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Jinnette admitted that he had never seen the EMS purchased by
Sav-Fuel and that he was not familiar with the design of the EMS
involved in this case.14 Mr. Jinnette acknowledged that some of
the equipment could have become obsolete over the years.
Therefore, we assign no weight to Mr. Jinnette’s conclusion
regarding the useful life of the EMS and instead base our
analysis on the assumption in the PPM that the EMS had a useful
life of 25 years. This is the useful life projected at the time
the limited partnership interests in Sav-Fuel were offered to
investors.
4. Anticipated Energy Savings
The PPM assumes that the savings in electrical energy costs
to Gould would be 20 percent of its annual energy bill.
Respondent does not challenge this assumption, and both parties’
experts relied on this assumption for purposes of determining
projected income.
5. Inflation Rate of Energy Costs
The PPM assumes that the inflation in energy costs would be
20 percent per year. Petitioner contends that there were energy
supply shortages around 1980, and that it was not unreasonable at
14We note that the evidence in the record includes a letter
from Mr. Jinnette stating that properly maintained industrial
equipment of the same type as the EMS has a useful life of 10
years to more than 20 years. This is seemingly inconsistent with
petitioner’s assertions and Mr. Jinnette’s statements in his
report and at trial that the EMS had a useful life of at least 30
years.
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