man000172 48

38 The capital estimates have already been presented. Such capital bases have been reduced for depreciation that has accrued as represented by the retirement reserve or an estimate of that reserve. Depreciation Requirement Under this heading will be discussed the retirement reserve, the amortization of defense plant capital, and the annual depreciation expense requirements. Reserve Requirements < Tables E, P and G, in which the rate base figures are de­veloped, show the amounts used for the depreciation deduction. Under the Investment basis, the actual reserve set up on the books for the Water Utility, less the defense plant amortization, has been used for the year 1949. There has been substituted for the de- W fense plant amortization write-off, a normal depreciation accrual which has been computed for plant capital of that age, and thus a new reserve requirement was calculated and used. In other words, in Table H (Appendix) for example, included in the amount of #200,497 for 8 ” C. I. mains is the cost of defense plant 8 ” C. I. mains amounting to #49,006. A service life of 65 years has been assigned to 8 " C. I. mains. Knowing the age of each main ad­dition, the ratio of this age to 65 years has been applied to the original cost of the mains and the reserve requirement obtained. A breakdown of the #18,973 shown m Table H as reserve requirement for 8 " G. I. mains would reveal #5,196 applicable to those mains installed as defense projects. Similar treatment by sizes of the rest of defense project mains results in a total reserve requirement of #20,756. This amount is part of the #87,705 deducted from the fixed capital in Table P - year 1949 adjusted, in developing the rate base figure of #666,800. In further reference to the defense plant amortization,