ing companies in these active systems.1 The remaining 5 registered holding companies are of relatively small size and are excluded from the active holding-company systems. In the 18 active systems there are 88 electric and/or gas utility subsidiaries, 69 non-utility subsidiaries, and 35 inactive companies, or a total, including the parent holding companies and the subholding companies, of 213 system companies. The table on page 78 shows the number of active holding companies and the number of subsidiaries (classified as utility, non-utility, and inactive) in each of the active systems as of June 30, 1966, and the aggregate assets of these systems, less valuation reserves, as of December 31, 1965. SECTION 11 MATTERS IN REGISTERED HOLDING-COMPANY SYSTEMS As reported previously, the Court of Appeals for the First Circuit disagreed with the Commission's interpretation of the phrase "loss of substantial economies" in Clause (A) of Section 11(b) (1) and reversed the order of the Commission directing New England Electric System to divest itself of its gas properties. However, in a decision rendered on May 16, 1966, the Supreme Court of the United States sustained the Commission's position, and remanded the case to the Court of Appeals for further consideration in the light of its decision.* On June 14, 1966, the Court of Appeals vacated its previous order and directed the filing of further briefs.5 On December 21, 1965, immediately after its acquisition of approximately 42 percent of the outstanding common stock of United Gas Corporation, Pennzoil Company registered as a holding company under the Act. United is a gas utility company engaged in the retail distribution of natural gas principally in Louisiana, Mississippi and Texas. Pennzoil directly, and United through subsidiary companies, are also engaged in substantial non-utility businesses. Pennzoil and United subsequently filed a plan pursuant to Section 11(e) of the Act. Part I of the plan proposes the sale of United's gas distribution system, and Part II proposes the consolidation of 1 The three subholding companies are The Potomac Electric Co. and Monongahela Power Co., utility subsidiaries of Allegheny Power System, Inc., and Southwestern Electric Power Co., a utility subsidiary of Central and South West Corp. "These holding companies are American Gas Co.; British American Utilities Corp.; Kinzua Oil & Gas Corp., and its subholding company, Northwestern Pennsylvania Gas Corp.; and Standard Gas & Electric Co., which is in process of dissolution. 31st Annual Report, pp. 86-87. *384 U.S. 176 (1966). "For the status of similar Section 11(b) (1) problems of other registered holding companies which have not been disposed of, see 31st Annual Report, p. 87. Less: Adjustment to eliminate Yankee Atomic Electric total assets of these two com panies, less valuation re 1 0 1 1702 3631 0100 02 15 10 10 19 3243 6600 10 15 780, 018 20 827, 411 780, 302 1, 179, 316 59, 772 1,945, 168 Represents the consolidated assets, less valuation reserves, of each system as reported to the Commission on Form U5S for the year 1965. These five companies are Beechbottom Power Co., Inc. and Windsor Power House Coal Co., which are indirect subsidiaries of American Electric Power Co., Inc. and Allegheny Power System, Inc.; Ohio Valley Electric Corp. and its subsidiary, Indiana-Kentucky Electric Corp., which are owned 37.8 percent by American Electric Power Co., Inc., 16.5 percent by Ohio Edison Co., 12.5 percent by Allegheny Power System, Inc., and 33.2 percent by other companies; and The Arklahoma Corp., which is owned 32 percent by Central and South West Corp. system, 34 percent by Middle South Utilities, Inc. system and 34 percent by an electric utility company not associated with a registered system. Pennzoil and United. It is contemplated that after the consolidation, which is subject to Commission approval, Pennzoil's registration as a holding company will be terminated pursuant to Section 5(d) of the Act. By order dated June 27, 1966, the Commission generally authorized the proposed sale and reserved jurisdiction with respect to the price to be paid by an acceptable purchaser for the retail distribution system. Eastern Utilities Associates, a registered holding company, and its three public-utility subsidiary companies have filed a plan under Section 11(e) of the Act to eliminate the public minority interests in the subsidiary companies.' Hearings on the plan have been held and at the close of the fiscal year, the matter was pending for decision by the Commission. American Gas Company, a gas utility company and a registered holding company, filed a plan for its liquidation and dissolution pursuant to Section 11(e) of the Act. Part I of the plan proposes the sale by American to a non-affiliate company of all of its properties and assets except its holdings of 88 percent of the common stock of American Gas of Wisconsin, Inc. Part of the net proceeds are to be applied toward the retirement of its outstanding bonds and bank loans. A hearing has been held on Part I, and, at the close of the fiscal year, the matter was pending for decision by the Commission. PROCEEDINGS WITH RESPECT TO ACQUISITIONS, SALES, AND OTHER MATTERS The Commission approved a proposal by Northeast Utilities (formerly Western Massachusetts Companies), an exempt holding company, to acquire, pursuant to an invitation for tenders, 80 percent or more of the outstanding common stocks of The Connecticut Light and Power Company and The Hartford Electric Light Company. As a result of the tender offer Northeast acquired over 98 percent of the common stocks of each of these companies, and on June 30, 1966, it registered as a holding company under the Act. Northeast also owns 100 percent of the outstanding common stock of Western Massachusetts Electric Company.10 6 • Pennzoil Company, Holding Company Act Release No. 15518. 'Eastern Utilities Associates, Holding Company Act Release No. 15453 (April 21, 1966). 8 American Gas Company, Holding Company Act Release No. 15509 (June 16, 1966). • Northeast Utilities, Holding Company Act Release No. 15448 (April 13, 1966). 1o After the close of the fiscal year Northeast and its two Connecticut subsidiary companies filed a plan under Section 11(e) of the Act to eliminate the public minority interests. 238-643-67- -7 Eastern Gas and Fuel Associates, an exempt holding company which owns all the outstanding stock of Boston Gas Company, has filed an application to acquire, pursuant to an invitation for tenders, the stock of Brockton Taunton Gas Company, a non-associate gas utility company. The management of Brockton Tauton objected to the proposed offer, and extensive hearings have been held on the application. The hearings were concluded shortly after the close of the fiscal year, and briefs are scheduled to be filed.11 American Natural Gas Company and a newly organized whollyowned subsidiary company filed an application during the fiscal year to acquire through the subsidiary substantially all the assets of Central Indiana Gas Company, a non-associate public-utility company.12 Hearings were held after the close of the fiscal year and briefs are scheduled to be filed. 13 As reported previously, the Commission denied a petition by The Alabama Electric Cooperative, Inc. for leave to intervene and for a hearing with respect to a financing proposal by Alabama Power Company, an electric utility subsidiary company of The Southern Company, a registered holding company. The Cooperative sought review and the Court of Appeals for the District of Columbia Circuit affirmed the Commission's order. 14 In a second case, the Commission authorized the public sale of bonds and preferred stock by Alabama Power Company and again denied a request by the Cooperative for leave to intervene and for a hearing. The Court of Appeals for the Fifth Circuit affirmed the Commission's order.15 The Commission denied a similar petition by the Cooperative with respect to a third financing proposal by Alabama Power Company,16 and the Cooperative again filed a petition for review in the Court of Appeals for the Fifth Circuit." Subsequent to the close of the fiscal year, this petition was dismissed by stipulation of the parties. "Eastern Gas and Fuel Associates, Holding Company Act Release No. 15406 (February 17, 1966). 12 13 American Natural Gas Company, Holding Company Act Release No. 15517 (June 23, 1966). 13 31st Annual Report, p. 93. 14 See The Alabama Cooperative, Inc. v. S.E.C., 353 F. 2d 905 (1965), cert. denied 383 U.S. 968 (1966). 15 Alabama Power Co., Holding Company Act Release No. 15287 (July 29, 1965), affirmed sub. nom. The Alabama Electric Cooperative, Inc. v. S.E.C., 359 F. 2d 434 (1966). 16 Alabama Power Company, Holding Company Act Release No. 15415 (February 28, 1966). 11 The Alabama Electric Cooperative, Inc. v. S.E.C., No. 22858. FINANCING OF ACTIVE REGISTERED PUBLIC-UTILITY HOLDING COMPANIES AND THEIR SUBSIDIARIES During the fiscal year 1966, 11 active registered holding-company systems sold 36 issues of long-term debt and capital stock aggregating $823 million 18 to the public and financial institutions for cash pursuant to authorizations granted by the Commission under Sections 6 and 7 of the Act. All of these issues were sold for the purpose of raising new capital. The following table shows the amounts and types of securities issued and sold for cash by registered holding companies and their subsidiary companies during fiscal 1966: 19 Securities issued and sold for cash to the public and financial institutions by registered holding companies and their subsidiaries, fiscal year 1966 1 Debt securities are computed at their principal amount, preferred stock at par value or at price to the company if no par stated, and common stock at offering or subscription price. 10 The active registered holding-company systems which did not issue and sell long-term debt or capital stock for cash were Delmarva Power & Light Co., Eastern Utilities Associates, Northeast Utilities, Ohio Edison Co., Pennzoil Company, Philadelphia Electric Power Co., and Utah Power & Light Co. |