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in #2 - Mr. Wm, Reinhardt June 15, 1950 In summary form the results for the forecasted year 1950 ares Present Rates Revenues Expenses Ret Revenue Rate Base Rate of return ( ) Red figure. Investment Cost t2Xb,000 222,231 (6,231) 550,000 (1.50??) Original Cost t21b,000 231,S13 (17,613) ^39»000 (2*76$) Present-Bay Cost #21b,000 270,023 (56,023) 662,600 (6.5c#) It is thus seen that not only mill the Water Depart­ment of the Lae Vegas Land and Water Company fail to earn a fair return on the capital employed in rendering the water * eervioe, but it will fall to earn its costa of operation be­fore any return. In other words, its operations are estimated to be in the •red* for 1950 and future years, Irrespective of the capital base used. A 6|$ return has been used as reasonable in determin­ing the deficiency in earnings. Such deficiencies aa devel­oped are as follows: Deficiency In Cross Revenue to yield 6t$ Investment Cost Original Coat Present-Day Cost Est'd. Gross Rsvenus needed #277.675 #296,227 1356.9*0 8 * * Present Rates 21b,000 Deficiency in Gross Rsvenus #63,675 21b,000 "VBTbf 21b.000 irSiifao Per cent Increase needed 29.75* 3».b2$ 66.61$ The proposed water rates developed will yield an in­crease of approximately #60,000 of gross revenue for the year or an over-all increase of 37.3$. Such increase is viewed as not unreasonable, as the average billing for water service in Las Vegas will still remain lew as compared to most other cities and exceedingly low when the high per >0 $