HomeMy WebLinkAboutOrdinance 7726 ORDINANCE NO. 7 7,.k Lc,
AN ORDINANCE SUSPENDING THE PROPOSED RATE INCREASE
INTENDED TO BECOME EFFECTIVE DECEMBER 6, 1977, FOR
AN ADDITIONAL 30 DAYS TO MAY 4, 1978; PROVIDING A
SEVERABILITY CLAUSE; AND PROVIDING AN EFFECTIVE
DATE.
WHEREAS, on October 31, 1977, the Lone Star Gas Company
filed with the City Secretary of the City cf Fort Worth a
Statement of Intent to Change Rates seeking to make a major
change in gas rates which it proposed go into effect on December 6,
1977, which major change in gas rates was estimated by the Lone
Star Gas Company to increase its annual revenue in the amount of
$2,318,798.00 and to increase the gas rates of 116,928 customers;
and
WHEREAS, under the Texas Public Utility Regulatory Act,
(Article 1446c, V.T.C.S.) , the City Council of the City of Fort
Worth is charged with the duty of making a "reasonable determina-
tion of rate base, expenses, investment and rate of return" within
the City of Fort Worth; and
WHEREAS, as a matter of public necessity the proposed
rate increase intended to become effective on December 6, 1977,
was suspended as authorized by Article 1446c, the Public Utility
Regulatory Act, "for at least 120 days beyond *** [the] date on
which the schedule of proposed rates would go into effect and at
least until April 4, 1978" by Ordinance No. 7660 and a thorough
investigation, including hearings held on January 12, 25-27,
February 13-15, 1978, was undertaken; and
WHEREAS, under the Texas Public Utility Regulatory Act,
(Article 1446c, V.T.C.S.) , Section 43(d) , the Regulatory
Authority may, where a longer time will be required for a final
determination, further extend the period in and for which the
proposed rates are suspended; NOW, THEREFORE,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
FORT WORTH, TEXAS:
SECTION I.
That the City Council of the City of Fort Worth finds
that a longer time will be required for a final, reasonable
determination of the Company's rate base, expenses, investment
and rate of return within the municipal boundaries.
SECTION II.
That the proposed rate increase of Lone Star Gas
Company intended to become effective on December 6, 1977, and
suspended for 120 days by Ordinance No. 7660, be and the same
is hereby suspended for an additional 30 days beyond April 4,
1978, i.e. to May 4, 1978.
SECTION III
Should any part, portion, section or part of a section
of this ordinance be declared invalid or inoperative or void for
any reason by a court of competent jurisdiction, such decision,
opinion or judgment shall in no way affect the remaining portions,
parts, sections or parts of sections of this ordinance, which
provisions shall be, remain and continue to be in full force and
effect.
SECTION IV.
That this ordinance shall take effect and be in full
force and effect from and after the date of its passage, and
it is so ordained.
APPROVED AS TO FORM AND LEGALITY:
t� 1
City Attorney
-2-
City of Fort Worth, Eexas
MATSON
BAILIFF Mayor and Council Communication,
SMITH
Jl] 1 N )RC E DATE NUMBER PAGE
ERCE SUBJECT: Lone Star Gas Company
Uc:r3/28/78 G-3764 Requested Rate Increase i of
Statement of Intent to Change Rates
On October 31, 1977, Lone Star Gas Company filed with the City of Fort
Worth a Statement of Intent to Change Rates as provided by Article 1446c
(Public Utilities Regulatory Act), (R.C.S.). The proposed change included
an increase from $2.5968 to $4.00 for the first 1,000 cubic feet, or less,
of gas sold and an increase from $2.0968 to $2.453 per Mcf for all gas sold
over 1,000 cubic feet per month to residential and commercial consumers in
Fort Worth. In addition, an increase from $5.00 to $20.00 was proposed in
the Reconnect Charge.
Lone Star Gas Company calculated that the new rates would increase the
monthly bill for 8 Mcf of consumptions (considered a year round average)
from $19.86 to $21.29 and would produce a total increase in annual revenue
of $2,318,798. Lone Star calculated that their Rate Base in Fort Worth is
$47,244,001 and their rate of return with the new rates would be 8.70
percent. On November 15, 1977, the City Council adopted Ordinance No. 7660
suspending the proposed new rates as submitted by Lone Star for at least
120 days or until April 4, 1978.
Rate Analysis Procedure
In Chapter 30 of the Code of the City of Fort Worth, Texas (1964 as
amended) the following is found:
"Section 30-13. Rates to be regulated; Recommendations and analysis
for change.
"It shall be the duty of the Utilities Supervisor to submit to
the City Manager and the City Council a detailed analysis of any
new or proposed rate or rate change. He shall make such reconimen-
dations as to rates or combinations of rates as will be equitable
to the City. The rates to be regulated by the City Council shall
apply to natural gas, electrical power and light, transportation,
communication or any other enterprise serving the general public
as a utility."
To assist the Utilities Supervisor in his analysis of the proposed rate
change, the City Council directed the City Manager to engage consultants as
necessary. After a review of professional assistance available, the con-
sultants engaged for this case were: Mr. B. R. McMorries, a registered
professional engineer; Mr. Wayne 'Brown, CPA; and Dr. Jack Hopper, a PHD in
economics. In addition to these consultants being hired, the City Manager
also engaged Mr. John P. Wood to conduct public hearings and invite
testimony from all interested parties into the matter and engaged a court
reporter to make a complete transcript of all testimony and evidence.
DATE REFERENCE SUBJECT: PAGE
NUMBER Lone Star Gas Company
3/28/78 G-3764 Requested Rate Increase 2 of 5
The following hearings were held:
January 12, 1978: Presentation of the direct case of Lone Star Gas
Company with testimony by William T. Clark, R. E.
Reading, Gloria L. Ramsey, Samuel K. Clammer, and
John $. Gillum.
January 25, 1978: Cross-examination of Lone Star Gas Company wit-
nesses Clark, Reading and Gillum.
January 26, 1978: Cross-examination of Lone Star Gas Company wit-
nesses Ramsey and Clammer and the presentation of
the City s direct testimony by witnesses B. R.
McMorries and Dr. Jack Hopper.
January 27, 1978: Direct testimony by City's witness, Wayne Brown,
CPA, and public presentations by G. H. Wakefield,
representing ACORN, and Art Brender, representing
Citizens for Fair Utility Regulation.
February 13, 1978: Cross-examination of the City s witnesses by the
counsel for Lone Star Gas Company and receipt of a
letter from the Citizens for Fair Utility Regula-
tion requesting items of information.
February 14, 1978: Continued cross-examination of the City' s witnesses
by the counsel for Lone Star Gas Company.
February 15, 1978: A rebuttal testimony by Lone Star Gas Company
witnesses Mr. Clark, Mr. Reading, Ms. Ramsey, and
Mr. Clammer and cross-examination of each by Mr.
S. G. Johndroe, Jr. , City Attorney. The questions
raised by the Citizens for Fair Utility Regulation
were addressed by Mr. Reading s rebuttal testimony.
A complete verbatim record and transcript of all proceedings was made and
all exhibits were attached to the original transcript and are available in
the Office of the Public Utilities Supervisor for review by any interested
party.
Summary of City of Fort Worth Testimony
The three consultants engaged by the City were assigned to their specific
areas of professional expertise for preparation of testimony. A summary of
their testimony follows:
(a) Rate of Return
Dr. Jack Hopper was asked to develop a recommendation as to the rate
of return appropriate to the Lone Star Gas Company, giving
consideration to all pertinent economic consideration. Dr. Hopper
recommended that Lone Star, be authorized to earn 13 percent on their
equity investment. He found that the cost of their embedded debt was
7.38 percent and the cost of Preferred Stock was 9.53 percent.
DATE PAGE
REFERENCE SUBJECT: Lone Star Gas Company NUMBER
3 5
3/28/78 G-3764 Requested Rate Increase I of
Combining these rates on a weighted basis he found that a return of
9.8 percent on Invested Capital was adequate. He then recommended a
rate of return of 8 percent on Adjust Value of Invested Capital.
Lone Star Gas experts had testified to a Debt Cost of 7.91 percent,
Preferred Stock Cost of 9.53 percent, and Equity rate of return of
18.00 percent. Based on their weighting and an adjustment for a return
on the Adjusted Value Increment of their rate base, they requested a
rate of return on Adjusted Value of Invested Capital of 8.70 percent.
(b) Rate Base
Mr. B. R. McMorries, a registered Professional Engineer, was asked to
develop a recommendation as to the rate base on which Lone Star should
be allowed to earn the 8 percent recommended by Dr. Hopper. Mr.
McMorries' development of his Adjust Value Rate Base of $33,393,761 is
shown as (McMorries) Exhibit 1 and 2 attached and is- a part of this
M&C. Please note that he has disallowed Construction Work in Progress
in calculating the rate base and has determined that Working Capital
Needed is provided by funds available without cost to Lone Star. He
has used a balance of 70 percent Original Cost and 30 percent Current
Cost in calculating Adjusted Value. The Public Utility Regulatory Act
(Article 1446c) authorizes the use of a range of 60 percent/40 percent
to 75 percent/25 percent for this calculation. Lone Star Gas Company
used a ratio of 60 percent Original Cost and 40 percent Current Cost
in their application for new rates.
(c) Earnings Requirement
Mr. Wayne Brown, CPA, was asked to find the present earnings of Lone
Star Gas and calculate the deficiency, if any, based on the 8 percent
rate of return recommended by Dr. Hopper and the Adjusted Value Rate
Base of $33,393,761 of Mr. McMorries. Mr. Brown found that the present
rate structure of Lone Star plus the increase to $20 in the Reconnect
Charge (which he recommends) is sufficient to produce an earnings of 8
percent on $33,393,761. The conclusion is based on his findings that
during the test year ending June 30, 1977, the adjusted revenues were
$70,155,370 and adjusted expenses were $66,728,143. The complete
schedule of Mr. Brown' s findings is found as City Exhibit WEB-1, 2, 3,
4 attached and a part of this M&C. Please note that Adjustment No. 8
in Mr. Brown's Exhibit WEB-2 is a disallowance of the air conditioning
discount authorized by ordinance adopted by the City of Fort Worth
City Council.
Near the end of the hearings, Lone Star Gas Company entered four
adjustments into the record about depreciation, Construction Work in
Progress, degree heating days adjustment, and industrial revenue.
The net effect of these adjustments is to increase adjusted revenues
by $901,287, increase expense and taxes by 866,539, and increase Net
Operating Income by $34,748. These figures were not obtained in time
to be analyzed by the City consultants.
DATE REFERENCE SUBJECT: PAGE
NUMBER Lone Star Gas Company 4 5
3/28/78 G-3764 Requested Rate Increase of
Staff Comments
The experts engaged by the City have developed their testimony using a
depth of experience across a broad range of similar cases. In each issue
considered, they appear to have recommended in the consumers favor if at
all possible. In most of the major issues, the Public Utilities Supervisor
agrees with the recommendation of the City' s witnesses, with a few
exceptions.
We do not agree with Dr. �opper's findings as to an appropriate rate of
return. At current rates of interest an 8 percent rate of return does not
appear to be adequate to attract capital. We do not agree that Mr. Brown
should disallow the air conditioning discount, which was authorized by the
Fort Worth City Council, and will expire at the end of 1978. We do not
agree with Mr. McMorries' recommendation that the City Council conduct a
hearing each month regarding the gas cost adjustment. The testimony of the
City experts is that current revenue schedules are adequate to produce an 8
percent rate of return and their analysis shows this to be true. However,
these earnings include all of the GCA charges allowed by the Council,
including the Court ordered recovery of previously disallowed GCA.
Experience thus, seems to show that our present practice of permitting the
GCA minus out-of-period costs works effectively and therefore we see no
reason to change. The cost to Lone Star and the City of monthly hearings is
ultimately passed on to the rate payer and does not appear to be justified,
based on current experience.
We do not agree that the Reconnect Charge should be increased to $20.00.
Although the study shows that $20.00 may be the cost of this service, we
are reluctant to price such a service at full cost recovery. In many
instances, discretion to cause reconnect service is at the sole control of
the company and not the consumer, and a price of $20.00, or full recovery,
might serve as an incentive to be too aggressive in disconnecting service.
On the other hand, since there is no longer a penalty for late payment,
Lone Star does need some control for maintaining delinquent accounts at a
reasonable level.
These differences, and other minor ones, between the Public Utilities
Supervisor and the City experts are not sufficient, however, to support a
major change in the recommendation made by the consultants.
Recommendations
It is recommended:
1) That the Council enter findings consistent with the recommen-
dations of our experts, subject to the minor deviations
hereinabove noted, with respect to reasonable operating expenses,
adjusted value of the Company' s invested capital used and useful
in rendering service to the public, and a reasonable net rate of
return;
DATE NUMBER
sue�Ear: Lone Star Gas Company PAGE R
5
3/28/78 G-3764 Requested Rate Increase 5
Of
2) That Lone Star Gas Company be authorized to increase its
Reconnect Charge to $10.00;
3) That the temporary rates adopted in Ordinance No. 7678, on Decem-
ber 20, 1977, ihcluding the GCA provisions as contained therein,
be adopted as the permanent rates;
4) That this report and these recommendations be furnished specifi-
cally t-o Lone Star Gas Company and the other interested persons
to the hearings held in this matter and notice of same be
otherwise furnished generally to the citizens of Fort Werth by
posting td the same manner as are proposed monthly rate
adjustments;
5) That hearings before the City Council on this report and these
recommendations be noticed and placed on the Council' s agenda for
March 28 'and April 4, 1978; and
6) That the City Attorney prepare necessary ordinances and notices
to comply with statutory and City Charter requirements.
4CM:bk
Attachments:
McMorries - Exhibit 1 and 2
City Exhibit - WEB-1, WEB-2, WEB-3, WEB-4
SUBMITTED BY: DISPOSI AkWWUNCIL PROCESSED BY
�j !�OTHER (DESCRIBE) j
p,/ ,(I'yP�r�� ri C'-0 -(v A T I C,7 , SECRETARY
DATE
l -7 7 �G-�IJ.� i� r �wc r Y C-A T E — '4' -%T
CITY MANAGER 1
C c
y-) t q `r
(McMorries) Exhibit 1
Lone Star Gas Company
.Fort Worth Distribution System
June 30, 1977
RATE BASE
OC N Less
Invested ADJ For
Capital A&C
Plant in Service $49,027,445 $84,779,629
Less Depreciation Reserves (19,919,040)
Less Age and Condition (34,187,682)
Net Plant in Service 29,108,405
Current Cost New Adjusted 50,591,947
Contribution-in-Aid (included) (1,038,634)
Working Capital Needed 1,190,976 1,190,976
Working Capital Available (1,190,976) (1,190,976)
Deferred Taxes 0 0
Construction Work In Progress (not included) (not included)
Retirement Work In Progress 55,916 55,916
Applicable Investment Credit (.559,636) (559,636)
Customer Deposits (979,798) (979,798)
Insurance Reserves-Total (1) (184,170) (184,170)
Customer Advances (180,423) (180,428)
Rate Base Items $27,260,289 $47,705,197
70% Original Cost 19,082,202
30% Current Cost 14,311,559
Adjusted Value Rate Base $33,393,761
Invested Capital Rate Base $27,260,289
(1) Insurance Reserves-Property ($7,401) + Liaffili� ($ wo,W* ) Associates, Inc.
McMorries Exhibit 2
Page 1
Lone Star Gas Company
Fort WortL Distribution System
ORIGINAL COST LESS ACCUMULATED PROVISION FOR DEPRECIATION
At June 30, 1977
ACC %
OC DEPR OCD DF.PR
Distribution Plant
Land $ 23,842$ $ 23,842 0
Land Rights 38,020 15,174 22,846 39.91
Structures and Improvements 78,819 31,457 47,362 39.91
Mains 29,780,527 11,885,445 17,895,082 39.91
Meas. and Reg. Station Equipment 516,213 206,021 320,192 39.91
Services 8,101,192 3,233,196 4,867,996 39.91
Meters 4,394,789 1,753,966 2,640,823 39.91
Meter Installations 785,277 313,405 471,872 39.91
House Regulators 759,137 302,972 456,165 39.91
House Regulator Installations 301,144 120,187 180,957 39.91
Other Equipment 685,990 273,779 412,211 39.91
General Plant Allocated 3,562,495 .1,783,438 1,779,057 50.06
TOTAL 49,027,445 19,919,040 29,108,405 40.63
Bill R. McMorries & Associates, Inc.
(McMorries) Exlu.bit 2
Page 2
lone Star Gas Company
Fort Worth Distribution System
June 30, 1977
CURRENT COST NEW LESS ADJUSTMENT
CCN
ADJ Tess %
CCN A&C ADJ DTPR
Distribution Plant
Land (1) $ 23,842 $ 23,842 0
Land Rights (1) 38,020 $ 15,174 22,846 39.91
Structures and Improvements (1) 78,819 31,457 47,362 39.91
Mains 53,217,802 21,239,224 31,978,578 39.91
Meas. & Reg. Station Equipment 798,859 (3) 318,825 480,034 39.91
Services 16,364,326 6,531,003 9,833,323 39.91
Meters 7,255,797 2,895,789 4,360,008 39.91
Meter Installations 1,558,963 (2) 622,182 936,781 39.91
House Regulators 883,634 352,658 530,976 39.91
House Regulator Installations 311,082 124,153 186,929 39.91
Other Equipment (1) 685,990 273,779 412,211 39.91.
General Plant Allocated (1) 3,562,495 1,783,438 1,779,057 50.06
TOTAL $84,779,629 $34,187,682 $50,591,947 40.33
(1) Original Cost Less Depreciation
(2) $1,525,359 x 785,277/768,350 = $1,558,963
(3) 790,129 x 516,213/510,572 = 798,859
Bill R. McMorries & Associates, Inc.
Lone Star Gas Company
Fort Worth, Texas Distribution System
Revenues , Expenses, Net Income and Adjustments
Twelve Months Ended June 30, 1977
Adjusted
Account To Reflect
No. Per Bool,,s Adjusted Proposed Ral (,
Revenues
Gas Sales
480 Residential & Commercial $ 45,739,380 $ 43,735,455 $ 43,735,455
481 Industrial 24 322 ,273 25,881 ,348 25,881 ,348
Total Gas Sales $ 70,061 ,653 $ 69,616,803 $ 69,616,803
488,495,879 Other Gas Revenues 538,567 T 538,567 1 ,054,057
Total Revenues $ 70,600,220 $ 70,155,370 i$ 70.670,860
Expenses
Gas Purchased
804 Residential $ 21,103 ,261 $ 20,293,141 $ 20,293,141
804 Commercial 9,776,599 9,615,841 9 ,615,841
804 Industrial 21 ,469,877 22 ,690,409 22 ,690,409
804 Company Used 46,756 52 ,892 52 ,892
804 Unaccounted-for 2,850,919 2 ,830,777 2 ,830,777
Total Gas Purchased $ 55,247 ,412 $ 55,483,060 $ 55,483,060
870-879 Distribution Operations-Labor 1 ,032,737 1 ,032 ,737 1 ,032 ,737
870-881 Distribution Operations-S & E 378,225 378,225 378,225
885-894 Distribution Maintenance-Labor 640,346 640,346 640,346
885-894 Distribution Maintenance-S & E 367 ,278 367,278 367,278
901,903,905 Customer Accounts - Labor 958,293 958,293 958,293
901,903,905 Customer Accounts - S & E 610,699 610,699 610,699
907-910 Cust. Serv. & Information-Labor 53,961 53,961 53,961
907-910 Cust. Serv. & Information-S & E 14 ,136 14 ,136 14 ,136
911-913,916 Sales Expense - Labor 68,553 68,553 68,553
911-913 ,916 Sales Expense - S & E 109,388 109,388 109,388
920 Administrative & General-Labor 433,966 433 ,966 433,966
921,932,426 Administrative & General-S & E 1,369,362 1 ,355,580 1 ,355,580
904 Uncollectible Accounts 293,904 293,904 293,904
408 Taxes Other Than Federal Income 3,818,013 3,700,061 3,700,061
403 Provision for Depreciation 1 ,227.956 1,227,956 1,227,956
Total Expenses (Excl. FIT) $ 66,624 ,229 $ 66,728,143 ,$ 66,728 143
Net Income Before FIT $ 3 ,975,991 $ 3,427 ,227 $ 3,942,717
409 Provision for FIT 1 ,102,880 839,474 1 ,086,909
Net Operating Income S 2 ,873,111 $_2 58 1-U 2A-55,80$
Return on Rate Base of $33,393,761 8.60% 7. 75% 8. 55`/,
ti
•• Cily Lxhibit
WEB-2
Page 1 oaf 2
Lone Star Cas Company
Fort Wurth, Texas Distribution System
Detail of Adjustments to Revenues and Expenses
Twelve Months Ended ,Tune 30, 1977
Ad 'ust_m.�nt No. 1 - City gate Rate Effective September 20, 1977
Residential Cas Purchased $ 1 ,690,489
Commmercial Gas Purchased 844 ,929
Company Used Gas 6,136
Unaccounted-for 489,055
Total Purchases $ 3,030,609
Provision for Federal Income Taxes _ (1 ,454 ,692)
Adjustment to Net Income
Adjustment No. 2 - Normalize Weather
Residential & Commercial Gas Sales $ (5,474,436)
Industrial Gas Sales (29,001)
Total Gas Sales $ (5,503,437)
Residential Gas Purchased $ (2 ,500,609)
Commnercial Gas Purchased (1 ,005,687)
Industrial Cas Purchased (23,251)
Taxes Other Than Federal Income (328,860)
Provision for Federal Income Tax (789,614)
Total Expenses and Federal Income Tax $ (4,648.021)
Adjustment to Net Income
Adiustment No. 3 - Industrial Rate Increase to N mate level
Industrial Gas Sales $ 1,588,076
Industrial Gas Purchased $ 1 ,243,783
Taxes Other Than Federal Income 30,539
Provision for Federal Income Tax 150,602
Total Expenses and Federal Income Tax $ 1,424 ,924
Adjustment to Net Income
Adiustment No. 4 - Annualize General Service Rate Increase
Residential & Commercial Gas Sales $ 3,360,923
Taxes Other Than Federal Income $ 162,150
Provision for Federal Income Tax 1 ,535,411
Total Expenses and Federal Income Tax $ 1,697�561
Adjustment to Net Income $ I.-
Adiustment No. 5 - Unaccounted-For Gas to 57, of Adjusted Purchases
Unaccounted-for Gas Purchased $ (509,197)
Provision for Federal Income Tax 244 ,415
Adjustment to Net Income -2f�4,7�2
A_dItAstmont No. 6 - Rate Case Expense
.Administrative & General - Supplies & Expense $ (13,782)
Provision for Federal Income Tax 6,615
Adjustment to Net Income
� 1
City Exhibit
WED-2
Page 2 of 2
Lone Star Gas Company
Fort Worth, Texas Distribution System
Detail of Adjustments to Revenues and Expenses
Twelve Months Ended June 30, 1977
Adjustment No. 7 - Unemployment Tax and FICA Tax Increase
Taxes Other Than Federal Income $ 12,931
Provision for Federal Income Tax (6,207)
Adjustment to Net Income
Adiustment No. 8 - Adjust Air Conditioning Revenue
Residential & Commercial Gas Sales $ 109,588
Taxes Other Than Federal Income $ 5,288
Provision for Federal Income Tax 50,064
Total Expenses and Federal Income Tax $ 55,352
Adjustment to Net Income
Adjustment No. 9 - To Reflect Increased Reconnect Charge
Other Gas Revenues $ 514,490
Provision for Federal Income Tax _ 247,435
Adjustment to Net Income _ 2L,Q5.5
City Exhibit
WE"B-3
Lone Star Gas Company
Fort Worth, Texas Distribution System
Federal Income Tax Calculation
Adjusted
Line Per To Reflect
No. Books Adiusted , Proposed Rate
1. Net Income Before Federal Income Tax $ 3,975,991 $ 3,427,227 $ 3,942,717
2. Allocated Income Deductions 1,677.390 1,677,390 1,677,390
3. Taxable Income ,$ _2,7.9 41 S 1,749.831 .,$ 2-265, 27
4, Federal Income Tax at 48% $ 1,103,328 $ 839,922 $ 1,087,357
5. Less: Allocated Surtax Credit 448 448 448
6. Federal Income Tax t=_1-JD1J$Q _=_139—AlA
City Exhibit
WEB-4
Lone Star Gas Company
Fort Worth, Texas Distribution System
Revenue Deficiency
Line
No.
1. Rate Base at June 30, 1977 $ 33,393,761
2. Rate of Return .08
3. Net Operating Income Required (Line 1 x Line 2) $ 2,671,508
4. Adjusted Net Operating Income $ 2;587,753
5. Net Operating Deficiency (Line 3 less Line 4) $ 83,755
6. Ratio Incremental Net Income to Incremental Revenue (1) .49491
7. Increase in Revenue Required (Line 5 : by 'Line 6) $ 169,232
8. Increase in Revenue Requested for Reconnect Increase 515,490
9. Revenue in Excess of Requirement on Line 7 $ (346,258)
10. Revenue Required to be Produced by Residential &
Commercial Customers NQng_
(1) Incremental Revenue $ 1.00000
Incremental Occupation Tax .01706
Incremental Street & Alley Rental .03119
Incremental Taxable Income .95175
Incremental Federal Income Tax .45684
Incremental Net Operating Income $ 49491