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Stpissfeer I, 3$5® Mr* £. 1* liswtti: General Solicitor, Union Pacific Railroad Company, ktt West Sixth Street, Jm tageles Xi», California. Mat Hr* Benmiit lb accordance with your latter of August 17, lf5% and ©or discussion in S#J Angeles following that date, I hare reviewed Mr* W* II. Hulslser’s comwii cation of August 11, 1#50, covering the rough draft of sy report on the later System at las Vegas. 1 hare endeavored to Incorporate the changes suggested as, for the most part, they bring about clarity and iB^ovwijant in the text. Some changes in footage of distribution main and fixed capital figures supplied under date of July 10, Iffi, were not available when the draft ms submitted as of June 15th. While the dollar differences are very small and no change in the end result* will result, it is believed desirable to miss the changes and re~c©iaput© the earnings so that the basic figures on the report will tie in with the capital figures in the Omaha office* there was me sizable error, too, in ay calculations that Mr* Hulsiaer caught* A# this occurred in the Breseat-Day Cost basis, it will not change the increase selected, m such increase did not reflect the higher amount that would arise from the present-day price level. Item 3* {Mr* Hulsiser*» letter) .Directing our attention to cost of wholesale water billing (page 2?) and to the sumary analysis of the component cost* m developed in the report, Mr* Kuialser raises a question as to the adequacy of the "adjusted cost of depreciation*, in the amount of 110,1*06. This results in an average rate of 1*JM¥ and compares with 1*80$ developed m the original cost basis (fable J). As you will recall, the report {page 1) develops these capital bases, namely* I - Recorded Goats IX - Original Costa HI - Present-Day Costs As to the annual depreciation expense for both the producing and the Water Company, the actual depreciation rates, as. used in the Omaha office, have consistently been used in the derolopssant of earnings and return on the Recorded Cost basis. Far the other two, 1 have used, my own estimates, as set forth in detail in the Appendix of the report, these are predicated on shorter lives end result in higher rates.