Comparative Consolidated Income Statements, 1936 1945, Inclusive --Continued 1939 1940 1941 1942 1943 1944 1945 $1, 105, 331 $ 965, 170 $ 968, 082 $1, 113, 824 $ 1, 197, 500 $1,094, 159 $1, 249, 465 $1,079, 480 $1, 125, 813 $ 851, 283 1936 1937 1938 Income Deductions --- 1.81 1.71 1.71 1.78 1.84 1.76 1.91 1.83 1.87 1.62 Excluding Federal Tax Reduction from Gross Income APPENDIX C PENNSYLVANIA EDISON COMPANY Market Prices of Preferred Stocks Since Dates of Issuance to June 30, 1946 Chairman Hanrahan, dissenting in part: I am unable to agree with the conclusion of the majority opinion that an additional payment should be made to holders of the $2.80 series of Pened preferred stock. It is my considered judgment, after weighing the poor capitalization ratios, the low earnings coverages and the substantial uncertainties in the financial position of Pened, that the quality of the preferred stock is not such as to justify a capitalization rate as low as 5.33%, which has been reached by the majority in finding payment of the additional amounts to the $2.80 series to be required under the standards of fairness. In my view, a proper capitalization rate reflecting all the underlying factors would be as low as but no lower than 5.60%. That being the case, we are not warranted under the fair and equitable standard in finding that any further payment should be made to the $2.80 series and I would accordingly conclude that the holders of that stock have already received fair compensation for the rights surrendered by them. NEW ENGLAND ELECTRIC SYSTEM, NEW ENGLAND POWER COMPANY, BEVERLY GAS AND ELECTRIC COMPANY, GLOUCESTER ELECTRIC COMPANY, HAVERHILL ELECTRIC COMPANY, MALDEN ELECTRIC COMPANY, MALDEN AND MELROSE GAS LIGHT COMPANY, SALEM ELECTRIC LIGHTING COMPANY, SALEM GAS LIGHT COMPANY, SUBURBAN GAS AND ELECTRIC COMPANY File No. 70-1909. Promulgated October 22, 1948. (Public Utility Holding Company Act of 1935--Sections 10 and 12(f)) ACQUISITION OF SECURITIES BY SUBSIDIARY COMPANY OF REGISTERED HOLDING COMPANY. Acquisition by a subsidiary utility company from a registered holding company and certain other subsidiary utility companies thereof of all the outstanding common stock and note indebtedness of an associate non-utility company, as a preliminary step in the acquisition of the assets of such non-utility company, approved, pursuant to Sections 10 and 12 (f) of the Act, the Commission observing no basis for holding that the consideration to be paid for the securities is not reasonable with respect to the acquiring company. SALE OF SECURITIES BY REGISTERED HOLDING COMPANY AND SUBSIDIARY COMPANIES THEREOF. Sale by a registered holding company and certain subsidiary utility companies thereof to another subsidiary utility company in the same holding company system of the common stock and notes of a non-utility associate company, approved, the Commission observing no basis for adverse findings under Section 12 (f) of the Act or Rule U-43 promulgated thereunder. APPEARANCES: Robert F. Krause, for the Applicants -Declarants. Arthur J. Buswell, for the Division of Public Utilities of the Commission. FINDINGS AND OPINION OF THE COMMISSION New England Electric System ("NEES''), a registered holding company, and its subsidiary companies, New England Power Company ("NEPCO"), Beverly Gas and Electric Company ("Beverly"), Gloucester Electric Company ("Gloucester'), Haverhill Electric Company ("Haverhill"), Malden Electric Company ("Malden''), Malden and Melrose Gas Light Company ("Malden and Melrose'), Salem Electric Lighting Company ("Salem Electric"), Salem Gas Light Company (Salem Gas"), and Suburban Gas and Electric Company ("Suburban') have filed a joint application-declaration, and amendments thereto, pursuant to Sections 10 and 12 of the Public Utility Holding Company Act of 1935 and Rule U-43 promulgated thereunder. 28 S. E. C.--35----8840 711 In brief, the proposal contemplates the acquisition, for cash, by NEPCO and the sale by the other nine Applicants -Declarants (hereinafter sometimes referred to as the "selling companies") of all of the outstanding common stock and notes of Salem Terminal Corporation ("Salem Terminal''), which company is a non-utility coal terminal company. The application-declaration states that the Salem Terminal securities are to be acquired by NEPCO in anticipation of its ultimate acquisition of the assets of Salem Terminal. After appropriate notice a hearing was held. In view of the time factors involved we issued our order, dated October 22, 1948, approving the proposed transactions upon the basis of the findings which we publish below: DESCRIPTION OF COMPANIES NEES, a registered holding company, is a voluntary association organized under the laws of the Commonwealth of Massachusetts. It has more than 40 subsidiaries, primarily in the electric utility business in Massachusetts, Rhode Island, and certain other New England states. Total assets of NEES and its subsidiaries on a consolidated basis as at July 31, 1948, aggregated $477,336,188. Revenues on a consolidated basis for the twelve months ended July 31, 1948 aggregated $105,459,941, of which approximately 82.1% was electric, 9.3% gas, and 8.6% transportation and other operating revenue. NEPCO, the company proposing to purchase the securities of Salem Terminal, is a Massachusetts corporation engaged primarily in the purchase, generation and transmission of electricity. The major portion of the energy purchased and generated by NEPCO is sold at wholesale to affiliated companies in the NEES system, including the selling companies most of which do not have any substantial generating capacity. All of the common stock of NEPCO is owned by NEES. A balance sheet and earnings statement of NEPCO, actual and pro forma, are attached hereto as Appendices A and B. The eight other declarants are public utility subsidiary companies of NEES, and the per cent of voting control is shown in the following table: |