SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: January 25, 1994
EASTERN EDISON COMPANY
(Exact name of registrant as specified in this charter)
Massachusetts 0-8480 04-1123095
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
110 Mulberry Street
Brockton, Massachusetts 02403
(Address of principal executive offices) (Zip Code)
Item 5. Other Events.
(a) Eastern Edison Company's ("Eastern Edison") subsidiary, Montaup
Electric Company ("Montaup"), today announced that generating unit #5 at
its Somerset Station has been placed in deactivated reserve.
This 69 mw generating unit is 42 years old. It has been out of
service for the past 5 months because of mechanical problems. During this
period of time an assessment of the cost and feasibility of repairing and
refurbishing the unit to meet reliability standards and Clean Air Act
requirements has been conducted. The study concluded that it was not
economic to repair this unit. Montaup's power supply remains sufficient to
meet its commitments. It is envisioned that new replacement capacity will
not be needed until the year 2000.
Deactivating may result in the loss of jobs for about 30 of the 140
employees at the Somerset Station. Donald G. Pardus, Chairman of Montaup,
in a meeting with the employee representatives today, pledged Company
efforts to minimize the impact on employees. Alternatives to layoffs are
being investigated to reduce the number of employees affected.
(b) By complaint dated December 17, 1992, Montaup commenced a
declaratory judgment action in which it sought to have the Massachusetts
Superior Court determine its rights under the Power Purchase Agreement
between it and the defendant Aquidneck Power Limited Partnership
("Aquidneck"). Montaup sought a declaration that the Power Purchase
Agreement was binding on the parties according to its terms. The defendant
had asserted, in effect, that Montaup had either an express or implied
obligation to negotiate new terms and conditions to the Power Purchase
Agreement. Specifically, the defendants sought to amend, through
negotiations, certain milestone events to which they were bound in the
Power Purchase Agreement as written. The first milestone event required
the defendant to provide Montaup with written documentation that it had
title to, or lease of a certain site in Rhode Island, and that it do so no
later than January 1, 1993. Aquidneck failed to meet the milestone.
Accordingly, on January 5, 1993, Montaup exercised its rights to terminate
the Power Purchase Agreement effective immediately.
By counterclaim dated January 11, 1994, Aquidneck claimed certain
breaches of the Power Purchase Agreement, including an alleged failure on
the part of Montaup to renegotiate the terms and conditions of the Power
Purchase Agreement relating to the first milestone event.
By motion to implead third parties dated January 20, 1994, the
defendant seeks to join Eastern Edison's parent, Eastern Utilities
Associates ("EUA"), and EUA's subsidiary, EUA Service Corporation, as
parties necessary for the just adjudication of the subject controversy. In
its counterclaim, Aquidneck alleges that EUA and EUA Service Corporation
conspired to void the obligations of Montaup under the Power Purchase
Agreement. In addition, Aquidneck alleges that Montaup and/or the other
parties sought to be joined did not comply with the provisions of the Power
Purchase Agreement by failing to adequately and promptly assist the
defendant in certain permitting activities.
Aquidneck apparently claims $11,000,000 of damages on the theory that
EUA can "avoid an approximately an eleven million dollar ($11,000,000)
obligation to purchase capacity and power which it does not currently
need." Because Aquidneck alleges that the actions of Montaup, EUA and EUA
Service Corporation constitute a violation of Massachusetts General Laws,
Chapter 93A, section 1 et seq. and that, the actions complained of in the
counterclaim were undertaken willfully and knowingly, Aquidneck seeks
treble damages and attorney's fees.
Montaup, EUA and EUA Service Corporation intend to vigorously defend
the counterclaim. As asserted in its complaint for declaratory judgement,
Montaup claims that the documents in question, including the Power Purchase
Agreement, are unambiguous and that the parties are entitled to performance
according to their terms. Montaup asserts that it was entitled to
terminate the Power Purchase Agreement. In any event, Montaup believes
that the defendants apparent damage theory has no basis in law.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
EASTERN EDISON COMPANY
(Registrant)
By: /s/ John R. Stevens
President
Date: January 25, 1994
