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That corporation enters into turnkey contracts to build
hydroelectric power facilities. Based on those conversations,
Mr. Moody concluded that contractors that enter into agreements
to deliver fully functional hydroelectric power facilities
typically charge a turnkey premium equal to 15-percent of the
funds expended in constructing the facility in question.
Respondent asserts that a 15-percent turnkey fee is excessive.
Respondent supports that assertion with Mr. Knoll's testimony.
Mr. Knoll's experience with turnkey contracts, however, is
limited to three turnkey contracts involving the construction of
assets to be used in the petrochemical industry. Mr. Knoll
apparently has no experience in determining appropriate turnkey
fees applicable to contracts calling for the construction of
assets to be used in the hydroelectric power industry. We find
that Mr. Moody was a more credible witness than Mr. Knoll. We
have no reason to believe that Mr. Moody overstated the turnkey
fee, and we accept his determination and calculation of that fee.
Respondent questions the amount of, rather than the
necessity of, a developer’s profit allowance. Indeed, Mr. Knoll
factors into his own analysis a developer’s profit of 13 percent.
Respondent also argues that Mr. Moody erred by including both a
turnkey fee and a developer’s profit in computing the
reproduction cost of the facility. Respondent cites no authority
prohibiting both a turnkey fee and a developer’s profit, and
petitioner has convinced us that the two address different
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