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Water Rates- Las Vegas, Nevada* Los Angeles, A pril 6, 1932. Mr. P. H. Knickerbocker: Replying to your l e t t e r of March 25th, and with retu rn o f Mr. Gray’ s l e t t e r of March 17th with accompanying data o f "Operating R esu lts - - Las Vegas Water S erv ice" fo r the period from January, 1920, to September 30, 1 9 3 1 ,-- I wish to advise th at the reasons Las Vegas Land and Water Company did not ask fo r a 100 per cent in crease in a l l ra te s were: F i r s t : We had inform ation beforehand th at the Public Serv ice Commission would not allow earnings in excess o f approximately nine per cent on the c a p ita l in v e st­ment o f u t i l i t i e s in c i t i e s and towns such as Las Vegas, Reno and Elko w ith a permanent fu tu re , whereas, in towns o f le s s permanent duration, such as Tonopah, Ely and other mining camps, they perm itted as high as fourteen per cent on the investm ent. Second: The annual earnings o f Las Vegas Land and Water Company a t the time we made our ap p licatio n based upon the value o f the c a p ita l investment of the Company as r e ­ported to the Public Service Commission from year to year plus the value o f our water rig h ts not so rep orted, le s s expenses and d e p re c ia tio n ,- based upon a 100 per cent in ­crease in ra te s would have shown a p r o fit on the in v e st­ment fa r in excess o f what we had reason to b e lie v e the Commission would allow . Third: We did not place a l i t e r a l in te rp re ta tio n on the in stru c tio n s to in crease the r a te s 100 per cent in a l l c la s s if ic a t io n s , inasmuch as the schedule under which we were then operating was a n tiq u a te d ,- over 25 per cent of the c la s s if ic a t io n s th erein lis t e d being o b so le te , and there being some 12 or 15 c la s s if ic a t io n s , which were major consumers, not l is t e d . I t was th erefore necessary fo r us to r e c la s s if y the se rv ice s so as to make the same conform with the cla sse s o f se rv ice th at we were g iv in g . At the time the old schedule was adopted in 1909, fo r in ­stan ce, there were no apartment houses mentioned, and, in f a c t , a t th a t time there were no apartment houses in Las Vegas C ity , nor were there any bungalow co u rts. During 1931, however, and fo r several years p rio r th e re to , a con sld erab le p ortion o f our revenue was derived from ap art­ment houses and from bungalow co u rts. When working under the old schedule we made an a r b itr a ry c la s s if ic a t io n o f apartment houses and charged $1.00 each, the same as a