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Fr - BOOK 58 WWF 8"'?9 (c) Routine repairs accepted at $987 per year. Chlorinator scales are capital items not maintenance and should come out of R & R account. Air compressor should come out of R and R account. Pipe and fittings accepted. Blower unit is a capital expense , not maintenance. Detecto scale is a capital expense not a maintenance item. Sewage pond cleaning Is a maintenance item. Mowing is included in plant operator expense. Therefore, total of accepted repair items: Routine $ 987 Pipe and fittings 455 Total $1,442 Amortized over three (3) years= 48� 0.67 (d) Rate case expense shown is considered excessive. The PSC has indicated the historical allowance for small utility rate case expenses is approximately $25 - $30 per connection. This allowance has been supported by rulings of the First District Court of Appeals. Therefore, allowing the high end of accepted ranges, recommend allowance of $30 per connection as a rate case expense which is: 87 connections x $30/connection = $2,610 Amortized over two (2) years = $1,305 We have now presented a revised rate base and operation maintenance expense calculation. Based on the revised rate base and expense calculations, we propose a rate structure which would consist of a base facilities charge which represents fixed costs per connection and a variable cost charge which is associated with the cost per one thousand (1,000) gallons of water and sewer service sold. As all water meters are 5/8"x3/4", we are only showing a calculation for one meter size. If the structure needs to be expanded, we recommend using the factors recommended by the American Water Works Association to set rates at different meter sizes. The following is our rate calculation based on our revised rate base and expense summary. On page 11, which is a summarization of operation and maintenance expenses, Mr. Robbins pointed out that he is of the opinion that the depreciation that has been requested by the Utility as an expense should be zero for the purpose of rate making because IRC requires the customers of the system to fund a renewal and replacement account of 2% of the preceding year's gross revenues. Since depreciation is used as an expense to cover worn out capital assets, he felt it is unfair that the customers pay depreciation to the Utility and also pay 20 renewal and replacement expenses on top of that. There should be some money set aside for continuity of service, which explains their zero line item for depreciation. It is their opinion that the Utility has been very poorly maintained and it is not the responsibility of the customers to fund these repairs. It is also their feeling that capital items should not be included as maintenance. 26 L��