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<br />I <br />I Ilea <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />obtain the average annual energy for the system. Appro- <br /> <br />priate amounts for transmission losses, for offpeak <br /> <br />project pumping (Colorado-Big Thompson Project) and <br />reserves were deducted to obtain the average annual <br /> <br />energy and dependable capacity marketable at load. <br /> <br />Exhibit A-3 shows that the average system generation <br /> <br />experienced during the 6 years since Yellowtail has been <br /> <br />in full production slightly exceeds the predicted long-term <br /> <br />average. <br /> <br />4. O&M Expenses <br />By law, operations and maintenance expenses are deducted <br /> <br />from power revenues before any reduction in interest and <br /> <br />principal. O&M costs have continued to increase annually <br /> <br />in the past decade above 1963 projections for the following <br /> <br />reasons: (a) prolonged escalation of labor and material <br /> <br />costs, for example, labor costs in 1972 were I.B times <br /> <br />the 1962 costs, and (b) extraordinary maintenance items <br /> <br />(storm damage, equipment modifications, etc.). O&M costs <br /> <br /> <br />have doubled from about $8.2 million in 1963 to $l9.4 <br /> <br /> <br />million (projected) in 1973, an average increase of <br /> <br /> <br />7 percent per year. <br /> <br />In the current rate and repayment study, the historical <br /> <br />data are per the accounting records through June 30, 1972. <br /> <br />18 <br />