of the hold With res is likely to in question arrangeme of operatir ticularly in of power panies will terim and 1 for any su should be inadequate quate pow the obligat Middle declaration ments in Since Sout proposal s case of M but we do our order V. EXCE Excepti course of as to the of evidenc others lin ered had find no e An app By the Adams, dissenting 69 It may be that operatin APPENDIX II MISSISSIPPI VALLEY GENERATING COMPANY Pro Forma Balance Sheet as of Completion of Project ASSETS AND OTHER DEBITS Itility Plant-at original cost, including $345,000 of organiza Common Stock, 55,000 shares, par value $100 per share..... Earned surplus-representing interests during construction on capital stock 5,500,000 700,000 First mortgage bonds, 3% %-sinking fund payments to retire the bonds in 30 years from completion of project, starting with the 11th year. 77,362,000 Bank loans, 34%, to be paid off in 10 years from completion of project-less amount due in one year.. 20,612,000 Current liabilities-bank loans due in one year.. 1,941,000 $106,115,000 Commissioner Rowen, dissenting: A consideration of this joint application-declaration immediately presents the question, the resolution of which in my opinion is dispositive of the matter, whether the proposed acquisition by Southern of a stock interest in MVG, a generating company whose utility plant will be over 150 miles distant from the nearest point in Southern's service area, will tend toward the economic and efficient development of Southern's integrated holding company system. Under Section 10 (c) (2) of the Act a finding that such acquisition does so tend is an essential requisite to the order issued pursuant to the majority opinion.1 To join in making that finding I would have to conclude that the Southern system, with MVG included, meets the integration standards of Section 2 (a) (29) (A) which defines an integrated public utility as one: "whose utility assets . . . are physically interconnected or capable of physical interconnection and which under normal conditions may be economically operated as a single interconnected and coordinated system confined in its operations to a single area or region." On the record in these proceedings I am unable to reach that conclusion. Under the normal operations contemplated by the proposed power arrangements during the life of the Power Contract, which might remain in effect for 45 years, the Southern system, whose peak demand in 1954 was 2,920,000 kw, will have available to it only 10,000 kw of power from MVG. In this connection it is significant that the Power Pool Manager of the Southern system, who is responsible for supervising and coordinating the system's power supply facilities, observed that there must be "easier ways" for the system to obtain 10,000 kw than by entering into a project involving the expenditure of $107,000,000 and the installation of facilities to generate 650,000 kw. Under these circumstances it is clear that the purpose of the proposed acquisition is not to meet any present needs of the Southern system for power and is not related to the further development of that system. In my opinion there is neither the physical interconnection nor 1 Regardless of what may have been stated in the Congress when it enacted the Atomic Energy Act of 1954, Congress did not adopt an amendment to the Holding Company Act making Section 10 inapplicable to the instant application. In this connection it should be noted that the Attorney General in his Opinion holding the Power Contract valid under the Atomic Energy Act of 1954, stated: "It should be expressly understood that this opinion does not consider in any manner questions which are within the jurisdiction or regulatory bodies, such as the Securities and Exchange Commission . . ., the approval of which may be required in accordance with the provisions of Section 8.15 of the contract." coordination of operations required by Section 2(a) (29) (A) of the Act. The Report of the National Power Policy Committee, which was appended to the Senate Report on the bill that was later enacted as the Holding Company Act, states: "New acquisitions should not be allowed unless the applicant can clearly demonstrate a resultant economy and efficiency from the connection of naturally related and interdependent properties." (Emphasis supplied.) 2 While the Southern system is interconnected with the systems of Middle South and TVA, which are, in turn, interconnected with MVG, in my mind, this does not constitute an "interconnection" between MVG and the Southern system within the meaning of the Act or serve as the basis for any direct operational relationship between them. The testimony of applicants' witnesses shows that it is not contemplated that any power generated by MVG will flow to the Southern system. The surplus power generated by MVG will normally be consumed in the northern area of the Middle South system and energy allocated to the Southern system will be supplied from reserve capacity generated by Middle South in the area of the interconnections between the two systems, the nearest of which is 275 miles south of West Memphis. These arrangements will perhaps result in Southern's having operating relationships with certain Middle South properties, but not with MVG. As for the capability of direct interconnection between MVG and Southern, it does not appear from the record that this could economically be undertaken unless the energy available to Southern from the MVG plant were substantially in excess of 10,000 kw. This situation, however, would not occur unless the AEC terminated part or all of the Contract Capacity, the likelihood of which cannot be assumed. The requirement of the Act that the operations of a system must be confined to a "single area or region" would not, in my opinion, be satisfied if the Southern system included an interest in MVG. Not only in West Memphis distant from Southern's other utility properties, as pointed out above, but it also is well within an area served by a different integrated utility system, that of Middle South. Furthermore, there intervenes between West Memphis and the Southern system part of the service area of yet an 2 S. Rep. 621, 74th Cong., 1st Sess., p. 59. This report of the National Power Policy Committee was cited by the Supreme Court when construing the Act in North American Co. v. S.E.C., 827 U.S. 686 (1946); and in American Power & Light Co. v. S.E.C. 329 U.S. 901 (1946). |