upr000278 38

2 Results of Operation Utilizing Adverse Factors (Year 1951) Estimated increases in Gross Revenue at the four following rates of return along with comparisons as per report on Original Cost Basis are here set forth; 5jg% 5-5/4% 6%______6lt% (a) Gross Revenue Deficiency at 6 Origi1n$a la s Copsetr RBeapsoirst - „ „ Table P, Sheet 2 f $94,418 $94,418 $94,418 $94,418 (b) Gross Revenue Defi­ciency using adverse foaf ctroertsu rnat sthhoew nr ates 24,415 29,086 55,758 58,451 (c) Possible loss in es­timated increase in Gross Revenue $70,005 $65,352 $60,660 $55,987 If, instead of comparing the gross revenue deficiency developed under adverse factors (line (b)) with the $94,418 estimate predicated on a 63$ return, a return^of 6% is used (Original Cost Basis — Table P, Sheet 2), a figure of 188,047 is developed. Thus each of the iosses shown under line (c) are reduced $6,371 ($94,418 - $88,047). This means that the proposed rates, which are estimat­ed to produce approximately $90,000, might be reduced to raise a minimum of $23,413 at < 5-%% and $37,431 at 6-3/4%. The minimum results that are produced utilizing all the adverse factors are much too severe in my opinion. My own judgment is that the Commission might well award a gross revenue increase in the neighborhood of $65,000. Such is predicated on the following assumptions: RateA dvBeasrese Rate Base - Table I this memo Add both ((ab)) RLeatnidr eams enpte r Acbcoookusnting (c) Btaol aOnrcieg inoaf l DeCfoesntse Plant Amortization (d) Water Rights $1,028,000 15,665 105,474 141,996 25,000 $1,316,135 Rate Base Use $1,316,000