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HomeMy WebLinkAbout12/11/1979TUESDAY, DECEMBER 11, 1979 THE BOARD OF COUNTY COMMISSIONERS OF INDIAN RIVER COUNTY, FLORIDA, MET IN SPECIAL SESSION AT THE COURTHOUSE, VERO BEACH, FLORIDA, ON TUESDAY, DECEMBER 11, 19791 AT 7:00 O'CLOCK P.M. PRESENT WERE WILLIAM C. WODTKE, JR., CHAIRMAN; ALMA LEE Loy, VICE CHAIRMAN; WILLARD Wit SIEBERT, JR.; R. DON DEESON; AND PATRICK B. LYONS. ALSO PRESENT WERE ASSISTANT COUNTY ADMINISTRATOR NEIL NELSON; PERSONNEL DIRECTOR ROBERT DONLON; UTILITIES DIRECTOR GEORGE LINER; GEORGE G. COLLI'NS, JR., ATTORNEY TO THE BOARD OF COUNTY COMMISSIONERS; AND VIRGINIA HARGREAVES, DEPUTY CLERK. THE.CHAI-RMAN CALLED THE MEETING TO ORDER AND ANNOUNCED THAT IT IS BEING HELD FOR THE PURPOSE OF REVIEWING A PROPOSED RATE INCREASE FOR GENERAL DEVELOPMENT UTILITIES, INC. THE HOUR OF 7:00 O'CLOCK P.M. HAVING PASSED, THE DEPUTY CLERK READ THE FOLLOWING NOTICE WITH PROOF OF PUBLICATION ATTACHED, TO -WIT: VERO' BEACH PRESS -JOURNAL. Published Weekly 1 Vero Beach, Indian River County, Florida I � COUNTY OF INDIAN RIVER: 1 STATE OF FLORIDA 'I Before the undersigned authority personally appeared J. J. Schumann, Jr. who on oath says that he is Business Manager of the Vero Beach Press -Journal, a weekly newspaper published at Vero Beac.H in Indian River County, Florida; that the a�tached copy of advertisement, being in t�a matter of .�J77 �� in the Court, was pub- lished in said newspaper irr the issues of 1 Affiant further says that the said Vero Beach Press -Journal is a newspaper published at Vero Beach, in said Indian, River County, -and that the said news,ppaper has heretofore been continuously published in said Indian ,River County, Florida, weeklyland has been entered as second class mail matter at the post offick in Vero Beach, in said Indian{ Riven'County, Florida for a period of one year next preceeding the first publication of the attjchRd'coPy of adver tisement; and affiant further says that he has neither paid nor promised'a y;person, firm or corporation any discount, rebate, commission or refund for ttie'purpos of secorirta this adver- tisement for publication in the said newspaper. I I � 1 Sworn t? and subscribed befo a me t 's ' day. of Zlez .I A;D'. Z?Z. —' 1 I !Busines4 Manager) Lzu (Clerg of the Circuit Cou t, Indian Riiver Count, Florida) (SEAL) I I t 1 DEC 111979 I j - INDIAN RIVER COUNTY, FLORIDA _ I NOTICE OF PUBLICHEARING is hereby given that the Notice Board of County Commissioners, Indian River County, will hold a public hearing In the Commission Room, Indian River County Courthouse, 3145 14th Avenue, Vero Beach, Florida 32960 on TUESDAY, the 11th day of December, 1979, a17:00 P.M. to consider the request of General Development Utilities, Inc., for a rate increase in the Vero Beach Highlands and Vero Shores Water and Sewer Division. The Commission will consider General Development Utilities, Inc. request for a rate Increase which will yield revenues of 551,870.00 in the Water Division arw s23,55.00 in the Sewer Division. `rhe rate Inifreases will j effect the following changes in the rates currently paid by the typical single familyr ltlentfal customer using 5,00D gallons per month: I Present Rates ' • Water: Minimum (3,000 gallons) - - $2.97 Usage MON gallons) 1.08 Total(5,000 gallons) -'j $4.05. Sewer: Weighted Average 3.71 Present Total combined water 8, sewer bill:. �� $7.76 I Proposed Rates Water: MlniMum (3,000 galions) :•SS.20 Usage (3,000 gallons) 1 1 ; t A, 3.75 Total (5,W0 gallons) $8.95 Sewer: Pi PosedTot�I combined water & sewer bill: t $16.45 General Development Utilities, Inc., seeks this rate Increase to offset the adverse impact of lirflation upar Is Operating costs and to bring Its rates In line with comparable rates In the area. All General;Development Utilities, Inc., customers affected by the proposed Increases will be! separately notified Eby mail at least ten (10) days before the public hearing date by General! Development U..... es, Inc. 1 All ihteested ernes will be heard. Dated this 30t tlay of October, 1979. Board of Indian River County CommissioterS _ Indian, R ver County, Florida i By: Will m C. Wodtke Jr., Chairman Nov. 13, 16, 1979 - i tl�ll BOOK A PAGE -246 DEC 111979 Boa 44 FACE G.47 ATTORNEY COLLINS REQUESTED A SIGNED COPY OF A CERTIFICATION STATING THAT NOTICE WAS SENT TO ALL THE CUSTOMERS OF THIS DIVISION OF GENERAL DEVELOPMENT UTILITIES, INC., IN REGARD TO THE REQUESTED RATE INCREASE, AND NANCY ROEN, ATTORNEY FOR GENERAL DEVELOPMENT UTILITIES INC., SUPPLIED"THE FOLLOWING AFFIDAVIT RE MAILING OF THE NOTICES, WHICH SHE NOTED IS THEIR EXHIBIT 7. 2 L7 STATE OF FLORIDA ) COUNTY OF DADE ) J Before me, a Notary Public in and for the state and county aforesaid, personally appeard Sylvia Levy who upon being by me first duly sworn, deposes and says as follows: 1. The undersigned affiant asserts that she placed a copy of the attached Notice of Public Hearing in connection with the application of General Development Utilities, Inc. for a rate increase in the Vero Beach Highlands and Vero Shores Water & Sewer Division, together with a pamphlet explaining the need for the rate increase in envelopes addressed to customers of the Division. 2. These envelopes containing the Notice and pamphlet were delivered to the mailroom and she has been advised that a total of four hundred thirty-eight (438) envelopes containing the Notices were mailed to all affected customers on November 16, 1979 and November 19, 1979 for a total cost of $65.77, at least ten (10) days prior to the public hearing date as required by the Indian River County Commission Notice of Public Hearing. Further affiant sayeth not. Sworn to and subscribed before me -C-his, 29f__1< day of November, 1979. ' f NOTARY PUBLIC, State of Florida at Largr.iARY PUB! I( : a.f OF FLORID4 At t Irl MY COMMISSION EXPIRES NOV. 19 1980 K)NMD'THRU C' 1[F*AI 1'tj )rtll�rR••,fl Exhibit 7 DEC 111979 1 SYLVJP LEVY BOOK PACEIA iGC9 J DEC 111979 nox 4� PACE 249 ATTORNEY ROEN INTRODUCED GERARD MOSIAN, VICE PRESIDENT OF FINANCE AND ADMINISTRATION FOR GENERAL DEVELOPMENT UTILITIES, CHARLES FANCHER, UTILITY RATE CASE COORDINATOR, THOMAS VAUGHN, GENERAL MANAGER OF OPERATIONS FOR THE VERO BEACH AND PORT ST, LUCIE DIVISION, NANCY WILLIAMS, ASSISTANT MANAGER, AND LOUIS MENDEZ, UTILITIES OPERATOR. ATTORNEY ROEN MADE THE PRESENTATION FOR GENERAL DEVELOPMENT UTILITIES. SHE INFORMED THE BOARD THAT THE PRESENT RATES WERE PLACED IN EFFECT IN 1965 AND HAVE NOT BEEN INCREASED SINCE THAT DATE. THEIR FRANCHISE PROVIDES THAT THE RATES CHARGED WILL BE SUCH AS TO GIVE THE COMPANY A SUM TO MEET ALL COSTS OF SERVICES AND INCLUDE A FAIR NET RETURN. MS. ROEN STATED THAT IN 1978, WHICH IS THE TEST YEAR CHOSEN FOR THIS CASE, THE COMPANY LOST $41,753 IN THE WATER DIVISION AND $61,000 IN ITS SEWER DIVISION, AND IT CANNOT CONTINUE TO HAVE A LOSS OF THIS MAGNITUDE EACH YEAR AND KEEP OPERATING. SHE POINTED OUT THAT THEIR RATES ARE CONSIDERABLY LOWER THAN OTHERS IN THE AREA; THEY MERELY WANT TO TRY TO OFFSET A PORTION OF THEIR LOSS, AND EVEN IF THE INCREASE IS GRANTED, THE COMPANY WILL CONTINUE TO LOSE MONEY. MS. ROEN STATED THAT IN EVALUATING THE EVIDENCE PRESENTED THIS EVENING IT WILL BE THE TASK OF THE COMMISSION TO CONSIDER THE AMOUNT OF THE INVESTMENT, THE EXPENSES TO OPERATE THE UTILITY IN A TYPICAL YEAR, THE AMOUNT OF RETURN OF INVESTMENT WHICH IS REASONABLE AND FAIR, THE TOTAL REVENUES REQUIRED TO BE COLLECTED TO MEET EXPENSES AND HAVE A REASONABLE RETURN, AND WHETHER THE -QUALITY OF SERVICE MEETS REASONABLE APPLICABLE REGULATORY STANDARDS. Ms. ROEN STATED THAT THEY BELIEVE THE COMMISSION WILL FIND THE UTILITY MUST RECEIVE THE RATE INCREASE REQUEST. SHE THEN SUBMITTED EXHIBITS TO BE ADMITTED INTO EVIDENCE AS FOLLOWS, WHICH EXHIBITS ARE ON FILE IN THE OFFICE OF THE CLERK: 1. - INDIAN RIVER COUNTY MINIMUM FILING, INFORMATION AS SUGGESTED IN ROBERT DONLON'S LETTER OF APRIL 271 1979. 2. - SUMMARY OF SYSTEM FACILITIES AND FINANCIAL EXHIBITS. 3. - FINANCIAL EXHIBIT - DETAIL WORKPAPERS ON INVESTMENT, RESULTS OF OPERATIONS, COST OF CAPITAL AND BILLING. 4A.— USED AND USEFUL ANALYSIS - A DETAILED ANALYSIS OF THE FACILITIES USED AND USEFUL IN PROVIDING WATER AND SEWER SERVICE TO CUSTOMERS IN VERO SHORES AND VERO BEACH HIGHLANDS FOR THE TEST YEAR ENDED DECEMBER 311 1978. 4B.- MAP OF THE WATER SYSTEM USED TO SUPPORT CALCULATIONS IN EXHIBIT 4A, 4C.- MAP OF THE SEWER SYSTEM USED TO SUPPORT CALCULATIONS IN EXHIBIT 4A. 5. - 1978 ANNUAL REPORT TO THE SHAREHOLDERS FOR GDU, INC. - CONTAINS GENERAL DATA AND THE ANNUAL REPORT FORM 104 TO THE SECURITIES AND EXCHANGE COMMISSION. 6A.- PROPOSED WATER TARIFF INCLUDING THE PROPOSED RATE SCHEDULES. 6B.- PROPOSED SEWER TARIFF INCLUDING THE PROPOSED RATE SCHEDULES. 7. - AFFIDAVIT OF SYLVIA LEVY CONCERNING MAILING OF NOTICE OF PUBLIC HEARING TO CUSTOMERS. 8. - RESULTS OF WATER ANALYSIS BY ORLANDO LABORATORIES, INC. 9. - OCTOBER 1979 BILLING ANALYSIS. ATTORNEY ROEN NOTED THAT ALL BOARD MEMBERS HAVE BEEN SUPPLIED WITH COPIES OF THESE EXHIBITS, EXCEPT POSSIBLY EXHIBIT 9. SHE THEN CALLED HER FIRST WITNESS, THOMAS VAUGHN, GENERAL MANAGER OF OPERATIONS, AND SUBMITTED A COPY OF HIS PROPOSED TESTIMONY, WHICH IS HEREBY MADE A PART OF THE MINUTES. 5 caK42ACF 250 DEC 111979 DEC 111979 VERO RATE HEARING aoox 42 WF 251 PROPOSED -TESTIMONY FOR TOM VAUGHN A. (Q.) Name, address, current position, previous work experience, education background. (A.) My name is Thomas S. Vaughn. My business address is 2055 Skyline Drive, Vero Beach, Florida. My current position is General Manager of Operations for the Vero Beach and Port St. Lucie Divisions of General Development Utilities, Inc. My previous work experience prior to being promoted to General Manager of Utilities for the Port St. Lucie/Vero Beach Division of General Development Utilities, I was Chief Operator of Waste Water Operations in General Development's Port Charlotte Division, a position which I held from January 1976 to October 1977 at which time I was promoted to the Port St. Lucie area. Before coming to work with General Development Utilities in January of 1976, I was Utility Director for Butler County Water and Sewer District, Butler County, Ohio, a position I :r held from June of 1972 until June of 1975 at which time I moved to Florida. Before that time I was Utility Director for the city of Eason, Ohio from June 1970 until June 1972. And Prior to that I worked for the - city of Avon Lake, Ohio from June of 1966 until June of 1970. Before that time I put more than eight years in the U. S. Navy. My educational background is basically high school graduate with several Usophy courses completed in the United States Navy plus utility related courses from Ohio State University, Miami University of Oxford, Ohio, business courses from Middletown Business College, Middletown, Ohio, plus the courses sponsored by the Operator Training Committee of the State of Ohio which are basic water plan -P - operation, advanced water plan operations, basic waste water treatment planroperation's, advanced waste .Tater treatment plan ,1— operations, distribution and collection courses, and utility management course from Michigan State University along with .numerous semi ears - sponsored by the Arnerican Waterworks 7161 'Association an4- the Federal Water Pollution Control Federation. B. In your capacity as General Manager for the Vero Shores and Vero Beach HiEhlands System: 1. (Q.) Are -,ou familiar with the facilities, operations, and procedures of the Vero.Shores and Vero Beach High=ands? (A.) Yes, I am. 2. (Q.) Have you read Exhibit 1, Attachment 3 and that portion of Exhibit 2 relating to the system facilities of the Application submitted to the Indian River County Commission in this case? ?Is it true and accurate in its description of the facilities? Could you summarize for us the facilities as they existed during the test year for both water and sewer systems? What upgrading of the system or increased capacity occurred during that time frame and subsequently? (A.) Yes, I have read Exhibit 1, Attachment 3 and also Exhibit 2. To the best of my knowledge and belief it is true and accurate in its description of the facilities. The waste water treatment facilities that existed during the test year were a complete mix activated sludge treatment process consisting of a comminutor, aeration tank, settling tank, aerobic digester, an anaerobic digester, effluent weir chamber. oxidation ponds, chlorine contact chamber, percolation ponds X. disposal of plant effluent, and grass farm type sludZe beds for disposal of sludge. There was also .a 50,% diesel poweredgenerator installed for emergency or sand -by electrical power. These facilities as outlined had a capacity of .25MGD. This system was completed and put in service the latter Fart of 1977, it replaced a .07?9GD Imhoff type clarifier/digester DEC 111979. Bog -PACE CDC Boa 42 PAGE.253 DEC 111979 plant with an effluent weir box and an oxidation pond. The existing water treatment facilities in service during 1978 were upgraded. This expansion consisted of going from the former facilities of: two wells, two softeners, a hydropneumatic tank, and chlorination facilities with a capacity of .14MGD to: one new well, redevelopment of the two existing wells, two new zeolite softeners with increased capacity and fully automated controls, a 250,000 ground storage tank, three new high service pumps, a new automated 50KW diesel powered generator for emergency or stand-by electrical power, and new chlorin- ation facilities which increased the capacity to .36MGD. 3. (Q.) Based upon these two exhibits, what was the capacity of the system to serve water and sewer customers during the test year? (A.) The sewage system was increased from a capacity of 70,000 gallons per day to 250,000 gallons per day, or increased by more than 3 times:thle previous capacity. The water treatment facilities were increased from 140,000 gallons per day to 360,000 gallons per day or increased by more than 22 times the previous capacity. r� 7. (Q.) Mr. Vaughn, did you participate in.preparing the used and useful analysis in the case? what is a used and useful analysis or calculation? How does it affect rates? (A.) A used and useful analysis is conducted to determine that portion of plant that is used in rendering - service to the customers. That is to say that the used and useful analysis analyzes total utility plant, and determines that portion of plant that is currently being used in providing service to the customers and that portion of plant that will be " used in providing service to future customers. J - 9 The customers should be expected to pay for the cost of providing a service plus the company should be entitled to make a fair return on -its investment for providing that service. That amount of plant that will be held for the use of future customers, the current customer will not pay for. I show you Exhibit 4(a), (b), and (c) submitted with the application to the Comission. Is it true and accurate to the best of your knowledge and belief? Please summarize for the Commission the Used and Useful Analysis. (A.) Exhibit 4(a), (b) , and ,(.c) submitted with the application is true and accurate to the best of my knowledge and belief. The used and useful analysis is a tool that is used to determine that portion of the utility's facilities that is necessary to provide service for its.customers. The procedure that was used for determining the used and useful portion of the water treatment plant is as follows: Taking the average of the monthly maximum production days for the test year and multiplying'it by the marginal reserve factor gives us the total adjusted maximum flow. DEC 111979 BOOK PAGE`4 .r - a DEC 111979 BOO 42 PAGE, The marginal reserve factor is determined by taking the average annual percent of growth for the past 2`1/4 years (1977, 1978, and three months of 1979) and multiplying it be a time lag factor of 1.5. The 1.5 represents 1 1/2 years or 18 months, the minimum time necessary to construct plant additions for increased capacity. This now gives us a marginal reserve percent. The marginal reserve represents that portion of the plant that must be available to serve the present anticipated demand of customers in the immediate future for which the utility must always be prepared and.to serve the demands of those persons for whom the utility must be prepared but who do not actually connect to the system. ' Now, when we take the adjusted maximum flow and compare it to the design capacity for the water treatment plant, the resulting calculation shows the water treatment plant to be 56.9% used and useful. By taking 56.9% of our total plant cost we get the dollar amount that.can be..used for rate base. The remaining 43.1% will represent the amount that is held for future use. Now looking at the water distribution system, the following concept was used to establish the used and useful portion: All transmission mains 8 inches and larger are considered to be used and useful because that is the backbone of the system. All water mains with fire hydrants that are within 500 feet of an existing house will be considered used and useful. DEC 111979 L_ All 4 -inch or smaller lines will be considered used and useful.only on the basis of housing frontage an that - line. All mains in areas where there is no housing will be eliminated from the rate base. Any portion of a line fronting vacant lots in a high density area, this is an area that is 95% or more, is considered to be used and useful. In order to establish a dollar amount for each size line we used a weighted historica-1 cost for the various size of lines. By using the aforementioned criteria, we established the amount of the distribution system that is determined used and useful. It has now been determined that 1,710 feet of 44 -inch and 400 feet of 10 inch main should be deleted from the rate base and considered held for future use as outlined.in Exhibit 4=B." Now let's look at the waste water or sewage treatment plants: The basic concept is the same as what was used for the water treatment plant. We averaged the average daily flow and the maximum daily flow as tabulated.by month for the 1978 test year. This average gives a conservative estimate of the hydraulic loading on the plant. We then adjusted this average flow using the marginal reserve factor to give us the total adjusted flow for the test year. The marginal reserve was established in the same manner as was used for the water treatment plant. That is, using the percent of growth rate for"the years 1977, 1978, and 3 months of 1979, then applying the time lag factor against the percent of increase for the 24 years, we came up with a marginal reserve of 5.60. By computing QOOK PAGE U DEC 111979 BOOK 42 PAGE 25 the total adjusted flow against the design capacity of the plant, we established that the sewage treatment plant was 43% used and useful and that the remaining 57% would be held for future use. � As we now look at the sewage collection system, the following concepts were used to establish the used and useful portions for rate base. All force mains will be considered used and useful. The collection of mains will be considered on the basis of housing density with adjustment for the marginal reserve factor. To establish the dollar amount for the sewer mains we used the weighted historical cost for the various size mains. Housing density analysis is made by comparing the number of actual connections with the number of potential connections, for the test year we had 278 actual connections and 481 potential connections. This gives us a housing density percentage of 57.80. Now, when we apply the marginal reserve of 5.6% we have established a used and useful portion of the collection mains of -61.1% with the remaining 38.9% to be considered held for future use. The actual dollar values for the used and useful analysis are contained in Exhibit 4 (a). 10. Now, Mr. Vaughn with regard to the overall operation of the utility office and plant: a. (Q.) Have the plant and the facilities of the utility been maintained and operated by certified operators? (A.) Yes, both the water and sewer plants have been maintained and operated by certified operators, as outlined by the Department of Environmental Regulation. b. _(Q.) Has the plant been designed, constructed and installed in accordance with the requirements of the Department of Environmental Regulation? (A.) Yes, the plant design and construction has been approved by the Department of Environmental Regulation and other regulatory agencies concerned. C. (Q.) Has the plant been inspected to insure safe and adequate service at all times? (A.) Yes, it has. Daily Operating Reports are required by and must be submitted to the D.E.R. on a monthly basis for their review.. The D.E.R. also makes unannounced inspections of the utilities and collects samples for their labs to analyze to ensure our compliance with the state require- ments. The last visit of this type was on July ll, 1978. On November 9, 1977 the Legislature of the State of Florida enacted the "Florida Safe Drinking Water Act" sections 403.850 - 403.864 Florida Statutes. The purpose being to assure that public water systems supply drinking water which meets minimum requirements as required by the "Safe Drinking Water Act" of the Federal Government. The Regulations outlined in Chapter 17-22 are promulgated to implement the requirements of the Florida Safe Drinking Water Act as well as acquire primacy for the State of Florida under the Federal Act. These Regulations adopt the National Primary and Secondary Drinking Water Regulations of the Federal Government where possible. The quality standards for the Primary Drinking Water Regulations provide for the maximum allowable contaminant levels applicable to community water systems. The regulation provides that a water analysis is to be made and completed by June 24, 1979 and June 24, 1980 to establish whether the utilities water meets these standards. f= Bfl1(€ OLCa To comply with these. Regulations, General Development DEC 111979 Utilities had samples analyzed by an outside certified DEC 111979 BOOK V PAUF 25a - laboratory during the month of May, 1979. A copy of these analyses is identified as Exhibit 9 and in all cases shown compliance. In fact, prior to this, General Development Utilities, has an analysis made of its raw water by another outside certified laboratory to monitor its quality prior to treatment. Our raw water before any treatment meets the Drinking Water Standards that are now in effect, a copy of which is identified Exhibit 1, Attachment 4. dj (Q.) Do you keep all records in the offices of the utility open for inspection. (A.) The operating records are kept in the offices of the utility and are open for inspection. e. (Q.) Are the customer's account records kept in a manner which will permit reproduction of the customer's bills for any given billing.period? (A.) Yes, all customer billing history is recorded on microfilm and a duplicate bill could be readily reproduced. f. (Q.) With regard to customer relations; does the utility provide information -and assistance to its customers including the method of meter reading and the method of deriving a bill? Do you also provide an explanation and a copy of the utility's rates upon request? Do you respond to all complaints and service requests. (A.) Yes, we do. CHAIRMAN"WODTKE QUESTIONED IF THE ANALYSIS DONE BY ORLANDO LABORATORIES (EXHIBIT 8), REPORT #17246-1, 17246-2 AND 17246-3, IS ON THREE DIFFERENT WELLS. MR. VAUGHN STATED THAT IT IS NOT AND EXPLAINED THAT IT IS AN ANALYSIS OF THE RAW WATER SUPPLY AND IS A COMBINATION OF ALL WELLS PUMPING INTO THE PLANT PRIOR TO TREATMENT. THE SAMPLE IS TAKEN FROM THE RAW WATER TAP AT THE PLANT. IN EXHIBIT 1, ATTACHMENT 4, THERE IS AN ANALYSIS FROM ENVIRONMENTAL SCIENCE & ENGINEERING, WHICH HAS EACH OF THE THREE WELLS SEPARATE. CHAIRMAN WODTKE FELT THERE IS A GREAT DEAL OF DIFFERENCE FROM ONE WELL TO ANOTHER AND ASKED WHETHER IT IS NORMAL TO MAKE TESTS FROM THE COMBINED WELLS OR BY SAMPLES FROM EACH WELL. MR, VAUGHN EXPLAINED THAT THE DER DOES NOT REQUIRE A TEST OF THE RAW WATER, BUT A TEST OF THE WATER LEAVING THE PLANT GOING TO THE CONSUMER. THE CHAIRMAN POINTED OUT THAT THERE IS A NOTE STATING THAT THE SAMPLE MEETS REGULATIONS, AND HE ASSUMED THERE ARE REGULATIONS TO BE MET. MR. VAUGHN STATED THAT THEY JUST WANTED TO INDICATE THAT THEIR RAW WATER BEFORE ANY TREATMENT DOES MEET ALL THE NATIONAL PRIMARY DRINKING WATER STANDARDS - WITHOUT ANY TREATMENT. COMMISSIONER LYONS ASKED IF THESE ARE ALL OF THE REQUIREMENTS THAT HAVE TO BE MET, AND MR. VAUGHN STATED THAT THESE ARE THE RE- QUIREMENTS OF THE NATIONAL PRIMARY DRINKING WATER STANDARDS, CHAPTER 22. HE NOTED THAT THERE ARE OTHER STANDARDS WHICH DO NOT RELATE TO THE PRIMARY STANDARD, BUT THESE ARE THE STANDARDS THAT EACH WATER TREATMENT FACILITY IS REQUIRED TO HAVE MET BY JUNE 24TH. CHAIRMAN WODTKE ASKED IF ON EXHIBIT 1, ATTACHMENT 4, THEY ARE SAYING IN THE WRITTEN TEXT OF COMMENTS THAT EVERYTHING ON THIS PAGE MEETS THE REGULATIONS. MR. VAUGHN EXPLAINED THEY ARE SAYING THAT IT MEETS ALL THE REQUIREMENTS THAT ARE IN EFFECT AS OF THIS DATE. HE THEN MENTIONED TOTAL ALPHA AND TOTAL BETA AND SAID THEY DO NOT MEET THAT REQUIREMENT, DEC 111979 15 boUit PACE SQ pr - DEC 111979 ® rr�Ij� BOOK �� PA&E,G1 BUT THESE ARE REQUIRED OF FINISHED WATER AND THIS IS RAW WATER. HE BELIEVED THEIR TREATMENT PROCESS WILL REDUCE THE ALPHA AND BETA AND NOTED THIS IS RADIOLOGICAL. MS. ROEN FELT THAT MR. VAUGHN IS TRYING TO SHOW THAT THE RAW WATER MEETS THE APPLICABLE STANDARDS, AND IF THE RAW WATER DOES, THEN THE FINISHED WATER SURELY MUST. SHE NOTED THAT THEY NOW HAVE BOTH A RAW WATER TEST AND A FINISHED WATER TEST AVAILABLE. COMMISSIONER Loy COMMENTED THAT THEY SAY ALL MAINS IN AN AREA WHERE THERE IS NO HOUSING WILL BE ELIMINATED FROM THE RATE BASE; THEN THEY SAY ANY PORTION OF LINES FRONTING VACANT LOTS IN A HIGH DENSITY AREA ARE CONSIDERED TO BE USED AND USEFUL. COMMISSIONER SIEBERT ASKED IF THEY FELT THEIR FINISHED PRODUCE' WILL MEET ALL STANDARDS FOR PRIMARY DRINKING WATER IN 1930. MR. VAUGHN FELT CONFIDENT THAT IT WILL. HE EXPLAINED HOW SAMPLES ARE COMPOSITED ON A QUARTERLY BASIS FOR ONE YEAR, AND THE ANALYSIS IS NOT MADE UNTIL AFTER ALL FOUR COMPOSITES ARE RECEIVED, WHICH TAKES A YEAR. CHAIRMAN WODTKE DISCUSSED PERCENTAGE FIGURES RELATING TO USED AND USEFUL It FOR THE SEWER PLANT AND THE WATER PLANT, AND MR. VAUGHN STATED THAT THE WATER PLANT WAS 56.9% USED AND USEFUL, WHILE THEY ONLY CONSIDERED 43% OF THE SEWER PLANT USED AND USEFUL TO BE CONSIDERED IN THE RATE BASE. THE CHAIRMAN INQUIRED ABOUT WHERE IT SAYS "THE REMAINING 38.9% TO BE CONSIDERED HELD FOR FUTURE USE," AND MR. VAUGHN EXPLAINED THAT RELATES TO THE SEWAGE COLLECTION MAINS, NOT THE PLANT. ATTORNEY ROEN CALLED CHARLES FANCHER, JR., UTILITY RATE CASE COORDINATOR, AS HER NEXT WITNESS AND SUBMITTED COPIES OF HIS PROPOSED TESTIMONY, WHICH IS HEREBY MADE A PART OF THE MINUTES. 16 GENERAL DEVELOPMENT UTILITIES, INC. VERO SHORES & VERO BEACH HIGHLANDS RATE CASE TESTIMONY OF CHARLES E.'FANCHER. JR. 1 Q. Please state your name and business address. 2 A. My name is Charles E. Fancher, Jr. and my business address is 3 1111 South Bayshore Drive, Miami, Florida. 4 5 Q. By whom are you presently employed? 6 A. General Development Utilities, Inc. VA 8 A. Please state your present position, the length of time you have 9 been employed in that capacity and a brief description of your 10 responsibilities. 11 A. I have held the position of Utility Rate Case Coordinator for 12 approximately 2 years. In this position I am responsible for the 13 coordination of all areas that impact the rate making process, 14 including the preparation of rate case filing documents and 15 packages, the preparation of testimony, interactions with 16 regulatory agencies, and any other operations that impact the 17 rate making process. 18 19 Q. Briefly summarize your educational and professional background. 20 A. I hold a Bachelor of Science in Business Administration Degree 21 from the University of Florida and a Masters in Business 22 Administration Degree from the University of Miami. I have DEC 111979 F_ DEC 111979 E40K 42 FADE 1 approximately seven years experience in the utility business. 2 My first five years were spent working for Florida Power & 3 Light Company. During that time I was primarily involved in 4 filing rate cases before federal and state regulatory agencies 5 and developing a system for deferred income tax accounting. I 6 have given testimony as an expert witness before state and 7 municipal regulatory authorities. 8 9 Q. Have you been involved in the preparation of the application 10 for rate increase submitted to the Indian River County Commission 11 on June 8, 1979 and the exhibits thereto? 12 A. Yes. 13 14 Q. Are the exhibits prepared under .your direct supervision and 15 control true and accurate to the best of your knowledge and 61 belief? 71 A. Yes. 81 91 Q. You have heard the testimony of Mr. Vaughn regarding the invest - 20 ment in utility plant used and useful in providing service to 21 the customers. Based upon his testimony and your knowledge of 22 the contents of the application and the exhibits, are the 23 figures given true and accurate to your knowledge and belief? 24 A. Yes. 25 26 Q. As you know, the Company is required by the franchise to charge 27 rates which are fair and reasonable, designed to meet all -2- 1 2 3 4 5 6 7 8 9 10 11 12 13 17 18 19 20 21 22 23 24 A. necessary costs of service, including a fair rate of return on the net valuation of its properties under efficient and economical management and the County is correspondingly required to fix just, reasonable and compensitory rates. Would you please provide us with.a general framework in which to view the financial exhibits submitted in this rate case? Yes, Ms. Roen. The function of the financial exhibits in this case is to prove the need for and show the effect of the rate increase sought in this application. My testimony and the primary financial exhibits will be addressed in the following five (5) steps: 1. Determine the amount of investment in property, plant and equipment used in providing service to the customers. This is called the rate base. 2. Determine the total expense to operate the utility system in a typical year. This is called the test year. 3. Determine the amount of return on investment which is reasonable. This is done by a cost of capital analysis. 4. By employing the amounts determined in steps 1, 2 and 3, the total amount of revenues to be collected from the customers can be determined. 5. Using the billing history actually experienced during the test year, a rate structure is formulated which will produce the total revenues determined in step 4. -3- 1 . , 4qK 1,4910 acF 4 DEC 111979 r DEC 111979 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 soox 42 FAcf 265 Q. What time frame was used as a test year or base year from which to make adjustments to obtain a normal year's operations for purposes of setting rates in this hearing? A. The base year used was the results of operations for the twelve months ended December 31, 1978. This year was used because it provided the most recent year's results of operations and was, therefore, considered a more accurate representation of the time period for which the proposed rates would go into effect. Q. Have you prepared a document which shows the investment was rate base of the utility which is to be used for this rate making proceeding? A. Yes. Q. Would you please provide a brief explanation of the major components which comprise rate base and any adjustments thereto. A. Certainly. Exhibit "2" provides the summary financial exhibits which make up the core of this rate case. Exhibit "3" provides the detailed backup financial data for those figures appearing in the summary exhibits included in Exhibit "2". Attachment 1 of Exhibit "2" contains the rate base calculations for Vero water and sewer operations for the twelve months ended December -4- 1 31, 1978. Page 1 of 2 shows that the average rate base invest - 2 ment for water operations during the test year was $208,000.00. 3 That investment was made up of the following components. 4 Utility plant and service of $341,000.00, which represents the 5 total original cost of all assets included in the water 6 operation. This is reduced by the accumulated depreciation on 7 that investment of $124,000.00. Contributions in aid of 8 construction reduces the rate base by $17,000.00. This 9 represents those dollars paid by the customers at the time 10 they initially connect to the system. These connection charges 11 help defray the cost of connecting new customers to the system 12 and contribute to lower monthly rates by reducing the earnings 13 base of the utility. The authority for the current level of 14 connection charges is contained in Resolution No. 77-95�, passed 15 by this Commission on September 21, 1977. The net effect of 16 two other minor components is to increase rate base by $8,000.00. 17 Column 2 of that same exhibit contains adjustments that are made 18 to the original cost of plant for that portion of the plant 19 considered to be held for the future use of customers. These 20 figures are derived from the used and useful analysis that 21 Mr. Vaughn previously provided testimony on. Adjustment A of 22 $153,000.00 is included to provide for one-half of the addition 23 to the water treatment plant which was completed in October, 24 but closed to plant in service subsequent to December 31, 1978. 25 The adjustment to utility plant in service of $113,000.00 is 26 the result of the used and useful analysis which can be found 27 on page 3 of Exhibit "4-A". Adjustments C, D, and E also relate -5- A.. DEC 111979 B00% 4 Pay 2n� DEC 111979 1 2 3 4 5 6 9 10 11 12 13 14 15 16 17 20 21 22 23 24 25 26 27 am 42 PAGE 26 to the used and useful adjustment of $113,000.00. The net result of these adjustments is to increase rate base by $66,000.00 which provides a total net investment in property, plant and equipment used and useful of $274,000.00. Page 2 of attachment 1 shows the rate base calculation for sewer operations for the test year. The components of the sewer rate base are the same as those of the water operations. Utility plant in service of $783,000.00 which is reduced by the accumu- lated depreciation of $198,000.00 and contributions in aid of construction of $27,000.00. The total rate base unadjusted for used and useful components amounts to $564,000.00. Column 2 contains the adjustments that were arrived at from Mr. Vaughn's analysis of plant used and useful. Adjustment B shows the reduction of plant in service of $324,000.00. A summary of how this figure was arrived at is contained on pages 4 through 6 of Exhibit "4-A" which Mr. Vaughn previously testified to. The other adjustments to the other components of rate base are the result of the used and useful adjustment to utility plant in service. The net effect is to reduce the total rate base by $242,000.00 which provides a net investment rate base used and useful in providing service to the customers of $323,000.00. Q. Mr. Fancher, would you please explain the importance of rate base and the way it will be used for purposes of •phis rate case. A. Yes, the rate base represents the net investment which the owners will be allowed a return on in this rate ;Waking process. This amount and the determination of the cost of capital will M 11 determine the total dollar amount of retu_n on investment 2 allowed to the shareholders. 3 4 Q. Have you pre;Dared a schedule which shows the cost of capital 5 for this rate case? 6 A. Yes. 7 8 Q. Would you please provide us with an explanation of this 9 calculation. 10 A. Yes. If you will turn to attachment 3 of Exhibit "2",,you will ,T %C-G�'_ : ....a.Y_�.--`-l�•o-Ci 11 see a calculation of the cost of capital,vhichAwould provide a r 12 fair rate of return on the investment used .�i:d useful in rendering 13 service to the customers. This calculaticn is a computation 14 of the weighted cost of capital based on tle actual capital 15 structure of General Development Utilities at December 31, 1978. 16 The weighted cost takes the composition of the capital structure 17 into account where a simple arithmetic average of the cost 18 components would not. Equity capital composes 98% of the 19 capital structure and has a computed cost rate of 14.82%. Debt 20 capital is represented by customer deposits at a cost rate of 21 6%. The equity cost of capital computation is contained on page 22 2 of attachment 3. This shows the weighted cost of capital 23 computation of GDV, Inc. as of December 31, 1978. The various 24 equity and debt capital components are contained on that 25 exhibit which results in an overall weighted cost of 14.82%. 26 The cost rate for the equity capital component of that computation 27 is based on the most recent debt offering of GDV, Inc. of -7- DEC 111979 w POOK 4 fAcE 268 r cc���� DEC �. 1979 Box 42 PAGE 2,69 1 13.2% plus a 5% factor included to represent the spread between 2 the cost of debt and equity capital. This factor is included 3 to recognize differences in risk between a debt and equity 4 capital position. However, I want to point out that based on 5 the revenues requested in this rate case, the water and sewer 6 operations will still sustain a net operating loss and, there - 7 fore, there will be no return on the investment. 8 9 Q. Mr. Fancher, have you prepared a schedule which shows the 10 effects of the requested level of revenues and its results 11 on the operations of the company? 12 A. Yes I have. If you will turn to attachment 2 of Exhibit "2", 13 you will see the constructed statement of operations for both 14 water and sewer operations for the test year ended December 15 31, 1978. Column 1 shows the per book results of operations 16. for the test year and the various components of the expense 17 items. For water operations we had operating revenues of 18 $22,000.00. The related expenses are broken up into the 19 following categories: operation of $44,000.00; maintenance of 20 $7,000.00; depreciation of $9,000.00; and taxes other than 21 income taxes of $4,000.00. Total expenses incurred during the 22 test year were $64,000.00, which resulted in a net operating 23 loss of $42,000.00. In column 2 we have adjustments to reflect 24 that portion of plant which is not considered used and useful 25 in providing service to the customers. The total adjustments 26 in that column reduce the net operating loss by $2,000.00 so 27 that the adjusted statement of operations for the test year 1 for water operations is $40,000.00. Column 4 shows the 2 additional operating revenues which would be derived from 3 the implementation of the proposed rates if those proposed 4 rates had been in effect during the test year. These 5 additional revenues would result in total operating revenues 6 of $52,000.00 for the year which would reduce the operating 7 loss to $10,000.00 for water operations. Column 6 shows the 8 additional revenues that would be required to increase the net 9 operating income enough to provide a fair rate of return on 10 the investment rate base. Page 2 of attachment 2 shows the 11 same computations for the sewer operations for the test year. 12 Total revenues received during the year were $12,000.00 with 13 the corresponding figure for total expenses of $73,000.00 14 which resulted in a net operating loss of $61,000.00. Column 2 15 contains adjustments for property not considered used and useful 16 which reduces the operating loss by $15,000.00. Column 4 shows 17 the requested increase in revenues of $12,000.00 which would 18 result from the proposed rates if they had been in effect 19 during the test year. This would result in a net operating 20 loss of $35,000.00. Column 6 shows those revenues that would 21 be required to provide a return on investment of 14.68% which 22 was the amount that was computed to be a fair rate of return. 23 24 Q. Mr. Fancher, would you please provide us with an explanation 25 of how you determined the additional revenues that would be 26 derived from the new rate structure. 27 A. Yes. Included in Exhibit "3" is a detailed analysis of all DEC 11.1979 oK V QAcE 270 DEC 111979 2 3 4 5 0 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Box 42 PAGE 271 billing during the test year 1978. This analysis shows a recomputation of all bills rendered daring the test year at the rates that were in effect during that year and the proposed rates. If you turn to page 48 of Exhibit "3", you will see a summary of the total water revenues that would be produced at the proposed rates. This figure of $51,870.00 agrees with the revenue figure included in column 5 of attachment 2 of Exhibit "2" which is the constructed statement of operations at proposed revenues for the test year. Page 54 of Exhibit "3" shows the corresponding figure for sewer of $23,655.00 which will again agree with the revenue figure in the constructed statement of operations calculation shown in attachment 2 of Exhibit "2". Q. Would you please identify for this Commission where in the filing package they can find the detailed rate structure currently in effect and the proposed rate structure. A. Yes. On page 66 and 67 of Exhibit "3", the Commission will find a schedule of the present and proposed rate structures. The proposed rates were set based on analyses done with rates in the surrounding area. Specifically we tried to set this rate structure on a comparable basis with that of Indian River County, specifically North County. Q. Mr. Fancher, could you tell us when and under what authority these rates were last approved? A. The rates presently in effect have been in effect since January of 1965. This was the last increase in water and sewer rates -10- 1 for this system. The increases that occurred at that time 2 were to bring the rates up to the amounts that were set forth 3 in the original franchise agreement dated April 1960. 4 5 • Q. Are there any other items which you would like to bring to 6 the attention of this Commission? 7 A. Yes. Included in the filing package are the proposed tariff 8 sheets for Vero operations. These documents are identified 9 as Exhibits "6-A" and "6-B". The tariff contains all the 10 rules and regulations, explanation of terms, detailed rate 11 schedules and copies of certain key documents which combine 12 to form the basis for the operations of the utility. Section 13 9(a) of the existing Resolution gives the Company the authority 14 to promulgate such rules. I would like the Commission to 15 adopt these tariffs as a supplement to be incorporated in the 16 Franchise Resolution. DEC 1. 1979 12 mEZ"? DEC 111979 aooK 42 PAGE"213 ATTORNEY ROEN ASKED MR. FANCHER IF THERE ARE ANY CHANGES IN THE RULES OR REGULATIONS WHICH WOULD BE INCLUDED IN THE FRANCHISE REGARDING MONITORING OF METERS. MR. FANCHER EXPLAINED THAT THE ONLY DIFFERENCE IN WHAT IS INCLUDED IN THE EXISTING RESOLUTION AND THE TARIFFS IS THE AREA CONCERNED WITH GUIDELINES INVOLVING THE INACCURACIES ALLOWED FOR METERS. THE TARIFFS CONTAIN STANDARDS THAT ARE BASED ON THE AWWA STANDARDS. THEY HAVE SEVERAL DIFFERENT TYPES OF METERS INVOLVED AND VARIOUS RANGES WHICH ARE ACCEPTABLE. THE RESOLUTION HAS A CRITERIA OF + OR — 3%. THE + 3% IS THE HIGH, AND THE AREA THAT WOULD INVOLVE FOR METERS THAT ARE RUNNING FAST IS THE SAME IN BOTH THE RESOLUTION AND THE STANDARDS. THE STANDARDS, HOWEVER, PROVIDE A GREATER CRITERIA IN THE AREA OF HOW SLOW METERS CAN RUN. MR. FANCHER EXPLAINED THAT SOMETIMES IT IS CHEAPER TO LET THE METER RUN A BIT SLOW BECAUSE IT IS VERY POSSIBLE IT WOULD COST MORE DOLLARS TO GO OUT AND CHANGE THE METER THAN IT WOULD IN LOST REVENUE SO IT WOULD BE IN THE INTEREST OF BOTH THE UTILITY AND THE CUSTOMER NOT TO CHANGE THE METER. ATTORNEY COLLINS DID NOT FEEL IT IS APPROPRIATE TO ADDRESS THIS MATTER OTHER THAN TO PUT THE COMMISSION ON NOTICE TO WORK TOWARDS SOME OTHER CHANGES. CHAIRMAN WODTKE UNDERSTOOD THAT MR. FANCHER HAS BEEN WITH GENERAL DEVELOPMENT LESS THAN TWO YEARS AND THAT IT IS HIS RESPONSI— BILITY TO PREPARE THE FINANCIAL FIGURE AND TO PREPARE THE TESTIMONY TO BE GIVEN HERE TODAY. MR. FANCHER STATED THAT HE COORDINATES THE TESTIMONY, AND THAT HE DID NOT PREPARE THE TESTIMONY GIVEN BY THE OTHERS. THE CHAIRMAN ASKED -IF; BASED ON THE CONSTRUCTION THAT WAS GOING ON IN 1978, HE FELT IT WAS A TYPICAL YEAR OF OPERATION FOR THAT SYSTEM. MR. FANCHER STATED THAT ALTHOUGH THE PLANT WAS UNDER CONSTRUCTION DURING THAT TIME, IT WAS NOT PUT ON THE BOOKS IN 1978; S0, HE FELT WITH THE ADJUSTMENTS THEY HAVE MADE, IT IS A SUITABLE YEAR FOR LOOKING AT WHAT THE AFFECTS WILL BE FOR THE REVENUES AND SETTING RATES. HE CONTINUED THAT THE SEWER PLANT WAS ON LINE AND IN THE BOOKS, BUT THE WATER PLANT WAS PUT IN THE BOOKS IN 1979. CHAIRMAN WODTKE ASKED IF THE COST OF CAPITAL ANALYSIS IS THE ONLY WAY YOU CAN FIGURE THE RETURN, AND MR. FANCHER STATED THAT THE RATE BASE ITSELF IS A UNIQUE TYPE OF CONCEPT AND THERE ARE ANY NUMBER OF WAYS OF CALCULATING A RETURN ON INVESTMENT. THE CHAIRMAN NOTED THAT THE COST OF CAPITAL MR, FANCHER USED WAS THE ENTIRE COST OF GENERAL DEVELOPMENT COMPANY TO BORROW MONEY FOR THEIR ENTIRE SYSTEM. MR. FANCHER STATED THAT GENERAL DEVELOPMENT UTILITIES CANNOT GO OUT AND RAISE ALL THE CAPITAL THAT IS REQUIRED IN AND OF ITSELF. THE WEIGHT AND REPUTATION OF GENERAL DEVELOPMENT STANDS BEHIND IT, AND IT IS A WHOLLY OWNED SUBSIDIARY FUNDED PRIMARILY FROM THE FUNDS OF GENERAL DEVELOPMENT CORPORATION. ON PAGE 2, THE COST RATES YOU SEE THERE FOR THE DEBT CAPITAL COMPONENTS ARE, IN FACT, EMBEDDED COST BASED ON THE CURRENT OUTSTANDING DEBT CAPITAL REQUIRE- MENTS FOR GDV. THESE FUNDS ARE WHAT IS USED TO PROVIDE FUNDS TO THE UTILITY OPERATIONS. CHAIRMAN WODTKE NOTED THATTHERE IS NO SEPARATE BALANCE SHEET FOR THIS UTILITIES OPERATION AS SUCH, AND MR. FANCHER STATED THAT THE FIGURES ARE THERE - THE BALANCE SHEET THAT IS THE AUDITED STATEMENT FOR GENERAL DEVELOPMENT UTILITIES IS, IN FACT, A COMBINED STATEMENT AND IS LOOKED AT FROM THE VARIOUS STATEMENTS. CHAIRMAN WODTKE NOTED THAT THERE IS NOT A BALANCE SHEET WHICH SEPARATES THIS UTILITY FROM THE SIX OR SEVEN OTHERS, AND MR. FANCHER STATED THAT THEY DO NOT HAVE A BALANCE SHEET PREPARED IN THE FORM THE CHAIRMAN IS REFERRING TO. THE CHAIRMAN ASKED IF THEY HAVE THE FIGURES SHOWN FOR THE INVESTMENT JUST FOR THIS OPERATION, AND MR, FANCHER SAID THEY DID NOT. CHAIRMAN WODTKE REQUESTED THAT MR, FANCHER DEFINE THE TERM ItTOTALAVERAGE INVESTMENT." 2Q E DEC 111979 �K. � PAcE274 DEC 111979 avox 42' pAcE275 MR. FANCHER STATED THAT HE USED AVERAGE INVESTMENT TO CALCULATE THE RATE BASE BECAUSE THAT WOULD MORE CLOSELY APPROXIMATE A TOTAL DOLLAR INVESTMENT THROUGH THE TEST YEAR 1978 AS OPPOSED TO THE YEAR END INVESTMENT, WHICH WAS CONSIDERABLY HIGHER. HE EXPLAINED THAT THE AVERAGE INVESTMENT ATTEMPTS TO RELATE THE AVERAGE INVESTMENT IN DOLLARS THROUGHOUT THE YEAR COMPARED TO THE AVERAGE COST AND REVENUES PRODUCED THAT YEAR TO SERVE THE CUSTOMERS THAT WERE THERE ALL YEAR THROUGH. CHAIRMAN WODTKE COMMENTED THAT THEY WERE TALKING ABOUT TAKING A FACTOR OUT FOR FUTURE PLANT USE AND TOOK 1977, 1978 AND 3 MONTHS OF 1979 AND FACTORED THESE FIGURES IN TO COME UP WITH A USABLE PORTION. HE ASKED IF IT WAS NOT TRUE THAT THERE WAS A MORATO- RIUM IN 1977 OR 1978 AND NO ONE COULD HOOK UP. MR. FANCHER STATED THAT HE HAD NO KNOWLEDGE OF ONE. CHAIRMAN WODTKE THEN INQUIRED AS TO THE NUMBER OF CUSTOMERS WHO HAVE HOOKED ON SINCE MARCH OF 1979, AND MR. FANCHER FELT THAT MR. VAUGHN WOULD HAVE A BETTER IDEA OF THIS. COMMISSIONER LYONS COMMENTED THAT MR. VAUGHN STATED THAT ALL FORCE MAINS WERE CONSIDERED USED AND USEFUL, BUT DID EXEMPT SOME OF THE LINES IN OTHER CATEGORIES. HE ASKED WHY ALL FORCE MAINS ARE CONSIDERED USED AND USEFUL AND NOT EXEMPTED. MR. FANCHER FELT MR. VAUGHN COULD ANSWER THIS BETTER, AND COMMISSIONER LYONS THEN NOTED THAT TO GET THE AMOUNT OF MONEY THAT GOES INTO THE RATE BASE, MR. FANCHER USED FACTORS CALLED "HISTORICAL COST PER FOOT It AND ASKED HIM TO EXPLAIN THIS. MR. FANCHER AGAIN FELT MR. VAUGHN COULD MORE PROPERLY ANSWER THIS, BUT EXPLAINED THAT THERE IS A BASE ESTABLISHED WHICH, IN THIS -INSTANCE IS A 4° MAIN, AND THEN ALL THE OTHER RELATIVE COSTS OF THE DIFFERENT SIZE LINES ARE COMPARED TO THAT BASE AMOUNT, CHAIRMAN WODTKE DISCUSSED THE FIGURES USED TO COMPUTE THE BASE AMOUNT AND ASKED,IF THE LINE HAS BEEN IN THERE SINCE 1960, DID THEY USE THE RELATIVE COST OF THAT LINE TODAY OR THE COST OF IT 10 YEARS AGO AND DEPRECIATE IT, AND MR. FANCHER WAS NOT SURE OF THE ANSWER TO THAT (QUESTION. - 30 CHAIRMAN WODTKE STATED THAT HE WISHED TO HAVE SOME SIMPLE INFORMATION AS TO WHAT GENERAL DEVELOPMENTS ORIGINAL COST WAS FOR THE WATER PLANT, THE IMPROVEMENTS THEY HAVE MADE, AND THE COST FOR THE SEWER PLANT, WATER PLANT AND LINES. HE NOTED THAT WITHOUT A BALANCE SHEET, WE DONT HAVE ANYTHING TO START WITH. MS. ROEN STATED THAT SHE FELT EXHIBIT 3, PAGE 19, MAY BE WHAT THE CHAIRMAN IS LOOKING FOR IN TERMS OF A BALANCE SHEET. MR. FANCHER AGREED THAT THE ORIGINAL COST OF THE VARIOUS COMPONENTS AND EQUIPMENT INCLUDED IN THE VERO HIGHLANDS AND SHORES SYSTEM ARE INCLUDED IN THE COMPOSITE BALANCE SHEET ON PAGE 19 OF EXHIBIT 3. CHAIRMAN WODTKE ASKED IF ON PAGE 42 AND 43, THE COLUMN ON THE RIGHT HAS THE WRONG YEAR ON IT, AND MR. FANCHER AGREED THAT IT SHOULD BE DECEMBER 31, 1979. HE NOTED THAT IT IS CORRECT AT THE TOP OF THE EXHIBIT. THE CHAIRMAN CONTINUED TO DISCUSS FIGURES FOR 1977, AND ASKED IF THERE ARE ANY COSTS THAT COULD BE ATTRIBUTED TO OPERATION DURING THE TIME OF BUILDING THAT MIGHT NOT BE OPERATIONAL EXPENSES. MR, FANCHER STATED THAT THE COSTS INVOLVED IN THE BUILDING OF THE PLANT WERE CAPITALIZED. CHAIRMAN WODTKE ASKED WHAT AMOUNT THE UTILITY COMPANY PAYS ON ADMINISTRATIVE OR GENERAL EXPENSES TO THE PARENT COMPANY. MR. FANCHER STATED THAT THERE IS A FEE OF $1,200 FOR WATER AND $700 FOR SEWER OPERATIONS, AND FOR THAT FEE, THE UTILITY SYSTEM RECEIVED SERVICES INCLUDING LEGAL, ACCOUNTS PAYABLE, COMPUTER SERVICES FOR BILLING, BILLING ANALYSIS REPORTS AND OTHER ADMINISTRATIVE AND GENERAL EXPENSES. COMMISSIONER LOY ASKED IF THESE FEES WERE PER MONTH, AND MR. FANCHER REPLIED THEY WERE PER YEAR. THE CHAIRMAN THEN BROUGHT UP TAP -IN FEES, AND MR. FANCHER STATED THAT THEY ARE INCLUDED IN THE RATE BASE UNDER CONTRIBUTIONS TO CONSTRUCTION, AND NO DOLLARS ARE BOOKED UNTIL TIME OF CONSTRUCTION. CHAIRMAN WODTKE ASKED IF THEY REDUCE THE BASE BY THE AMOUNT THEY RECEIVE, AND MR. FANCHER STATED THAT THEY DO. HE CONTINUED THAT 31 DEC 111979 BOOK, PAGF�o% Fr ­ DEC 1979 Boob 42 PACE27 THEY HAVE RECEIVED $17,000 TAP—IN FEES FOR WATER AND $27,000 FOR SEWER, AND THAT IS EVERYTHING THAT HAS BEEN COLLECTED SINCE THE INCEPTION OF THE SYSTEM. CHAIRMAN WODTKE COMMENTED THAT THE APPROVED TAP—IN FEE WAS ABOUT $1:000 FOR AN 80' LOT. HE ASKED IF THE MONEY ESCROWED NOW FOR FUTURE SEWER AND WATER TAP—INS IS INCLUDED IN THIS AMOUNT, AND MR. FANCHER STATED THAT IT IS NOT. THE CHAIRMAN NOTED THAT $17:000 WOULD ONLY AMOUNT TO 45 HOMES AT $400 EACH. COMMISSIONER LOY RETURNED TO A DISCUSSION OF THE FEES FOR ADMINISTRATION AND GENERAL EXPENSES PAID TO THE PARENT COMPANY, AND ASKED IF SHE READ THE BREAKDOWN CORRECTLY, WHICH INDICATES AN EXPENSE FOR ACCOUNTING AND COLLECTING OF $1,800, IN ADDITION TO THE $700 MANAGEMENT FEE. MR. FANCHER SAID THAT WAS CORRECT. HE EXPLAINED THAT THE SUM OF THE FIGURES IN EXHIBIT 3, PAGES 42 AND 43 GIVES YOU A TOTAL EXPENSE DURING THE YEAR OF $32,000, WHICH IS MADE UP OF $29,000 OPERATING EXPENSES AND $3,000 MAINTENANCE. COMMISSIONER SIEBERT CONTINUED TO QUESTION THE FIGURES FOR ACCOUNTING AND COLLECTION, AND MR.FANCHER EXPLAINED THAT IT INCLUDES THE METER READERS. COMMISSIONER LOY ASKED THE EXTENT OF PERSONNEL AT THIS PLANT, AND MR. FANCHER BELIEVED THERE ARE THREE PEOPLE PERMANENTLY ASSIGNED. COMMISSIONER LOY NOTED THAT ON PAGE 43 EVERYTHINGUNDER GENERAL EXPENSE IS PART OF THE MAIN OFFICE SO WE ARE TALKING ABOUT $5,000 OUT OF THE MAIN OFFICE THAT IS THROWN AGAINST THIS SYSTEM. COMMISSIONER SIEBERT QUESTIONED WHY THEY WAITED FROM 1965 UNTIL AFTER THEY WENT INTO PLANT EXPANSION TO GO FOR A RATE INCREASE. HE NOTED THAT IT IS VERY CONFUSING TO SEPARATE THE PLANT EXPANSION FROM THE COSTS. ATTORNEY ROEN STATED THAT THIS IS THE EXTENT OF THE TESTIMONY THEY WISH TO PRESENT, AND ASKED MR. MOSIAN TO ANSWER THE BOARD'S QUESTIONS. GERARD MOS -IAN, VICE PRESIDENT OF FINANCE AND ADMINISTRATION, FOR GENERAL DEVELOPMENT UTILITIES, CAME BEFORE THE BOARD. HE ASKED THAT THEY TURN TO PAGE 19 OF THE LIGHT BLUE BOOK AND STATED'THAT THIS SCHEDULE IS THE CLOSEST THEY -HAVE TO AN OFFICIAL BALANCE SHEET FOR THE VERO OPERATION. HE STATED THAT THEY DO MAINTAIN DETAILED RECORDS OF THEIR PLANT AND NOTED THAT PLANT MEANS ANY PHYSICAL ASSETS; THEY MAINTAIN CONTINUOUS PROPERTY RECORDS AND DO HAVE A COMPUTERIZED HISTORY OF ALL ASSETS OF THE COMPANY. MR. MOSIAN THEN DISCUSSED WHY THEY USE AVERAGE RATE BASE, NOTING THAT A SUPREME COURT CASE IN THE STATE OF FLORIDA STATES THAT THEY MUST USE AVERAGE RATE BASE UNLESS IN EXTREME CIRCUMSTANCES. HE POINTED OUT THAT THE COLUMN IN DECEMBER, 1978, FOR SEWER SHOWS THE TOTAL PLANT IS OVER $1,000,000 AT THE END OF THE YEAR, BUT IF YOU LOOK FURTHER, YOU WILL SEE THAT IN OCTOBER, THE PLANT WAS ONLY $500,000. THEY DID NOT HAVE THE PLANT ON THE BOOKS THE WHOLE YEAR SO USED AN AVERAGE FIGURE INSTEAD OF YEAR END. CHAIRMAN WODTKE QUESTIONED THE PHRASE "WEIGHTED HISTORICAL COST." MR. MOSIAN USED WATER MAINS AS AN EXAMPLE AND EXPLAINED THAT THEY HAVE SAID IF A LINE DOES NOT SERVE ANYBODY, THEY WILL REMOVE THAT LINE FROM THE RATE BASE. IN ORDER TO REMOVE PART OF THE LINES, THEY DECIDED TO TAKE THE AVERAGE COST OF THE LINES. HE NOTED THAT SOME OF THESE LINES WERE PUT IN MANY YEARS AGO AND TO RESEARCH ALL THE VARIOUS SIZE LINES TO DETERMINE WHAT YEAR THEY WERE PUT IN THE GROUND WOULD BE VERY COSTLY SO TO SIMPLIFY THIS THEY ESTABLISHED THE RELATIVE DIFFERENCE IN COST OF A 2" LINE FROM A 4" LINE, ETC., APPLIED IT TO THE AVERAGE COST, AND REMOVED FROM THE RATE BASE THE LINES THAT WERE DESIGNATED AS NOT USED AND USEFUL. "WEIGHTED" MEANS A FACTORED DIFFERENCE IN THE COST OF THE LINE. COMMISSIONER LYONS ASKED WHAT IT MEANS IN ITEM 6 WHERE IT SAYD "ALL MAINS WILL BE COSTED ON A FACTORED BASIS." MR. MOSIAN EXPLAINED THAT IN SCHEDULE G IN THE DARK BLUE BOOK YOU WILL SEE SIZE OF THE MAINS AND INSTALLATION COSTS - THIS WOULD BE A RECENT COST. THEY ASSUME THAT THE DIFFERENCE IN COST TO DEC 111979 33 Box 42 FnE 27 r DEC 111979 Bw 4Z PAGE 279 INSTALL A 4" MAIN VS. A 3" WOULD BE THE SAME MANY YEARS AGO, I.E. 50% MORE FOR 4" OVER 3". THEY USED THE INSTALLATION COST FOR 1976. THE COLUMN MARKED "FACTOR" IS THE ARITHMETIC DIVISION, AND ALL THIS DOES IS ESTABLISH A WEIGHTED DIFFERENCE IN THE COST TO INSTALL EACH SIZE MAIN. THE NEXT COLUMN IS THE ACTUAL FOOTAGE AT THE END OF 1978 BY SIZE, AND THE LAST COLUMN "WEIGHTED FOOTAGE" IS MULTIPLICATION OF THE FACTOR TIMES THE FOOTAGE, OR $123,000. COMMISSIONER LYONS ASKED IF THAT NUMBER IS AN ADDITION OF ALL THE COSTS OF MAINS FROM THE YEAR ONE WITHOUT DEPRECIATION, AND MR. MOSIAN STATED THAT WAS CORRECT. THEY HAVE SET $2.96 AS THE AVERAGE COST OF A 4" MAIN, AND BY APPLYING THE FACTOR TO THE $2.961 THEY COME UP WITH THE AVERAGE FOR THE OTHER SIZES. THE PURPOSE OF THE WHOLE EXHIBIT IS TO EXPLAIN HOW THEY FACTOR TO ARRIVE AT A COST FOR THE VARIOUS SIZES. MR. MOSIAN INFORMED THE BOARD THAT THERE WAS A MORATORIUM UNTIL THE SEWER TREATMENT PLANT WAS EXPANDED. THERE WERE NO CONNECTIONS IN 1976; THERE WERE SOME IN 1977. HE NOTED THAT THE PURPOSE OF THE BLUE BOOK IS TO DETERMINE WHAT PLANT IS HELD FOR FUTURE USE BECAUSE THEY STRIVE TO ELIMINATE FROM THE COST WHAT WILL SERVE CUSTOMERS IN THE FUTURE. HE THEN DISCUSSED CONNECTION CHARGES AND NOTED THAT THE CHARGE IS USED TO DEFRAY THE COST OF THE FACILITY. THEY COLLECT THOSE CHARGES AT THE TIME OF CONNECTION AND NOT BEFORE. HE EXPLAINED THAT WHEN A CUSTOMER PAYS FOR HIS LOT, HE CAN PUT MONEY INTO A SEPARATE ESCROW ACCOUNT FOR WATER AND SEWER, AND THIS MONEY MAY NOT BE REMOVED UNTIL CERTAIN CONDITIONS ARE MET. TO DATE THESE ESCROW FUNDS HAVE NOT BEEN TOUCHED. THIS ESCROW ACCOUNT IS NOT GENERAL DEVELOPMENT UTILITIES ESCROW - AND IN A WAY IT IS NOT EVEN GENERAL DEVELOPMENT'S; IT IS SHOWN ON THE BOOKS BOTH AS AN ASSET AND A LIABILITY. CHAIRMAN WODTKE ASKED IF GENERAL DEVELOPMENT HAS AN OBLIGA- TION TO HONOR THOSE COMMITMENTS WHENEVER THE CUSTOMER WANTS TO BUILD, AND MR. MOSIAN STATED THAT GENERAL DEVELOPMENT WILL MEET ANY COMMIT- MENTS IT HAS, AND HE FELT THEIR TRACK RECORD IS EXCEPTIONALLY GOOD. HE WANTED TO MAKE IT CLEAR THAT THEY DO NOT HAVE ACCESS TO THOSE FUNDS AND WILL NOT SEE THEM UNTIL THERE IS SOME ACTIVITY IN THAT AREA. ATTORNEY-COLLINS NOTED THAT THE CHAIRMAN HAD COMMENTED -THAT THE CONTRIBUTION AS SHOWN ON THE BOOKS SHOWED A HOOK-UP OF ABOUT 45 HOMES, AND THERE ARE CONSIDERABLY MORE HOUSES THAN THAT. MR. MOSIAN POINTED OUT THAT THE CURRENT CHARGE FOR TAP -IN, WHICH COMES TO ABOUT $1:000, WENT INTO EFFECT IN 1977. PRIOR TO THAT IT WAS CONSIDERABLY LESS. THE CHAIRMAN STATED THAT IT WAS $630.00, AND `YAR. MOSIAN NOTED THAT WAS FOR WATER AND SEWER. HE FURTHER COMMENTED THAT THEY DID NOT ALWAYS MAKE CONNECTION CHARGES. THERE WAS A TIME BACK IN THE 50'S AND EVEN 60'S WHEN THERE WAS NO REGULATION UNDER THE PUBLIC SERVICE COMMISSION, AND IT WAS COMMON PRACTICE FOR MOST WATER AND SEWER SYSTEMS TO PUT IN THEIR OWN LINES. THE COST OF YOUR WATER BILL WAS VERY MINIMAL, AND MOST COMPANIES WERE ABLE TO EARN A LITTLE RETURN. IN THE 60'S THAT CHANGED, AND IT BECAME -MORE DIFFICULT TO BORROW MONEY SO THE ALTERNATIVE TO GET CAPITAL WAS TO GET IT FROM THE CUSTOMER, WHICH LED TO THE CONNECTION CHARGE TO PROVIDE CAPITAL FOR EXPANSION NEEDS. ATTORNEY COLLINS ASKED IF IT WOULD BE MR. MOSIAN'S SWORN TESTIMONY THAT THERE HAVE ONLY BEEN 45 HOUSES THAT HAVE PAID TAP -IN FEES, AND MR. MOSIAN STATED THAT IT WOULD NOT BECAUSE IT DIDN'T SEEM RIGHT TO HIM AND HE WOULD HAVE TO GO BACK TO THE BOOKS AND RESEARCH. HE NOTED THAT IN 1977 THERE WERE 13 CONNECTIONS, ONLY 7 IN 1978, AND NONE IN 1976; A GOOD DEAL OF THE GROWTH CAME VERY EARLY IN THE SYSTEM. THE CHAIRMAN ASKED HOW MANY WATER CUSTOMERS THEY NOW HAVE, AND MR. MOSIAN FELT IT WAS APPROXIMATELY 340. THE CHAIRMAN ASKED WHEN GENERAL DEVELOPMENT CORP. SOLD THE HOUSES WHAT AMOUNT THEY PUT INTO THE OTHER CORPORATION FOR THE COST OF THE WATER AND SEWER, AND MR. MOSIAN STATED THAT NO AMOUNT WAS PUT IN BECAUSE THAT WAS BACK IN THE PERIOD WHEN INVESTMENT IN WATER AND SEWER SYSTEMS WAS COMMON. CHAIRMAN WODTKE ASKED IF HE WAS SAYING THAT WHEN THEY SOLD A HOUSE, THEY DID NOT INCLUDE ANYTHING IN THE COST OF THE HOUSE FOR THE WATER AND SEWER PLANT OR DISTRIBUTION LINES. MR. MOSIAN STATED THAT HE DID NOT KNOW WHAT THEY DID AT THAT TIME, BUT IT WOULD MAKE 35 DEC 111979 Nox 42.'PACE'280 J DEC 111979 Bo 42 VALE 281 SENSE THAT ANY COMPANY WOULD HAVE TO RECOVER THE COST. THE PRACTICE AT THE TIME WAS FOR THE COMPANY TO INVEST THE MONEY AND INSTALL THE LINES. THE CHAIRMAN NOTED THAT THEY STILL HAVE THAT ORIGINAL MONEY INVESTED. EVEN THOUGH THEY SOLD 200 TO 300 HOUSES WHEN THERE WERE NO CONNECTION CHARGES, HE FELT WE CAN ASSUME THEY DID NOT GIVE THE WATER AND SEWER AWAY, AND NOW THEY WANT A RETURN ON THAT MONEY WHEN ACTUALLY THIS CORPORATION RECOUPED THE INVESTMENT. MR. MOSIAN STATED THAT WAS A PERIOD WELL BEFORE HIS TIME WITH THE COMPANY, AND HE IS NOT SURE THAT IS A FACT. COMMISSIONER SIEBERT ASKED WHY THEY DID NOT COME IN FOR A RATE INCREASE PRIOR TO GOING INTO PLANT EXPANSION. MR. MOSIAN EXPLAINED THAT IN 1972 AND 1973 THE IMPACT OF GROWTH AND INFLATION HIT THE COMPANY VERY BADLY, AND IT BEGAN FOR THE FIRST TIME TO LOOK AT ITS RATES AND BEGAN FILING RATE CASES TO RAISE THE RATES IN EVERY DIVISION THEY OPERATE. IT TAKES UPWARDS OF TWO YEARS TO'PROSECUTE A CASE BEFORE THE STATE OF FLORIDA, AND THEY USE THE SAME DOCUMENTATION THAT THEY HAVE HERE TODAY. BECAUSE OF THE TIME AND THE MANPOWER IT TAKES, THEY DECIDED TO FILE THE CASES IN ORDER OF MAGNITUDE, AND THEY ARE JUST NOW GETTING TO VERO. MR. MOSIAN NOTED THAT WITH A SYSTEM THIS SMALL, IT IS VERY DIFFICULT TO MAINTAIN A PROFIT, BUT THEY WERE ABLE TO ABSORB WHAT WERE SMALL LOSSES UNTIL RECENT YEARS. MR. MOSIAN THEN INFORMED THE BOARD THAT THE NUMBER OF CUSTOMERS AS OF MARCH, 1979, WAS 338 FOR WATER AND 238 FOR SEWER. HE EXPLAINED THAT THEY HAVE THREE PERMANENT EMPLOYEES, AND THE LABOR CHARGES SHOWN ARE DIRECT LABOR PLUS A PORTION OF THE LABOR FROM PORT ST. LUCIE FOR MR. VAUGHN AND THE BILLING OFFICE, WHICH CONSISTS OF FOUR PEOPLE. A PORTION OF THEIR TIME IS ALLOCATED TO VERO BEACH ON THE BASIS OF THE NUMBER OF CUSTOMERS. HE NOTED THAT PORT ST, LUCIE HAS APPROXIMATELY 6,000 WATER CUSTOMERS AND 3:500 FOR SEWER. THAT IS WHY THE ALLOCATIONS TO VERO BEACH ARE (QUITE MINIMAL. 36 CHAIRMAN WODTKE WISHED TO KNOW THE NUMBER OF NEW CONNECTIONS" FOR ALL OF 1979, AND MR, MOSIAN ANSWERED THAT IT WAS 10 THROUGH MARCH AND HE DID NOT HAVE THE FIGURES THROUGH THE REMAINDER OF 1979, BUT HE WOULD GUESS ABOUT 20 FOR THE YEAR TO DATE. MR. VAUGHN, GENERAL MANAGER, DID NOT KNOW THE FIGURES FOR THE HOOK-UPS FOR THE YEAR TO DATE EITHER. COMMISSIONER LYONS ASKED WHY ALL OF THE FORCE MAINS ARE CONSIDERED USED AND USEFUL. MR. VAUGHN STATED THAT THE FORCE MAINS DO NOT COLLECT SEWAGE; THEY ARE USED TO TRANSPORT IT TO THE PLANT FROM THE LIFT STATIONS. COMMISSIONER LYONS ASKED IF HE WAS SAYING THAT ALL FORCE MAINS THAT THEY HAVE IN THE SYSTEM ARE IN USE, AND MR. VAUGHN STATED THAT THEY ARE 100% USED. THE CHAIRMAN ASKED IF THERE ARE ANY OVERFLOW OR BLOW-OUT VALVES IN THE SYSTEM THAT WOULD POSSIBLY DISCHARGE ANYTHING INTO THE RIVER, AND MR. VAUGHN STATED THAT THERE ARE NOT AND THAT YOU ARE NOT ALLOWED TO HAVE ANYTHING LIKE THAT. CHAIRMAN WODTKE NOTED THAT IN THE ORLANDO LABORATORY REPORT IN THE AREA OF NITRATES, IT SAYS THE RAW WATER IS 1.3, AND THE FINISHED PRODUCT PRIOR TO DISTRIBUTION IS .06; HOWEVER, IN THE THIRD REPORT AT THE CUSTOMER S HOUSE, THE NITRATE IS HIGHER THAN IN THE RAW WATER. MR, VAUGHN COULD NOT EXPLAIN WHY IT IS A LITTLE BIT HIGHER IN ONE PLACE THAN IN ANOTHER. HE NOTED THAT WHEN THEY LOOK AT .016 ON THE MONITOR, THAT IS A VERY SMALL AMOUNT IN THE SENSITIVITY RANGE, AND IT IS PRETTY HARD TO GIVE ANY KIND OF AN ANSWER. HE POINTED OUT THAT THE MAXIMUM CONTAMINANT LEVEL FOR NITRATES IS 10. THE CHAIRMAN THEN DISCUSSED CALCIUM CONTENT, AND MR. VAUGHN INFORMED HIM THAT THE SALTS OF CALCIUM AND MAGNESIUM ARE A NATURAL ELEMENT OF WATER AND ARE BASICALLY WHAT CONSTITUTES HARDNESS IN WATER. HE NOTED THAT SOFTENED WATER IS REALLY A LUXURY ITEM. DISCUSSION CONTINUED IN REGARD TO THE FIGURES GIVEN FOR NITRATES, AND MR. VAUGHN AGAIN POINTED OUT THAT YOU ARE LOOKING FOR COMPLIANCE WITH A MAXIMUM OF 10 AND YOU ARE GETTING A READING OF .06. 37 DEC 111979 'BOOK y $ ` DEC 111979 aoox 42 eacF 283 COMMISSIONER SIEBERT FELT THIS IS REALLY NIT PICKING SINCE THE LAB REPORT SHOWS THAT IT IS WELL WITHIN THE TOLERANCES FOR THE NATIONAL PRIMARY DRINKING WATER STANDARDS. GEORGE LINER, COUNTY UTILITIES DIRECTOR, COMMENTED THAT MAYBE IT IS BELABORING THE POINT, BUT EVEN WITH THESE LOW FIGURES, THERE IS THE IMPLICATION THAT SOMEWHERE ALONG THE LINE TO THE CUSTOMER `S HOUSE, THE WATER QUALITY WO-RSENS. HE THEN NOTED THAT THE LAB REPORT ADDRESSED THE PRIMARY STANDARDS ONLY, AND ASKED IF THE COMPANY HAD ADDRESSED THE SECONDARY STANDARDS. HE REALIZED THESE STANDARDS WHICH HAVE TO DO WITH APPEARANCE, SMELL, ETC., ARE NOT ENFORCED, BUT FELT THE COMPANY MIGHT BE CURIOUS AS TO HOW THEY STAND IN THIS REGARD. MR. VAUGHN STATED THAT THESE STANDARDS HAVE NOT BEEN IDENTIFIED. CHAIRMAN WODTKE INQUIRED ABOUT THE TOTAL NUMBER OF HOMES THE PLANT HAS THE CAPACITY TO SERVE. MR. MOSIAN EXPLAINED THAT WHEN THEY DESIGNED THE PLANT THEY USED THE STATE CRITERIA OF 350 GPD PER STANDARD CONNECTION. BASED ON THAT CRITERIA, THE WATER PLANT WILL HANDLE 1,028 AND THE SEWER PLANT 714. OF COURSE, EVERYONE DOES NOT USE THE STANDARD AMOUNT, SO THOSE NUMBERS WOULD FLUCTUATE SOME. THE CHAIRMAN ASKED IF ANY MEMBER OF THE PUBLIC PRESENT WISHED � =T.lq BILL DAVENPORT, PRESIDENT OF VERO SHORES PROPERTY OWNERS ASSOCIATION, STATED THAT HE WOULD SPEAK FOR THE ASSOCIATION FIRST AND THEN FOR HIMSELF INDIVIDUALLY. HE PRESENTED PETITIONS SIGNED BY 199 RESIDENTS WHICH PETITIONS ARE ON FILE IN THE OFFICE OF THE CLERK, AND READ THE TEXT OF THE PETITION ALOUD, AS FOLLOWS: 38 7!2 We the undersigned resident- f -,f the Vcrt.-) Shores object to and oppose the proposes:: rate increasF� for watEIr ar�,d� sewer service by General Development Ulk.-ilities ln,.-. The monthly bill for the resiOentia'tl, custo,,rer using 5000 gallons of -wairer %stated to be the approxiizia--e average) would', rise -f"rom $4.05 to $8.1-15 por monkth, a 121 percent in= -ease. The montInly sewer bill ,vould incrc-ase from $4.00 to $7.50 which is almost doubic the present, rate. Actually, the average. Monthly water usage of many res dents in thc Vero Shores Conurainity is about 4 times what GDU clai-mis as the average. is due to the fact that nianv of the homes operate -;-,.uto-_n1at2_C sprinkler systens. Based upon the projected rate increases the avOrage monthly; water/-: Iwer bill for a Vero Shores household could be of the i-nagnit-u'lle of $40-$45 which is excessive by any standard. In the past the qunlit' of water furnished by thn 'Urt-ility Co-wip.any has been poor containing sediments and having an objectionable ojor. Many residents have, as a result-, purchased bottled drinking water and/or installed treatment facilities. It is apparent --hat - General Development is projecting ttiese.excessive rate increases to help offset the cosl- of planned expansion principally in the Vero Highlands. We feel it -,s unfair that long time established residents in Vero Shares be forced to bear any such development costs at this point in time. A moderate rate increase may be Justified based strictly upon increased operating costs and consistent with prevailing -rates of comparable operatinq utility companies, MR. DAVENPORT EMPHASIZED THAT A MAJOR PART OF THEIR CONCERN IS THE BASIC 5,000 GALLON STANDARD WHICH SEEMS TO BE MINIMAL, AND HE FELT THE INCREASED RATES BASED ON ACTUAL USAGE WOULD EARN MUCH MORE THAN ESTIMATED. MR. DAVENPORT, SPEAKING AS AN INDIVIDUAL, THEN READ TO THE BOARD THE FOLLOWING MAILGRAM WHICH HE HAD SENT TO THE CHAIRMAN: 39 DEC 111979 Boa 42 PnE2384 A I L IL 1 .1 :4T) (,I" o) V E NP 011 -'., T '7' 454 1 PL SOLPEAST FL 32e60 DEC 111979 4— 1 �;617-,k40 I ^ /C -G/79 ICS I P rly-Mil CSP L A t� 5 6 7'26�`""IMTTMT VFFM BEACH F 545 12-06 IPF-7T I T Y f --f N1 ;J Y T V) RIM', "OUNTY %f'CUPT!!,CU!F Y,: r 11 r C305 BOOK PACE rwo BOOK ME A ,:j I =J.Y, yetT-,':TT tt VENP ORT 4 V;:Rr' St-'CiRt-S V 134 A ^ 4 'rl- ("'> I D A 30 c 1 - N:, .1 ­.- Ul I L Tl ES `ATES 'A'4 i :_X P'll L;S -i,-; YOU CIJ' 0 'IC OUT TH- "Y"UR F UTI LI TI FS Th -:i CU!,'7)1 TI ON 'F OUR 'VJA'�- R. OUR r NZ is I 1 LY 'bILL .v07 DIRRI 'a'� THIS FR U!.'LrSS A IS FILTERED THPOUGH A A ;;4 EN'T. IAI E P U R 0.4 A S E B 0 T T L E ',.!A r TFFJp US F IN COFFEE, TEA AND iX I X I N',ICE. T X PRESENT :kATER LEAVES A CRUSTY SCU'Y! AROUND THE SHOWER V0 T31LFiS. LET XE EXPRESS MY CUCN^E_R`6 CVER THE COSTS IF THF 711 L' ;: M A,'_ '_ "PF"VED. T";' AVERA^w VOLUME FOR CUR HOUSEHOLD IS Pcoo AF 17 T N 0 T 59000 1, A L L 0.111 13" AS DEVELOPMENT UTI LI Tl ES IF" TH F PROJECTED WARNINGS FOR G, U _4 I L L FSE WRONG IF A 5 0 0 v L L G N'S AV:!MrAGF IS USFD. AT A RECENT 4CMEOWNERS MEETING G,.)U MADE V'- I I- STATEMENTS. I 'VOULD LIXF 110 REPEAST SOME OF THE STATEMENTS YOU. 7)U, STATED THAT OU- NATER IS BAD 773ECAUSE TPE SYSTEM IS SITED _TI -NE' ')�'IITN THE Pi C AD "OF r � T -1 D LARGER STORAGE 'N.. Ic)77-7? CMU AIMED ONE i Jr__L At;l A 1. A, u S '7 A 1111A I 'If T'-' I N r: S 6 H 0) U I) � iA V E P aN D 0 N E ASOUT WATER llijjl.T J'y i-� y 'i' .. R L_ T1117 1-CCAL -NA,� V,F PUT '�Er'Cr NOT. 4. TT 0 %1 A � I �' E F 0PR N CT UTI I L 1 TYGN P L A N T !-.'A 3 1'L CAPA0F CITY 500 C . I.- -'l N, N 7c T 1 P MCI'l 114,fESvl;�* O TO 5. U T A T ET) THE AT)`l`('AAL '17UPF CONINFCTIOI %'ILL IMPROVE T47IR % .::U T I T ;-;") T T 2, R C E NT T C P C I T Y 1 F 4 HFIPa3 F 4"lr",rF`vT (7 T117 f):7 T . ';",U ST,TF-' T'_%AT T'. _ PPFS_ll)F'JTj I A'_ U 1 1 '4 FS 0 7 P FIR (' F T 1 E -`-S D"'ES .'i 11 APPLY 7r0l T*, -'E__`*% I"". .iiFl' 7 DID NOT PROJECT o .3 TAT :f! L:. I li;_ -,. :, V-; ':AT "OULD 0.kF "POUT 3Y 7) U E- T!,4rL ED T11AT T'1171Y "AD " NO 11'11F.4" THIT T:,c_*P, PAPENT MM)PANY ETINI:� ,,. - L A117TVTTY 1.. T3 1 .' c i, � EA S R 7, IN T'4-- HlG'iL.AN)S 4C; LM 1 Cr I o, 5C'1012 , 000 140frF U"I TS _4OULD BPI NG ABOUT 1 .5 MILLI ON T.. ..:_LI.,` 11 7) ') L I - ", i I, .') I T I F 7 _._ 31 10 cl () p FR .1,ill - ., FtiI!T", Ai C'.1 TXF [Jrll.IIY CCC" V ir- y i T I ( I IT lX'L,'Lr) WAE , 1 A I L 0 N 'S D 27,(C^ r 3. T*.4 L!_ P 0411. F 1'J TXF -7) U, C) I S F C!; LD ur, .-7,0 11177 T F 1Fi U. 13 7 F,4cH I" -F T';;'r'M "J13L." r) Fl C F AM 17, T I F AP 17 OF T' tnrz 7f- I Of' T r;F PP 1 8 I ' r' C A I TH"!!t' " , P N Y I S E I N :,I P L N N' F D 'P CP T �7 T F-1 T U N' T Y T1 T I N' A 7 r) _JI 1 33 F 0 LTS 4 L .4:Cr' T Y� }T i1i7 7 � TTS Tn') T AR7 SP'-lJF` -0 71J T T 1 .'J':'. F 4 17 ATTORNEY ROEN INQUIRED IF MR. DAVENPORT HAD CONTACTED THE UTILITY OFFICE IN REGARD TO THE ODOR AND SCUM REFERRED TO. MR. DAVENPORT STATED THAT HE HAD NOT. HE NOTED THAT HE HAS BEEN A RESIDENT OF FLORIDA ALL HIS LIFE, AND IN GENERAL, WATER IN FLORIDA IS LIKE THAT. MR, DAVENPORT COMMENTED THAT 30 DAYS BEFORE THIS HEARING THE WATER MYSTERIOUSLY GOT BETTER, AND EXCEPT FOR THAT IT HAS BEEN VERY, VERY POOR. ATTORNEY RQEN FELT IT WOULD BE ONLY FAIR TO INFORM THE UTILITY COMPANY OF THE PROBLEM. MRS. MARGE DAVENPORT STATED THAT THEY HAVE LIVED IN THIS SUBDIVISION FOR THREE YEARS. IN REGARD TO NOT MAKING A COMPLAINT, SHE COMMENTED THAT THEY WERE ADVISED BY ANOTHER RESIDENT EITHER TO GET USED TO THE WATER OR BUY BOTTLED WATER. OTTO PISANI OF VERO HIGHLANDS FELT THAT MR. DAVENPORT HAD COVERED EVERYTHING VERY WELL, AND THAT IT ALL APPLIED TO VERO HIGHLANDS AS WELL AS VERO SHORES. HE INFORMED THE BOARD THAT HE HAD COMPLAINED TO THE UTILITY COMPANY ABOUT THE SMELL, ETC., AND THEY ADVISED HIM TO CHANGE THE PIPE GOING FROM THE METER INTO HIS HOUSE. MR. PISAN I CONTINUED THAT HE CHANGED THE PIPE TO PVC AND HAS COPPER PIPE IN HIS HOUSE, BUT STILL HAS THE SMELL AND OTHER PROBLEMS. HE COMMENTED THAT THERE HAS BEEN NO MENTION OF CITY INVESTING COMPANY, AND NOTED THAT AT A GENERAL MEETING HELD AT THE RIVERSIDE THEATRE CONCERNING EXPANSION OF VERO HIGHLANDS, ONE OF THEIR REPRESENTATIVES MENTIONED CITY INVESTING AND SAID IT WAS THE HOLDING COMPANY FOR GENERAL DEVELOPMENT. HE CONTINUED THAT THE THOUGHT COMES TO MIND AS TO WHAT PERCENTAGE OF GDV's REVENUE CITY INVESTING REQUIRES, WHICH WOULD ALSO ADD TO THE CUSTOMER S COST FOR THEIR SERVICES. CHAIRMAN WODTKE NOTED FOR THE RECORD THAT HE HAS RECEIVED LETTERS IN OPPOSITION TO THE PROPOSED RATE INCREASE FROM WALTER MELLOR, JR.; JOHN AND ANGIE DAUNIS; PAUL AND JUNE OTT; WILLIAM AND BETTY GATLING; AND ADELE GEISZ. SAID LETTERS ARE ON FILE IN THE OFFICE OF THE CLERK. DEC I 11979 41 Boa 42 FACE 286 pr - DEC 111979 boos 42 PA,f287 ATTORNEY COLLINS REQUESTED THAT THE FRANCHISE UNDER WHICH GENERAL DEVELOPMENT UTILITIES IS OPERATING AND THE AMENDED RESOLUTION N0, 77-95 BE MADE A PART OF THE RECORD AND MARKED EXHIBIT 10 AND EXHIBIT 11. ALL EXHIBITS ARE ON FILE IN THE OFFICE OF THE CLERK. CHAIRMAN WODTKE ASKED THAT THE APPLICANT RESPOND TO THE QUESTIONS BROUGHT UP BY THOSE OPPOSING THE RATE INCREASE. MR. MOSIAN ADDRESSED THE QUERY AS TO WHAT WOULD HAPPEN IF, IN FACT, THE AVERAGE USAGE WAS LARGER THAN 5;000 GALLONS PER MONTH. HE NOTED THAT THE IMPLICATION WAS THAT THEY COMPUTED THE REVENUE AND MULTIPLIED BY THE NUMBER OF CUSTOMERS; WHILE ACTUALLY THEY DID WHAT IS COMMONLY KNOWN AS A BILL ANALYSIS, WHICH IS COMPUTED ON EVERY BILL, AND THE BULK OF THE BILLS ON 3/4" METERS WAS 5,000 GALLONS PER MONTH OR LESS. MR. MOSIAN NOTED THAT PRIMARILY THOSE IN VERO SHORES ARE ON LARGER METERS, AND THEIR AVERAGE TURNED OUT TO BE ABOUT 14,000 GALLONS PER MONTH. HE EXPLAINED THAT THE NUMBERS USED IN THE RATE CASE ARE BASED ON ACTUAL USE, NOT AVERAGE. AS TO THE COST OF DEVELOPMENT, MR. MOSIAN EXPLAINED THAT ALL COSTS HAVING TO DO WITH THE UTILITY PLANT ARE CAPITALIZED AND DO NOT SHOW AS AN OPERATING EXPENSE. HE EMPHASIZED THAT EVEN WITH THE RATE INCREASE, THEY ARE NOT ASKING FOR A RETURN, BUT MERELY TO RECOVER OPERATING EXPENSES. MR. MOSIAN AGREED THAT THE SIZE OF THE INCREASE IS SUBSTANTIAL BUT THE RATES THEY ARE REQUESTING ARE VERY COMPARABLE TO THE COUNTY'S RATES, AND SEVERAL MUNICIPAL ENTITIES HAVE HIGHER RATES. IN REGARD TO GENERAL DEVELOPMENT'S PROPOSED FUTURE DEVELOPMENT IN THE HIGHLANDS' AREA, MR. MOSIAN NOTED THAT THE PRESS RELEASE INDICATED THAT THEY ARE PLANNING TO BUILD 1,150 SINGLE FAMILY RESIDENCES AND 725 DUPLEX. HE POINTED OUT THAT THESE WILL NOT BE BUILT OVER NIGHT; THE GROWTH WILL BE OVER A LONG PERIOD OF TIME, AND PROBABLY GENERAL DEVELOPMENT WILL ONLY BUILD 2,000 RESIDENCES THIS YEAR IN ALL OF ITS DIVISIONS. HE DID NOT KNOW THE ACTUAL NUMBER, BUT SPECULATED THEY ARE GEARING UP TO BUILD ABOUT 50 HOMES IN THIS AREA IN THE NEAR FUTURE. MR. MOSIAN FURTHER NOTED THAT THE CURRENT TREATMENT PLANTS WILL NOT SUPPORT 2,000 HOUSES, AND THEY WILL BE EXPANDED AS NEED BE. IN REGARD TO CONNECTION FEES, HE STATED THAT IF 2,000 HOUSES WERE ADDED, IT WOULD BE 2 MILLION DOLLARS IN CONNECTION FEES,.BUT THIS WOULD NOT OFFSET THE PLANT. THE CONNECTION FEES WOULD-BE A REDUCTION FROM THE RATE BASE AT THAT TIME. MR. MOSIAN WENT ON TO EXPLAIN THAT GENERAL DEVELOPMENT UTILITIES IS A WHOLLY OWNED SUBSIDIARY OF GENERAL DEVELOPMENT CORPORATION, WHICH, IN TURN, IS A WHOLLY OWNED SUBSIDIARY WHICH, IN THE FUTURE, WILL BE OWNED 80% BY CITY INVESTING. HE STATED THAT THERE IS NO SPECIFIC REVENUE FROM ONE TO THE.OTHER, MR, MOSIAN THEN STATED THAT MEMBERS OF THEIR STAFF HAVE WRITTEN DOWN THE NAMES AND ADDRESSES OF THOSE WHO SPOKE TODAY, AND HE WOULD LIKE TO HAVE ONE OF THEIR REPRESENTATIVES GO TO THESE HOMES AND TAKE SAMPLES TO SEE EXACTLY WHAT THE PROBLEMS ARE, VARIOUS MEMBERS OF THE AUDIENCE REQUESTED THAT THEY BE CON- TACTED ALSO, AND WERE INSTRUCTED TO GIVE THEIR NAMES TO MRS.*NANCY WILLIAMS, ASSISTANT MANAGER. COMMISSIONER SIEBERT NOTED THAT ACCORDING TO MR. DAVENPORT.- SOMEONE AVENPORT, SOMEONE HAD TALKED TO THE HOME OWNERS IN VERO SHORES AND HAD SAID THE CONDITION OF THE WATER WAS PARTLY DUE TO THE OVERSIZING OF THE LINES. MR. MOSIAN STATED THAT HE REALLY DID NOT UNDERSTAND THAT STATEMENT AND WOULD LIKE TO TALK TO THEM TO SEE EXACTLY WHAT WAS SAID. COMMISSIONER SIEBERT COMMENTED THAT THE WATER AESTHETICALLY IS NOT WHAT THEY WOULD LIKE TO HAVE. HE REALIZED THAT SECONDARY TREATMENT IS VERY EXPENSIVE, BUT ASKED IF THEY HAD ANY PLANS IN THIS REGARD. MR. MOSIAN STATED THAT THEIR TREATMENT FOR SOFTENER IS WITHIN THE PRESCRIBED RANGE, HE FELT ONE OF THE PROBLEMS IS THE CHLORINE TASTE. HE DISCUSSED THE CHLORINE RESIDUAL AND STATED THAT OTHER THAN MONITORING IT, ALL HE COULD RECOMMEND IF ANYONE HAS A PROBLEM, IS THAT THEY CALL THE OFFICE. HE POINTED OUT THAT THERE MAY BE SOME HOMES WITH GALVANIZED PIPE, AND THIS DOES DETERIORIATE AFTER A TIME. ATTORNEY COLLINS NOTED THAT MR. MOSIAN MENTIONED THAT THE COST OF THE PLANT IMPROVEMENTS WERE NOT FIGURED IN THE RATE STRUCTURE THEY ARE ASKING FOR TODAY. DEC 111979 HE CONTINUED THAT AS HE UNDERSTOOD THE 43 r - D EC 1-x.1979 Box 42. PbsE 289 TESTIMONY, THE SEWER PLANT FOR THE LAST TWO MONTHS OF.1078 - THE NEW PLANT - WAS FIGURED IN. MR. MOSIAN STATED THAT WHAT THE ATTORNEY WAS SAYING WAS CORRECT. HE NOTED THAT THEY ARE ASKING FOR A RETURN ON A UTILITY, AND WHILE THEY.HAVE ESTABLISHED THE RATE BASE, THEY ARE NOT ASKING FOR A RETURN ON IT, JUST A RECOVERY OF THEIR OPERATING EXPENSE, AND THE SAME IS TRUE FOR SEWER, COMMISSIONER LYONS FELT OUR QUESTION IS WHETHER THAT IS THE TRUE INVESTMENT FOR THE RATE BASE, AND ISR. MOSIAN STATED THAT THEY BELIEVE IT IS. COMMISSIONER LYONS CONTINUED THAT IF WE WERE TO ACCEPT THIS.- WE HIS, WE HAVE NOW ESTABLISHED THE RATE BASE, AND THE NEXT TIME, WE START FROM THERE. MR. MOSIAN COMMENTED THAT IN ANY GROWING COMPANY, YOU ALWAYS HAVE TO LOOK AT THE USED AND USEFUL PORTION, BUT THERE IS SOME LASTING ELEMENT. MR, VAUGHN ADDRESSED THE SIZE OF THE MAINS, NOTING THAT THE ORIGINAL FRANCHISE REQUIRED PROVIDING FIRE PROTECTION, WHICH IS ONE REASON THE LINES ARE OF THE SIZE THAT THEY ARE. IN ADDITION, HE NOTED THAT WHEN YOU BUILD A SYSTEM, YOU MUST PUT IN A LINE THAT WILL SUPPORT THE PROPOSED SYSTEM. COMMISSIONER SIEBERT EXPLAINED THAT WE ARE JUST ASKING WHAT AFFECT THE SIZE OF THE MAINS HAS ON THE QUALITY OF THE WATER. MR. VAUGHN CONTINUED THAT THE FUTURE EXPANSION WAS NOT BASED ON THE 2,000 THEY ARE NOW TALKING ABOUT. HE NOTED THAT THE SIZE OF THE LINES CREATES A GREATER RETENTION TIME FOR THE WATER IN THE MAINS. COMMISSIONER SIEBERT ASKED IF AN IMPROVEMENT IN THE QUALITY OF THE WATER CAN BE EXPECTED WHEN MORE PEOPLE GO ON THAT LINE, AND MR. VAUGHN FELT GETTING MORE USAGE WILL HELP AND ALSO GETTING RID OF GALVANIZED LINES. HE NOTED THERE IS A BUILD-UP ON THE INSIDE OF THE LINES OVER THE YEARS, AND THERE WILL BE SOME TASTE AND ODOR PROB- LEM IN THE INTERIM PERIOD BEFORE FUTURE DEVELOPMENT. THIS IS SOME- THING THAT EVERY SMALL SYSTEM HAS. HE FURTHER NOTED THAT PEOPLE IN FLORIDA WHO HAVE WELLS HAVE THE SAME PROBLEMS. CHAIRMAN WODTKE INQUIRED IF IN THE OPERATING EXPENSES SHOWN ON PAGES 42 AND 43, THAT IS THE PERSONNEL ASSIGNED TO THE SYSTEM WHO GO OUT AND REPAIR A METER, DO THE MAINTENANCE,AND CUT IN NEW CUSTOMERS. MR. VAUGHN ANSWERED THAT PART OF THEIR DISTRIBUTION CREW OUT OF PORT ST. LUCIE DOES THAT WORK, AND WHEN THEY DO A MAJOR RE— PAIR WHICH THE PEOPLE HERE CANNOT HANDLE, THAT IS CAPITALIZED. MR. MOSIAN EXPLAINED THAT THEY HAVE A CHART OF ACCOUNTS.- AND CCOUNTS, AND ALL THESE FUNCTIONS HAVE AN ACCOUNT NUMBER. THE DAILY TIME SHEETS ARE TRANSFERRED TO TIME CARDS, AND THEY ARE KEY PUNCHED AND CODED, THIS ALSO PERTAINS TO ANYTHING THAT IS CAPITALIZED. ATTORNEY COLLINS COMMENTED THAT THE PEOPLE IN VERO SHORES DISPUTE THE 5,000 GALLONS PER MONTH AVERAGE USAGE. MR. MOSIAN STATED THAT IS THE AVERAGE. HE EXPLAINED THAT THEIR RATE PROJECTIONS ARE BASED ON THE ACTUAL USAGE— NOT AN AVERAGE, AND THEY TABULATED EVERY SINGLE BILL AND ADDED THEM ALL UP. HE AGREED THAT THE PEOPLE IN VERO SHORES DO HAVE LARGER METERS AND USE MORE WATER, CHAIRMAN WODTKE COMMENTED THAT THEY HAVE 3,460 WATER BILLS LISTED ON PAGE 50. HE ASKED IF THAT IS FOR THE YEAR, AND MR. MOSIAN STATED THAT IT WAS. THE CHAIRMAN POINTED OUT THAT IF YOU TAKE 3,460 AND DIVIDE BY 12, YOU COME UP WITH 288 CUSTOMERS, AND MR. MOSIAN NOTED THAT THESE BILLS ARE ONLY FOR THE 5/8" METERS. ATTORNEY COLLINS ASKED HOW MANY GALLONS A MONTH PER CUSTOMER THE ACTUAL USAGE WAS PROJECTED TO BE, AND MR. MOSIAN STATED THAT THEY TAKE THE AVERAGE OF WHAT EVERYONE USED. ATTORNEY COLLINS NOTED THAT A FIGURE OF 350 GPD WAS MEN— TIONED, AND MR. MOSIAN STATED THAT WAS DESIGN CRITERIA. ATTORNEY COLLINS ASKED IF THE AVERAGE IS 5,000 GALLONS PER MONTH PER CUSTOMER, AND MR. MOSIAN STATED THAT IT WAS FOR PEOPLE WITH 3/4" METERS: FOR 1", IT IS ABOUT 14,000, ATTORNEY COLLINS QUESTIONED WHETHER THEIR REPRESENTATION OF 5,000 GALLONS PER HOUSEHOLD PER MONTH IS REALISTIC SINCE THEY DESIGNED THE PLANT FOR TWICE THE AVERAGE. DEC 111979 45 Boob 42 PAGE U I F_ DEC 111979 BQOK 42 . PACE MR. MOSIAN STATED THAT IF YOU TAKE ALL CUSTOMERS, HE BE- LIEVED IT WOULD PROBABLY COME OUT TO 10,000, AND EXPLAINED THAT THEY TRIED TO SHOW YOUR TYPICAL CUSTOMER, ATTORNEY COLLINS ASKED IF THE PROJECTED REVENUES ARE BASED ON 5,000_GALLONS OR 10,000 GALLONS PER MONTH, AND MR. MOSIAN STATED THAT THEY ARE BASED ON 10,000, WHICH IS THE ACTUAL. HE IN- FORMED THE BOARD THAT THESE FIGURES CONTAIN A LOT OF ATYPICAL PEOPLE, AND THEY WANT TO LEAVE THEM OUT OF THE AVERAGE. COMMISSIONER LOY NOTED THAT THEIR DESIGN PLANNED FOR 350 GPD PER UNIT, AND MR. MOSIAN EXPLAINED THAT PART OF THIS IS CAUSED BY PEAKS WHICH YOU MUST ALLOW FOR. HE NOTED PEOPLE IN VERO SHORES USE MORE THAN IN THE HIGHLANDS. YOU CANT OVERLOAD PLANTS, AND YOU MUST START SOMEWHERE TO FIGURE OUT PLANT CAPACITY SINCE YOU DON T WANT TO KEEP BUILDING PLANTS, WHICH ULTIMATELY COSTS EVERYBODY MONEY. COMMISSIONER SIEBERT COMMENTED ON AVERAGES, NOTING THAT IF YOU TAKE TEN PEOPLE AND ONE OF THEM MAKES A MILLION DOLLARS AND THE OTHER NINE MAKE $10,000 EACH, THE AVERAGE WOULD BE $190,0000 BUT THE OTHER NINE WOULDNIT BELIEVE IT. ATTORNEY ROEN THEN MADE HER CLOSING STATEMENT AND FELT THE EVIDENCE HAS PROVED THAT DURING THE TEST YEAR, THE COMPANY LOST MONEY UNDER THE PRESENT RATE STRUCTURE; IT CANNOT MEET ITS COSTS; AND CANNOT HOPE TO MAKE A RETURN. SHE REITERATED THAT ALL THEY ARE ASKING FOR IS SUFFICIENT REVENUE TO COVER OPERATING EXPENSES, AND THEY WILL STILL OPERATE AT A LOSS. SHE STATED THAT THE QUALITY OF SERVICE MEETS ALL APPLICABLE REGULATORY STANDARDS, AND SHE URGED THE COMMISSION TO GRANT THE RELIEF REQUESTED AND PUT THE RATES IN EFFECT IMMEDIATELY. MS. ROEN FURTHER REQUESTED THAT THE PROPOSED TARIFFS BE INCORPORATED WITH ANY RESOLUTION TO BE PASSED, CHAIRMAN WODTKE INFORMED THOSE PRESENT THAT THE COMMISSION WILL NOT BE ABLE TO REACH A DECISION ON THIS TONIGHT AND MAY WANT SOME ADDITIONAL INFORMATION. HE ASKED IF THE BOARD WISHED TO CONTINUE THE PUBLIC HEARING OR CLOSE IT. COMMISSIONER Loy STATED THAT SHE WOULD LIKE TO CLOSE THE HEARING, BUT WOULD LIKE TO BE ABLE TO GET MORE ANSWERS IF NECESSARY. Ed HEARING. E-1 m MOTION WAS MADE BY COMMISSIONER LYONS TO CLOSE THE PUBLIC DISCUSSION FOLLOWED ABOUT ADDITIONAL EXHIBITS, AND THE MOTION DIED FOR LACK OF A SECOND. ATTORNEY COLLINS EXPRESSED CONCERN THAT IF ADDITIONAL EXHIBITS WERE PRESENTED, SOMEONE IN THE AUDIENCE MIGHT WANT TO EXAMINE THEM, AND THEY SHOULD BE AFFORDED THAT OPPORTUNITY. MOTION WAS MADE BY COMMISSIONER LYONS TO CONTINUE THE PUBLIC HEARING TO THE SECOND MEETING IN JANUARY. THE MOTION DIED FOR LACK OF A SECOND. COMMISSIONER SIEBERT ASKED WHAT INFORMATION MIGHT BE RE- QUESTED THAT WE DON T ALREADY HAVE, AND COMMISSIONER LOY NOTED THAT SHE MIGHT JUST WANT SOME CONCURRENCE THAT SHE IS READING THEIR INFORMATION CORRECTLY. COMMISSIONER SIEBERT DID NOT FEEL CLARIFICA- TION OF CONCLUSIONS WOULD BE A PROBLEM. ATTORNEY COLLINS STATED THAT IF THE BOARD WERE PLANNING ON INVOLVING THE WITNESSES AGAIN, HE WOULD ADVISE THAT THEY NOT CLOSE THE PUBLIC HEARING, BUT IF THEY WERE SATISFIED THAT THEY HAVE ALL THE INFORMATION NECESSARY AND IT IS STRICTLY A DISCUSSION BETWEEN THE COMMISSIONERS, THEN THE HEARING CAN BE CLOSED, AFTER FURTHER DISCUSSION, THE BOARD AGREED THEY DID NOT HAVE A PROBLEM WITH CLOSING THE PUBLIC HEARING. MR. DAVENPORT NOTED THERE WERE STATEMENTS HE MADE THAT WERE COUNTERED BY OTHERS, AND THEIR STATEMENT WERE CONTRARY TO WHAT HE WAS TOLD PREVIOUSLY. IN REGARD TO A LONG PERIOD OF GROWTH IN THE HIGHLANDS, HE STATED THAT HE WAS TOLD THIS WAS A 5 -YEAR PROJECT. HE POINTED OUT THAT THEY ARE BUILDING A VERY EXPENSIVE MARKETING OFFICE. MR. DAVENPORT AGREED THAT AT THE AVERAGE OF 5,000 GALLONS PER MONTH, THE RATES ARE COMPARABLE TO THE COUNTY'S RATES, BUT NOTED THAT -AS THE USAGE GOES UP, THE PROPOSED RATES WILL BE MUCH HIGHER IN COMPARISON. ON MOTION BY COMMISSIONER SIEBERT, SECONDED BY COMMISSIONER Loy, THE BOARD UNANIMOUSLY CLOSED THE PUBLIC HEARING. IT WAS ANNOUNCED THAT WHEN A TIME IS DECIDED UPON TO REACH A DECISION, THOSE INVOLVED WILL BE NOTIFIED. 47 DEC 1.11979 BOOK -WE J DEC 1 1979 BOOK � PACE�g�" THERE BEING NO FURTHER BUSINESS, ON MOTION MADE, SECONDED AND CARRIED, THE BOARD ADJOURNED AT 11:45 O'CLOCK P.M. ATTEST: CLERK 48