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M <br />lower rate base. <br />He also noted that they calculated a slightly <br />different depreciation schedule, which is shown as footnote (3). <br />A depreciation rate for small utilities of around 3% per year is <br />generally accepted, and as a result, they have calculated <br />depreciation at $36,132.94. He reported that they also accept <br />the rate of return requested by the Utility because it is in line <br />with what is allowed by the Public Service Commission. <br />REVISED PROFORMA PREPARED BY MOSSY-ROBBINS AND ASSOCIATES• INC. <br />Operating and Maintenance Expense Analysis <br />Operating Expenses 1983 Proforma <br />Depreciation -0- (a) <br />Electricity $ 3,150 <br />Contract Services <br />Plant Operator 91000 (b) <br />Accounting 3,990 (b) <br />Office suppies 266 <br />Repairs 480.67 (c) <br />Miscellaneous expense 400 <br />Sludge Removal 500 <br />Telephone 180 <br />Chemicals 240 <br />Insurance 452 <br />Taxes 450 <br />Rate case expense 1,305.67 (d) <br />Revised Total Operating Expense $20,414.34 <br />Proposed by Mosby -Robbins <br />Provision for income taxes $ 1,572.96 <br />Income 9,275.68 <br />Rate Base 70,969.25 <br />Return on Rate Base 13.07% <br />(a) Depreciation is an allowance made to a utility to help offset the <br />cost of replacing spent capital components of a utility system for <br />the purposes of rate making. These monies are kept by the utility <br />and should be used for capital repair or replacement. Indian River <br />County per Franchise Resolution is requiring the users of the system <br />to escrow (fund) to the utility and the county jointly, 2-1/2% of <br />their monthly bill to serve as renewal and replacement funds. Since <br />the county is requiring the establishment of a renewal replacement <br />account which represents a percentage of the rate base and associated <br />expenses and rate of return, we do not believe funding of a separate <br />line item for depreciation should be allowed. If Indian River County <br />requires the users to fund a renewal replacement account, the utility <br />can pocket the depreciation which effectively represents excess revenue. <br />Users should not be required to pay twice and, therefore, we have <br />eliminated depreciation as an expense. It should also be noted, <br />if the users are required to fund renewal and replacement, this account <br />should represent contributions in aid of construction and should <br />reduce the utility rate base. <br />(b). We accept the proposed charges for contract services for operation <br />and accounting. <br />25 <br />ma 58 SZ8 <br />I <br />