upr000062 173

On aha August 11, 1950* Mr* ' fli g 0/,\ 3703.1 O' . ? ? x Wfi CC - Mr. A. E. Stoddard, Mr. V.rm. Reinhardt - Los Angeles Mr. T. h. Bo ekes Referring to 3rour letter of June 26, 1950, file 30-5, enclosing rough draft of report prepared by Mr. Welie on results of operation of the water system at Las Vegas, and draft of pro posed new agreement between the Railroad Company and the hater Company: With respect to Mr* hehe’s report, I am attaching a memorandum listing my views and suggestions. While your atten­tion is called to several apparent errors as noted, we have not made a mechanical check of all the computations. The main points-at issue as I see it are (l) - the question of reducing rental base by the estimated depreciation accrued thereon in computing interest charged the hater Company for use of Railroad Company1s facilities as outlined in my comments on attached memo regarding page 27 of the report, item 6(c), and (2) - reduction in rate base by the estimated unrefundable portion of construction advances subject to complete a partial refund, as referred to on the attached memo in my comments regarding page 36 of the report. While I believe that, for our information, we should have the results of operations as set out in Mr. ¥ehe* s report, in­cluding the adjustments noted in (1) and (2) above, tne report, in my opinion, should not be presented to the Utilities Commission on that basis. With respect to the proposed new agreement between Rail­road and Water Company: Section k (c). An item of “vacation allowance" should be added.