upr000274 205

M r . H o y a . W eh e -2' J a n u a r y 2 6 , 1 9 5 © However, It may not be possible to ohange the present method of aeeoiratlng with respect to the facilities in railroad ownership because of the limitations imposed by the present I.C.G. accounting classifications* Also, there may be income tax reper­cussions and other policy matters which would make undesirable a change in the accounting with respect to properties in the ownership of the Las Ye gas Land and Water Company. X believe that you have all of these things in mind but X am mentioning them so that the question may be fully explored when Mr. Bertolaccl goes to Omaha for the purpose of developing information for your study. X do not believe there is any serious difference in viewpoint within our organization on the subject of historical and reproduction cost. 0ur Valuation Department favors reproduction cost as a method, and both Mr. Belnhardt and X are of similar mind. However, 1 realize that that method of valuation has been somewhat discredited by recent Court and Commission decisions and that the Nevada public Service Coni salon, following the recent trend, may rely more strongly upon historical cost than upon reproduction cost. Xt is for this reason that X definitely agree with you that it is very important to develop a proper historical cost which will reflect as high a cost as can reasonably be justified. You also mentioned that your study should include the development of a set of proposed flat rates to yield the revenues required. Any substantial change in the relationship among the present schedule of flat rates would require a survey as to the pro­portionate use of water by various classes of users. X do not be­lieve that you should be burdened at this time with the work of making such a survey. The City of Las Vegas intends to Install a few test meters to obtain information on water consumption of various representative water consumers and it may be that our own forces, from the informat ion so developed and other information in their possession, may be able to develop for your benefit data from which you can recommend changes in the relationship between our present rates. The information to be obtained from the meters installed by the City may come too late to be of much value in our proposed in­crease case and X am inclined to believe that we will have to seek a horizontal increase in our present rates without much adjustment. At any rate hearing, however, we will, of eourse, be faced with a complaint on the part of motel operators at Las Vegas concerning their charges. You mentioned that the tax practices relating to the water producing and distributing facilities will be reviewed in con­nection with your study of operating expenses. A great deal of in­formation on this subject can be given you by Mr. Charles Mams, our Land ami Tax agent at Los Angeles, who deals directly with the Tax Commission of the State of Nevada, of which Commission Mr* Allard,