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Project No.. 309-Continued.

Items questioned-Continued.

4. Services securing contract with Penn Public Serv-
ice Corporation (which Walbridge & Co. con-
trolled)-

To purchase output of plant

To guarantee payment of principal and in-
terest on Clarion River Power Co. bonds_
5. Services and expenses in connection with issuance of
securities by Clarion River Power Co. and famil-
iarizing local investors with the merit of the
Clarion River developments, part questioned.__

Total charges by H. D. Walbridge & Co for
alleged services and expenses__

Charges by General Construction Corpora-
tion "for expenditures and services, includ-
ing salaries of general officials, expenses
of New York office and contractor's over-
head and profit, in addition to promotion
and financing services"-

6. Fee for general engineering and supervision (paid
in securities).

7. Unidentified item apparently included in balance
with total security issues –

Total charges by General Construction Cor-
poration for alleged services and expenses--

Total__.

* * *

Administrative action taken: Joint examination of project accounts and records made in 1925, by accountants for Public Service Commission of Pennsylvania and Federal Power Commission. * * * Access to certain records refused by H. D. Walbridge & Co. * * * Report submitted by auditors. Control of licensee corporation passed to Associated Gas & Electric Co. * * * New owners upon request submitted informal claim for project investment and promised access to all pertinent records. Accounts and records again examined by auditor for Federal Power Commission in 1927, but necessary records for verification of claim were not produced. * * Another report submitted by auditor. * * * Request now pending with licensee for formal sworn statement of actual legitimate investment in project, with details and reference to couvhers and other evidence of cost.

*

Project No. 485: States of Georgia and Alabama. Cost of original project. Licensee or applicant, Columbus Electric & Power Co. (Bartletts Ferry project):

Total claimed..

Items questioned

1. Interest on cost of lands and legal expenses to Dec.
31, 1924 ($188,717), prior to beginning construc-
tion_

2. Interest on cost of investigations, surveys, etc., re-
lating to lands to Dec. 31, 1924 ($19,989), prior
to beginning construction_.

Less interest at 6 per cent per annum from May 1,
1924 (beginning of construction), to Dec. 31,
1924 (on $208,706)_.

Total interest deductions on account of land__

$300, 000. 00

200, 000. 00

394, 102. 80

2, 214, 000. 00

2, 550, 000. 00

44, 736. 81

2, 594, 736. 81

5, 259, 736. 81

7,688, 544. 12

177, 753. 00

11, 154. 00

188, 907. 00

8, 348. 24

180, 558. 76

Project No. 485-Continued.
Items questioned-Continued.

3. Taxes on land acquired prior to Dec. 31, 1924...
4. Fee paid to Stone & Webster (Inc.), under contract
effective on Jan. 1, 1924__

Total..

Administrative action taken: Accounts and records examined and accounting report served on licensee. Protest filed by licensee. Application for intervention filed by Stone & Webster. Hearing requested but no date for hearing fixed as yet.

Project No. 389: State of Kentucky. Preliminary cost of project. Licensee or applicant, Cumberland Hydro-Electric Power Co. (Cumberland Falls project):

Total claimed...

Items questioned

1. Obligation of Cumberland River Power Co. under
contract of Oct. 8, 1928, to advance monies to
the Kentucky State Park Commission for pur-
chase of lands for park purposes and improve-
ments thereon in the vicinity of Cumberland
Falls. Objected to as not being a proper pre-
liminary cost for the reason that payment has
not been made, and the amount to be paid
under contract is indefinite. Considered to be
a proper cost to project if and to the extent paid
in the future..
2. Obligation of Cumberland River Power Co. under

article 6 (a) of agreement of Oct. 12, 1925, to
issue Middle West Utilities Co. and Cumber-
land Hydro-Electric Power Co. 30,000 shares of
nonpar common stock of Cumberland River
Power Co. This appears to be an arbitrary
promotion fee for alleged services of promoters
and of officers of Middle West Utilities Co____

Total...

Administrative action taken: Accounting report and solicitor's opinions Nos. 1, 2, and 4, served on applicant Aug. 5 and 9, 1929. Further action deferred awaiting opinion by Attorney General on certain legal questions. Project No. 324: State of Missouri. Preliminary cost. censee or applicant, the Empire District Electric Co. (Table Rock project):

Total claimed..

Items questioned

$6, 232. 00

459, 249. 55

646, 040. 31

921, 163. 57

250,000

250,000

500, 000

Li

290, 725. 47

1. Overhead expense of the Empire District Electric
Co., Joplin, Mo., covering executive salaries,
salaries of stenographers and clerks, together
with cost of stationery, office supplies, and office
rent, light, and heat (arbitrary charge)..

2. Taxes paid on lands acquired for the Table Rock
development (questioned as to any expenditures
for lands in excess of actual reasonable cost at
time of acquisition by licensee) -

3. Interest on actual expenditures prior to beginning
actual construction__.

4. Preliminary engineering fees of Henry L. Doherty
& Co., New York office..
Total...

Administrative action taken: Applicant's claim investigated, conferences had with its representatives, accounting report served on applicant, to which protest has been filed and hearing requested. No date fixed for hearing as yet.

28, 260. 00

1, 924. 87

29, 825. 08

22, 309. 07

82, 319. 02

Project No. 516: State of South Carolina. Prelicense cost.
Licensee or applicant, Lexington Water Power Co. (Dreher

Shoals project):

Total claimed...

Items questioned

1. Organization expenses

Arbitrary payment to W. S. Barstow & Co. for
services__

$1, 249, 470. 22

150, 000. 00

Arbitrary payment to Murray & Flood, for
services__

150, 000. 00

Cost of acquiring_water-power site on Saluda
River known as Dreher Shoals (represents esti-
mated value) _

135, 000. 00

435, 000. 00

2. Engineering and superintendence, refund by Murray
& Flood of payment for services...

3. Interest during construction-interest on notes to
General Gas & Electric Corporation_-

Total_

Administrative action taken: Accounts and records examined and copy of accounting report served on licensee. › Protest to proposed eliminations filed by licensee and hearing requested. No date for hearing fixed as yet. Project No. 346: State of Minnesota. Cost of original project. Name of licensee or applicant, Minnesota Power & Light Co. (formerly Pike Rapids Power Co.) (Blanchard Rapids projetc): Total claimed..

Items questioned

1. Prelicense cost

Claimed by licensee..

Approved by accounting division.

Difference recommended for disallowance. __
NOTE.-Licensee has accepted under pro-
test the recommendations of the accounting
division.

2. Discount on sale of 7 per cent 5-year notes__
Interest on 7 per cent notes___

Funds for construction were obtained from
the sale by Pike Rapids Power Co. from time
to time of its 5-year 7 per cent notes, all dated
Jan. 2, 1924, at 90 per cent of par and ac-
crued interest. However, all of these notes
were paid off in full on Dec. 30, 1925, and
some of them were outstanding for a very short
time. These notes were all purchased by
American Power & Light Co., a holding com-
pany, which controlled the licensee. Had the
notes been outstanding for their entire term,
the interest at 7 epr cent plus the discount of
10 per cent would have made the cost to the
licensee for the construction funds approxi-
mately 9 per cent per annum. Considering the
average period during which the notes were out-
standing it appears that Pike Rapids Power Co.
paid American Power & Light Co. 161⁄2 per cent
per annum for the construction funds furnished
by the holding company. Active construction
work appears to have continued over a period
of about 15 to 18 months. The total charge
for interest and discount was $475,172.34,
which is 15.97 per cent of the cost of the proj-
ect ($2,976,002.91) exclusive of interest by a
controlling holding_company, is considered to
be unreasonable. It would appear under the
circumstances that the charge for discount was
hardly justified.

10, 999. 98

10, 007. 14 456, 007. 12

3, 451, 175. 25

388, 004. 00 181, 235. 93

206, 768. 07

306, 000. 00 164, 057. 01

Project No. 346—Continued.
Items questioned-Continued.

3. Construction fee paid Phoenix Utility Co...

Phoenix Utility Co. is assumed to be owned
and controlled by Electric Bond & Share Co.,
and the fee of $92,289.97 is believed to repre-
sent largely, if not entirely, a profit to Electric
Bond & Share Co. not properly includable in
the cost of the project.

4. Other items, aggregating half a million dollars or more
have been questioned in whole or in part and are
now under investigation.

Administrative action taken: In 1928 the books and
accounts for this project were examined by an auditor for
the commission. On Dec. 18, 1929, the licensee filed a
sworn statement of the cost of the original project which
has not been reconciled with the auditor's report which is
based upon figures contained on the books. The licensee's
claim is now being investigated.

Project No. 16: State of New York.

$92, 289. 97

Valuation of old plants.

80, 534, 130. 46

Licensee or applicant, the Niagara Falls Power Co.
Total claimed..

Licensee's appraisal based on reproduction costs as of
Mar. 2, 1921. All items questioned in whole or in part.
Intangible property-

Organization

Promotion and preliminary investigation_
Organization and development...

Franchises, patent rights, and licenses..

Miscellaneous intangible capital:
Cost of assembling capital.
Cost of attaching business..
Cost of easements..

Deficit in return during development_.

[blocks in formation]

Total intangible property

Tangible fixed capital:

Land__

Structures, equipment, and facilities...

1, 265, 541. 00 29, 925, 432. 80

Overhead costs and other undistributed items:
Engineering and superintendence...

Law expenditures during construction _ --
Injuries and damages during construction.
Taxes during construction...

Interest during construction__

Miscellaneous construction expenditures-Salaries of

officers and clerks, miscellaneous office expenses,
insurance, contingencies, and incidentals.

31, 190, 973. 80

1, 917, 059. 00 99, 973. 00 100, 201. 00 1, 159, 925. 39 4, 406, 368. 87

1, 034, 806. 85

Total of plant properties---.

8, 718, 334. 11

45, 671, 451. 54

Project No. 16-Continued.
Miscellaneous investments -
Water power rights..

Grand total__.

Administrative action taken: Inventory of property has been checked and prices for labor and material investigated to a certain extent. Attempt made to ascertain original or historical cost but licensee refused access to books and records of constituent companies consolidated and merged in October, 1918, to form present company. No definite action since that time, which was in 1922 or 1923.

Project No. 16: State of New York. Accounting since license was issued. Licensee or applicant, the Niagara Falls Power

Co.:

$2,862, 678. 92

32, 000, 000. 00

80, 534, 130. 46

Total construction accounts involved (to Dec. 31, 1925) 27, 000, 000, 00 Items questioned

Items 1 to 13, inclusive-Buildings, structures, equipment,

etc., of hydraulic station No. 2, that have been either
demolished, abandoned, removed, sold, or otherwise dis-
posed of and for which retirements were either unreported
or were insufficient in amount, resulting in overstatement
of plant investment account.

1. Power House No. 2, appraised value...
Retirements amount to $694.05.

156, 073. 37

2. Flumes, forebays, gates and tailraces, appraised
value...

162, 073. 37

[blocks in formation]

10. Steel elevator tower and bridge, appraised value ___
No retirements recorded.

13, 858. 28

6, 986. 39

11. Structure 2-F, appraised value..........

No retirements recorded.

12. Cliff development, appraised value.........

No retirements recorded.

13. Cliff facing, appraised value..

No retirements recorded.

14. Building 38, inlet gatehouse station 3A. The
American Appraisal Co.'s valuation for this
building..

Although its walls, roof, floor, framing, par-
titions, windows, and doors were removed the
retirement of fixed capital is only $4,871.75.
This building was replaced with a new steel and
stone building costing $42,312.78.

15. Building 39, ice-run gatehouse. The American
Appraisal Co.'s valuation for this building-----
Although it was replaced by a steel and
rubble stone building, the retirements credited
to fixed capital are only $6,410.15. This build-
ing was replaced by a steel and stone building
costing $40,714.58.

481, 468. 05

82, 765. 63

49, 509. 88

31, 467. 40

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