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upr000279-012
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    included la the rate bases covering respectively the water production facilities of the Railroad and the distribution facilities of the Water Company. Mr. Maag, who has been mailing a physical inventory and valuation of these facili­ties during the past few months, was able to very effectively clear up any doubt as to the extent of and the book cost of these facilities. Our only other witness was Mr. Boy A. Wehe who presented revised estimates of the results of operation for the year 195f based upon the actual experience in the first four months of that year. These revised estimates indicated that the ex­pense of operation had Increased over the estimates made at the time of the original hearing and which were based on the actual 1950 experience. The protestante were not able to east much doubt upon the accuracy of Mr* Wehe*s estimates of revenue and operating expenses. His estimates were conservative and very well pre­sented. I believe that they will be largely accepted by the Commission. Mr. Wehe presented rate base figures on several bases - investment cost, original cost and present-day cost* He stressed the original cost figures. There are several con­troversial items in the rate base figures such as cost of pipe line replacements not capitalized under betterment accounting, the capital cost of facilities completely amortized under the war-time provisions of the Internal Revenue Code and advances in aid of construction. Mr. Wehe testified that a reasonable return would be upon an original cost rate base including amounts for all of these controversial facilities. I believe that the Commission will not allow a rate of return as high as £££ and I believe the Commission will establish a rate base lower than that recommended by Mr. Wehe, All persons concerned have from the start realized that we would hare some difficulty supporting the rate base figures which we proposed. Mr. Wehe furnished some very fine testimony in support of the rate of return and rate base which he proposed. The Commission listened very attentively to his testimony and I be­lieve will give it very serious consideration. However, we can hardly expect to receive an increase of the full amount requested even though the facts of the ease Justify the full increase pro­posed. I believe that political factors will to some extent influence the amount of the increase which the Commission will ultimately award. The only witness presented by the protestant, City of Las Vegas, was Mr. Everett L, Clark, a Consulting Engineer of Los Angeles, California, who was formerly employed by the California public Utilities Commission. Mr. Clark compared our operating expenses with the operating expenses of several California com­panies. The only class of operating expense with reepeet to