man000208 13

January 1, 1951 and May 1, 1952, consisting of 5Jt for freight, 2jt for engineering, l|# for general expenditures and 5^ for interest during construction. On all distribution facilities including service connections, as of Hay 1, 1952, an overhead charge of 6.3593S& has been made, consisting of 1$ for engineering, l|$ for general expenditures and 3-3M* for interest during construction. The variation in overhead percentages vas not explained by the Union Pacific in their summary although certain of the variations seem obvious. Evidently the 2fft engineering charge on production facilities as opposed to tiie 1$ charge on distribution facilities arises from the fact that the production facilities, being of a more cocpllcated and detailed nature, require much more planning and supervision than the distribution system which: .is relatively simple of construction. Also, the variation in Interest during construction is probably due to a longer estimated construction period for production facilities than that required for the distribution system. The reasons behind the 5$ for freight charges on production faci­lities constructed between January 1, 1951 end May 1, 1952 are not clear Inasmuch as this item was not Included in any other valuation overhead charge. It is felt that the overhead item could well be eliminated from the valuation of the property. It is true that engineering expense was required for a part of the system but other parts "^uet grew". It is felt that the unrefunded portions of the advances in aid of construction would offset tiie engineering costs. The charge for general expenses, according to Hr. Wehe, has not been made prior to 1951 and, while the point raiggit be argued, it seems to be a poor time to "find" this ^amount when selling the -13-