I now offer the report, Exhibit 4721, as prepared by Mr. Prichard, for this record.

Examiner BENNETT. Let it be received as Exhibit 4721. (The document referred to was thereupon received in evidence and marked "Commission's Exhibit No. 4721.")

Mr. HEALY. I ask the presiding commissioner to give us permission to revise Exhibit 4721 to include in it a statement showing the profits realized by the Southeastern Power & Light Co. on the 1927 servicing arrangements.

Examiner BENNETT. The idea is to have it inserted hereafter, or presented?

Mr. HEALY. Inserted hereafter, as soon as the information can be obtained.

Examiner BENNETT. Let that be done.

Mr. HEALY. It appears that the 1928 and 1929, servicing is done at cost.

Examiner BENNETT. Yes.

Mr. HEALY. That is the management servicing. I am not speaking about the engineering and construction work begun by Dixie and Empire.

Examiner BENNETT. I see. That may be done.

Mr. HEALY. That is all for Mr. Prichard. I call Mr. Dickerman. (Witness excused.)

JUDSON C. DICKERMAN, a witness heretofore sworn, was recalled and testified further as follows:

Direct examination by Mr. HEALY.

Question. The name of the witness is Judson C. Dickerman. You have been sworn, Mr. Dickerman?

Answer. Yes, sir.

Question. You have told about your training and experience in connection with utility affairs?

Answer. Yes, sir.

Question. You are employed by this commission and attached to the economic division?

Answer. Yes, sir.

Question. Have you obtained some information concerning the properties of the Southeastern Light & Power Co.?

Answer. I have.

Question. During what period and how?

Answer. For about three weeks and a half preceding November 10-this month-I was going over the properties of the several companies constituting the Southeastern Power & Light group in South Carolina, Georgia, Alabama, Mississippi, and Florida. Question. You did not visit Tennessee?

Answer. No, sir.

Question. Did you see all of the power plants and towns served? Answer. I think I must have seen considerably over three-quarters. of them. There are a few plants I did not see, and of course some towns.

Question. Have you had time to prepare a formal report?
Answer. No, sir.

Question. You intend to prepare a formal report covering your examination and present it for this record?

Answer. Yes.

Mr. HEALY. That will be offered when it is ready, if that right may be reserved to us.

Examiner BENNETT. Yes. The number to be given at that time! Mr. HEALY. I think we had better number it when we get to it. It will probably be the least confusing to do it in that way. Examiner BENNETT. Yes.

By Mr. HEALY:

Question. Can you give us somewhat of an outline now as to what you saw?

Answer. Yes, sir.

Question. And what will that outline cover in a general way? Answer. It will cover a description of the territory served by the companies, the general organization of the individual operating companies, and relations to one another, some measure of the volume of service given by the different companies and their interconnections with each other and with unaffiliated companies, the condition and quality of the construction, and the general apparent serviceability of their equipment and organization.

Question. You will be able to submit conditions of the principal power stations?

Answer. Yes, sir.

Question. The types of substations?

Answer. Yes, sir.

Question. Something about the transmission lines?

Answer. Yes, sir.

Question. The conditions under which the service is given, and so

on?

Answer. Yes, sir.

Question. Will you first tell us something about the relationships of the several companies through financing the engineering supervision?

Answer. The properties of the Commonwealth & Southern Corporation located in six Southeastern States, while organized and operated definitely as separate corporations each in its own State, form the most cobweblike system of interconnected and interstate transmission lines which have yet been presented in hearings before this commission. The properties grouped togethes are as follows: Alabama Power Co., supplying substantially all the electrical power distributed within the State of Alabama by public utilities. Georgia Power Co., supplying a very large percentage, approximately 85 per cent of the total public utility electric light and power service in the State of Georgia.

The Mississippi Power Co., operating in the eastern part of Mississippi the full length of the State from north to south.

The Gulf Power Co., a rather small operation in western Florida, with Pensacola the principal area served, with several small scattered communities.

The South Carolina Power Co., operating in southern South Carolina, from about opposite Augusta, Ga., to Charleston, S. C. These five properties constituted the Southeastern Power & Light Co. system previous to January 7, 1930, when the Commonwealth & Southern Corporation was formed and obtained control, and has since added to the group for general supervisory purposes, because

of interconnection to power sources, the Tennessee Electric Power Co., which serves the greater part of Tennessee, particularly the eastern and central industrial areas.

In all of this vast territory of perhaps 175,000 square miles, an area of nearly three times that of New England and almost half that of Texas, and greater than that of California, intercompany and interstate connections are made purely on the basis of the most feasible system possibilities. Operations are coordinated to make the maximum use of developed water powers, in meeting the greatly varied consumer demands, largely because of the unified control by the holding company.

Also centered at Birmingham, Ala., is another company of engineers, known as Allied Engineers (Inc.), which undertakes, by extensive surveys, design and conduct of construction for the various companies.

Question. Let me interrupt you there. By the companies, do you mean the companies now in the Commonwealth & Southern group? Answer. In the Commonwealth & Southern group in the southeastern division; the five companies that belonged in the original Southeastern Power & Light Co., plus the Tennessee Co., as I understand it now.

Question. Do you know how long this company which you have just mentioned has been performing this service?

Answer. Only this year. Much of my information is current, and the great changes that have taken place in the organization of the companies in the last year or so may show, through reports during 1929, as not quite fitting mine, but I have the distinct impression of existing conditions.

Question. What is the name of this corporation again?

Answer. Allied Engineers (Inc.).

Question. Do you know who owns or controls it?

Answer. It is a subsidiary of the Commonwealth & Southern Corporation.

Question. Was any subsidiary corporation of that name in existence on the last of December, 1929?

Answer. Not that I know of. I understand it was a new concern to take the place of the Dixie Construction Co., previously in existence.

Question. In other words, it was not in the Southeastern picture at all prior to the consolidation of the Commonwealth & Southern? Answer. That is my understanding very definitely.

Question. Very well. Excuse me for interrupting you. You may

go ahead.

Answer. This group of engineers virtually displaced all design and construction engineering forces in the various operating companies. Each company has an engineering staff, principally engaged in conducting operations, maintenance, and minor installations. The Allied Engineers (Inc.) also seek contracts for design and construction from nonaffiliated utilities and from industrial organizations. It is operated on a fee basis, since it is in outside work, I assume, on a profit basis, but I have no definite knowledge yet. The Allied Engineers is a successor to Dixie Construction Co. and other similar organizations performing engineering and construction services for the Southeastern Power & Light Co., and is a subsidiary of the present holding company.

While each State organization is directly responsible for the operations within its own territory, the development of new sources of power for and the present operations of the numerous existing power sources of the entire group, are carefully studied and are subject to day by day scrutiny by a central organization of engineers with headquarters at Birmingham. These supervising advisory engineers constitute the staff of the Commonwealth & Southern Corporation of New York. That is a new company, I understand, a subsidiary of the Commonwealth & Southern Corporation of Delaware, which latter is the holding company.

This supervisory group operates on a cost basis, its expenses being allocated to each company in the Southeastern group on the basis of their respective gross revenues. That is the plan on which it is supported, as I was told.

The issuance and sale of securities are controlled from the financial offices of the holding company in New York. The preferred stocks are sold locally by an investment department of each company. Dividend checks and arrangements for payment of bond coupons are handled directly by the respective company treasurers. Each operating State company is completely organized and manned as if an independent unit, except for larger matters of engineering and overall matters of financing, as indicated above.

Question. The Allied Engineers does work for all the properties of the Commonwealth & Southern group, does it not?

Answer. My understanding was that Allied Engineers is an organization which will do work for the whole group of properties, but they have a division of the Allied Engineers (Inc.) centered at Birmingham, whose duties are with that group in the South.

Question. Do the Allied Engineers have a northern division also? Answer. I am not sure, but my impression, from the discussion with the gentlemen there in Birmingham, was that it does.

Question. Do you know whether the Allied Engineers is a successor by purchase to Empire Construction Co., Dixie Construction Co., and one other company which was allied with the Commonwealth & Southern Corporation?

Answer. I do not know. All I know is that it exists now in Birmingham.

Question. I think that the Allied Engineers is a successor by purchase of the companies that I have named. Now, I think that you might tell us some more about the size of the territory served, the population, size of cities, and so on.

Answer. The feature to bear in mind is that these companies fur nish substantially all the public utility electric energy now distributed in the States of Alabama and Georgia, and a very considerable area in Mississippi, South Carolina, and Tennessee, and a portion of Florida, and operate in an area in which only about 4 cities exceed 100,000 population and approximately 50 have populations in excess of 5,000. In the area, however, are centers of great natural resources, such as Birmingham, Ala., with its iron, coal, and limestone, the marble and clay deposits of Georgia, and the mineral areas of Tennessee.

The population of these States is approximately 60 to the square mile. Seaports of importance are within the territory served, such as Mobile, Pensacola, Charleston, and Gulfport.

Natural gas has been piped into the large cities of Birmingham in Alabama and into other areas near by from the natural gas fields of Louisiana.

Question. Do you know by what companies?

Answer. Last spring we learned that the New United Gas Corporation, a subsidiary of the Electric Power & Light Corporation of the Electric Bond & Share group, had acquired control of pipe-line services to Birmingham, Ala.

Question. I think, without me asking further questions, you can go on and state such observations and facts as you think are of interest in connection with these properties.

Answer. All of these States enjoy a copious rainfall, from 40 to 70 inches, fairly well distributed over the year, with the late summer and early fall having the least. There are no natural lakes. The terrain is in large part in the States which lie in the foothills of the Appalachian Mountains, is steep and gullied, resulting in rapid run-off, so that the rivers have flows yielding a maximum sometimes one hundred times the minimum flows recorded. That, of course, makes the problem of hydroelectric control a rather important one to take care of.

Now, we will go back to the real Southeastern Power & Light group without Tennessee, since I only have a very general knowledge of the Tennessee situation.

The entire Southeastern system is built up about 2 important groups of hydroelectric power plants, 1 in Alabama and 1 in Georgia. Each of these important groups has a storage reservoir of large size, in addition to the limited storage available above each dam. In addition, the Georgia Power Co. has a number of hydroelectric plants in various parts of the State. The South Carolina Power Co. owns a hydro plant near Augusta, Ga., on the Savannah River, and the Tennessee Electric Power Co. is said to have several hydro plants in Tennessee.

Each company in the group owns and operates one or more steam electric stations, some to serve isolated communities, such as Gulfport, Miss., and Brunswick, Ga., and others are a stand-by or reserve plant to the system as a whole, to supplement the low flows of the rivers.

In the most recent years of good rainfall, the large companies have not had to operate the reserve steam stations to any important extent. Further, under temporary annual contracts, the Alabama Power Co. has a right to energy generated at Wilson Dam of Muscle Shoals hydro plant as it can use it, and transmits this energy into its own system and now to both the Georgia and Tennessee companies.

The Alabama Power Co. plants are practically all located wholly within the State. It, however, is a large exporter of power to each of the adjoining States. In 1929 it sold to other electric companies, largely external to Alabama, 652,047,341 kilowatt-hours out of a total of 1,433,721,080 kilowatt-hours sold to all classes of consumers. The above figure contains energy sold to the Birmingham Electric Co., an Electric Bond & Share supervised company, and to certain municipally owned operations in the State of Alabama. The tabulation of sales to out-of-State companies, which does not mention. the Tennessee Electric Power Co., a tabulation furnished by the company, indicates 334,800,000 kilowatt-hours sent out of the State.