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N — From analysis o f figures contained in statements 2 and 3 it is shown that the most favorable method is that recommended; namely, No. 3, and it is thought that Commission cannot require Water Company to operate at a loss although, as outlined in my J-294, opposition to any increase in rates w ill he considerable and the outcome o f action recommended cannot be foreseen. Reports made by Auditor to Public U t il­it ie s Commission have been examined and it is believed that information contained therein w ill not be detrimental to ap­p lica tion fo r increase in rates. Referring particu larly to Mr. J effers' F-157 , i t w ill be noted that a ll figures set fo rth agree very closely with those given above, and the subject o f conserving water supply has been set forth in several instances. Endeavor was made to point out that we cannot conserve the supply as present source is Springs and flowing w e ll, the flow from which, i f not used, w ill go to waste, and although users are wasteful we are not warranted in making the expenditure to conserve supply until population increases considerably, or Company ranch is developed to such an extent as to require more water. While we control the major supply of water; namely, springs and w ell, nevertheless, additional artesian wells could be d rille d at any time and supply equal to that owned by Water Company and Hailroad could be obtained; in fa ct, i t is understood one large w ell a short distance north