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they did treat impact fees as CIRC throughout the rate study. Mr. Olstein continued that there have been a number of court decisions re this and there are tax consequences. He pointed out that Sarasota is a non -Chapter 367 County, the same as Indian River County, i.e., a county that has elected to regulate the utilities in its county. In the case cited, the court determined in very similar circum- stances that it was improper to allow the regulatory body to completely eliminate the depreciation of CIAO in the rate- making process. In addition, the court determined that the entire section of the county ordinance which prohibited this was confiscatory and violative of the due process laws. Mr. Olstein contended that if the rates were calculated without the CIRC depreciation, Hutchinson Utilities would be operating at a loss. Therefore, this is a true cost - it is an erosion of a useful asset. In regard to the rate study itself, Mr. Olstein stressed that the County staff has reviewed it and concurred with the methodology with the one exception, and furthermore staff agreed with all of the costs with the exception of two items which are less than 3% of the total. They just thought those particular costs were high, not that they should not have been included. Mr. Olstein emphasized that he did everything possible to keep the proposed rates as low as possible, and he believed they are at the lowest end of the range of the zone of reasonableness. Mr. Olstein next discussed impact fees, how they were calculated, and the different methodologies that could be used. He explained that essentially the Dunedin Decision says you cannot charge more than the cost of capacity in an impact fee. The PSC uses a somewhat different methodology where basically they look at the entire assets attributable to give a new connection. Mr. Olstein reported that he utilized the Dunedin approach in calculating the impact 46 JAN 18 1984 999K 55 re,,dL 854