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2- ? water lines, and similar explanations are given for excessive maintenance costs in June, July and October, 1941. it is obvious that our present ledger value of the facilities would be considerably less than our out-of-pocket cost, or if accounted for on a property retired and replaced basis# In this same connection, we have made some inquiry as to the, value bases acceptable to the Public Service Com­missions and Courts in connection with rate hearings, and find there is a tendency on the part of some of the Commissions to consider historical eost as the proper value basis in determin­ing fair return on investment in rate cases# In some in­stances, the historical cost of facilities and present market value of land has been deemed the proper basis# Bennett, we are of the opinion that, as we will undoubtedly be called upon to substantiate any application for increase in water rates, we should have a statement showing! 2 - A statement Showing historical cost I of the Railroad Company water produc­ing lands and the present market value of such lands# In each instance, the value of the \ Railroad Shop Grounds Well and pipe \ lines used exclusively by the Railroad \ Company and its lessees should be ex-x— eluded# Will you please arrange for the preparation of such statements for our use in connection with preparation of pro­posed application for increase In our water rates# Unless there has been soma subsequent adjustment, Discussing the matter with Messrs# Reinhardt and 1 - The historical eost of the facilities using a retired and replaced basis rather than betterment and separated as between LVL&St and RRCo# ownership# m 1 W# H# Johnson Id