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DEC 111979 <br />L_ <br />All 4 -inch or smaller lines will be considered used and <br />useful.only on the basis of housing frontage an that - <br />line. <br />All mains in areas where there is no housing will be <br />eliminated from the rate base. <br />Any portion of a line fronting vacant lots in a high <br />density area, this is an area that is 95% or more, is <br />considered to be used and useful. <br />In order to establish a dollar amount for each size line <br />we used a weighted historica-1 cost for the various size <br />of lines. <br />By using the aforementioned criteria, we established the <br />amount of the distribution system that is determined used <br />and useful. It has now been determined that 1,710 feet <br />of 44 -inch and 400 feet of 10 inch main should be deleted <br />from the rate base and considered held for future use as <br />outlined.in Exhibit 4=B." <br />Now let's look at the waste water or sewage treatment <br />plants: <br />The basic concept is the same as what was used for the <br />water treatment plant. We averaged the average daily <br />flow and the maximum daily flow as tabulated.by month <br />for the 1978 test year. This average gives a conservative <br />estimate of the hydraulic loading on the plant. We then <br />adjusted this average flow using the marginal reserve <br />factor to give us the total adjusted flow for the test <br />year. The marginal reserve was established in the same <br />manner as was used for the water treatment plant. That <br />is, using the percent of growth rate for"the years 1977, <br />1978, and 3 months of 1979, then applying the time lag <br />factor against the percent of increase for the 24 years, <br />we came up with a marginal reserve of 5.60. By computing <br />QOOK PAGE U <br />