[162] Control.-Western Carolina Power Co. became affiliated with the Duke power system in August 1909, when Southern Power Co. acquired all of the outstanding capital stock. Previous discussion has shown that stock with a stated value of $50,000 had been issued to acquire property, and that the property acquired was recorded at that value. Southern Power Co., however, originally recorded the purchase of this stock at a total cash price of $35,000, or at $70 per share. Additional common stock of Western Carolina Power Co. was authorized during the period 1917 to 1922, and the sale of 53,500 additional shares to affiliated companies was recorded. Southern Power Co., Great Falls Power Co., and Wateree Electric Co. (name changed to Duke Power Co.) each held onethird of the outstanding capital stock. In December 1924, a common-stock dividend of 56,070 shares (at 103.83 percent) was declared and each of the three corporate stockholders received an additional 18,690 shares, bringing their respective investments to 36,690 shares each. Duke Power Co. acquired the holdings of the other two stockholders as a result of their merger with Duke Power Co. as of November 30, 1927. The officers and directors of Western Carolina Power Co. served in similar capacities for other companies of the Duke power system. [163] Fixed capital and retirement reserve development and growth.-The growth of the fixed capital of Western Carolina Power Co. from organization to May 10, 1932, on which date all of its assets not previously transferred were acquired by Duke Power Co., may be summarized under five major headings. These headings are outlined herewith and will be discussed in subsequent sections: (1) Construction of the Bridgewater plant and storage reservoir, 1919; (2) appraisal and write-up of fixed capital as of August 31, 1923; (3) construction of Rhodhiss plant, 1925; (4) construction of Oxford plant, 1928; (5) transfer of undeveloped waterpower properties to Duke Power Co. and cancelation of capital stock, May 10, 1932. Bridgewater hydroelectric development.-The Bridgewater project comprised both a hydroelectric station and a storage reservoir. The generating station of 20,000-kilowatt installed capacity is located near the mouth of the Linville River, a headwater tributary of the Catawba River, about 21⁄2 miles northeast of Bridgewater, N. C. The storage reservoir has a drainage area of 370 square miles and the superficial area at crest level is 6,510 acres, providing available storage capacity of 12,581,000,000 cubic feet. The reservoir consists of three separate items; a masonry dam, earth dam and spillway, on the Catawba River, earth dam on Paddy Creek and earth dam, concrete intake, power house, on Linville River. Construction of this project was begun in April 1915 and the generating station was placed in service in May 1919. A considerable portion of the work was performed by the Hardaway Contracting Co. of Columbus, Ga., on unit price bids. Considerable litigation resulted from this contract, with the result that the company lost a claim of $393,332.96, and in addition paid a judgment of $250,000 to the contractor. [164] The recorded ledger value of the Bridgewater plant on November 30, 1927, was $9,668,114.53 and included the following items: Construction, May 31, 1919.. Appreciation recorded as a result of appraisal, Aug. 31, 1923. Net additions to November.. Total as conveyed to Duke Power Co..... 1 Denotes deduction. The majority of the appreciation appeared to be applicable to land and water rights as shown by the following: Land, flowage, storage, and riparian rights as appraised by W. S. Lee.. $3,658, 667.00 3,092, 768.00 Average appraisal value....... 3, 375, 517.50 Interest during construction was capitalized and included in construction cost in the amount of $609,185.62, and represented 12.63 percent of construction cost, exclusive of interest but including cost of land and rights. Interest was calculated at the rate of 7 percent per annum on net monthly expenditures to December 31, 1919. Included in the recorded construction costs were items of $25,263.20 entitled "labor bonus" allowed Hardaway Contracting Co. on account of increased labor costs and $22,414.51 of improvements to a club house used by officers and employees of the Duke system. [165] No unit costs per kilowatt installed capacity were calculated for the reason that a large part of the expenditures are applicable to the storage reservoir which serves other stations along the Catawba River. The Bridgewater hydroelectric development was conveyed to Duke Power Co. as of November 30, 1927, as per copy of journal voucher copied herewith. Western Carolina Power Co., journal voucher no. 2508, Dec. 19, 1927 [Explanation: To transfer Bridgewater development and certain real estate and all water rights to Duke Power Co., as of Nov. 30, 1927, all as per resolution adopted by board of directors at a special meeting held in Charlotte, N. C., on Dec. 19, 1927] [166] Appreciation based upon revaluation of property as of August 31, 1923.— On December 31, 1924, Western Carolina Power Co. wrote up its recorded investment in fixed capital by an amount of $4,192,053.58 which applied to the following items of property: Bridgewater hydroelectric development.. Total. $4, 189, 816. 42 2, 237. 16 4, 192, 053. 58 The amount of appreciation recorded was the result of writing up the recorded investment to the average of two appraisals made as of August 31, 1923. These appraisals were made by J. E. Sirrine & Co., engineers, Greenville, S. C., and W. S. Lee, consulting engineer, Charlotte, N. C. Mr. Lee was a director and vice president of Western Carolina Power Co. and also served as chief engineer of the several companies of the Duke Power System. Further details of the amount of appreciation recorded are shown by the statement appearing on the following page. This statement shows, among other facts, that the engineers who made the appraisals used recorded book values on all items of property, except the Bridgewater hydroelectric development. |