Except Prunes

Not laggard to take to the courts against Section 11 of the Public Utility Act of 1935--the section described in the press as "the death sentence"--was American Water Works & Electric Co. Inc. Last February American Water Works withdrew its suit and registered with SEC. Five months ago American Water Works became one of the first of some 90 holding companies which are now registered with SEC to file a voluntary plan for reorganization. And last week SEC, pleased to find a public utility that wanted to cooperate, gave its approval in all major respects.

American Water Works, whose total consolidated assets in 1936 amounted to almost $385,000,000, has gradually accumulated properties and organized new companies till it is the customary public utilities tangle of holding companies, operating companies, companies that are not purely one nor the other, and indiscriminate holdings ranging from Manhattan real estate to California prune orchards. After it is simplified, it will keep no less than 108 non-utilities, including 89 waterworks companies which are not defined as utilities by the act. But it will have only three operating and holding utility subsidiaries--West Penn Power Co., Monongahela West Penn Public Service Co. and Potomac Edison Co. To provide cash for the untangling, it plans to issue about $50,000,000 in new securities.

SEC did tell American Water Works to get rid of its prune orchards. But if it wished to, said the Commissioners, it could take "a reasonable period of time" to sell them--an obvious effort to convince other utilities that if they become a little more sociable SEC is perfectly willing to make friends.

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