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guidelines. Mr. Olstein stated that he has used the conventional approach - the Hunt curve more used in Florida, and noted he could have used other methods to show a much higher rate of return. Commissioner Lyons pointed out that if the projected costs should not turn out as anticipated now, and this has to be recomputed, it may require another rate hearing. He did not see why we must go through all this now when we don't even know if they are going to expand. Chairman Scurlock agreed that to go through a whole involved process when the assumptions this is based on may be incorrect is very time consuming. He hoped this could be narrowed down, and noted that he had two issues he wished to discuss: (1) whether the impact fee is at the maximum justifiable level, and (2) the actual treatment of the contributions in aid of construction. Mr. Olstein reviewed Schedule 6 of his rate analysis, explaining in detail how he used Hunt Curves, the methodol- ogy preferred by the PSC, to arrive at a rate of return of 10.751%, which is a relatively low rate of return. He noted that Schedule 5 presents the computation of the rate base and explained that when completed, the new plant will be operating at 68% of capacity; so, utilizing the guidelines that it is essentially used and useful at 80% of capacity, 68% corresponds to 85%, and he, therefore, is identifying 15% as the net utility plant held for future use. Mr. Olstein stated that the Contributions in Aid of Construction .(CIRC) were calculated on estimated new customers for the year as projected by management, and in arriving at that specific number, they utilized a connection fee of $780.00. Mr. Olstein then reviewed Schedule 4 - Annual Depreciation, reporting that what they did was use a percentage provided 44 �j JAN 18 1984 BROK 5 949 J