EXHIBIT 8 OF EXHIBIT C. FINANCIAL SUPPORT AND FINANCING

(Cost included among other services)

Few companies furnish as striking an example of the benefits of holding company financial support and assistance as does Virginia Electric & Power Co. Control of this company was acquired in June 1925 by Engineers Public Service Co. Prior to this time it had been operated independently and, because of the lack of broad experience in public-utility operation and a sound philosophy of the business, the company had failed to gain public goodwill and was at odds with the public served and the local municipal governments.

An expiring franchise in Richmond was threatening to embarrass the company because of the hostile attitude of the public in this location, fomented by opposition to a requested rise in street-car fares. Jitney competition was seriously injuring the transportation department earnings. Lack of organized sales effort and insufficient rate schedules, and in some cases schedules in need of modernization, were hampering the growth of the electric business. As a result of these factors, the financial standing of the company was poor and it was impossible for the company to get money for necessary extensions and improvements to the service. The crux of its difficulties, however, lay in the policies under which the company was being operated.

With the advent of holding company control came broader and sounder policies, an attitude of cooperation with the public and a sound philosophy of the business based on extensive experience in public-utility operation. The transformation which followed in public regard for the company was nothing short of amazing. In a relatively short time the public recognized the changed attitude of the company and the soundness of its purposes and it was soon able to work out all of its controversies with various governing bodies and through their cooperation restrict damaging competition and to gain the goodwill of the general public.

The change in the financial standing of the company was no less remarkable. Prior to the acquisition by the holding company, almost all financing of the company was done on a disadvantageous basis. Bond issues were burdened with sinking fund charges and restrictions of dividends and other burdensome requirements. The company was unable to obtain bank loans without putting up collateral security. Preferred-stock holders were dissatisfied because at times their dividend had had to be paid in scrip. Common-stock holders were going without fairly earned dividends because of restrictions placed by bankers. Within a year after the support of the holding company had been put behind the company, it sold $9,000,000 of 5-percent bonds without burdensome restrictions and on a very favorable basis. It was also able from time to time to borrow money from the banks in larger amounts than ever before and since June 1925 has never been required to put up any collateral as security for such loans. Even under present difficult conditions, the company's credit is so firm that its bonds are selling close to par and even during 1932 it was able to sell bonds, as is more fully described hereafter.

Not only has it been possible to finance through the sale of bonds but the company has sold preferred stock, largely in the territory served, and in every case the amount of stock offered has been oversubscribed within 3 days of the time it was offered. In order to keep the capital structure balanced, common stock has also been sold pro rata to existing stockholders. Because it owns over 99 percent of the common stock, the holding company has furnished a corresponding proportion of this equity money. Not a small part of the improvement in the credit position of the company arises through public recognition of the backing of the holding company, indicated by the original acquisition and confirmed by the investing of additional cash in the equity.

The fairness of the public and the regulating authorities in allowing the company to earn when possible a fair rate of return on its property has been a primary factor in establishing and maintaining the credit of the company. It will be faced on July 1, 1934, with the maturity of $10,633,000 of bonds and it should be a matter of great satisfaction to all concerned, including the public served, that the credit of this company stands firm and that it is likely that it will meet this maturity on a favorable basis without the difficulties which so many companies have encountered in financing a similar maturity during these trying times. The improvement in the financial standing of the company enabled it to proceed with a major program of improving the existing service to its customers, not only by increasing the capacity and strengthening the distribution system but by extending the service to outlying territory and thus aiding in the development

of the area served. Moreover, the development of business of existing customers which followed the improvement to the service, fostered by wide-spread effort to acquaint all customers with the economically attractive uses of this service in homes and in manufacturing plants, led to an increase in use which enabled rates to be lowered repeatedly. Due to changes in the accounting classification in 1926, specific comparison with periods prior to 1927 cannot be made accurately. Since 1927, however, the average use per residential customer has increased from 350 kilowatt-hours annually to 703 kilowatt-hours in 1932. This record is all the more impressive when compared with the national averages which are 430 kilowatt-hours for 1927 and 601 kilowatt-hours for 1932. In the same period the average rate per kilowatt-hour has declined 35 percent as against 20 percent for the national average and the rate is now under the national average.

In addition to the direct benefits of improving and supporting the financial standing of Virginia Co. by the holding company, the Service Co., Engineers Public Service Co., Inc., has been exceedingly helpful in advising regarding the financial policies and in negotiating senior financing for the Virginia Co. The Service Co. organization is exceptionally well qualified to keep in touch with financial conditions and thus to arrange financing at the most advantageous times and on the most advantageous basis possible for its various subsidiary companies. For example, in 1932 the Virginia Co. had notes payable to banks of nearly $4,000,000 which had been built up from construction expenditures over a period of 2 years. Such a bank debt in ordinary times would not be considered large for a company the size of Virginia and would be allowed to run until a particularly favorable opportunity appeared to fund the debt. However, in 1932 the banking situation was in such a turmoil that it no longer appeared safe to be in a position where the payment of such a sum of money might be called for due to circumstances beyond the control of the banks, however willing they might be under ordinary circumstances to carry such a loan. Moreover, the investing public had come to look with distrust on large bank loans of this sort which are thus apt to affect investor confidence in all securities of the company. Accordingly, when in March 1932 the Service Co. officials found a bond market appearing, they recommended and assisted in arranging the sale of $4,000,000 of 51⁄2 percent convertible bonds on a favorable basis to the company, thereby removing this threat to the company's stability and improving the credit position of the Virginia Co. This transaction emphasizes also the favorable credit position of the company, since there were relatively few periods during 1932 when public-utility bonds could be sold at all and even then relatively few such companies had sufficiently strong credit to be able to sell them.

There is a great deal of work connected with the sale of a bond issue, much of which is covered in the discussion of the work of various departments. However, at this point, we wish to call attention to the work of the statistical department in compiling circulars, supplemental information, and comparisons of security prices in connection with such sale; the work of the corporation department in drawing up the mortgage or supplemental indenture and all other papers in connection with the issue, etc., but the most important and valuable work is that of actual negotiation of the sale at the most favorable time for the issuing company.

EXHIBIT 9 OF EXHIBIT C. TREASURER ($14,290)

(NOTE. Includes cost of tax and accounting service as well as treasurer) Virginia Electric & Power Co. maintains depositary accounts with two New York banks. These accounts are handled in New York by Engineers Public Service Co., Inc.

The treasurer's services performed by the New York office for the Virginia Co. during 1932 involved:

Over 50 receipts of cash aggregating $9,400,000 and about 80 disbursements totaling over $9,300,000.

Obtaining loans from New York banks-the placing of 6 note renewals aggregating $2,150,000.

Disbursing over $2,700,000 to transfer agent for payment of quarterly dividends on preferred and common stocks held by stockholders not located in the territory served by the company.

Payments of funds to trustees to meet semiannual interest on the various outstanding bonds of Virginia Electric & Power Co. together with the sinking fund requirements thereon, aggregating nearly $2,300,000-17 transactions.

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Handling the receipt and disbursement of the proceeds of over $3,600,000 received from the sale of $4,000,000 10-year 51⁄2 percent secured convertible gold bonds.

The signing by hand of $4,000,000 of temporary 10-year 51⁄2-percent secured convertible gold bonds ($1,000 denomination pieces and fully registered $10,000 denomination pieces) and a like amount of definitive bonds. Also $4,000,000 of definitive first and refunding mortgage gold bonds, series A, of similar denominations, which bonds are on deposit with the trustee as security for the aforesaid secured convertible bonds and available for conversion at option of holders of said secured convertible bonds.

The validation of multilated coupons on bonds of the company and, where necessary, advising the New York Stock Exchange of such action.

The maintenance of records for the intelligent and adequate handling of the funds received, disbursed, or arranged for through the New York depositaries of the company and the carrying on of correspondence arising from or pertaining to the various transactions. These records include notes payable, the history of outstanding securities of the company, sinking fund and escrow operations, the 2-percent normal Federal income tax paid on various securities issued, weekly balances of cash and monthly estimates to ascertain company's needs to meet requirements handled through the New York depositaries of the company.

The benefits derived through the maintaining of financial representation in New York are explained more in detail later on in this exhibit. These benefits being apparent, it naturally follows the company should rely upon such representation for the handling of its financial transactions with the New York depositaries provided such services can be economically performed for the Company. Engineers Public Service Co., Inc., is equipped for the performance of such service and as this is combined with similar service performed for many other public-utility companies, the relative cost to each is correspondingly reduced. The records maintained in the New York office are records which would otherwise be maintained in the Richmond office of the company. The elimination of the New York office would not do away with the expense of maintaining these records.

The proximity of the New York office with the more important disbursing agents for securities of the company facilitate the handling of unusual transactions. Personal contact is possible with the New York banks which has proven of assistance in the obtaining of loans. Otherwise, it would undoubtedly be necessary to have officers of the company from Richmond come to New York which would entail considerable time and expense in traveling.

Practically every company of the size of the Virginia Electric & Power Co. has found it necessary to maintain an office in the city of New York, the chief money center of the country, in order to secure financial accommodations. In this case the Virginia Co. has been able to secure this representation on an economical, cooperative basis through the Engineers Public Service Co., Inc.

The ability of the Virginia Co. to market additional securities during 1932 permitted the liquidation of its entire floating debt which amounted to $3,840,000 for a part of the year. Of this, $2,150,000 or 56 percent was represented in loans carried with New York banks and the balance $1,690,000 or 44 percent represented loans carried with local banks. This indicates the extent to which the Virginis Co. relies upon banks outside of its territory to obtain financial assistance in the form of short-term borrowings. While the company at the end of the year 1932 had no floating debt, it can be expected when future major construction programs require financial aid, the company will again look to these outside banks for the necessary short-term credit.

This outside credit has been successfully obtained in the past by the New York office primarily because of its associations and contracts with financial institutions in New York its dealings with such institutions not only for the Virginia Co. but for the numerous other subsidiaries of Engineers Public Service Co and to the reputation which Engineers Public Service Co. has built up with such institutions over a period of many years.

Looking to the future, the retaining and furtherance of these financial connections already established is of vital importance not only to the company but also to the communities and to the customers which it serves.