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DEC 111979 <br />1 <br />2 <br />3 <br />4 <br />5 <br />6 <br />9 <br />10 <br />11 <br />12 <br />13 <br />14 <br />15 <br />16 <br />17 <br />20 <br />21 <br />22 <br />23 <br />24 <br />25 <br />26 <br />27 <br />am 42 PAGE 26 <br />to the used and useful adjustment of $113,000.00. The net <br />result of these adjustments is to increase rate base by <br />$66,000.00 which provides a total net investment in property, <br />plant and equipment used and useful of $274,000.00. Page 2 <br />of attachment 1 shows the rate base calculation for sewer <br />operations for the test year. The components of the sewer rate <br />base are the same as those of the water operations. Utility <br />plant in service of $783,000.00 which is reduced by the accumu- <br />lated depreciation of $198,000.00 and contributions in aid of <br />construction of $27,000.00. The total rate base unadjusted <br />for used and useful components amounts to $564,000.00. Column <br />2 contains the adjustments that were arrived at from Mr. Vaughn's <br />analysis of plant used and useful. Adjustment B shows the <br />reduction of plant in service of $324,000.00. A summary of how <br />this figure was arrived at is contained on pages 4 through 6 <br />of Exhibit "4-A" which Mr. Vaughn previously testified to. <br />The other adjustments to the other components of rate base are <br />the result of the used and useful adjustment to utility plant <br />in service. The net effect is to reduce the total rate base by <br />$242,000.00 which provides a net investment rate base used and <br />useful in providing service to the customers of $323,000.00. <br />Q. Mr. Fancher, would you please explain the importance of rate <br />base and the way it will be used for purposes of •phis rate case. <br />A. Yes, the rate base represents the net investment which the <br />owners will be allowed a return on in this rate ;Waking process. <br />This amount and the determination of the cost of capital will <br />