[231] In chapters III and IV it has been shown that the properties of the merged companies had been written up prior to the transfer to Duke Power Co. The properties were recorded by Duke Power Co. at the ledger amount at which carried by the merging companies, therefore the write-up was carried forward to the fixed capital account of the Duke Power Co. through this merger. The amount of said write-ups has been shown by individual companies in the preceding sections. The write-ups brought forth to Duke Power Co. through this transaction will be summarized, together with other write-ups in a later section of this report.

Classification of fixed capital acquired through merger.—As of date of merger of the Southern Power Co. and Great Falls Power Co., the fixed capital of Duke Power Co. consisted of its investments in the General Gas & Electric Corporation acquisition and Charlotte office buildings. Through this merger Duke Power Co. became the direct owner of the hydroplants, steam plants, transmission and distribution systems, and other fixed properties owned by the Southern and Great Falls Power Cos. The following tabulation gives a description of, together with the ledger investments in, the properties acquired through the merger and consolidation with Southern and Great Falls Power Cos.

Property acquired through merger, Dec. 1, 1927—Continued

[233] Acquisition of Bridgewater hydrostation and storage reservoir of Western Carolina Power Co.-Under date of December 19, 1927, the Duke Power Co. acquired the Bridgewater hydrostation and the storage reservoir from Western Carolina Power Co. At the date of acquisition the outstanding stock of the latter was owned by Duke Power Co. The Bridgewater property was carried by Western Carolina Power Co. at a ledger amount of $9,668,114.53. Deducting from this amount the provision for depreciation, amounting to $444,214.06, a depreciated value of $9,223,900.47 was determined. In consideration for this property, the Duke Power Co. surrendered and canceled 92,239 shares of the common stock of Western Carolina Power Co., with a total par value of $9,223,900, and paid 47 cents in cash. The total par value of stock canceled plus the 47 cents, or a total of $9,223,900.47, equals the depreciated ledger amount at which the plant was carried by the selling company.

In chapter V it has been shown that this plant was written up prior to the transfer to Duke Power Co. The plant was recorded by Duke Power Co. at the ledger amount at which carried by the selling company; therefore, the write-up was carried forward to the fixed capital account of the Duke Power Co. through this acquisition.

The amount of said write-ups has been shown by individual companies in the preceding sections. The write-up brought forth to Duke Power Co. through this transaction will be summarized in a later section of this report.

Acquisition of Rhodhiss hydrostation. Under date of December 19, 1927, the Duke Power Co. acquired the Rhodhiss hydrostation from its subsidiary, Western Carolina Power Co. On the date of [234] sale this plant was carried at a ledger investment to Western Carolina Power Co. of $3,067,691.05. Deducting from this amount the provision for depreciation, amounting to $187,288.26, a depreciated value of $2,880,402.79 was determined. In consideration for the transfer of this plant, Duke Power Co. paid $2,880,402.79, or the ledger value at which the plant was carried by the selling company.

Acquisition of hydro plants of Wateree Power Co., December 1927.—As of November 30, 1927, the Duke Power Co. acquired the Fishing Creek, Wateree, new Catawba, and Spencer Mountain Mills hydro stations from Wateree Power Co. At the date of acquisition, these plants were being carried by the selling company at the following ledger amounts:

As indicated, the properties transferred to Duke Power Co. represented a ledger investment amounting to $23,749,579.06 to Wateree Power Co. The stock of Wateree Power Co. was entirely owned by Duke Power Co. at the time of this transaction. Up to the date of transfer, depreciation in the amount of $1,101,510.58 had been provided on these properties. Deducting this depre

ciation from the gross ledger amount of the properties transferred gives a net depreciated investment of $22,648,068.48.

In consideration for the transfer of these properties Duke Power Co. surrendered for cancelation 140,781 shares of the common stock of the Wateree Power Co., with a total par value of $14,078,100, [235] and credited the open account of Wateree Power Co. in the amount of $8,124,968.48, and assumed a deferred liability in the amount of $445,000. The total consideration given, therefore, was $22,648,068.48 and equals the depreciated ledger investments of the selling company in these properties.

In chapter VI it has been shown that these plants were written up prior to the transfer to Duke Power Co. These plants were recorded by Duke Power Co. at the ledger amount at which carried by the selling company; therefore, the write-up was carried forward to the fixed-capital accounts of the Duke Power Co. through this acquisition.

The amount of said write-ups has been shown by individual companies in the preceding sections. The write-up brought forth to Duke Power Co. through this transaction will be summarized, together with the other write-ups, in a later section of this report.

Acquisition of stocks and properties from General Gas & Electric Corporation, June 17, 1927.-Under date of June 17, 1927, the Duke Power Co. entered into a contract with General Gas & Electric Corporation providing for the purchase from that company of its properties located in North Carolina and its properties located in South Carolina, north of Union, S. C. In connection with this purchase, the Duke Power Co. entered into power contracts providing for the purchase of power from the development which the Lexington Water Power Co. proposed to make on the Saluda River, and further, in connection with this transaction, contracted for one-half the capacity of the Parr Shoals steam plant of the Broad River Power Co. The General Gas & Electric Corporation, the Lexington Water Power Co., [236] and the Broad River Co. were affiliated and were a part of Associated Gas & Electric Co. system.

By the terms of this contract, Duke Power Co. acquired 30,020 shares of the common stock of the North Carolina Public Service Co. which was all of the common stock issued and outstanding. It acquired 11,387 shares of the common stock of South Carolina Gas & Electric Co. out of 11,956 shares of such stock issued and outstanding. It acquired 2,352 shares of the second-preferred 6-percent cumulative stock of South Carolina Gas & Electric Co. out of 6,052 shares of such stock issued and outstanding. It acquired $84,450.05 principal amount of certificates of indebtedness of South Carolina Gas & Electric Co. out of $472,171.78 principal amount thereof issued and outstanding. It acquired $1,401,000 principal amount of notes of South Carolina Gas & Electric Co.

In addition to the securities acquired, the Duke Power Co. acquired:

(1) Property and franchises formerly owned by Blue Ridge Power Co. and Manufacturers Power Co., which were conveyed to Broad River Power Co.

(2) Property and franchises formerly owned by Melrose Power Manufacturing Co., which were conveyed to Broad River Power Co.

(3) Property and franchises formerly owned by Enoree Power Co. which had been conveyed to Broad River Power Co.

(4) The East Spartanburg substation of the Broad River Power Co.

(5) Transmission line running from east Spartanburg substation to a point about 2 miles west of Union, S. C.

[237] (6) All the property owned by Broad River Power Co. situated north and east of the East Spartanburg substation of said company.

(7) All investment or additions made by Broad River Power Co. in or to the property from January 1, 1927, to the closing of this contract.

A copy of the contract between General Gas & Electric Corporation and Duke Power Co., dated June 17, 1927, is submitted as appendix no. 5, page 469.

In consideration for the securities and properties, Duke Power Co. paid $11,114,574.10 in cash and assumed $967,000 principal amount of bonds. The total consideration of cash and bonds assumed was $12,081,574.10. Immediately following the acquisition, Duke Power Co. transferred the North Carolina Public Service Co. and South Carolina Gas & Electric Co. and allocated certain other of the property purchased to its subsidiary, Southern Public Utilities Co. In this transfer Duke Power Co. allocated the cost applicable to the property transferred to Southern Public Utilities Co. and applied the balance to the property retained. In splitting the property, it was intended to transfer the local distribution portion of the property to Southern Public Utilities Co. and for Duke Power Co. to retain the generation and transmission properties. Insofar