upr000282 249

rental, resulted In a handsene profit to the rail* road* Here, again, is exaggeration. Hie payment for In­come tax simply makes the Union raelfie whole, and there is no profit whatsoever Involved in the tax item* the second amount represents interest rental on the depreciated cost of the facil­ities, computed at 6-1/4$ per annum, which dose not appear un­reasonable* the only eo-ealled element of profit 1 see in this latter item could arise from the fact that the rental base rep­resents the original cost basis, which is slightly higher than the investment basis, and the fact that the lands are included in the base at market value Instead of at investment cost* Also, 1.90$ of all costs are absorbed by Union Pacific on basis of relative water consumption* Further, the Commission selected the higher amounts of two years, i*s«, the tax amount Is for 1951 and the rental amount for 1950* Analysis has bssn made of the tabulations on pages 6 and 9, and thsre is attached a summary, identified as "Statement A", showing the amounts used by the Commission in arriving at Its rate of return as compared with the amounts, which, in our opinion, should have been used, based on the evidence introduced at the Court trial* You will note that the Commission states that the additional revenue granted in 1951, plus the additions! revenus now granted, will result in a return to MUm Co* of f.6S$* #£ the basis of the figures I have used, this amounts to only 1.7$$, which does not indicate a reasonable return. ment 8", on which is shown a reconciliation of the two sets of figures used in determining the rate of return, referred to in paragraph next above* railroads and the utility was never approved by the Commission, which probably is the reason why the latter excluded from its figures ths income tax and return payments to Ursa So* when determining its final results for hflMl Co. it is stated ©n page 2D that "The defense projects are entirely written off the books of sidered". If tho company and cannot again bo con­the defense projects are eliminated from the base as the Commission has directed, the return on my figures would be increased from 1*71$ to l*9o$* there le also attached a summary Identified as "State- On *p* ag7*e 4 it iI s s... ta- . ted th_a t t___heIhis afe.c oa. ntA. raf* cir, —t M.n bif ernttm.4w. eMWe*n tho lith respect to the omission of the defense projects, I- n arriviAnrg adtt. liotis. jf6ii nfalo rc orsetgsu,l atthosr yc oemxpmeinsssei*o nw hdiidc hnot have not used that figura in the restatement on Statement A