Montana labor news., 1944-05-11

NY uelU before Uu6 1eQcfal
Montana Railroad and Publ
Federal building, when CHI
Commissions bureau of acc.
the stand.
The Honorable Leland ODDS, chairman
of the Federal Power Commission, who
had arrived from Washington by plane,
joined the trial examiner and the men,
bers of the Montana commission who are
conducting the hearing. His presence
emphasized the Importance of the pro-
ceedings against the Montana Power
Company.
Questions which Chairman Olds adj
dressed to the Montana Power Company's
expert witness, William A. Patton, re-
vealed Mr.. Odds familiarity with the
record of the hearing which, it is esti-
mated, already consist of more than
5000 pages of typewriter transcript and
AGO exhibits.
The Importance of Mr.. Smiths testi-
mony with respect to SAT 1915, $685.
writeups warrant the printing Of por-
tions Of his testimony, especially that re
lating to the so-called account 1O7, in
which the staff of the Federal Power
Commission contends, the writ-up on the
books of the Montana Power Company
should be placed.
II, o~5or. "a, rtr,dorrfor,I ruIof tho row
eminent is trying to do, it is necessary
to describe first of all just what account
1O7 consists Of. The following testimony
throws a good deal of light IN this mat
ter. Attorney Wahrenbrock Of the F
P. g. questioned Mr. Smith as follows:
Q. Mr.. Smith, you have stated that
the cost to a utility of its electric plant
is shown in balance sheet account 100
What happens to any amounts on the
books of a utility which exceed proper
cost Of its plant2
A. Such amounts are to be recorded in
account LOT, which is a separate balance
sheet account.
@. You say account 1O7 is a separate
balance sheet account. What is the sig
~nificance Of that statement?
A. Well, account 1O7 is generally a
very unwholesome account, it throws
considerable question on the utility's ac-
counting and probably on its financial
structure, and for these reasons the
amount is set up on a special balance
sheet account where anyone who is in
terested may see the amount and may
make an appropriate decision thereon
In reading the following testimony, il
should be remembered that where the
word classification is used, it refers tc
this account No. 1O7. $57,o17,6a9.95 and
$536,s59 are writeups.
The testimony of MI. Smith is in part
as follows;
@. Mr.. Smith, do you agree with the
classification of the items Of s47,O16
$685. as shown on Exhibit 262, and
1886, 1853 shown on Exhibit 1853?
A. Yes, I do.
@. viii you please explain what you
believe to be the nature of the amounts
of ~$584,549.1O, $1s9,s99.62, and $1,8s1,-
347.O7, shown on Exhibit 1862 particularly
as to why they did not constitute cost.
A. These items that you have just
given represent amounts that are en-
tered in the books Of account by Butte
Electric & Power Co. OIL its predecessors
between 1892 and 1912, when the merger
and reorganization of Butte into Mon
tana occurred.
Beginning in 1892, Butte General
Electric Co. acquired the properties Of
Silver Bow Electric Light g. Power Co.,
and Butte Electric Light & Power Co.,
in exchange for securities.
Butte General Electric Co. was a newly
formed corporation and it entered on its
books as cost of plant an amount suffi-
to balance the par and principal
amount of securities issued. In doing
so, the amount recorded in plant was
$584,549 greater than the amount APP
pearing on the books of the two prede-
cessors.
There was no additional investment
made in Butte General Electric Co.
There wa no additional cost incurred
n my opinion. The same owners con-
5inued to own the properties indirectly.
Accordingly, I believe that the $584,OO0
'epresents a write-up which is properly
,lassifiable in account LOT.
The Butte General Electric Co., the
asst company I mentioned, in 1889 had
It's properties transferred 70 another
lewly-formed corporation, the Butte
Lighting g. Power Co. Again the trans
was an exchange Of securities.
The Butte Lighting & Power Co. en-
cred on its books Of account a book cost
plant of s139,899 in excess Of cost
N the books Of the predecessor. once
more there was no additional invest
nent, no increase in cost, the same own
rs continued to operate the properties
indirectly, and again I feel the amount
IS a write-up properly classifiable in
account 1O7.
In 1901 the Butte Lighting & Power
Go. the last company I named, had its
properties transferred to the Butte
Electric g. Power Co., another newly
formed corporation. The latter corpora
ton likewise issued securities 70 rthe
properties Of the predecessor company.
TN, ,fo,t aaoa,,nt uac cfatad at an