Ord 1978-053 - Laserfiche WebLink

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2 I The available data on earnings from present rates by customer classes indicate that the full amount of the $34,000 rate increase sholl go to the residential class. However, the Company has asked that the increase be spread to both the residential and small commercial classes. Since our review in this area has been brief and factors other than Cost of Service may be considered in setting rates we believ( that Entex should have some input in the final rate design. We would recommend that after the City determines the proper revenue increase that the Company be requested to file rates for review' and approval by the City. I Entex has requested that a Cost of Service Adjustment Clause be allowed in its rate tariffs for San Marcos. This clause would adjust rates to reflect actual on-going increases or decreases in costs other than gas purchases. For the reasons outlined in the following discussion, we recommend that the City approve the Cost of Service Adjustment Clause and require the Company to file the calculation of the computed adjustment factor prior to the rates being adjusted, along with a Statement of Operations for the San Marcos distribution system for the same calendar year. Further, since the Company has adjusted expenses beyond 1977 in the rate filing a COS adjustment based on increases in expenses from 1977 to 1978 would cause a double recovery of some costs. To alleviate this problem we recommend that the City delay implementation lmtil 1980 with an adjustment for cost increases from 1978 to 1979. Discussion In order to test the requested increase we determined the revenue requirements of the system as measured by contemporan~ous cost of service standards applied in recent railroad commission cases. The cost of service components include the operating and maintenance expenses, depreciation, taxes and a fair rate of return to the in- vestors. To measure the cost of service a test period must be .