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Valuation of water systeal Mr, i> f« Kniolrer booker, General Manager, X«os Angeles, California* ?Soar Sir: laa ?#g&gs fieva&a, May 10, 1932. -1 1-8- Gy ¥-23-1-7 W-^3-4 Pursuant to the moating with Mr. Haag* and yourself, held in ay office last night, Hr. Connolly iM myself reviewed oar reoordE tfe.it- morning end submit the following: «Tost «&at basis the Auditor*g office need to errire at the amount of $104.77 depreciation for March 1932, we «rt unable to say. Howaver, it appeare that they are using e basis of approximately 2 per cent on valuation established by' the .Pub­lic Utilities Oorjatseion at the recent hearing in Ice Vega®, which would mean retirement in a period of 50 years, «?© know that redwood pipe will not last that long, and while we have » guarantee of 20 years on this pipe m anticipate satisfactory service from it for a period of 20 to 25 years, I believe depre­ciation should •-•<? accrued on our wood pipe at the rate of 6 per >w>/ cent per nnn.ua, which will amply protect om* investment by re-^p^ tiretaent in 17 years* , Cast iron pipe, engineering department® and other®^ / have assured us, we could depend on for 50 years of life. How­ever, ae suggested by Mr. Baugh, we believe retirement should be completed in about 25 year® and the rote of 4 per cent par annum-: should be need. ^he question of a proper representative figure..for our investments was also talked over, end while no definite conclu­sion was reached, I era of the opinion that where the large expea- ? :dltures of 1924 and 1925 were charged to 0*1. as adjustment in our Investment accounts should be made to show these amounts in Capital Account, os this is the basis for our earnings. - 1 -