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administrative expenses also; for instance, executive salary of $64,340, which in a utility with only 700 customers would amount to roughly $100 per customer per year. Mr. Duynslager continued that revenue collected, including connection fees was about $179,000, and the expenses he would consider appropriate would be about $143,000; so, the existing rate should have provided a good profit for that year. In regard to the insurance, Mr. Duynslager noted that life insurance might be required as a buy-out situation if one partner should pass away and that really is an appropriate business expense, but it would come under the balance sheet rather than the profit and loss statement. Mr. Duynslager then reviewed the Greeley and Hansen Report signed by Arthur Adams, the partner in charge of their office, and explained that he did 90% of the work involved. Mr. Duynslager stated that this report has been provided to Hutchinson Utilities and their CPA's have reviewed it and take a little exception to his statement that the accounting processes they have used are fine for tax purposes, but for rate making purposes, it would be approached in a different manner. Mr. Duynslager then wished to read into the record two short paragraphs from a letter in which they responded to his remarks, as follows: "We believe the deciding factor is the lack of restriction by the franchise agreement placed upon the connection charges collected. (Mr. Duynslager agreed with this.) The owner's reserve for capital expenditures required by the franchise agreement is 100 of the gross rates charged by the utility up to a maximum of $20,000." "It is important to note that the accounting treatment as required by generally accepted accounting principles may not necessarily be the same treatment as required for rate making purposes." 26