of the Atomic Energy Commission. On November 28, 1958, the Commission issued its findings and opinion and order granting approval of the applications of Union Electric Company to acquire 40 percent, of Illinois Power to acquire 20 percent, and of Kentucky to acquire 20 percent, of the common stock of Electric Energy, Inc., pursuant to section 10 of the act and released the jurisdiction previously reserved under that section. The Commission dismissed the application of Central Illinois Public Service Company to acquire 20 percent of the EEI stock on the ground that it was not, and would not become, as a result of the proposed acquisition, an affiliate of EEI and of any other public-utility company and that, absent such an affiliated relationship, no approval of the acquisition of the common stock of EEI need be obtained.21

On March 26, 1956, Union Electric filed an application for exemption from the provisions of the Holding Company Act pursuant to section 3(a) (2) thereof. On January 13, 1959, Union Electric filed an amendment to bring the exemption application up to date. The matter was pending at the close of the fiscal year.

In the fiscal year there were four cases before the courts arising out of objections by J. Raymond Dyer, a stockholder of Union to solicitation of proxies by the company's management and by solicitation by Dyer. For a discussion of the background of this litigation see the 24th Annual Report at pages 119-120. On April 10, 1959, the Court of Appeals for the Eighth Circuit affirmed the Commission's orders entered in March 1958 allowing a declaration filed by management to become effective as a basis for proxy solicitation for the 1958 stockholder's meeting.22 The Court rejected all of Dyer's numerous contentions on the merits and held that within the scope of its review functions, there is nothing which the Commission did or failed to do which would entitle petitioners to have the orders reversed. Moreover, the Court found that the questions presented had not become moot or inoperative because the stockholder's meeting had been held. As set forth in the 24th Annual Report, Dyer had filed a petition for certiorari in the Supreme Court of the United States to review the Eighth Circuit's dismissal as moot of his petition for review of the Commission's orders relating to Union's 1957 meeting.23 On May 18, 1959, the Supreme Court granted certiorari, vacated the judgment and remanded the case to the Eighth Circuit for further consideration in view of that Court's opinion in the 1958 proceeding.24 At the end of the fiscal year the case was pending before the Court for a decision on the merits. In addition, Dyer has filed a petition to review the Com

32 S.E.C. 202 (1951).

Dyer v. 8.E.C., 266 F. 2d 33. Dyer filed a petition for certiorari in the Supreme Court In this case on Aug. 3, 1959.

"Dyer v. 8.E.C., 251 F. 2d 512 (C.A. 8, 1958).

24 Dyer v. 8.E.C., 359 U.S. 499.

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mission's orders in connection with the 1959 solicitation of proxies for Union's meeting. The related injunction action in the district court referred to on page 120 of the 24th Annual Report was decided adversely to Dyer subsequent to the end of the fiscal year.

B. DEVELOPMENTS IN OTHER SYSTEMS

Central Public Utility Corporation

This company registered under the act as a holding company in 1938, at which time the system consisted of 47 operating companies located in 19 States and in areas outside of the United States. In order to effectuate compliance with section 11 (b) of the act, the system consummated a number of section 11(e) plans and on June 1, 1955, filed an application for exemption under section 3(a) (5) of the act, stating that it had disposed of all its domestic public-utility subsidiaries and had substantially simplified its capital structure. On April 3, 1959, following several amendments to and a hearing on the application, the Commission issued an order granting Cenpuc an exemption from the act,25 subject to a number of terms and conditions, which included consummation of a proposed consolidation of Cenpuc with one or more companies within 6 months of the date of the order (subsequently extended for 1 month) and the right of Cenpuc shareholders objecting to the consolidation to receive $28 per share in lieu of shares of the consolidated corporation. Cenpuc agreed that the consolidation, in and of itself, would constitute a change of circumstances within the meaning of section 3(c) of the act; thus, the Commission may revoke the exemption if the circumstances existing after the consolidation prove to be detrimental to the public interest or the interest of investors. Subsequent to the exemption order, Cenpuc publicly announced and filed proxy material with the Commission relating to a proposed consolidation of itself, Consolidate Electronics Industries Corp., and Philips Industries, Inc. into a new corporation to be named Consolidated Electronics Industries Corp. and into whose shares Cenpuc's capital stock would be converted on a share for share basis. The Commission, after examining the proxy material, released the jurisdiction which it had reserved thereover. On October 16, 1959, following the requisite stockholder approval, the proposed consolidation was consummated.

Cities Service Co.

On September 20, 1957, the Commission issued an order pursuant to section 11(b) (2) of the act requiring Cities to eliminate the 48.5 percent minority interest in Arkansas Fuel Oil Corporation or to dispose of its holdings of 51.5 percent.26 Cities, Ark Fuel and a stockholder of Ark Fuel petitioned the United States Court of Appeals

25 Holding Company Act Release No. 13970. Holding Company Act Release No. 13549.

for the Third Circuit for review of the order. On July 22, 1958, the Court affirmed the order of the Commission.27 On September 18, 1958, Cities filed a plan pursuant to section 11(e) for the purpose of eliminating the minority interest in Ark Fuel. The plan provided for division of the assets of Ark Fuel into two new campanies, one to be owned by Cities and the other by the minority interest. Subsequently, the plan was withdrawn and a new plan filed providing for the exchange of one share of Cities common stock for each 2.4 shares of Ark Fuel common stock. Hearings on the latter plan were commenced on March 31, 1959, and were still in progress at the close of the fiscal year.

Electric Bond and Share Company

Electric Bond and Share Company, which no longer holds as much as 5 percent of the outstanding voting securities of any domestic public-utility company, has pending before the Commission an application, filed pursuant to section 3 (a) (5) of the act, for exemption as a holding company from provisions of the act. In the event such exemption is granted, it is the intention of the company to convert its status to that of an investment company and register under the Investment Company Act of 1940. The proceeding on the exemption application involves a number of very difficult and complex issues, among which is the question as to whether Bond and Share, through its wholly-owned engineering and consulting service company subsidiary, Ebasco Services, Incorporated, exercises controlling influence over, or is affiliated with, certain public-utility and holding company clients of Ebasco which formerly were controlled by Bond and Share. Hearings were concluded on March 26, 1959, and the matter was under advisement for decision by the Commission at the close of the fiscal year.

Standard Gas and Electric Company

Standard Gas and Electric Company, a registered holding company, was formerly a subsidiary of Standard Shares, Inc. On September 23, 1958, the Commission granted an application of Standard Shares under section 5(d) of the act for an order declaring it not to be a holding company and its registration as such thereupon ceased to be in effect.28 Standard Shares, formerly known as Standard Power and Light Corp., upon the issuance of such order, completed its registration as an investment company under the Investment Company Act of 1940 and is subject to the requirements of that act and to the Commission's jurisdiction thereunder.

Standard Gas and Electric owns 45.6 percent of Philadelphia Company, also a registered holding company. Neither owns directly or indirectly 10 percent or more of the voting securities of a public

"Arkansas Fuel Oil Corporation, 257 F. 2d 926. "Holding Company Act Release No. 18824.

utility company and both are required by orders issued under section 11(b) (2) of the act to liquidate and dissolve. Each of these registered holding companies is in a position to effectuate dissolution except that there exist undetermined questions relating to Federal income taxes for the years 1942 through 1950.

Other Matters

As previously reported at pages 114-115 of the 23d Annual Report, International Hydro-Electric System ("IHES") was reorganized pursuant to section 11(d) of the act and IHES is now registered as an investment company under the Investment Company Act of 1940 and subject to the Commission's jurisdiction thereunder. The only remaining matters under the Holding Company Act are fees and expenses to be awarded in connection with the reorganization. After hearings, oral argument was heard by the Commission and the matter was pending for decision at the end of the fiscal year.

There are also pending before the Commission applications for the allowance of fees and expenses in connection with a plan filed and consummated by The United Corporation pursuant to section 11(e) of the act for its conversion into an investment company. Hearings on such applications have been held, oral argument heard, and the matter was under advisement for decision by the Commission at the close of the fiscal year.

FINANCING OF ACTIVE REGISTERED PUBLIC UTILITY HOLDING COMPANIES AND THEIR SUBSIDIARIES

During the fiscal year 1959 active registered holding companies and their subsidiaries sold to the public and to financial institutions, pursuant to authorizations granted by the Commission under sections 6 and 7 of the act, 25 issues of long-term debt and of stocks aggregating $477 million.29 This is in contrast to fiscal year 1958 when there were 36 such issues with aggregate gross sales value of $583 million.30 All but five 31 of the active registered holding company systems sold longterm debt or stock to the public in varying amounts and of various types in fiscal 1959.

The following table presents by systems the financing by active registered holding companies and each of their subsidiaries classified by amounts and types of securities.

20 Debt securities are computed at their principal amount and stocks are taken at gross proceeds to the company.

30 In fiscal 1959, all of the securities were sold to provide new capital. In fiscal 1958, two issues of debt securities, aggregating $36 million, were sold to refund other debt securities carrying a higher interest rate.

31 These are Delaware Power & Light Company, Granite City Generating Company, Philadelphia Electric Power Company, Union Electric Company, and Utah Power & Light Company. Because of the nature of their business Granite City and Philadelphia required no new capital, and Delaware, Union and Utah met their financial requirements through the issuance of short-term notes.

TABLE I.-Securities issued and sold for cash to the public and financial institutions by active registered holding companies and their subsidiaries, fiscal year 1959.

In addition to common stock issued for cash listed in the above table, The Columbia Gas System, Inc., through a subsidiary, exchanged with the public 3,574,373 shares of its stock in connection with the acquisition by the subsidiary of the assets of Gulf Interstate Gas Company, a nonaffiliated natural gas pipeline company. The market value of the stock at the time of issuance was approximately $78 million. This issuance was excepted from the competitive bidding requirements of rule 50, the Commission concluding that compliance with competitive bidding was not necessary or appropriate in the public interest or for the protection of investors or consumers to assure the receipt of adequate consideration or the reasonableness of the fees or commission to be paid with respect to such issuance. Details of the transaction are more fully discussed at page 125 hereof. The table also does not reflect the issuance of short-term notes to banks by any of the system companies, nor does it include intrasystem financing represented by the issuance of securities by subsidiaries to their holding companies. These issuances also required authorization by the Commission except in the case of the issuance to banks of short-term notes having a maturity of less than 9 months where the aggregate amount did not exceed 5 percent of the total capitalization of the company as defined in section 6(b) of the act. The issuance of such securities is exempted by that section 6(b).

It may be noted from the table that the total of $477 million is made up of $194 million bonds, $80 million debentures, $18 million