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Consumers Power Co. - Lehman Brothers Collection

Consumers Power Co.

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Consumers Power Company was founded through a 1910 merger of the two largest Michigan power company owners, W. A. Foote and the partners Anton G. Hodenpyl and H. D. Walbridge. Through the Commonwealth Power holding company, Foote controlled almost all the electric utilities in western Michigan. He also had interests in a number of "traction lines," electric trolley systems. Hodenpyl and Walbridge controlled most of the gas companies in eastern Michigan, along with some electric power facilities and electric trolley systems. Their interests also extended into New York, Pennsylvania, Illinois, and Indiana. The merger of these properties into the Consumers Power Company created the largest utility company in Michigan and formed the basis for what was to become, for a brief period, one of the most important utility conglomerates in the United States. At the time of the formation of Consumers Power, Michigan politicians extended the jurisdiction of the Railroad Commission over electric rates and utilities securities. To bypass the commission's control, the founders incorporated Consumers Power as a holding company in Maine. Consumers Power was to have control over Foote's old operating company, Commonwealth Power, as well as the other Michigan utilities held by Foote or Hodenpyl-Walbridge. The company was in turn controlled by a super-holding company, Commonwealth Power Railway and Light Company, which also controlled a variety of utility and electric railway companies in other states.

The post-World War I years were hard for the company. The war had drained capital needed for the construction of large hydro dams and electric railway lines. The increasing popularity of automobiles resulted in a serious decline in the electric railway business. Consumers Power had relied on the electric railway for the bulk of its electric power sales. The company's actions at this time served to secure its future in the power industry. Consumers Power began to offer preferred shares to all of its customers; thus began the tradition of broad public ownership of utility stocks. As a means of increasing customer demand for electricity, the company also began to market products that could be electric-powered. Consumers Power sent out traveling salesmen and staged theatrical demonstrations of electric appliances and gadgets. Such tactics were successful, and the company's net income grew from $4.2 million in 1922 to $14.3 million in 1929.

The Public Utility Act of 1935 prompted a major change for Consumers Power. The Act called for the dissolution of all utility holding companies that could not show that they controlled a regionally distinct and internally integrated system of operating companies. Commonwealth Power was forced to divest itself of Consumers Power. In 1946 the company became an independent gas and electric utility company.

The years after World War II were dramatically better for the company than those after the previous war. Many large factories were built in Michigan during these years, and Consumer Power's kilowatt-hour sales nearly doubled between 1945 and 1955. The increase in employment opportunities in the area led to a population rise, thus increasing the company's residential sales. By 1945 the company had completely converted from manufactured gas to natural gas and gained more customers in the process. Consumers Power also extended its geographical reach over most of central Michigan as it acquired smaller regional utilities.

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