NEPSCO pointed out that, in view of the proposed sale by the subsidiary, the offering of Central Maine common stock by NEPSCO was undesirable at that time. Central Maine's application, as amended, we granted by orders of February 1 and 28, 1949, and the stock was thereupon sold for net proceeds before expenses of $4,195,000. Central Main Power Company, 28 S.E.C. 39 (1949), Holding Company Act Release No. 8891.

In April 1949, New Hampshire, to finance its construction program, filed with us an application with respect to the issuance and sale by it of 104,804 shares of additional common stock. This application, as later amended, we granted, and the stock was then sold for net proceeds before expenses of $2,224,000. Public Service Company of New Hampshire, 29 S.E.C. 341 (1949, Holding Company Act Release No. 9159. To avoid conflict with the sale of such stock by its subsidiary, NEPSCO amended its declaration (File No. 70-1951) to postpone its proposed sale of New Hampshire common stock until September 1949.

In September 1949, further to finance its construction program, Central Maine filed an application with respect to the issuance and sale by it of 200,548 shares of additional common stock. This application is presently pending before us. HCA Release No. 9374.

NEPSCO points out that the sale by it of common stock of Central Maine would be inappropriate while that company itself is proposing to issue and sell additional common stock, and further states that the sale of New Hampshire's common stock at this time is inadvisable since experience in marketing the common stocks of Central Maine and New Hampshire indicates that the two securities appeal to substantially the same market. NEPSCO therefore proposes, as a first step in reduction of the loan, to sell 200,000 shares of the common stock of New Hampshire in the latter part of 1949 or in January 1950.

The burden of NEPSCO's showing is to the effect that it has not been guilty of lack of due diligence in not making sales of securities in the period which has elapsed from its making the loan. That we have not taken serious issue with this position is indicated by the fact that we have not taken affirmative action despite the fact that NEPSCO has been in default on its commitment. We are not in a position, however, to find that it will not be feasible to make the requisite sales within less than a year and thus find no reason to grant the requested extension, which would have the potential effect of tying our hands for a full year. The

renewal of the notes carries with it no such potential and is, of course, presently necessary and thus will be permitted.

IT IS ORDERED, accordingly, that the application-declaration of NEPSCO insofar as it relates to the renewal for the period of one year of its notes, dated October 11, 1948 in the aggregate amount of $10,300,000, be, and the same hereby is, granted and permitted to become effective forthwith subject to the terms and conditions contained in Rule U-24, jurisdiction being reserved as to the remainder of the application-declaration.

By the Commission (Chairman Hanrahan and Commissioners McDonald and Rowen), Commissioner McEntire being absent and not participating.

IN THE MATTER OF

THE WEST PENN ELECTRIC COMPANY, ET AL. AMERICAN WATER WORKS AND ELECTRIC COMPANY, INC. AND SUBSIDIARY COMPANIES

File Nos. 54-142, 59-84. Promulgated October 10, 1949.

(Public Utility Holding Company Act of 1935-Section 11 (e))

SIMPLIFICATION OF HOLDING COMPANY SYSTEM

Fees and Expenses

In case of application for approval of fees and expenses in connection with a plan that has been approved for simplification of holding company system, where careful scrutiny with respect to the amount of time spent, complexity of problems faced, nature of duties performed, and relation of fee sought to contribution made shows amount of fees and expenses to be reasonable, held, applications approved.

MEMORANDUM OPINION

On February 17, 1947 the Commission adopted an order approving amended Plans ("Plans") filed pursuant to Section 11 (e) of the Public Utility Holding Company Act of 1935 and certain other sections of that Act by American Water Works and Electric Company, Inc. ("American"), a registered holding company, and joined in by certain subsidiaries of American.1

Briefly stated, the Plans, as amended, provided for the divestment by American of all of its directly owned water works companies; the acquisition of such water works companies by a reorganized sub-holding company of American to be known as American Water Works Company, Inc. ("Water Works Holding Company"); the simplification of the corporate structure of that sub-holding company system by satisfying and discharging certain publicly held preferred stocks of subsidiary companies; the private sale by Water Works Holding Company of twenty year sinking fund debentures in the aggregate principal amount of $15,000,000; the public sale, pursuant to competitive bidding, of the entire issue of common stock of Water Works Holding Company subject to the prior right of the common stockholders of

1 See American Water Works and Electric Company, Inc., et al. 25 S. E. C. 297 (1947), enforced without opinion, D. Del., Civil Action No. 1008 (March 19, 1947).

30 S. E. C.-35-9410

2

3

American (now common stockholders of The West Penn Electric Company ("West Penn Electric")) to acquire such common shares at the initial public offering price; the discharge by American of its outstanding debt and preferred stock obligations; the transfer by American to West Penn Electric Company of all residual assets; the liquidation and dissolution of American; and the assumption by West Penn Electric of all remaining obligations of American, including the obligation to pay applicable fees and expenses of the Plans.

The Commission's order approving the Plans, among other things, reserved jurisdiction with respect to the reasonableness and appropriate allocation of all fees, expenses, and other remunerations incurred in connection with the consummation of the Plans and the transactions incident thereto. Petitions with respect to fees and expenses have now been filed with the Commission. The amounts sought by these petitions, as amended, the identity of the petitioners, and the proposed allocation of such fees and expenses are as follows:

2 In January 1948 this Commission issued an order granting an application and permitting effectiveness to a declaration proposing the reclassification of the common stock of West Penn Electric and the exchange thereof for the common stock of American on a share for share basis.

By the terms of American's charter, the voluntary and involuntary liquidation preference applicable to its preferred stock was $100 per share plus accrued and unpaid dividends to the date of liquidation. The redemption preference was $110 per share plus accrued and unpaid dividends to the date of redemption. The preferred stockholders have already received $100 in cash plus accrued and unpaid dividends to the effective date of the plans and transferable warrants entitling the holders thereof to receive such additional amount, if any, as the Commission may determine and the courts finally adjudge to be fair and equitable in the premises. At the present time no determination by the Commission has been made with respect to the participation to be accorded the holders of these transferable warrants.

The fee to Sullivan & Cromwell was reduced from $150,000.00 and the fee to counsel for the Protective Committee for the common stock of Community Water Service Company was reduced from $12,000.00.

Originally this committee sought a fee of $7,500. It was informed by the staff that in its opinion only disbursements to the extent of $448.91 appeared to be justified on the record. No attempt was made by the Committee to improve that record.

• These fees and disbursements to be paid by W. C. Langley & Co. as underwriters for common stock of Water Works Holding Company.

The Plans, with which this proceeding was primarily concerned, were filed with the Commission on February 21, 1946. Public hearings with respect thereto were first convened on April 9, 1946. At that hearing, in addition to counsel for the applicantsdeclarants and counsel for the Division of Public Utilities of the Commission, James E. Riely appeared on behalf of certain owners of the common stock of Community Water Service Company and Messrs. Edward F. Moore and William F. Moore appeared, pro se, as owners of certain shares of preferred stock of Community. These persons were granted a limited right to participate in the proceedings. Upon motion of counsel for American, after the disposition of certain preliminary procedural matters and before the taking of any testimony, the public hearing was continued until May 14, 1946. On that date Meyer Abrams appeared as co-counsel with Riely. The Moores were also present. These hearings were resumed on May 15, 16, 17, 20, 21 and 22, and at that time, pursuant to motion of counsel of American, were continued until June 6, 1946. On June 6, 1946 David B. Landis first appeared on behalf of the Moores. The hearings again went forward on June 6, 7, 10, 11, 12, 13, and 24 at which time the record was closed, except for the purpose of taking testimony with respect to the results of competitive bidding, pursuant to Rule U-50, by Water Works Holding Company.