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la California, all snob advance* are deducted, in establish­ing the rate bane* If the position ia taken that the Monies advanced are for the parpose of guarangeeing to the Company that the extension is economically justified and that it will not bacons a burden to the other customers then, an interest credit to ths custoaers should be recognised. Tn this caw, if a 5* credit ia used, and a 6-3/4* return to the Company is em­ployed, these result in a relationship ©f % divided by 6-3/4*, or a j 0*765 factor la developed* Since the full £206,14$ is subject to refund, the equivalent portion that the customer should be given credit for becomes 0.765 x 206,146, or $163,400. However, studies made by Mr. Johnson indicate that, under Rule 9-a, not wore than 55* of the advance will he returned over a period of 10 years. In the calculations for this tenative study, it has been asaumei that 60* will be repaid - or 40* forfeited. Since such forfeitures will not be realised currently, the mean, or 20* has been used. Accordingly, the $163,400 has been further reduced t© $132,000 - the amount shown as deducted la Table A. Such a possible basis has obvious weakness, but is one basis of bringing the deduction to a more realistic figure. If some such basis is not used, then $190,000 will be the proper deduction - unless it is decided to stand on a legal interprets - ties that, slaca the ownarahip is with the Company, ths Company ia en­titled to earn on that property devoted to public service, irrespective of how it has been obtained. I would not recommend such a position, ft would be damaging to your public relations, and the Commission would jfrobably rule against you anyway, so the net result would bs to incurr public disfavor.