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MAR 19 1986 BOOK 63RA UL <br />Commissioner Lyons further noted that tonight we are looking <br />at something that has bothered this Commission for a number of <br />the years, which is that many of the developers in the past used <br />water and sewer rates as a loss leader to make it palatable to <br />come live in their subdivision. As a consequence, you finally <br />come to the day of reckoning when you have to face the cost of <br />doing this business and charge rates accordingly. Now when we <br />have a new franchise, the Commission tries to assure the rates <br />charged are as near realistic as possible so we don't have this <br />kind of situation where you suddenly go from imagination to <br />reality and it is really tough. <br />Robert Rathbun, Vero Shores resident, acknowledged that he <br />had.been sworn in. He believed a comment was made by staff that <br />the base facility charge was intended to cover basically fixed <br />expenses consisting of depreciation. <br />Mr. Wheeling advised that the largest dollar amounts in the <br />base facility charge are for depreciation, property taxes and <br />billing of customer accounts. These are continuing expenses. <br />Mr. Rathbun continued to question the figures re <br />depreciation and stated that he was trying to determine what <br />proportion of the base facility charge is truly fixed and how <br />much is variable. He pointed out that we are looking at a <br />differential in the base facility charge, which has gone from <br />$1.00 to $8.46. This increase is covering an expense which GDU <br />has indicated is fixed in nature. He, therefore, found it <br />perplexing that there can be an 8 -fold increase in an element <br />designed to cover a fixed expense which would not be expected to <br />vary over a period of time, and he wished to know if there is <br />something he did not understand about that original $1.00. <br />Director Pinto explained that what happened is that in the <br />rate case presented in 1983 when the Board gave an order for a <br />40% increase, the base facility charge was fixed at $1.00, not <br />based on anything, but just to establish the methodology. <br />18 <br />� r � <br />