The people's voice. [volume] (Helena, Mont.) 1939-1969, 1945-03-02

and other improper charges t
of $46,891, 597. This amount
is 800 of the original cost
($58, 023,509 of electric prop
critics as of January 1, 1887.
The amount is the largest so
far ordered disposed of by the
commission in any accounting
case.
The commission found the excess of
actual cost over original cost of prop
critics of going concerns acquired in
arm 's-length transactions to be $685.
42S. 1t concluded this amount does
not represent payment for tangible
properties now in service and ordered
the amount amortized over 15-year
period, beginning with 1915.
The opinion states that the write
ups resulted largely from balancing
the plant accounts with the par value
Of securities issued in less than arms
length transactions. The commission,
therefore, asserted the write-ups
should be absorbed by the common
stock equity This could be accom-
plished, the opinion states, by reduc-
ton in number of shares of stock, or
the stated value thereof, or by con-
tribution from the parent company.
After .disposing of specific items ag-
gregating $949,37S.61 there remained
$45, 942,2 1S.S0 of write-ups for disposi-
ton. OF this amount $34,500,000 was
ordered charged to capital surplus
account If one is created for the pur-
pose, but with the condition that If
one is not created, the amount shall
be charged to earned surplus.
Preferred Stockholders Protected
The balance of the write-ups, name
ly, $11,442,21S.80 is ordered charged to
earned surplus The opinion states
this would leave earned surplus of
close to $2,000,000 or two times the
annual dividend requirements on the
preferred stock.
Origin of Case
The case arose out of the commits
siops uniform system of accounts
which required interstate electric
utilities and licensees to reclassify
their accounts as of its effective date,
namely, January ], 1887 Montana
Powers reclassification studies were
subject to comprehensive investiga-
ton by the staff Of the commission,
which prepared a report thereon. The
report was served upon the company
and thereafter the case set for hear
ing. Six weeks of hearings were held
in Butte, last spring and oral argu-
ments were made before the commits
sion, sitting en- banc, in Washington,
d. c., in 1914. The Public Service
Commission of Montana sat with the
Federal Power Commission at the
hearings and at the oral arguments.
The arrangement was that the two
commissions would sit concurrently
in the hearings and argument, but
would compile their own record and
arrive at their Independent conclu
sions.
Company Under FPc Jurisdiction
The Montana Power Company owns
and operates facilities for the trans
mission and sale at wholesale of cleo
trio energy in interstate commerce. 1t
is therefore public utility under the
Federal Power Act, subject to all the
requirements of the uniform system
of accounts. 1t is also a licensee I'M
der the federal power act. 1t has not
questioned the jurisdiction of the com
The company serves customers in
Billings, Butte, Great Falls, |
Missoula and some seventy |
other Montana communities.
Two Main Transactions
Most of the initiation in the ac-
counts, according to the opinion, was
introduced by two large transactions,
one in December 1912, and the other
IN February 1913. In the first trans
action Butte Electric and Power com
Dany and its three subsidiaries, merged
and consolidated into the Montana
Power Company, a newly formed cor
1oration organized for the purpose.
IN the process, four shares of COM
non stock of a par value Of 800 per
share were issued for each share out
standing, with a resultant increase of
100000 of par amount of common
which was offset by charge to plant
If the same amount. Subsequent adj
ustments reduced the increase in
liant to s19,663, 39111)
The company admitted the transac-
ion was not arm's-length, but claimed
t resulted in new business venture
With an incurrence of a new cost The
commission opinion states From the
act that there was no change in own
,rship, no change of control, no
,hange in management, no change in
,fficers, no change in assets and no