be <br />available to serve the present anticipated demand <br />of customers in the immediate future for which the <br />utility must always be prepared and.to serve the <br />demands of those persons for whom the utility must <br />be prepared but who do not actually connect to the <br />system. ' <br />Now, when we take the adjusted maximum flow and <br />compare it to the design capacity for the water <br />treatment plant, the resulting calculation shows <br />the water treatment plant to be 56.9% used and <br />useful. By taking 56.9% of our total plant cost <br />we get the dollar amount that.can be..used for rate <br />base. The remaining 43.1% will represent the <br />amount that is held for future use. <br />Now looking at the water distribution system, the <br />following concept was used to establish the used and <br />useful portion: <br />All transmission mains 8 inches and larger are <br />considered to be used and useful because that is the <br />backbone of the system. <br />All water mains with fire hydrants that are within <br />500 feet of an existing house will be considered <br />used and useful. <br />