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TO: The Honorable Members of DATE: January 2, 198.0 FILE: <br />The Board of County Commissioners <br />THRU: Terrance G. Pinto SUBJECT: BREEZY VILLAGE FINAL ORDER <br />Utility Service Director <br />FROM: Joseph A. Baird REFERENCES: Attachment A - Final Order <br />Assistant Utility Director <br />DESCRIPTION AND CONDITIONS: <br />After considering and analyzing the information at the public hearing <br />on November 8, 1984, the Utility Department staff recommends the <br />Final Order attached. The revenue requirements within the order is <br />based on the scenario below: <br />Extraordinary repairs amortized over five years; fifty <br />percent of rate case expense amortized over three years; <br />thirty-six percent of depreciation expense because of con- <br />tributions -in -aid -of -construction adjustment; no rate of <br />return: <br />Total operating expense $271504 <br />Provision for taxes -0- <br />Return on rate base -0- <br />Total Revenue Requirement $27,504 1st year <br />Provision for taxes 1,634 <br />Return on rate base <br />(66,302 x 120) 7,956 <br />Total Revenue Requirement $37,094 after 1st year* <br />*provided the Board deems that utility is operating under <br />efficient and economical management. <br />Major issues addressed at the public hearing were, depreciation, the <br />amortization of new capital items and the management of the Utility. <br />Depreciation: There was the question of whether depreciation <br />should or s ould not be allowed as an expense. Staff allowed <br />depreciation for the following reason. Depreciation is the <br />systematic allocation of the cost of an asset over its estimated <br />useful life. Without depreciation, a business would have no <br />means of recapturing the original cost of their capital assets. <br />Depreciation is not for the purpos—e--oF Renewal and Replacement, <br />and the two should never be confused. <br />11 <br />9 1985 BOOK 59 w;F. 406 <br />