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,J,Roaa Clark. - 2 — f within the proviso of the franchise above quoted. In order to obtain an increase of rates, therefore, it will be necessary to make a showing that will demonstrate that the maximum rates prescribed to not afford reasonable com­pensation on the investment of the company. This will be absolutely essential in my opinion beoause it would only be by means of such showing that we could have any hope of obtaining permission of the Commission to set aside the schedule of rates provided inthe franchise. I am not prepared to state at this time unquali­fiedly that the Commission world have authority to grant this request, but I shall assume for the purposes of this letter that it would on the making of a proper showing. I would therefore suggest that the Auditor pre­pare a statement showing the investment of the Water Com­pany in the water plant with due allowance for depreciation also, a statement showing the gross receipts and expenses for the calendar year l^lg, and the net receipts. * From such a statement it will be possible to determine whether the company has received a fair and adequate return upon its investment. If it is not receiving an adequate return then we may consider the expediency of applying to the Commission for relief. Meanwhile I will investigate the authorities as to whether the Commission would have the right to set aside the schedule contained in the franchise. I return Mr. Bracken1s letter. Very truly yours,