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3. charges In operating expenses or any other account. If instead, the Water Company were operating the plant, it would be charging the Snion Pacific for water supplied the water tank, roundhouse, etc., and railroad operating expenses would then include charges aggregating perhaps #9,000 per annum (see tabulation following) instead of the present set-up whereby railroad operating revenue is this year to include a credit of #27,210, with operating expenses including some minor costs, and taxes, about #1,200, paid on the property. Thus, without al­lowing for interest payable by the Water Company on indebtedness growing out of the sale to it of the railroad property, ther would result a reduction of #35,000 in UPBR Co. annual income sub­ject to income tax. The LVL4W Go. should be able to pay something each year on the purchase price of the plant, and this would bring about a reduction of interest; at the interest would not greatly ex­ceed #17,500 per annum when the present program of improvement is completed, and there would still remain a net reduction in rail­road income, subject to Income tax of some #17,600. 6. The revenue received from water sales and the ex­pense of maintaining and operating the entire plant would not a-lone Justify the present LVL&W Co. tariff for water users, but on the combined investment in the plant which will be the Water Com­pany* s Investment if it purchases the LAdSL property , it will be seen that no more than a fair return is being earned. This show­ing should insure the preservation of the present water tariff. %