upr000283 219

* added to the understatement of $5,200.00 in operation and maintenance expense, we find that the Commission’s under­estimate in these two items of operating expenses alone a-mounts to $14,640.00. The Commission should have respected and followed the estimates shown in Exhibit Q,. These estimates were honest­ly and conservatively made. The basis for them was fully de­veloped in the record. Without any further evidence the Com­mission, upon reconsideration, should find that these estimates conservatively reflect the expenses which will be incurred in the test year 1951. However, if a further hearing is had, we are in position to show that these estimates were more than conservative. If a further hearing is had, we will prove that the total of the actual recorded expenses of the Water Company in these two categories for the first seven months of 1951 is $62,875.84. If this is expanded mathematically to an annual figure,., it becomes $107,737.12. This actual experience demonstrates that Mr. Wehe’s latest estimate for 1951 of $93,540.00 was overly conservative, and that the lower estimate of $78,900.00 used by the Commission is even more out of line. The annual depreciation charge computed by the Com­mission, like that computed by the Commission in connection with the Joint Facility Rents estimate, is erroneous because the capital base upon which it is computed is deficient as heretofore explained and because the depreciation rate of 2$ is applied to the depreciated capital base rather than the -65-