V. Proposed Settlement

On October 26, 2000, pursuant to Rule 51 of the Rules of Practice and Procedure (Rules), Park and RRB filed the Settlement. They reached agreement on all issues. The Settlement addresses: Park's capital structure, cost of long-term debt, consumption and operating revenues, operation and maintenance expenses, administrative and general expenses, taxes, plant in service, depreciation expense and rate base. The Settlement discusses the issues and sets forth the original positions of the parties and the adopted settlement. The Settlement is attached to this decision as Appendix A.

Table 1 compares Park and RRB's initial positions on revenue requirements for test years 2001 and 2002, and attrition year 2003 with the Settlement.

Table 1

Revenue Requirement Increases

	Utility Requested		RRB Recommended			Settlement/ Adopted
	$	%		$	%	$	%
2001	1,793,000	11.8		(979,800)	-6.7	1,334,000	8.7
2002	606,199	3.6		422,400	1.4	560,300	3.4
2003	744,197	4.2		389,465	2.6	583,200	3.4

The Settlement indicates the areas of major difference between the settling parties' initial positions and summarizes how those differences were resolved. Park initially sought a return on equity of 11.75% resulting in a return on rate base of 10.61% in 2001 and 10.60% in 2002 and 2003 while RRB advocated a return on equity of 8.70% resulting in a return on rate base of 8.78% in 2001, 8.77% in 2002, and 8.76% in 2003. The Settlement revenue requirements were based on an agreed upon return on rate base of 9.65% for 2001 and 9.64% for 2002 and 2003.