Evening star., 1939-01-01
Largest Expenditures
Since 1929 Forecast
In Peace Era
! Subsidiary Companies
TO Be Shifted in
ReoIienment
BY EDWARD B. HUBBARD,
Cambridge Associates Stan.

2dCO C1lC CNOlollOll VI lllC ulllty
dustry, but in the coming year, the
pace will be accelerated. For the
first time since 1929, there is a
definite prospect of important ex-
pansion of electric power generating
equipment of privately-owned COM
panies. Orphan operating COM
panies of large holding company
systems will be shuttled back and
forth between parents in perhaps
the most hectic period of realign-
ment the nation has yet seen. Rate
structures will see further wide
changes. And finally, 1899 is likely
to witness a rapprochement between
the Government and the utility
companies, leaving the die-hard ex-
tremists of both sides in Intellectual
minorities.
Refundings of outstanding issues
will continue, but the peak has been
passed, and future security fotations
are expected to include more serial
or sinking fund debentures, more
preferred stock, and if business con-
ditions permit, new offerings of
common stock. er-balanced cor
porate structures will result; mod
ernization and extension of present
facilities will bring in increased
earnings and greater efficiency. Ex-
pansion movements have a way of
feeding on themselves.
Linking Power Sources.
The utility industry has a task to
perform in improving the dependa-
bility of electric service since so
large a portion of the population
has become absolutely dependent on
1t for the preparation of food and
warmth of shelter. In the past
year, the realization has grown that
not only natural disasters but man.
made havoc as we'll may interrupt
service for long periods, with con-
sequent suffering and demoraliza-
ton. Insofar as economically pos
sible, sources of power are being
linked together for emergency sub
stitution. And this policy pays its
own dividends in ordinary times by
making more efficient use possible
under widely varying load condi-
tions.
In areas of large population con-
centration, the Government has eX-
pressed interest in aiding intercon-
nection as part of its program of
national defense, assuring minimum
interruption with workers lives and
continued flow of power to fac
tories. Government aid, however,
will not be needed in most cases, as
companies serving several large
ritiac houo yornuo6 floiy ohi1if1y n
borrow money for a 30-year period
at interest rates hardly above per
cent per annum
BY December /, 1898, all of the
major holding companies had COM
piled with the requirements of the
S. E. C. by filing plans for opera
ton under the terms of the famous
Holding Company Act. Keynoting
! new era of cooperation, one of
he companies most criticized for
recalcitrance in other matters pub
ished its plans, although most of
the others made their reports con-
given indications that substantial
compliance with the terms of the
act need not mean immediate and
complete rupture of holding COM
pany systems. Tentative setups
show many isolated operating COM
panies labelled subject to future
disposition" which foreshadoWs an
era Of horsetrading matching the
country's best tradition.
Realignments Faced.
Initiative will rest with the hold
ing companies themselves, with the
s. E. G. more in the character of
benevolent judge than that of die
tator. For entirely practical rea-
sons, this body must forego the as
sumption of an active part in the
realignment of the industry.
Two systems, each economically
and geographically integrated," are
allowed to each holding company.
Under the present conception of that
term the Associated Gas & Electric
Co. has grouped properties in North
Carolina, South Carolina, Georgia,
Florida, Kentucky and Tennessee as
one unit, although there is very lit
tie interconnection of facilities be-
tween the operating companies in
volved. In the reshuff1e, however,
the Associated proposes to reduce the
number of companies in the system
from 172 to go, which should simpli-
fy the problem of regulation consid-
erably. Wherever possible, all oper-
ating companies within a single
State are to be consolidated. The
other group under the aegis of As
sociated will serve parts of New
York, Pennsylvania and States
southwark to Virginia; water COM
panies will be separated from electric
and gas properties, and companies
in other sections of the country will
eventually be sold or exchanged. The
pattern of this plan may be consid-
cred as typical of what is to come.
Government Plants Watched.
In the field of Government-pro-
duced electric power, three districts
of the country are currently>in the
limelight. Bonneville on the Co.
lumbia has injected itself into the
picture with the least furore, owing
in part to the rapid growth of de-
mand in that locality and in part to
constructive cooperation between
public and private agencies. Admin
istrator Ross, who is also manager
of the Seattle municipal electric
project, Proposed two innovations in
the wholesaltng of power, and beth
were promptly accepted. The first
called for "postaization" of rates,
regardless of the transmission dis
tance. This envisions the pooling
Of Seattles hydroelectric power
with Bonneville and the Grand
Coulee, near Spokane. The second
innovation provided for sale on the
basis of capacity rather than actual
use.
Under this plan a stated amount
of kilowatts-o capacity is rented on
yearly basis at cost which, if