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GERARD MOS -IAN, VICE PRESIDENT OF FINANCE AND ADMINISTRATION, <br />FOR GENERAL DEVELOPMENT UTILITIES, CAME BEFORE THE BOARD. HE ASKED <br />THAT THEY TURN TO PAGE 19 OF THE LIGHT BLUE BOOK AND STATED'THAT <br />THIS SCHEDULE IS THE CLOSEST THEY -HAVE TO AN OFFICIAL BALANCE SHEET <br />FOR THE VERO OPERATION. HE STATED THAT THEY DO MAINTAIN DETAILED <br />RECORDS OF THEIR PLANT AND NOTED THAT PLANT MEANS ANY PHYSICAL ASSETS; <br />THEY MAINTAIN CONTINUOUS PROPERTY RECORDS AND DO HAVE A COMPUTERIZED <br />HISTORY OF ALL ASSETS OF THE COMPANY. <br />MR. MOSIAN THEN DISCUSSED WHY THEY USE AVERAGE RATE BASE, <br />NOTING THAT A SUPREME COURT CASE IN THE STATE OF FLORIDA STATES THAT <br />THEY MUST USE AVERAGE RATE BASE UNLESS IN EXTREME CIRCUMSTANCES. HE <br />POINTED OUT THAT THE COLUMN IN DECEMBER, 1978, FOR SEWER SHOWS THE <br />TOTAL PLANT IS OVER $1,000,000 AT THE END OF THE YEAR, BUT IF YOU <br />LOOK FURTHER, YOU WILL SEE THAT IN OCTOBER, THE PLANT WAS ONLY $500,000. <br />THEY DID NOT HAVE THE PLANT ON THE BOOKS THE WHOLE YEAR SO USED AN <br />AVERAGE FIGURE INSTEAD OF YEAR END. <br />CHAIRMAN WODTKE QUESTIONED THE PHRASE "WEIGHTED HISTORICAL <br />COST." <br />MR. MOSIAN USED WATER MAINS AS AN EXAMPLE AND EXPLAINED THAT <br />THEY HAVE SAID IF A LINE DOES NOT SERVE ANYBODY, THEY WILL REMOVE THAT <br />LINE FROM THE RATE BASE. IN ORDER TO REMOVE PART OF THE LINES, THEY <br />DECIDED TO TAKE THE AVERAGE COST OF THE LINES. HE NOTED THAT SOME <br />OF THESE LINES WERE PUT IN MANY YEARS AGO AND TO RESEARCH ALL THE <br />VARIOUS SIZE LINES TO DETERMINE WHAT YEAR THEY WERE PUT IN THE GROUND <br />WOULD BE VERY COSTLY SO TO SIMPLIFY THIS THEY ESTABLISHED THE RELATIVE <br />DIFFERENCE IN COST OF A 2" LINE FROM A 4" LINE, ETC., APPLIED IT TO <br />THE AVERAGE COST, AND REMOVED FROM THE RATE BASE THE LINES THAT WERE <br />DESIGNATED AS NOT USED AND USEFUL. "WEIGHTED" MEANS A FACTORED <br />DIFFERENCE IN THE COST OF THE LINE. <br />COMMISSIONER LYONS ASKED WHAT IT MEANS IN ITEM 6 WHERE IT <br />SAYD "ALL MAINS WILL BE COSTED ON A FACTORED BASIS." <br />MR. MOSIAN EXPLAINED THAT IN SCHEDULE G IN THE DARK BLUE <br />BOOK YOU WILL SEE SIZE OF THE MAINS AND INSTALLATION COSTS - THIS <br />WOULD BE A RECENT COST. THEY ASSUME THAT THE DIFFERENCE IN COST TO <br />DEC 111979 33 Box 42 FnE 27 <br />