upr000062 196

2 Results of Operation utilising Adverse Factors (Tear 1961) Estimated increases In Gross Revenue at the four following rates of return along with comparisons as per report on Original Cost Basis are here set fortht &H 6-3/4* 6* <oU (a) Gross Revenue Deficiency at 61& as per Report Original Cost Basis - Table P, Bheet 8 #94,413 #94,418 #94,418 #94,418 (b) Gross Revenue Defi­ciency using diverse factors at the rates of return shoen 84,418 89,088 88,768 88,481 (e) Possible loss In es­timates increase In Gross Revenue #70,005 #66,382 #60,660 #65,987 If, Instead of comparing the groar. revenue deficiency developed under adverse factors (line (b)) with the #94,413 estimate predicated on a 6i|* return, a return of Q% is used (Original Coat Basis - Table P, Sheet 2), a figure of #88,047 is developed. Tima each of the losses shown under line (e) are reduced #6,571 (#94,418 * $88,047). This means that the proposed rates, which arc estimat­ed to produce approximately $90,000, might be reduced to raise a minimum of #28,413 at d-g* and #87,481 at 6-3/4*. The minimum resulta that are produced utilising all the adverse factors arc much too severe in my opinion. My own judgment la that the Commission might well award a gross revenue increase in the neighborhood of #65,000. Such is predicated on the following assumptions! Rate Base X^erse Rate Base - Table X this memo $1,028,000 AM both (a) Land as per books 15,666 (b) Retirement Accounting to Original Cost 106,474 (e) Balance of Defense Plant Amortisation 141,996 (d) water Rights 26,000 u,3i6}Ais Use #1,516,000 Rate Base