man000172 3

R ? Y A. W E H E C O N S U L T I N G E N G I N E E R ? NE E LE V E N S U T T E R B U I L D IN G S A N F R A N C I S C O 4 , C A L I F O R N I A November 15, 1950 Mr. Wm. Reinhardt, Vice President, Oil Development, Union Pacific Railroad Company, 422 West Sixth Street, Los Angeles 14, California Subject: Results-of-Operation study, Las Vegas Land and Water Company and needed increase in water rates. Dear Sir; There is attached hereto a fairly comprehensive report covering the financial results of operation of the Las Vegas Land and Water Company as the same is limited to the water utility operations at Las Vegas, Nevada. Inasmuch as the study and analysis clearly show that such operations are being carried on at a loss under presently effective rates for water service, the report shows what such respective annual deficiencies are under each basic condition. A set of proposed water rates has been developed that will yield an estimated increase in revenue that is viewed as reasonable, both to the Las Vegas Land and Water Company and the public it serves in Las Vegas. Such report has been under preparation since January of this year, and the undertaking is in accordance with your and Mr. E. E. Bennett's assignment. Further, the report has been prepared with the view that it would be suitable for use as an exhibit in support of a rate increase, if such an application were filed with the Public Service Commission of Nevada. In order that both the management of the utility and the Commission might have available the most complete information reasonably possible as to the financial re­sults from the operation of the water properties, analysis has been made on three recognized bases of testing earnings. Such net earnings have been tested on depreciated capital bases predicated on (a) Investment Cost; (b) Original Cost; and (c)-'< Present -Day Cost, as each of these is defined in the report. The last two bases provide for land at present- day cost.