upr000279 53

V Omaha - April 18, 1951* Mr. Wm. Reinhardt (2 ) - Los Angeles: CC - Mr. E. E. Bennett - Los Angeles* When Mr. Hubbard was in Los Angeles last month he reviewed with Mr. L. R. Maag the reproduction costs of the Las Vegas Water facilities in order to reconcile the differ­ences between Mr. Maag*s figures and the present day costs pre­pared in this office and used by Mr. Wehe in his exhibits. costs with an explanation of the differences, and which are further commented upon below: Base Costs: noted that reproduction cost new exclusive of the overheads exceeds present day cost by #ip05,6lip, or 2>k% for the production facilities and $3l4->538> or 25$ for the distribution facilities. The various elements of cost making up the differences, which are not included in investment cost or present day cost, are properly included in the estimate of reproduction cost. base figures and I believe they could well be adopted for use in any future negotiations with respect to a sale cilities . price for the fa­Overhead Costs: stationery^and supplies, taxes, purchase expense and supervision. This I believe is high and should in my opinion be lig$ applied to the base cost plus engineering, as noted below under "General Expenditures". Engineering; Tb.e I.C.C. in its reproduction cost of Union Pacific properties adds lj.i=r$ to the base cost for this item of I am attaching two statements showing these Prom the attached statements it will be Mr. Maag seems to have good support for his 10 Reproduction cost includes an additive of $ to the base cost for organization, general and law expense^ 3 Reproduction cost includes an additive of $ to Ahe base cost for engineering expense. 1951