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3. THE RATE BASE AND THE RATE OF RETURN ALLOWED TO THE WATER COMPANY ARE INSUFFICIENT. At page 20 of its opinion, the Commission finds that the reasonable rate base for the Water Compan^r is $61$,919.72. This rate base is deficient, erroneous and con­trary to the evidence for the following reasons: 1. Because it does not reflect the cost of capital expenditures made and to be made in the year 1951. 2. The plant capital reflected in the base is valued at less than its true original cost. 3. The deduction for retirement reserve is exces­sive . 1951 Capital Ignored. At page 20 of the Commission’s decision it is stated that the total net plant cost as of January 1, 1950 is $$35,5$3«4$. This is the capital on the books of the Water Company as of December 31} 1950 rather than at the beginning of the jrear. (See Table Vll-b, page 21, Exhibit B and Ex­hibit P). All further computations are based upon this capi­tal base. It is thus apparent that the Commission in fixing a rate base of $61$,919.72 for the Water Company has disre­garded entirely all capital expenditure already made by the Water Company during the year 1951 ana which will be made dur­ing that year. On Table XI, page 25 of Exhibit B is listed in -55-