upr000283 216

4. THE DEFICIENCY IN REVENUE UNDER FORMER RATES FOUND BY THE COMMISSION TO BE $25,112.46 DURING THE TEST YEAR 1951 IS NOT CORRECT. THE TRUE DEFICIENCY IS NOT IESS THAN $111,790.00. The deficiency in revenue of $25,112.46 under former rates found by the Commission on page 21 of its opinion is based upon the Commission's estimate of revenues and expenses of the Water Company and its computations of the return which is required upon the rate base which it fixed for the Water Company. Two substantial items which result in understatement by the Commission in the deficiency in revenue are the Joint Facility Rents charges which we have already discussed and the insufficient rate base of the Water Company which we have likewise discussed. There are several other items in the operating expense estimates of the Commission which are erron­eous and which result in an understatement of the revenue re­quired by the Water Company. In making its estimates of revenue and expenses the Commission has followed to some ex­tent the estimates contained in Exhibit B which were made in the light of the experience in the year 1950 and before any actual results had been ascertained in the year 1951. The Commission disregarded entirely the latest estimates of the Water Company contained in Exhibit Q, which were made after the Water Company had the experience of the actual results of operations in the first four months of 1951. The opinion merely lists the operating expenses allowed but does not dis­cuss the reasons why the Commission allowed or disallowed particular amounts so that the Water Company or a reviewing - 6 2 -