Evening star., 1937-08-26
HOLDING COMPANY
S|MPL|F|ES SET-UP
American Water Works First
Utility to Bow to New

The American Water Works g.
Electric Co. has moved to simplify its
set-up, thus becoming the first big
holding concern to bow to 4 contro-
versial section Of the 1885 utility hold
ing company act.
The section empowers the Securities
Commission to force utility concerns
to integrate their systems geographic
cally, economically and financially.
Without waiting for the section to
become effective January l, or the
constitutionality Of the act to be de-
termined, the $384, ZOO 900 system yes
terday filed with the commission 4
voluntary plan Of reorganizatio
The plan would eliminate a SIS, 5,O00.-
900 subholding company, merge other
companies and in at least one case
cut from three to one the number of
intermediate companies between the
parent holding company and an oper-
ating utility. The system operates in
Pennsylvania, Ohio, West Virginia.
Maryland and Virginia.
Approval of Plan Seen.
American Water Works asked the
commission to rule that its plan will
satisfy the requirements OF the 1898
law. Observers anticipated early ap-
proval after learning commission ex-
perts worked with the company In
formulating the proposal.
A hearing on the plan will be held
September 18.
Commission circles were highly
pleased by the company's action. They
recalled that American Water Works
was one of the many utilities which
challenged the act in the courts before
the industry and the Government got
together on single test case now
pending before the Supreme Court.
The test case involves the Electric
Bond & Share System and was won
by the Government in the lower courts,
Dissolution Of the West Penn Elec.
trio Co. is the major feature of the
plan.
Other changes would:
Eliminate intermediate control of
the Monterey Utilities Corp. by the
Monongahela Securities Co.: make the
Monongahela West Penn Public Serv-
Ice co. direct subsidiary Of the par
ent company; make the West Virginia
Public Service Co. a subsidiary of
Monongahela West Penn; and merge
the South Penn Power Co. with its
subsidiaries, the Ayr Township Elec-
trlc Co., Licking Greek Township
Electric Co. and the Todd Township
Electric Co.
Simplification Intended.
An example of the simplification
intended by the reorganization is
shown by this compa rison of the lines
OF control between the parent COM
pany and the Monterey Utilities Corp:
Present: American Water Works.
west Penn Electric, West Penn Power.
Monongahela West Penn, Mononea-
nela Securities. Monterey Utilities.
proposed: American Water Works
west Penn Power. Monterey Utilities.
After the reorganization All, the
systems electric utilities would be
directly owned by one of three COM
olnatlon holding and operating COM
panies-West Penn Power, Monon-
gahela West Penn and the Potomac
Edison Co., all of which would in
turn be directly owned by American
Water Works
Subsidiaries Of the three larger
companies would be:
West Penn Power Co-Beech Bot.
tom Power Co., Potomac Transmission
Co., West Virginia Power & Trans-
mission Co. and six non-utilities.
Monongahela West Penn Public
Service Co.-Marietta Electric Co..
State Line Gas Co., West MARYLAND
Power Co., Monterey Utilities Corp.
West Virginia Public Service Co. and
three non-utilities.
Potomac Edison Co.-Northern Vir-
glnia Power Co., Potomac Lght 6s
Power Co., South Penn Power Co.
Franklin Transmission Co. and three
non-utilities.
To finance the estimated $5l 900 00o
capital required in connection with
the reorganization, American Water
Works proposed to sell $4,000 600
worth OF its bonds and $7,O00,000 of
common stock tn the n,,h1je