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wastewater, but he was not at this point convinced that every- <br />thing has been done that could be done and should be done to <br />improve the water quality. <br />Director Pinto explained that the initial analysis was based <br />on a combined rate base, taking the investment for both water and <br />sewer together and combining the total cost of operation, because <br />in such a small operation, it is very difficult to separate the <br />costs associated with the two and probably in the long run would <br />cost the rate payers considerably more just in accounting <br />procedures. When you do that, however, the utility company must <br />understand that.a failure of either one must affect the revenue <br />for the system as a whole, Director Pinto further emphasized <br />that the rates approved under this order were based on a 1983 <br />test year, and we allowed some improvements to be amortized into <br />the rates. If the Board wished to order further improvements, <br />the owners then would have to come back in for a rate adjustment <br />different than what is before us tonight. <br />Director Pinto informed the Board that the only outstanding <br />order that hasn't been.resolved by the utility company relates to <br />- <br />the -fact tha-t th-e DER has issued an order contrary to the <br />franchise requiring that the use of the fire hydrants be <br />discontinued and that they be taken out. The reason for this is <br />that the DER looks at the first priority of a public water supply <br />as being to supply potable water, and they feel the fire flow <br />could jeopardize the health and welfare of the community. If the <br />Board wishes staff to enforce the franchise as written, they will <br />order the utility to add whatever is necessary to the system to <br />provide fire flow; howeverjif this is done, the utility then <br />immediately has to come back in and adjust their rate base, which <br />will reflect in the rate structure. <br />Chairman Scurlock felt the most immediate problem is potable <br />water, and he believed it might be more economical for us to <br />acquire the water system, build a good, safe reverse osmosis <br />system, and expand the customer base to include a neighboring <br />9 Boa 347 <br />NOV 12 1996 <br />J <br />