PAGE 1
Washington, D. C. 20549-1004
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to _______________
Commission file number 2-7909
CAMBRIDGE ELECTRIC LIGHT COMPANY
(Exact name of registrant as specified in its charter)
Massachusetts 04-1144610
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Main Street, Cambridge, Massachusetts 02142-9150
(Address of principal executive offices) (Zip Code)
(617) 225-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES x NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock March 15, 1994
Common Stock, $25 par value 346,600 shares
The Company meets the conditions set forth in General Instruction J(1)(a) and
(b) of Form 10-K as a wholly-owned subsidiary and is therefore filing this
Form with the reduced disclosure format.
Documents Incorporated by Reference Part in Form 10-K
None Not Applicable
List of Exhibits begins on page 36 of this report.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
FORM 10-K DECEMBER 31, 1993
TABLE OF CONTENTS
PART I
PAGE
Item 1. Business.............................................. 3
General............................................ 3
Electric Power Supply.............................. 3
Power Contracts and Capacity
Acquisition and Disposition Agreement........... 4
New England Power Pool............................. 4
Energy Mix......................................... 5
Rates and Regulation............................... 5
(a) Retail Rate Proceeding...................... 5
(b) Wholesale Rate Proceedings.................. 6
(c) Cost Recovery............................... 6
Environmental Matters.............................. 8
Construction and Financing......................... 8
Employees.......................................... 9
Item 2. Properties............................................ 9
Item 3. Legal Proceedings..................................... 9
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters................................... 10
Item 7. Management's Discussion and Analysis of Results of
Operations............................................ 11
Item 8. Financial Statements and Supplementary Data........... 15
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................... 15
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K........................................... 36
Signatures...................................................... 54
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CAMBRIDGE ELECTRIC LIGHT COMPANY
PART I.
Item 1. Business
General
Cambridge Electric Light Company (the Company) is engaged in the
production, distribution and sale of electricity at retail to approximately
44,500 customers in the city of Cambridge, Massachusetts. The service
territory encompasses a seven square mile area with a population of
approximately 96,000. In addition, the Company sells power for resale to the
New England Power Pool (NEPOOL) and to the Town of Belmont, Massachusetts
(Belmont), and sells steam from its electric generating stations at wholesale
to an affiliated company for distribution to customers for use in connection
with space heating and other purposes.
The Company, which was organized on January 28, 1886 pursuant to a
special act of the legislature of the Commonwealth of Massachusetts, operates
under the jurisdiction of the Massachusetts Department of Public Utilities
(DPU), which regulates retail rates, accounting, issuance of securities and
other matters. The Company also files its wholesale rates with the Federal
Energy Regulatory Commission (FERC). The Company is a wholly-owned subsidiary
of Commonwealth Energy System ("System"), which, together with its
subsidiaries, is referred to as "the system."
By virtue of its charter, which is unlimited in time, the Company
distributes electricity without direct competition in kind from any privately
or municipally-owned utility. Alternate sources of energy are available to
customers within the service territory, but competition from these sources to
date has not been a significant factor affecting the Company.
However, the Massachusetts Institute of Technology (MIT) is constructing
a 19 MW natural gas-fired cogeneration facility which is expected to be
completed in January 1995. MIT expects that this cogeneration facility will
meet approximately 94% of its power, heating and cooling requirements. Sales
to MIT in 1993 accounted for approximately 9.4% of the Company's total unit
sales. MIT and the Company are presently negotiating a buy and sell
arrangement which will require the approval of the DPU.
Of the Company's 1993 retail electric unit sales, 12% was sold to
residential customers, 74% to commercial customers, 6% to industrial customers
and 8% to municipal and other customers.
Electric Power Supply
The Company owns generating facilities with a total capacity of 114.5
MW, of which 51.5 MW is used for peaking purposes. The Company relies
primarily on purchased power to meet its energy requirements.
Power purchases for the Company and Commonwealth Electric Company
(Commonwealth Electric), the other wholly-owned electric distribution
subsidiary of the System, are arranged whereby power is made available to the
subsidiaries in accordance with their requirements including purchases from
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CAMBRIDGE ELECTRIC LIGHT COMPANY
Canal Electric Company (Canal), an affiliated wholesale electric generating
company located in Sandwich, Massachusetts, and a major source of purchased
power for the Company. Under long-term contracts, system entitlements include
one-quarter (143 MW) of the capacity and energy of Canal Unit 1 and one-half
(292 MW) of the capacity and energy of Canal Unit 2.
In response to solicitations made to NEPOOL member companies by
Northeast Utilities (NU), Canal, on behalf of the Company and Commonwealth
Electric, agreed to purchase entitlements through various contracts ranging up
to five years in length. The terms of a five-year agreement stipulate the
purchase of 50 MW, on average, from NU annually from November 1989 through
October 1994. The Company and Commonwealth Electric are each appropriated a
portion of the power received from NU based on need.
In addition, the Company has ownership interests (2 1/2% to 4 1/2%) in
three operating nuclear units located in New England with power entitlements
totaling 67.6 MW. On February 26, 1992, Yankee Atomic Electric Company's
Board of Directors decided to permanently cease power operation at a nuclear
unit located in Rowe, Massachusetts and, in time, decommission the facility.
The Company has a 2% interest in this facility. For further information,
refer to Note 4(d) of the Notes to Financial Statements filed under Item 8 of
this report. In addition, through Canal's equity ownership in Hydro-Quebec
Phase II and joint-ownership in the Seabrook nuclear unit, the Company has
entitlements of 19.7 MW and 8.1 MW, respectively.
The Company expects to provide for future peak load plus reserve
requirements through existing and planned system generation, including
purchasing excess capacity from neighboring utilities. These and other bulk
electric power purchases are necessary in order to fulfill the system's NEPOOL
obligation and for Canal to acquire and deliver electric generating capacity
to meet the Company's and Commonwealth Electric's requirements.
Power Contracts and Capacity Acquisition and Disposition Agreement
The Company has long-term contracts for the purchase of electricity from
various sources. In addition, the Company's future generation needs will be
met substantially through a Capacity Acquisition and Disposition Agreement
with Canal. For further information, refer to Note 4(b) of the Notes to
Financial Statements filed under Item 8 of this report.
New England Power Pool
The Company, together with other electric utility companies in the New
England area, is a member of NEPOOL, which was formed in 1971 to provide for
the joint planning and operation of electric systems throughout New England.
NEPOOL operates a centralized dispatching facility to ensure reliability
of service and to dispatch the most economically available generating units of
member companies to fulfill the region's energy requirements. This concept is
accomplished through the use of computers to monitor and forecast load
requirements and provide for the economic dispatch of generation.
The Company and the System's other electric subsidiaries are also
members of the Northeast Power Coordinating Council (NPCC), an advisory
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CAMBRIDGE ELECTRIC LIGHT COMPANY
organization which includes the major power systems in New England and New
York plus the provinces of Ontario and New Brunswick in Canada. NPCC
establishes criteria and standards for reliability and serves as a vehicle for
coordination in the planning and operation of these systems in enhancing
reliability.
The reserve requirements used by the NEPOOL participants in planning
future additions are determined by NEPOOL to meet the reliability criteria
recommended by NPCC. The system estimates that, during the next ten years,
reserve requirements so determined will be in the range of 23% to 29% of peak
load.
Energy Mix
The Company's energy mix, including purchased power, was as follows:
1993 1992 1991
Oil 43% 58% 55%
Nuclear 44 38 40
Natural gas 12 4 5
Hydro 1 - -
Total 100% 100% 100%
Oil-fired generation, although reduced from prior year levels, still
accounts for a large percentage of the Company's total generation sources.
The Company's energy mix shifted during 1993 from oil to natural gas and other
types of generation due to the availability of capacity from an independent
power producing (IPP) facility (Altresco Pittsfield) and, to a lesser extent,
an effort to reduce its reliance on oil. In addition to power purchases, the
Company is actively pursuing sales of certain available capacity to utilities
in and outside the New England region.
Rates and Regulation
(a) Retail Rate Proceeding
The Company operates under the jurisdiction of the DPU, which regulates
retail rates, accounting, issuance of securities and other matters. The DPU
requires historical test-year information to support changes in rates.
On May 28, 1993, the DPU issued an order increasing the Company's retail
revenues by approximately $7.2 million or 6.4%. The rates, based on a June
30, 1992 test-year and effective June 1, 1993, provide an overall return of
9.95%, including an equity return of 11% and represented approximately 70% of
the amount requested. More than 80% of the increase related to: 1) plant
additions since the Company's last retail rate proceeding in 1989; 2) capacity
costs associated with certain purchased power contracts; and 3) costs of
postretirement benefits other than pensions. The costs associated with these
postretirement benefits were determined in accordance with Statement of
Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," issued in 1990 and adopted by
the Company as of January 1, 1993. The DPU authorized recovery of these costs
over a four-year period with carrying costs on the deferred portion. In
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CAMBRIDGE ELECTRIC LIGHT COMPANY
addition, the new base rates also reflect the roll-in of costs associated with
power from the Seabrook nuclear power plant which are billed to the Company by
Canal. Previously these costs were recovered through the Company's Fuel
Charge decimal.
(b) Wholesale Rate Proceedings
The Company requires FERC approval to increase its wholesale rates to
Belmont, a "partial requirements" customer of the Company since 1986. These
rates include a fuel adjustment clause which reflects changes in costs of
fuels and purchased power used to supply Belmont.
On March 23, 1990, the Company filed a request with the FERC to increase
its wholesale rates to Belmont by $2,252,000 annually. The request was
largely due to increased purchased power costs and major additions to plant-
in-service. The proposed rates were accepted by the FERC, subject to refund,
on August 1, 1990. On September 19, 1990, the Company and Belmont filed an
uncontested Offer of Settlement which the FERC approved on December 6, 1990
resolving all issues with the exception of Seabrook 1 costs which were subject
to change based upon the results of the FERC's final review of Canal's
investment in the unit. This settlement required the Company to adjust its
Belmont rate to reflect the final allocation of power purchased by Canal on
behalf of the Company and Commonwealth Electric. The Company made a refund to
Belmont in August 1991 and filed the requisite compliance report with the FERC
on September 16, 1991.
A settlement agreement between Canal and Belmont addressing all Seabrook
cost-of-service issues (except rate of return on common equity) was filed with
the FERC on April 16, 1991 and subsequently approved by the FERC on November
13, 1991. In addition, this settlement changed the effective date of the
Belmont Service Agreement from August 1, 1990 to June 30, 1990. The charges
and refunds resulting from this settlement were applied to Belmont's bill in
January 1992.
On November 12, 1991 a settlement agreement between Canal and Belmont
addressing the rate of return on common equity in the Seabrook Power Contract
was filed with the FERC. The return on equity settlement, which was approved
by the FERC on January 29, 1992, allowed a return on equity of 11.72% and
required Canal to refund certain sums to the Company and Commonwealth Electric
and to make a compliance report to the FERC. On March 12, 1992, Canal made
its compliance filing with the FERC indicating that all refunds were made to
the Company and Commonwealth Electric on February 27, 1992.
As a result of the return on equity settlement, the Company was required
to refund certain sums to Belmont. On April 2, 1992 the Company made its
requisite compliance filing with the FERC indicating that refunds were made to
Belmont in the March 1992 billings.
(c) Cost Recovery
Rate Schedule - The Company files a Fuel Charge rate schedule, which
provides for the current recovery, from retail customers, of fuel used in
electric production, purchased power and transmission costs. This schedule
requires the quarterly computation and DPU approval of a Fuel Charge decimal
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CAMBRIDGE ELECTRIC LIGHT COMPANY
based on forecasts of fuel, purchased power and transmission costs and billed
unit sales for each period. To the extent that collections under the rate
schedule do not match actual costs for that period, an appropriate adjustment
is reflected in the calculation of the decimal for the next calendar quarter.
Purchased Power - The Company has long-term contracts for the purchase
of electricity from various sources. Generally, these contracts are for fixed
periods and require that the Company pay a demand charge for its capacity
entitlement and an energy charge to cover the cost of fuel. The DPU ordered
the Company, effective July 1, 1991, to collect a portion of capacity-related
purchased power costs associated with certain long-term power and transmission
agreements through base rates. Prior to that date the Company was recovering
these costs through its Fuel Charge. The recovery mechanism for these costs
uses a per kilowatthour (KWH) factor that is calculated using historical
(test-period) capacity costs and unit sales. This factor is then applied to
current monthly KWH sales. When current period capacity costs and/or unit
sales vary from test-period levels, the Company experiences a revenue excess
or shortfall which can have a significant impact on net income. All other
capacity and energy-related purchased power costs are recovered through the
Company's Fuel Charge. The Company and Commonwealth Electric made a filing in
late 1992 with the DPU seeking an alternative method of recovery. This
request was denied in a letter order issued on October 6, 1993. However, the
Company and Commonwealth Electric were encouraged by the DPU's acknowledgement
that the issues presented warrant further consideration. The DPU encouraged
each company to continue to work with other interested parties, including the
Attorney General of Massachusetts, to reach a consensus solution on the issue
for consideration in each company's next base rate proceeding.
Seabrook Costs - The full commission of the FERC, in a final order
issued on August 4, 1992, approved full recovery of Canal's investment in the
Seabrook nuclear power plant. The Company and Commonwealth Electric had been
billing, subject to refund, Seabrook 1 charges to their retail customers since
August 1, 1990 through Fuel Charge decimals approved by the DPU. As discussed
in the aforementioned retail rate proceeding section, the Company is now
recovering its Seabrook 1 costs in base rates.
The Company and Commonwealth Electric collect, through their respective
Fuel Charge, amounts being billed to them by Canal for costs associated with
Seabrook 2 (over a ten-year period ending in 1997) pursuant to a Capacity
Acquisition Agreement the terms of which were approved by both FERC and the
DPU.
Conservation and Load Management Programs - The Company and Commonwealth
Electric have received approval from the DPU to recover conservation and load
management program (C&LM) costs. The programs offer opportunities to all
customers to save energy by investing in C&LM measures. The objective of the
programs is to reduce capacity and energy requirements which in turn reduce
the cost of providing service. The Company has Conservation Charge (CC) rate
schedules which allow for current cost recovery from retail customers. On
June 30, 1993, the DPU issued an order in Phase I of a C&LM filing by the
Company and Commonwealth Electric which authorizes the recovery of "lost base
revenues" from electric customers. The recovery of lost base revenues is
allowed by the DPU to encourage effective implementation of C&LM programs.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
The KWH savings that are realized as a result of the successful implementation
of C&LM programs serve as the basis for determining lost base revenues. The
amount to be recovered is $88,000 for the Company and is based on anticipated
KWH savings for the eighteen-month period beginning January 1, 1993. The
revenue will be recovered from customers over a twelve-month period which
began July 1, 1993.
On October 25, 1993, the DPU issued an order in Phase II of the C&LM
proceeding. In that order, the DPU ruled that approximately $526,000 in C&LM
Task Force related expenditures are not recoverable by the Company "at this
time" because certain programs have yet to be implemented and thus ratepayers
are receiving no current benefits. The Company removed these costs from the
current CC decimal and is continuing with the development of the programs and
plans to seek recovery of these costs in a subsequent filing with the DPU.
Based on the language in the order and subsequent discussions with the parties
involved in the proceeding, management believes that the ultimate recovery of
a substantial portion of these costs is likely.
Environmental Matters
The Company is subject to laws and regulations administered by federal,
state and local authorities relating to the quality of the environment. These
laws and regulations affect, among other things, the siting and operation of
generating facilities, and will continue to impact future operations, capital
costs and construction schedules. Air emission regulations require the use of
more costly lower-sulphur content fuels (0.5% maximum in the case of the
Company's facilities, which are located in a populated urban area) in electric
generating facilities. The amendments to the federal Clean Air Act enacted in
1990 will impose restrictions on air emissions, and have a particular impact
on the cost of electric generating operations. Regulations enacted by the
state of Massachusetts will require a reduction in sulphur dioxide emission
rates effective December 31, 1994. A plan to meet this target date was
developed and submitted to the state in compliance with applicable
regulations. These regulations may also result in an increase in the cost of
power purchased from others. The Company recovers its cost of fuel and
purchased power through its Fuel Charge or base rates.
In October 1992, the Company received a statutory demand letter alleging
the Company is jointly and severally liable, along with numerous other
(unrelated) entities, for the clean-up of a hazardous waste site located in
Waltham, Massachusetts. The Company anticipates that its share of site clean-
up costs will not be material. The Company is investigating these allegations
and will respond in accordance with state law.
Construction and Financing
Information concerning the Company's construction and financing programs
is contained in Note 4(a) of the Notes to Financial Statements filed under
Item 8 of this report.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
Employees
The Company has 167 regular employees, 122 employees (73%) are
represented by the Utility Workers' Union of America, A.F.L.-C.I.O. The
existing collective bargaining agreement expires June 15, 1995. Employee
relations have generally been satisfactory and management views the current
work force level to be appropriate to service the Company's customers.
Item 2. Properties
The Company owns and operates two steam generating plants and two gas
turbine units located in Cambridge with a total capability of 114.5 MW
together with an integrated system of distribution lines and substations.
At December 31, 1993, the Company's electric transmission and
distribution system consisted of 93 pole miles of overhead lines, 672 cable
miles of underground line, 217 substations and 44,920 active customer meters.
Item 3. Legal Proceedings
The Company is not a party to any pending material legal proceeding.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
PART II.
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
(a) Principal Market
Not applicable. The Company is a wholly-owned subsidiary of
Commonwealth Energy System.
(b) Number of Stockholders at December 31, 1993
One
(c) Frequency and Amount of Dividends Declared in 1993 and 1992
1993 1992
Per Share Per Share
Declaration Date Amount Declaration Date Amount
April 26, 1993 $ .95 October 21, 1992 $1.40
July 26, 1993 .90
October 18, 1993 4.50
$6.35
Reference is made to Note 7 of the Notes to Financial Statements
filed under Item 8 of this report for the restriction against the
payment of cash dividends.
(d) Future dividends may vary depending upon the Company's earnings
and capital requirements as well as financial and other conditions
existing at that time.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
Item 7. Management's Discussion and Analysis of Results of Operations
The following is a discussion of certain significant factors which have
affected operating revenues, expenses and net income during the periods
included in the accompanying statements of income and is presented to
facilitate an understanding of the results of operations. This discussion
should be read in conjunction with the Notes to Financial Statements filed
under Item 8 of this report.
A summary of the period to period changes in the principal items
included in the accompanying statements of income for the years ended December
31, 1993 and 1992 is shown below:
Years Ended Years Ended
December 31, December 31,
1993 and 1992 1992 and 1991
Increase (Decrease)
(Dollars in Thousands)
Electric Operating Revenues $ 13 125 11.6 % $(5 329) (4.5)%
Operating Expenses:
Fuel used in electric production (213) (8.2) (1 222) (32.1)
Electricity purchased for resale 9 971 15.5 3 813 6.3
Transmission (203) (2.6) (513) (6.1)
Other operation and maintenance (610) (2.6) 1 992 9.1
Depreciation 194 5.4 111 3.2
Conservation and load management (1 341) (31.6) (3 889) (47.8)
Taxes -
Federal and state income 2 143 310.1 (2 323) (142.3)
Local property and other 482 15.7 427 16.2
10 423 9.6 (1 604) (1.5)
Operating Income 2 702 64.6 (3 725) (47.1)
Other Income 301 602.0 (675) (108.0)
Income Before Interest Charges 3 003 72.7 (4 400) (51.6)
Interest Charges (34) (0.8) (425) (9.5)
Net Income $ 3 037 4745.3 $(3 975) (98.4)
Unit Sales (MWH) Change 86 179 5.6 (20 461) (1.3)
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CAMBRIDGE ELECTRIC LIGHT COMPANY
Unit Sales
The following is a summary of unit sales and customers for the periods
indicated:
Years Ended December 31,
1993 1992 1991
% %
Unit Sales (MWH): Change Change
Residential 155 638 6.2 146 500 (2.4) 150 157
Commercial 990 325 3.2 959 594 0.7 953 217
Industrial 82 706 (7.0) 88 943 (2.1) 90 874
Municipal and other 109 378 5.9 103 276 3.6 99 676
Total retail 1 338 047 3.1 1 298 313 0.3 1 293 924
Sales for resale 300 793 18.3 254 348 (8.9) 279 198
Total 1 638 840 5.6 1 552 661 (1.3) 1 573 122
Customers:
Residential 37 752 0.8 37 448 (0.6) 37 684
Commercial 6 030 0.8 5 984 0.3 5 966
Industrial 59 (9.2) 65 (4.4) 68
Municipal and other 600 2.6 585 2.1 573
Total 44 441 0.8 44 082 (0.5) 44 291
During 1993 retail unit sales increased 3.1% reflecting moderate growth
in customers, primarily residential, a greater demand for power from
commercial and municipal customers reflecting an improving economy and, to a
lesser extent, more extreme weather conditions resulting in additional use to
meet heating or air conditioning requirements, offset somewhat by the impact
of conservation programs. Retail unit sales were virtually unchanged for 1992
compared to 1991 reflecting the negative impact of the state's poor economic
condition.
Changes in the level of wholesale sales during the three years are
attributable to the Town of Belmont, Massachusetts and sales to NEPOOL.
Revenues, Fuel, Transmission and Purchase Power
Operating revenues increased $13.1 million or 11.6% in 1993 due
primarily to an increase in purchased power costs of $10 million or 15.5%,
offset in part by a $1.3 million (31.6%) decrease in conservation and load
management (C&LM) costs. Also contributing to the increase were new base
rates, which became effective June 1, 1993. Despite a $3.8 million or 6.3%
increase in purchased power costs, operating revenues decreased by
approximately $5.3 million (4.5%) in 1992. This reduction was due to a $3.8
million reduction in C&LM costs, a $1.2 million decrease in fuel used in
electric production and, to a lesser extent, decreases in transmission costs
and total unit sales.
The Company has received approval from the Massachusetts Department of
Public Utilities (DPU) to recover in revenues current costs associated with
C&LM programs through the operation a Conservation Charge (CC) decimal on a
dollar-for-dollar basis. To the extent that these costs increase or decrease
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CAMBRIDGE ELECTRIC LIGHT COMPANY
from period to period based on customer participation, a corresponding change
will occur in revenues.
Revenues collected through base rates are intended to reimburse the
Company for all costs of operation other than fuel, the energy portion of
purchased power, transmission and C&LM costs and provide a fair return on
capital invested in the business. The aforementioned costs not collected
through the Company's base rates are collected through a Fuel Charge (FC)
decimal, or for C&LM costs, through a CC decimal, as approved by the DPU.
Prior to April 1992 C&LM costs were collected through the FC. Listed below is
an analysis of revenue components and current recoverable costs for the years
1993, 1992 and 1991:
Years Ended December 31,
1993 1992 1991
(Dollars in Thousands)
% %
Change Change
Electric revenues:
Costs recovered in Fuel
or Conservation Charge $ 60 808 (0.6) $ 61 193 (3.0) $ 63 063
Power costs in base rates 26 294 48.6 17 696 0.1 17 636
Base rates and other 38 971 14.4 34 059 (9.4) 37 578
Total electric revenues $126 073 11.6 $112 948 (4.5) $118 277
Purchased power expense for 1993 and 1992 includes $526,000 and $2.5
million, respectively, for capacity-related costs associated with certain
purchased power contracts that were not recovered in revenues due to the
mechanism established by the DPU. The impact of this underrecovery reduced
net income by $320,000 and $1.6 million in 1993 and 1992, respectively. (For
more information refer to the "Purchased Power" section filed on page 7 under
Item 1 of this report).
For 1993 fuel, purchased power, transmission and C&LM costs accounted
for approximately 69% of each dollar of electric revenue in 1993 averaging 5.3
cents per KWH in current year and 5.1 cents in both 1992 and 1991. Shown
below is a summary of these costs together with base rate components of
electric revenues.
Percent of Electric Revenue
Revenue components: 1993 1992 1991
Costs recovered in Fuel or
Conservation Charge 48.2 54.1 53.3
Power costs in base rates 20.9 15.7 14.9
Base rates and other 30.9 30.2 31.8
100.0 100.0 100.0
Other Operation and Maintenance
During 1993, other operation expense decreased slightly due in part to a
decrease in the provision for bad debts ($544,000) reflecting better payment
experience resulting from improving economic conditions. Maintenance costs
for 1993 remained virtually unchanged compared to 1992.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
Other operation and maintenance increased in 1992 due primarily to a
significant increase in the cost of insurance and benefits ($977,000) and an
increase in the provision for bad debts ($352,000).
Depreciation and Taxes
Depreciation expense increased in both years due to the higher level of
depreciable property, plant and equipment.
Federal and state income taxes increased in 1993 due to a greater level
of pretax income and, to a lesser extent, a 1% increase in the federal tax
rate to 35%. For 1992, federal and state income taxes decreased due to a
significant decline in pretax income. Local property and other taxes
increased in both periods. The increase in 1993 was due to higher tax rates,
offset, in part by lower assessments. The 1992 increase resulted from an
increase in both the tax rate and assessments in the City of Cambridge.
Other Income
The change in other income for 1993 was due primarily to a $60,000
reversal of a 1992 charge to other income deductions related to the Company's
interest in Yankee Atomic Power Company (Yankee Atomic). This reversal was
made as a result of a Federal Energy Regulatory Commission audit. In
addition, the 1993 increase in other income resulted from a higher investment
base related to non-utility operations ($84,000) and a decline in costs
related to new business development costs that are treated as other income
deductions.
In 1992, other income decreased due, in part, to a 7.6% decline in
equity earnings, the aforementioned charge to other income deductions related
to Yankee Atomic and the absence of interest income from the Company's
investment in Series B Debentures of Connecticut Yankee Atomic Power Company,
which were redeemed in the fourth quarter of 1991.
Interest Charges
Interest charges decreased slightly in 1993 due to a lower level of
short-term borrowings and a decrease in average short-term interest rates,
offset, in part, by a greater level of long-term interest costs resulting from
the issuance of Series G (8.04%, $10,000,000) and Series H (8.70%, $5,000,000)
in March 1992. Interest rates on bank borrowings averaged 3.3% for 1993
compared to 4% in 1992.
Interest charges decreased in 1992 due to a lower level of interest
income on overpayment of Seabrook costs, a lower level of short-term
borrowings and the repayment of a $10 million long-term note which matured in
early 1992 offset, in part, by the aforementioned financing.
New Accounting Standards
Effective January 1, 1993, the Company adopted the provisions of a new
accounting standard, Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions." For
further information, refer to Note 5(b) of the Notes to Financial Statements.
PAGE 15
CAMBRIDGE ELECTRIC LIGHT COMPANY
In 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" (SFAS 112). The Company is required to adopt this
statement effective January 1, 1994. SFAS 112 requires employers to recognize
the obligation to provide benefits to former or inactive employees after
employment but before retirement (postemployment). Those benefits include
salary continuation, supplemental employment benefits, severance benefits,
disability-related benefits and continuation of health care and life insurance
coverage if each of the following conditions are met: 1) the obligation is
attributable to employee services already rendered, 2) employees' rights to
those benefits accumulate or vest, 3) payment of the benefits is probable and
4) the cost of the benefits can be reasonably estimated. The Company believes
that the adoption of the provisions of SFAS 112 will not have a material
impact on its financial position or results of operations.
Item 8. Financial Statements and Supplementary Data
The Company's financial statements required by this item are filed
herewith on pages 16 through 35 of this report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PAGE 16
CAMBRIDGE ELECTRIC LIGHT COMPANY
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Cambridge Electric Light Company:
We have audited the accompanying balance sheets of CAMBRIDGE ELECTRIC
LIGHT COMPANY (a Massachusetts corporation and wholly-owned subsidiary of
Commonwealth Energy System) as of December 31, 1993 and 1992, and the related
statements of income, retained earnings and cash flows for each of the three
years in the period ended December 31, 1993. These financial statements and
schedules referred to below are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Cambridge Electric
Light Company as of December 31, 1993 and 1992, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting
principles.
As discussed in Note 5 to the financial statements, effective January 1,
1993, the Company changed its method of accounting for costs associated with
postretirement benefits other than pensions.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the index to
financial statements and schedules are presented for purposes of complying
with the Securities and Exchange Commission's rules and are not part of the
basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN & CO.
Arthur Andersen & Co.
Boston, Massachusetts,
February 17, 1994.
PAGE 17
CAMBRIDGE ELECTRIC LIGHT COMPANY
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
PART II.
FINANCIAL STATEMENTS
Balance Sheets at December 31, 1993 and 1992
Statements of Income for the Years Ended December 31, 1993, 1992 and
1991
Statements of Retained Earnings for the Years Ended December 31, 1993,
1992 and 1991
Statements of Cash Flows for the Years Ended December 31, 1993, 1992 and
1991
Notes to Financial Statements
PART IV.
SCHEDULES
III Investments in, Equity in Earnings of, and Dividends Received From
Related Parties for the Years Ended December 31, 1993, 1992 and
1991
V Property, Plant and Equipment for the Years Ended December 31,
1993, 1992 and 1991
VI Accumulated Depreciation of Property, Plant and Equipment for the
Years Ended December 31, 1993, 1992 and 1991
VIII Valuation and Qualifying Accounts for the Years Ended December 31,
1993, 1992 and 1991
IX Short-Term Borrowings for the Years Ended December 31, 1993, 1992
and 1991
SCHEDULES OMITTED
All other schedules are not submitted because they are not applicable or
not required or because the required information is included in the
financial statements or notes thereto.
Financial statements of 50% or less owned companies accounted for by the
equity method have been omitted because they do not, considered
individually, constitute a significant subsidiary.
PAGE 18
CAMBRIDGE ELECTRIC LIGHT COMPANY
BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
ASSETS
1993 1992
(Dollars in Thousands)
PROPERTY, PLANT AND EQUIPMENT, at original cost $145 324 $142 790
Less - Accumulated depreciation 52 382 49 996
92 942 92 794
Add - Construction work in progress 1 013 96
93 955 92 890
INVESTMENTS
Equity in nuclear electric power companies 9 059 9 089
Other 5 5
9 064 9 094
CURRENT ASSETS
Cash 1 624 2
Accounts receivable -
Affiliated companies 1 036 1 253
Customers, less reserves of $491,000 in 1993
and $453,000 in 1992 10 178 8 764
Unbilled revenues 3 835 2 019
Inventories, at average cost -
Materials and supplies 738 742
Electric production fuel oil 575 811
Prepaid taxes -
Property 1 600 1 397
Income 423 1 016
Other 976 870
20 985 16 874
DEFERRED CHARGES (Notes 1 and 4)
Yankee Atomic purchased power contract 6 900 8 341
Other 3 084 852
9 984 9 193
$133 988 $128 051
PAGE 19
CAMBRIDGE ELECTRIC LIGHT COMPANY
BALANCE SHEETS
DECEMBER 31, 1993 AND 1992
CAPITALIZATION AND LIABILITIES
1993 1992
(Dollars in Thousands)
CAPITALIZATION
Common Equity -
Common stock, $25 par value -
Authorized and outstanding -
346,600 shares in 1993 and 1992,
wholly-owned by Commonwealth
Energy System (Parent) $ 8 665 $ 8 665
Amounts paid in excess of par value 27 953 27 953
Retained earnings (Note 7) 7 056 6 156
43 674 42 774
Long-term debt, including premiums, less
current sinking fund requirements and
maturing debt (Note 3) 42 189 42 351
85 863 85 125
CURRENT LIABILITIES
Interim Financing (Note 3) -
Notes payable to banks 2 000 1 500
Advances from affiliates 1 305 -
3 305 1 500
Other Current Liabilities -
Current sinking fund requirements 160 98
Accounts payable -
Affiliated companies 4 972 4 817
Other 5 187 4 687
Accrued taxes -
Local property and other 1 611 1 398
Income 97 -
Accrued interest 1 003 987
Other 2 776 1 281
15 806 13 268
19 111 14 768
DEFERRED CREDITS
Accumulated deferred income taxes 12 189 10 749
Unamortized investment tax credits 2 130 2 225
Yankee Atomic purchased power contract 6 900 8 341
Other 7 795 6 843
29 014 28 158
COMMITMENTS AND CONTINGENCIES (Note 4)
$133 988 $128 051
The accompanying notes are an integral part of these financial statements.
PAGE 20
CAMBRIDGE ELECTRIC LIGHT COMPANY
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
(Dollars in Thousands)
ELECTRIC OPERATING REVENUES $126 073 $112 948 $118 277
OPERATING EXPENSES
Fuel used in production 2 376 2 589 3 811
Electricity purchased for resale 74 102 64 131 60 318
Transmission 7 719 7 922 8 435
Other operation 20 301 20 997 18 753
Maintenance 2 996 2 910 3 162
Depreciation 3 795 3 601 3 490
Conservation and load management 2 905 4 246 8 135
Taxes -
Income (Note 2) 1 452 (691) 1 632
Local property 2 683 2 298 1 859
Payroll and other 860 763 775
119 189 108 766 110 370
OPERATING INCOME 6 884 4 182 7 907
OTHER INCOME (EXPENSE),net 251 (50) 625
INCOME BEFORE INTEREST CHARGES 7 135 4 132 8 532
INTEREST CHARGES
Long-term debt 3 797 3 549 3 427
Other interest charges 246 540 1 137
Allowance for borrowed funds used
during construction (9) (21) (71)
4 034 4 068 4 493
NET INCOME $ 3 101 $ 64 $ 4 039
The accompanying notes are an integral part of these financial statements.
PAGE 21
CAMBRIDGE ELECTRIC LIGHT COMPANY
STATEMENTS OF RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
(Dollars in Thousands)
Balance at beginning of year $ 6 156 $ 6 577 $ 6 604
Add (Deduct)
Net income 3 101 64 4 039
Cash dividends on common stock (2 201) (485) (4 066)
Balance at end of year $ 7 056 $ 6 156 $ 6 577
The accompanying notes are an integral part of these financial statements.
PAGE 22
CAMBRIDGE ELECTRIC LIGHT COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
1993 1992 1991
(Dollars in Thousands)
OPERATING ACTIVITIES
Net income $ 3 101 $ 64 $ 4 039
Effects of non-cash items -
Depreciation and amortization 3 842 3 716 4 309
Deferred income taxes 1 081 1 170 (487)
Investment tax credits (95) (96) (96)
Earnings from corporate joint ventures (1 069) (1 321) (1 430)
Dividends from corporate joint ventures 1 099 1 335 1 278
Change in working capital, exclusive
of cash and interim financing -
Accounts receivable and unbilled
revenues (3 013) 2 258 5 179
Prepaid (accrued) taxes 700 (1 906) 293
Accounts payable and other 2 362 839 (3 142)
All other operating items (1 549) (348) 1 818
Net cash provided by operating activities 6 459 5 711 11 761
INVESTING ACTIVITIES
Additions to property, plant and
equipment (exclusive of AFUDC) (4 270) (3 686) (4 658)
Allowance for borrowed funds used
during construction (9) (21) (71)
Connecticut Yankee debenture redemption - - 684
Net cash used for investing activities (4 279) (3 707) (4 045)
FINANCING ACTIVITIES
Sale of common stock to Parent - 5 250 -
Payment of dividends (2 201) (485) (4 066)
Proceeds from (payment of)
short-term borrowings 500 (10 200) (2 550)
Proceeds from (payment of)
affiliate borrowings 1 305 (1 540) (805)
Long-term debt issue - 15 000 -
Retirement of long-term debt through
sinking funds (162) (162) (162)
Long-term debt issue refunded - (10 000) -
Net cash provided used for
financing activities (558) (2 137) (7 583)
Change in cash 1 622 (133) 133
Cash at beginning of period 2 135 2
Cash at end of period $ 1 624 $ 2 $ 135
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid (net of capitalized
amounts) $ 3 863 $ 3 481 $ 4 254
Income taxes paid (refunded) $ (44) $ 229 $ 728
The accompanying notes are an integral part of these financial statements.
PAGE 23
CAMBRIDGE ELECTRIC LIGHT COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) Significant Accounting Policies
(a) General and Regulatory
Cambridge Electric Light Company (the Company) is a wholly-owned
subsidiary of Commonwealth Energy System. The parent company is referred to
in this report as the "System" and, together with its subsidiaries, is
collectively referred to as "the system." The Company is regulated as to
rates, accounting and other matters by various authorities including the
Federal Energy Regulatory Commission (FERC) and the Massachusetts Department
of Public Utilities (DPU). The System is an exempt holding company under
the provisions of the Public Utility Holding Company Act of 1935 and, in
addition to its investment in the Company, has interests in other utility
companies and several nonregulated companies.
The Company has established various regulatory assets in cases where the
DPU has permitted, or is expected to permit, recovery of specific costs over
time. At December 31, 1993, principal regulatory assets, included in
deferred charges, were $6.9 million for unrecovered plant and
decommissioning costs for the Yankee Atomic nuclear plant and $1.1 million
for postretirement benefits. The more significant regulatory liabilities,
reflected in deferred credits, include $3.9 million related to income taxes
and $6.9 million related to the Yankee Atomic nuclear plant.
(b) Reclassifications
Certain prior year amounts are reclassified from time to time to conform
with the presentation used in the current year's financial statements.
(c) Transactions with Affiliates
Transactions between the Company and other system companies include
purchases and sales of electricity, including purchases of electricity
through Canal Electric Company (Canal). Other Canal transactions include
costs relating to the abandonment of Seabrook 2 for the three years ending
in 1993 and the recovery of a portion of Seabrook 1 pre-commercial operation
financing costs in 1991. Transactions with other system companies include
purchases of gas and sales of steam. In addition, payments for management,
accounting, data processing and other services are made to affiliate
COM/Energy Services Company. Transactions with other system companies are
subject to review by the DPU.
The Company's operating expenses include the following major
intercompany transactions for the periods indicated:
Purchased Power
and Transmission
Period Ended Purchased Power Purchased Power From Canal
December 31, Canal Units Seabrook 1 As Agent
(Dollars in Thousands)
1993 $12 637 $ 9 082 $10 896
1992 13 596 9 335 9 600
1991 12 209 12 681 9 915
PAGE 24
CAMBRIDGE ELECTRIC LIGHT COMPANY
The Company also purchased gas from affiliate Commonwealth Gas Company
totaling $1,485,000 in 1993, $2,253,000 in 1992 and $4,708,000 in 1991.
(d) Equity Method of Accounting
The Company uses the equity method of accounting for its investments in
four nuclear electric power companies due, in part, to its ability to
exercise significant influence over operating and financial policies of
these entities. Under this method, it records as income the proportionate
share of the net earnings of the nuclear power companies with a correspond-
ing increase in the carrying value of the investment. The investment is
reduced as cash dividends are received.
(e) Operating Revenues
Customers are billed for their use of electricity on a cycle basis
throughout the month. To reflect revenues in the proper period, the
estimated amount of unbilled sales revenue is recorded each month.
The Company is generally permitted to bill customers currently for fuel
used in electric production, transmission and purchased power costs and
conservation and load management costs through adjustment clauses. The
Company collects capacity-related costs associated with certain long-term
power arrangements through base rates. Amounts recoverable under the
adjustment clauses are subject to review and adjustment by the DPU. The
amount of such fuel and energy costs incurred but not yet reflected in
customers' bills, which totaled $1,850,000 in 1993 and $514,000 in 1992, is
recorded as unbilled revenues.
(f) Depreciation
Depreciation is provided using the straight-line method at rates
intended to amortize the original cost and the estimated cost of removal
less salvage of properties over their estimated economic lives. The average
composite depreciation rate was 2.66% in 1993, 2.59% in 1992 and 2.58% in
1991.
(g) Maintenance
Expenditures for repairs of property and replacement and renewal of
items determined to be less than units of property are charged to
maintenance expense. Additions, replacements and renewals of property
considered to be units of property are charged to the appropriate plant
accounts. Upon retirement, accumulated depreciation is charged with the
original cost of property units and the cost of removal net of salvage.
(h) Allowance for Funds Used During Construction
Under applicable rate-making practices, the Company is permitted to
include an allowance for funds used during construction (AFUDC) as an
element of its depreciable property costs. This allowance is based on the
amount of construction work in progress that is not included in the rate
base on which the Company earns a return. An amount equal to the AFUDC
PAGE 25
CAMBRIDGE ELECTRIC LIGHT COMPANY
capitalized in the current period is reflected in the accompanying
Statements of Income.
While AFUDC does not provide funds currently, these amounts are
recoverable in revenues over the service life of the constructed property.
The amount of AFUDC recorded was at a weighted average rate of 3.5% in 1993,
4.5% in 1992 and 6.8% in 1991.
(2) Income Taxes
For financial reporting purposes, the Company provides federal and state
income taxes on a separate return basis. However, for federal income tax
purposes, the Company's taxable income and deductions are included in the
consolidated income tax return of the System and it makes tax payments or
receives refunds on the basis of its tax attributes in the tax return in
accordance with applicable tax regulations.
The following is a summary of the provisions for income taxes for the
years ended December 31, 1993, 1992 and 1991.
1993 1992 1991
(Dollars in Thousands)
Federal:
Current $ 327 $(1 636) $1 808
Deferred 973 1 252 (485)
Investment tax credits (96) (96) (96)
1 204 (480) 1 227
State:
Current 140 (129) 407
Deferred 195 240 (2)
335 111 405
1 539 (369) 1 632
Amortization of regulatory liability
relating to deferred income taxes (87) (322) -
$1 452 $ (691) $1 632
Effective January 1, 1992, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" (SFAS No. 109). SFAS No. 109 requires recognition of deferred tax
liabilities and assets for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Under
this method, deferred tax liabilities and assets are determined based on the
difference between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect in the year in which the
differences are expected to reverse.
PAGE 26
CAMBRIDGE ELECTRIC LIGHT COMPANY
Accumulated deferred income taxes consisted of the following in 1993 and
1992:
1993 1992
(Dollars in Thousands)
Liabilities
Property-related $14 820 $13 580
Postretirement benefits plan 358 74
All other 1 076 905
16 254 14 559
Assets
Investment tax credit 1 375 1 381
Pension plan 704 609
Regulatory liability 1 256 1 450
All other 959 745
4 294 4 185
Accumulated deferred income taxes, net $11 960 $10 374
The net year-end deferred income tax liability above is net of a current
deferred tax asset of $229,000 in 1993 and $375,000 in 1992 which was
included in prepaid income taxes in the accompanying Balance Sheets.
The following table, detailing the significant timing differences for
1991 which resulted in deferred income taxes, is required to be disclosed
pursuant to accounting standards for income taxes in effect prior to adoption
of SFAS No. 109:
1991
(Dollars in Thousands)
Accelerated depreciation $ 933
Seabrook power contract settlement (597)
Capitalized interest during construction (25)
Contributions in aid of construction (58)
Pension costs and deferred compensation (84)
Transmission costs (193)
Conservation and load management (219)
Other (244)
Deferred income tax provision $ (487)
PAGE 27
CAMBRIDGE ELECTRIC LIGHT COMPANY
The total income tax provision set forth previously represents 32% in
1993, 110% in 1992 and 29% in 1991 of income before such taxes. The
following table reconciles the statutory federal income tax rate to these
percentages:
1993 1992 1991
(000's)
Federal statutory rate 35% 34% $(213) 34%
Increase (Decrease) from statutory rate:
Dividend received deduction (6) 50 (315) (6)
Tax versus book depreciation 1 (5) 35 1
State tax net of federal
tax benefit 5 (14) 86 5
Amortization of investment
tax credits (2) 15 (95) (1)
Amortization of excess
deferred reserves (2) 29 (180) (4)
Other 1 1 (9) -
Effective federal tax rate 32% 110% $(691) 29%
As a result of the Revenue Reconciliation Act of 1993, the Company's
federal income tax rate increased to 35% effective January 1, 1993.
(3) Long-Term Debt and Interim Financing
(a) Long-Term Debt
Long-term debt outstanding exclusive of maturing debt issues, current
sinking fund requirements and related premiums is as follows:
Original Balance December 31,
Issue 1993 1992
(Dollars in Thousands)
7-Year Notes -
9.97%, due 1996 $20 000 $20 000 $20 000
7-Year Notes -
8.04%, due 1999 10 000 10 000 10 000
15-Year Notes -
8.70%, due 2007 5 000 5 000 5 000
30-Year Notes -
Series C, 6 1/4%, due 1997 6 000 4 380 4 440
Series D, 7 3/4%, due 2002 5 000 2 800 2 900
$42 180 $42 340
The balance of long-term debt at December 31, 1992 was exclusive of
$62,000 principal amounts purchased by the Company and deposited with the
Trustee in anticipation of future sinking fund requirements. The Company
may continue to purchase its outstanding notes in advance of sinking fund
requirements under favorable conditions.
PAGE 28
CAMBRIDGE ELECTRIC LIGHT COMPANY
Under terms of its Indenture of Trust, the Company is required to make
periodic sinking fund payments for retirement of outstanding long-term debt.
These payments and balances of maturing debt issues for the five years
subsequent to December 31, 1993 are as follows:
Sinking Fund Maturing
Year Payments Debt Issues Total
(Dollars in Thousands)
1994 $160 $ - $ 160
1995 160 - 160
1996 160 20 000 20 160
1997 100 4 260 4 360
1998 100 - 100
(b) Notes Payable to Banks
The Company and other system companies maintain both committed and
uncommitted lines of credit for the short-term financing of their
construction programs and other corporate purposes. As of December 31,
1993, system companies had $115 million of committed lines of credit that
will expire at varying intervals in 1994. These lines are normally renewed
upon expiration and require annual fees of up to .1875% of the individual
line. At December 31, 1993, the uncommitted lines of credit totaled $70
million. Interest rates on the outstanding borrowings generally are at an
adjusted money market rate. The Company's notes payable to banks totaled
$2,000,000 and $1,500,000 at December 31, 1993 and 1992, respectively.
(c) Advances from Affiliates
The Company is a member of the COM/Energy Money Pool (the Pool), an
arrangement among the subsidiaries of the System, whereby short-term cash
surpluses are used to help meet the short-term borrowing needs of the
utility subsidiaries. In general, lenders to the Pool receive a higher rate
of return than they otherwise would on such investments, while borrowers pay
a lower interest rate than that available from banks. The Company had
borrowings from the Pool totaling $1,305,000 at December 31, 1993.
(d) Disclosures about Fair Value of Financial Instruments
As required by Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," the fair value of
certain financial instruments included in the accompanying Balance Sheets as
of December 31, 1993 and 1992 are as follows:
1993 1992
(Dollars in Thousands)
Carrying Fair Carrying Fair
Value Value Value Value
Long-Term Debt $ 42 349 $ 45 782 $ 42 449 $ 45 394
PAGE 29
CAMBRIDGE ELECTRIC LIGHT COMPANY
The carrying amount of cash and advances from affiliates approximates
the fair value because of the short maturity of these financial instruments.
The estimated fair value of long-term debt is based upon quoted market
prices of the same or similar issues or on the current rates offered for
debt with the same remaining maturity. The fair values shown above do not
purport to represent the amounts at which those obligations would be
settled.
(4) Commitments and Contingencies
(a) Financing and Construction Programs
The Company is engaged in a continuous construction program presently
estimated at $33.1 million for the five-year period 1994 through 1998. Of
that amount, $10.3 million is estimated for 1994. The program is subject to
periodic review and revision because of factors such as changes in business
conditions, rates of customer growth, effects of inflation, maintenance of
reliable and safe service, equipment delivery schedules, licensing delays,
availability and cost of capital and environmental factors. The Company
expects to finance these expenditures on an interim basis with internally
generated funds and short-term borrowings which are ultimately expected to
be repaid with the proceeds from sales of long-term debt and equity
securities.
(b) Power Contracts and Capacity Acquisition and Disposition Agreement
The Company has entered into Power Contracts with Canal for a portion of
the capacity from Canal Units 1 and 2. The cost to the Company in 1993 for
purchases under these contracts was $12,637,000.
In addition, Canal seeks to secure bulk electric power on a single
system basis to provide cost savings for the customers of the Company and
Commonwealth Electric under terms of a Capacity Acquisition and Disposition
Agreement (CADA) which has been accepted for filing as an amendment to
Canal's rate schedule by the FERC. The CADA allows Canal to act as agent
for the Company and Commonwealth Electric in the procurement of additional
capacity for one or both companies, or, to sell a portion of each company's
entitlement in capacity and/or energy produced by Canal Unit 2. Such
"Commitments" are in effect for Seabrook 1, Phases I and II of Hydro-Quebec
and for power acquired from Northeast Utilities (NU). Exchange agreements
are in place with several of these utilities whereby, in certain circum-
stances, it is possible to exchange capacity so that the mix of power
improves the pricing for dispatch for both the seller and the purchaser.
Power contracts are in place whereby Canal bills or credits the Company and
Commonwealth Electric for the costs or revenues received associated with
these facilities. The Company and Commonwealth Electric, in turn, have
billed or are billing these net charges (net of revenues from sales) to
their customers through rates which are subject to DPU approval.
Currently, Canal's principal activities under the CADA are its ownership
interest in the Seabrook nuclear power plant and its Power Sales Agreements
with NU. Canal contracted to purchase 50 MW, on average, from NU annually
from November 1989 through 1994 to fulfill the system's NEPOOL capacity
PAGE 30
CAMBRIDGE ELECTRIC LIGHT COMPANY
obligation and to have sufficient energy supply to meet customer needs. In
1993, the costs to the Company for power purchases from Seabrook 1 and NU
were $9,082,000 and $9,380,000, respectively.
The Company has ownership interests in four nuclear generating
facilities in New England and is obligated to pay its proportionate share of
the capacity and energy costs associated with these units, which include
depreciation, operations and maintenance, a return on invested capital and
the estimated cost of decommissioning the nuclear plants at the end of their
estimated service lives. Pertinent information with respect to life-of-the-
unit contracts for power from the operating nuclear units is as follows:
Connecticut Maine Vermont
Yankee Yankee Yankee
Location Haddam Neck, Wiscasset, Vernon,
Connecticut Maine Vermont
Year of initial operation 1968 1972 1972
Contract expiration date 1998 2008 2012
Equity ownership 4.50% 4.00% 2.50%
Plant entitlement 4.50% 3.59% 2.25%
Plant capability (MW) 560.0 870.0 496.0
Company entitlement (MW) 25.2 31.2 11.2
1991 Actual cost ($000) $ 9 692 $5 900 $3 383
1992 Actual cost ($000) 9 508 6 671 3 970
1993 Actual cost ($000) 10 016 7 050 4 076
1994 Estimated cost ($000) 10 005 6 755 3 755
The Company pays its share of decommissioning expense to each of the
operators of the nuclear facilities as a cost of electricity purchased for
resale.
The Company has also contracted to purchase power and transmission
capacity from various other generating and transmission facilities as
follows:
Estimated
1991 1992 1993 1994
MW Cost MW Cost MW Cost MW Cost
(Dollars in Thousands)
Purchased Power -
Nuclear 6.5 $1 670 8.7 $1 986 11.7 $3 789 21.0 $4 880
Hydro 4.5 1 162 6.0 1 377 8.2 2 639 14.6 3 390
Waste-to-energy
and other 30.9 5 075 35.3 4 608 9.3 2 952 18.9 4 394
Transmission -
(Hydro-Quebec) - 1 586 - 1 222 - 1 232 - 1 292
Costs under these and other contracts are included in electricity
purchased for resale and fuel in the accompanying Statements of Income and
are recoverable in revenues through either the Fuel Charge or in base rates.
PAGE 31
CAMBRIDGE ELECTRIC LIGHT COMPANY
In addition, the Company incurred costs for purchases from NEPOOL for
$11,039,000, $11,215,000 and $7,546,000 in 1993, 1992 and 1991, respec-
tively.
The system's 3.52% interest in the Seabrook nuclear power plant is owned
by Canal, a wholesale electric generating subsidiary, to provide for a
portion of the capacity and energy needs of the Company and Commonwealth
Electric. Canal is recovering 100% of its Seabrook 1 investment through a
power contract with the Company and Commonwealth Electric pursuant to FERC
approval. The Company received DPU approval to recover Seabrook 1 costs
through base rates effective with the June 1, 1993 rate order.
(c) Guarantee Agreement
In connection with its investment in Maine Yankee Atomic Power Company
(Maine Yankee), the Company has guaranteed its pro-rata portion of that
company's nuclear fuel financing. At December 31, 1993, the Company's
portion amounted to $480,000.
(d) Yankee Atomic
On February 26, 1992, the Board of Directors of Yankee Atomic Electric
Company agreed to permanently discontinue power operation of its plant and,
in time, decommission the facility. The plant provided less than 1% of the
Company's capacity. The Company's 2% investment in Yankee Atomic was
approximately $475,000 at December 31, 1993. Presently, purchased power
costs, which include a provision for ultimate decommissioning of the unit,
are billed to the Company and collected from customers.
The Company has estimated their unrecovered share of all costs
associated with the shutdown of the facility, recovery of its plant
investment and decommissioning and closing the plant to be approximately
$6.9 million. This amount is reflected in the accompanying Balance Sheets
as a liability and a corresponding regulatory asset at December 31, 1993.
(e) Price-Anderson Act
The Price-Anderson Act (the Act) is a federal statute that includes
among its provisions a requirement that licensees of nuclear electric
generating units maintain financial protection to cover public liability
claims resulting from a nuclear incident or precautionary evacuation. In
1988, Congress enacted a 15 year extension of the Act and increased the
available insurance and the maximum liability. The higher liability is
provided by existing private insurance and retrospective assessments for
costs in excess of that covered by insurance, up to $66.15 million for each
nuclear reactor which is licensed to operate with a maximum assessment of
$10 million per incident within one calendar year. Based on the Company's
equity ownership interest in four nuclear generating facilities, its
retrospective premium could be as high as $1.6 million yearly or a
cumulative total of $10.3 million, exclusive of the effect of inflation
indexing (at five-year intervals) and a 5% surcharge ($3.3 million) in the
event that total public liability claims from a nuclear incident exceed the
funds available to pay such claims.
PAGE 32
CAMBRIDGE ELECTRIC LIGHT COMPANY
(f) Environmental Matters
The Company is subject to laws and regulations administered by federal,
state and local authorities relating to the quality of the environment.
These laws and regulations affect, among other things, the siting and
operation of electric generating and transmission facilities and can require
the installation of expensive air and water pollution control equipment.
These regulations have had an impact upon the Company's operations in the
past and will continue to have an impact upon future operations, capital
costs and construction schedules of major facilities.
(5) Employee Benefit Plans
(a) Pension
The Company has a noncontributory pension plan covering substantially
all regular employees who have attained the age of 21 and have completed a
year of service. Pension benefits are based on an employee's years of
service and compensation. The Company makes monthly contributions to the
plan consistent with the funding requirements of the Employee Retirement
Income Security Act of 1974.
Components of pension expense were as follows:
1993 1992 1991
(Dollars in Thousands)
Service cost $ 459 $ 471 $ 443
Interest cost 1 646 1 544 1 417
Return on plan assets (3 175) (2 156) (4 121)
Net amortization and deferral 1 781 849 3 051
Total pension expense 711 708 790
Transfers from affiliated companies, net 101 321 299
Less: Amounts capitalized and deferred 93 111 114
Net pension expense $ 719 $ 918 $ 975
The following economic assumptions were used to measure year-end obliga-
tions and the estimated pension expense for the subsequent year:
1993 1992 1991
Discount rate 7.25% 8.50% 8.50%
Assumed rate of return 8.50 8.50 8.50
Rate of increase in future compensation 4.50 5.50 5.50
Pension expense reflects the use of the projected unit credit method
which is also the actuarial cost method used in determining future funding
of the plan. The Company, in accordance with current rate-making, is
deferring the difference between pension contribution, which is allowed
currently in base rates, and pension expense, recognized pursuant to
Statement of Financial Accounting Standards No. 87, "Employers' Accounting
for Pensions." The funded status of the Company's pension plan (using a
measurement date of December 31) is as follows:
PAGE 33
CAMBRIDGE ELECTRIC LIGHT COMPANY
1993 1992
(Dollars in Thousands)
Accumulated benefit obligation:
Vested $(17 172) $(14 212)
Nonvested (2 267) (591)
$(19 439) $(14 803)
Projected benefit obligation $(23 109) $(18 836)
Plan assets at fair market value 23 236 21 002
Projected benefit obligation less
than plan assets 127 2 166
Unamortized transition obligation 1 099 1 236
Unrecognized prior service cost 1 091 876
Unrecognized gain (3 600) (5 322)
Accrued pension cost $ (1 283) $ (1 044)
Plan assets consist primarily of fixed income and equity securities.
Fluctuations in the fair market value of plan assets will affect pension
expense in future years. The increase in the accumulated benefit obligation
and the projected benefit obligation from December 31, 1992 to December 31,
1993 was primarily due to a reduction in the discount rate in light of
current interest rates.
(b) Other Postretirement Benefits
Through December 31, 1992, the Company provided postretirement health
care and life insurance benefits to eligible retired employees. Employees
became eligible for these benefits if their age plus years of service at
retirement equaled 75 or more provided, however, that such service was
performed for a subsidiary of the System. As of January 1, 1993, the
Company eliminated postretirement health care benefits for those nonbargain-
ing employees who were less than 40 years of age or had less than 12 years
of service at that date. Under certain circumstances, eligible employees
are now required to make contributions for postretirement benefits. Certain
bargaining employees are also participating under these new eligibility
requirements.
Effective January 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" (SFAS No. 106). This new
standard requires the accrual of the expected cost of such benefits during
the employees' years of service and the recognition of an actuarially
determined postretirement benefit obligation earned by existing retirees.
The assumptions and calculations involved in determining the accrual and the
accumulated postretirement benefit obligation (APBO) closely parallel
pension accounting requirements. The cumulative effect of implementation of
SFAS No. 106 as of January 1, 1993 was approximately $10 million which is
being amortized over 20 years. Prior to 1993, the cost of postretirement
benefits was recognized as the benefits were paid. The cost of retiree
medical care and life insurance benefits under the traditional pay-as-you-go
method totaled $428,000 in 1992 and $434,000 in 1991.
In 1993, the Company began making contributions to various voluntary
employee beneficiary association (VEBA) trusts that were established
PAGE 34
CAMBRIDGE ELECTRIC LIGHT COMPANY
pursuant to section 501(c)9 of the Internal Revenue Code (the Code). The
Company also made contributions to a sub-account of its pension plan
pursuant to section 401(h) of the Code to satisfy a portion of its
postretirement benefit obligation. The Company contributed approximately
$1,100,000 to these trusts during 1993.
The net periodic postretirement benefit cost for the year ended December
31, 1993 included the following components:
1993
(Dollars in Thousands)
Service cost $ 201
Interest cost 839
Return on plan assets (74)
Amortization of transition obligation
over 20 years 498
Net amortization and deferral (7)
Total postretirement benefit cost 1 457
Less: Amounts capitalized and deferred 734
Net postretirement benefit cost $ 723
The funded status of the Company's postretirement benefit plan using a
measurement date of December 31, 1993 is as follows:
1993
(Dollars in Thousands)
Accumulated postretirement benefit obligation:
Retirees $ (5 837)
Active participants (4 522)
(10 359)
Plan assets at fair market value 980
Projected postretirement benefit obligation
greater than plan assets (9 379)
Unamortized transition obligation 9 453
Unrecognized gain (74)
$ -
In determining its estimated APBO and the funded status of the plan, the
Company assumed a discount rate of 7.25%, an expected long-term rate of
return on plan assets of 8.5%, and a medical care cost trend rate of 9%,
which gradually decreases to 5% in the year 2007 and remains at that level
thereafter. The estimate also reflects a trend rate of 14.9% for
reimbursement of Medicare Part B premiums which decreases to 5% by 2007 and
a dental care trend rate of 5% in all years. A one percent change in the
medical trend rate would have a $160,000 impact on the Company's annual
expense (interest component - $111,000; service cost - $49,000) and would
change the accumulated benefit obligation by approximately $1.4 million.
Plan assets consist primarily of fixed income and equity securities.
Fluctuations in the fair market value of plan assets will affect postretire-
ment benefit expense in future years.
PAGE 35
CAMBRIDGE ELECTRIC LIGHT COMPANY
The DPU's policy on postretirement benefits is to allow in rates the
maximum tax deductible contributions made to trusts that have been estab-
lished specifically to pay postretirement benefits. Effective with its June
1, 1993 rate order from the DPU, the Company was allowed to recover its SFAS
No. 106 expense in base rates over a four-year phase-in period with carrying
costs on the deferred balance. Further, based on recent DPU action and
discussions with regulators, the Company believes that it is appropriate to
record the difference between the amount included in rates and SFAS No. 106
costs as a regulatory asset. At December 31, 1993, this deferral amounted
to approximately $1.1 million.
(c) Savings Plan
The Company has an Employees Savings Plan that provides for Company
contributions equal to contributions by eligible employees of up to four
percent of each employee's compensation rate. Effective January 1, 1993,
the rate was increased to five percent for those employees no longer
eligible for postretirement benefits other than pensions. The Company's
contribution was $321,000 in 1993, $327,000 in 1992 and $316,000 in 1991.
(6) Lease Obligations
The Company leases equipment and office space under arrangements that
are classified as operating leases. These lease agreements are for terms of
one year or longer. Leases currently in effect contain no provisions which
prohibit the Company from entering into future lease agreements or
obligations.
Future minimum lease payments, by period and in the aggregate, of non-
cancelable operating leases consisted of the following at December 31, 1993:
Operating Leases
(Dollars in Thousands)
1994 $1 577
1995 1 539
1996 1 256
1997 926
1998 892
Beyond 1998 2 675
Total future minimum lease payments $8 865
Total rent expense for all operating leases, except those with terms of
a month or less, amounted to $1,577,000 in 1993, $1,688,000 in 1992 and
$1,756,000 in 1991. There were no contingent rentals and no sublease
rentals for the years 1993, 1992 and 1991.
(7) Dividend Restriction
At December 31, 1993, approximately $5,722,000 of retained earnings was
restricted against the payment of cash dividends by terms of the Indenture
of Trust securing long-term debt. As of the same date, retained earnings
also included approximately $4,062,000 representing the Company's equity in
undistributed earnings of the nuclear companies.
PAGE 36
CAMBRIDGE ELECTRIC LIGHT COMPANY
PART V.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Index to Financial Statements
Financial statements and notes thereto of the Company together with the
Report of Independent Public Accountants, are filed under Item 8 of this
report and listed on the Index to Financial Statements and Schedules
(page 17).
(a) 2. Index to Financial Statement Schedules
Filed herewith at page(s) indicated -
Schedule III - Investments in, Equity in Earnings of, and Dividends
Received From Related Parties - Years Ended December 31, 1993, 1992 and
1991 (pages 45-47).
Schedule V - Property, Plant and Equipment - Years Ended December 31,
1993, 1992 and 1991 (pages 48-50).
Schedule VI - Accumulated Depreciation of Property, Plant and
Equipment - Years Ended December 31, 1993, 1992 and 1991 (page 51).
Schedule VIII - Valuation and Qualifying Accounts - Years Ended December
31, 1993, 1992 and 1991 (page 52).
Schedule IX - Short-Term Borrowings - Years Ended December 31, 1993,
1992 and 1991 (page 53).
(a) 3. Exhibits:
Notes to Exhibits -
a. Unless otherwise designated, the exhibits listed below are incorporated
by reference to the appropriate exhibit numbers and the Securities and
Exchange Commission file numbers indicated in parentheses.
b. If applicable, as designated by an asterisk, certain documents
previously filed by the Company have been disposed of by the Commission
pursuant to its Records Control Schedule and are hereby being refiled by
the Company.
c. The following is a glossary of Commonwealth Energy System and subsidiary
companies' acronyms that are used throughout the following Exhibit
Index:
CES.....................Commonwealth Energy System
CE......................Commonwealth Electric Company
CEL.....................Cambridge Electric Light Company
CEC.....................Canal Electric Company
CG......................Commonwealth Gas Company
NBGEL...................New Bedford Gas and Edison Light Company
PAGE 37
CAMBRIDGE ELECTRIC LIGHT COMPANY
Exhibit Index
Exhibit 3. Articles of incorporation and by-laws.
3.1 Articles of incorporation of CEL (Exhibit 1 to the CEL Form 10-K for
1990, File No.2-7909).
3.2 By-laws of CEL, as amended (Exhibit 2 to the CEL Form 10-K for 1990,
File No.2-7909).
Exhibit 4. Instruments defining the rights of security holders; including
indentures
Indenture of Trust or Supplemental Indenture of Trust.
4.1.1 Original Indenture on Form S-1 (April 1949) (Exhibit 7(a), File
No. 2-7909).
4.1.2 First Supplemental on Form S-9 (January 1958) (Exhibit 2(b)2, File
No. 2-13783).
4.1.3 Second Supplemental on Form 8-K (February 1962) (Exhibit A, File
No. 2-7909).
4.1.4 Third Supplemental on Form 10-K (1984) (Exhibit 1, File No. 2-
7909).
4.1.5 Fourth Supplemental on Form 10-K (1984) (Exhibit 2, File No. 2-
7909).
4.1.6 Fifth Supplemental on Form 10-K (1983) (Exhibit 1, File No. 2-
7909).
4.1.7 Sixth Supplemental on Form 10-Q (June 1989) (Exhibit 1, File No.
2-7909).
4.1.8 Seventh Supplemental on Form 10-Q (June 1992) (Exhibit 1, File No.
2-7909).
Exhibit 10. Material Contracts.
10.1 Power Contracts.
10.1.1 Power Contract between CEC and CEL dated December 1, 1965 (Exhibit
13(a)(1) to the CEC Form S-1, File No. 2-30057).
10.1.2 Contract between CEC and NBGEL and CEL, affiliated companies, for
the sale for specified amounts of electricity from CEC Unit 2 dated
January 12, 1976 (Exhibit 7 to the CES Form 10-K for 1985, File No.
1-7316).
10.1.3 Power Contract, as amended to February 28, 1990, superseding the
Power Contract dated September 1, 1986 and amendment dated June 1,
1988, between CEC (seller) and CE and CEL (purchasers) for seller's
entire share of the Net Unit Capability of Seabrook 1 and related
energy produced and other provisions (Exhibit 1 to the CEC Form 10-
Q (March 1990), File No. 2-30057).
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CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.4 Termination Supplement between CEC, CE and CEL RE: Seabrook Unit 2
dated December 8, 1986 (Exhibit 3 to the CEC Form 10-K for 1986,
File No. 2-30057).
10.1.5 Agreement for Joint-Ownership, Construction and Operation of the
New Hampshire Nuclear Units (Seabrook) between CE, Public Service
Company of New Hampshire (PSNH) and others dated May 1, 1973 and
filed by CE as Exhibit 13(N) on Form S-1 dated October 1973, File
No. 2-49013, and as amended below:
10.1.5.1 First through Fifth Amendments to 10.1.5 dated May 24, 1974, June
21, 1974, September 25, 1975, October 25, 1974 and January 31,
1975, respectively (Exhibit 13(m) to CE's Form S-1, (November 7,
1975), File No. 2-54995).
10.1.5.2 Sixth through Eleventh Amendments to 10.1.5 dated April 18, 1979,
April 18, 1979, April 25, 1979, June 8, 1979, October 11, 1979 and
December 15, 1979, respectively (Refiled as Exhibit 1 to the CEC
Form 10-K for 1989, File No. 2-30057).
10.1.5.3 Twelfth through Fourteenth Amendments to 10.1.5 dated May 16, 1980,
December 31, 1980 and June 1, 1982, respectively (Refiled as
Exhibits 1, 2 and 3 to the CE 1992 Form 10-K), File No. 2-7749).
10.1.5.4 Fifteenth and Sixteenth Amendment to 10.1.5 dated April 27, 1984
and June 15, 1984, respectively (Exhibit 1 to the CEC Form 10-Q
(June 1984), File No. 2-30057).
10.1.5.5 Seventeenth Amendment to 10.1.5 dated March 8, 1985 (Exhibit 1 to
the CEC Form 10-Q (March 1985), File No. 2-30057).
10.1.5.6 Eighteenth Amendment to 10.1.5 dated March 14, 1986 (Exhibit 1 to
the CEC Form 10-Q (March 1986), File No. 2-30057).
10.1.5.7 Nineteenth Amendment to 10.1.5 dated May 1, 1986 (Exhibit 1 to the
CEC Form 10-Q (June 1986), File No. 2-30057).
10.1.5.8 Twentieth Amendment to 10.1.5 dated September 19, 1986 (Exhibit 1
to the CEC Form 10-K for 1986, File No. 2-30057).
10.1.5.9 Twenty-First Amendment to 10.1.5 dated November 12, 1987 (Exhibit 1
to the CEC Form 10-K for 1989, File No. 2-30057).
10.1.5.10 Twenty-Second Amendment and Settlement Agreement to 10.1.5 both
dated January 13, 1989, (Exhibit 4 to the CEC Form 10-K for 1988,
File No. 2-30057).
10.1.6 Resolutions proposed by Merrill Lynch Capital Markets and adopted
by the Joint-Owners of the Seabrook Nuclear Project regarding
Project financing, dated May 14, 1984 (Exhibit 1 to the CEC Form
10-Q (March 1984), File No. 2-30057).
PAGE 39
CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.7 Interim Agreement to Preserve and Protect the Assets of and
Investment in the New Hampshire Nuclear Units by and between CEC,
PSNH and other participants, dated April 27, 1984 (Exhibit 2 to the
CEC Form 10-Q (June 1984), File No. 2-30057).
10.1.8 Agreement for Seabrook Project Disbursing Agent by and among CEC,
PSNH and other participants establishing Yankee Atomic Electric
Company as the disbursing agent under the Joint-Ownership
Agreement, dated May 23, 1984, (Exhibit 4 to the CEC Form 10-Q
(June 1984), File No. 2-30057).
10.1.8.1 First Amendment dated March 8, 1985 to 10.1.8 (Exhibit 2 to the CEC
Form 10-Q (March 1985), File No. 2-30057).
10.1.8.2 Second through Fifth Amendments dated May 20, 1985, June 18, 1985,
January 2, 1986 and November 12, 1987, respectively, to 10.1.8
(Exhibit 4 to the CEC Form 10-K for 1987, File No. 2-30057).
10.1.9 Capacity Acquisition Agreement between CEC, CEL and CE dated
September 25, 1980 (Exhibit 1 to the 1991 CEC Form 10-K, File
No. 2-30057).
10.1.9.1 Supplement to 10.1.9 consisting of three Capacity Acquisition
Commitments each dated May 7, 1987, concerning Phases I and II of
the Hydro-Quebec Project and electricity acquired from Connecticut
Light and Power Company (Exhibit 1 to the CEC Form 10-Q (September
1987), File No. 2-30057).
10.1.9.2 Supplements to 10.1.9 consisting of two Capacity Acquisition
Commitments each dated October 31, 1988, concerning electricity
acquired from Western Massachusetts Electric Company and/or
Connecticut Light and Power Company for periods ranging from
November 1, 1988 to October 31, 1994 (Exhibit 2 to the CEC Form 10-
Q (September 1989), File No. 2-30057).
10.1.9.3 Amendment to 10.1.9 as amended and restated June 1, 1993,
henceforth referred to as the Capacity Acquisition and Disposition
Agreement, whereby Canal Electric Company, as agent, in addition to
acquiring power may also sell bulk electric power which the Company
and/or Commonwealth Electric Company owns or otherwise has the
right to sell (Exhibit 1 to Canal Electric's Form 10-Q (September
1993), File No. 2-30057).
10.1.10 Power Contract between Yankee Atomic Electric Company and CEL,
dated June 30, 1959, as amended April 1, 1975 (Exhibit 1 to the CEL
Form 10-K, File No. 2-7909).
10.1.10.1 Second, Third and Fourth Amendments to 10.1.10 as amended October
1, 1980, April 1, 1985 and May 6, 1988, respectively (Exhibit 2 to
the CEL Form 10-Q (June 1988), File No. 2-7909).
10.1.10.2 Fifth and Sixth Amendments to 10.1.10 as amended June 26, 1989 and
July 1, 1989, respectively (Exhibit 1 to the CEL Form 10-Q
(September 1989), File No. 2-7909).
PAGE 40
CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.11 Power Contract between Connecticut Yankee Atomic Power Company and
CEL dated July 1, 1964 (Exhibit 13-K1 to the CES Form S-1, (April
1967) File No. 2-25597).
10.1.11.1 Additional Power Contract to 10.1.11 providing for extension on the
contract term dated April 30, 1984 (Exhibit 5 to the CEL Form 10-Q
(June 1984), File No. 2-7909).
10.1.11.2 Second Supplementary Power Contract to 10.1.11 providing for
decommissioning financing dated April 30, 1984 (Exhibit 6 to the
CEL Form 10-Q (June 1984), File No. 2-7909).
10.1.12 Power Contract between CEL and Vermont Yankee Nuclear Power
Corporation dated February 1, 1968 (Exhibit 3 to the CEL 1984 Form
10-K, File No. 2-7909).
10.1.12.1 First Amendment (Section 7) and Second Amendment (decommissioning
financing) to 10.1.12 as amended June 1, 1972 and April 15, 1983,
respectively (Exhibits 1 and 2, respectively, to the CEL Form 10-Q
(June 1984), File No. 2-7909).
10.1.12.2 Third and Fourth Amendments to 10.1.12 as amended April 1, 1985 and
June 1, 1985, respectively (Exhibit 1 and 2 to the CEL Form 10-Q
(June 1986) File No. 2-7909).
10.1.12.3 Fifth and Sixth Amendments to 10.1.12 both as amended May 6, 1988
(Exhibit 1 to the CEL Form 10-Q (June 1988), File No. 2-7909).
10.1.12.4 Seventh Amendment to 10.1.12 as amended June 15, 1989 (Exhibit 2 to
the CEL Form 10-Q (September 1989), File No. 2-7909).
10.1.12.5* Additional Power Contract between CEL and Vermont Yankee Nuclear
Power Corporation providing for decommissioning financing and
contract extension dated February 1, 1984 (Refiled herewith as
Exhibit 1).
10.1.13 Power Contract between Maine Yankee Atomic Power Company and CEL
dated May 20, 1968 (Exhibit 5 to the System's Form S-7, File No. 2-
38372).
10.1.13.1 First Amendment (decommissioning financing) and Second Amendment
(supplementary payments) to 10.1.13 as amended March 1, 1984 and
January 1, 1984, respectively (Exhibits 3 and 4 to the CEL Form 10-
Q (June 1984), File No. 2-7909).
10.1.13.2 Third Amendment to 10.1.13 as amended October 1, 1984 (Exhibit 1 to
the CEL Form 10-Q (September 1984), File No. 2-7909).
10.1.14 Participation Agreement between Maine Electric Power Company and
CEL and/or NBGEL for the construction of a 345 KV transmission line
between Wiscasset, Maine and Mactaquac, New Brunswick, Canada and
for the purchase of base and peaking capacity from the New
Brunswick Electric Power Commission, dated June 20, 1969 (Exhibit
13 to the CES Form 10-K for 1984, File No. 1-7316).
PAGE 41
CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.14.1 Supplement Amending 10.1.14, as amended June 24, 1970 (Exhibit 8 to
the CES Form S-7, Amendment No. 1, File No. 2-38372).
10.1.15 Service Agreement for Non-Firm Transmission Service between Boston
Edison Company and CEL dated July 5, 1984 (Exhibit 4 to the CEL
1984 Form 10-K, File No. 2-7909).
10.1.16 Power Exchange Agreement by and between Boston Edison Company and
CEL dated December 1, 1984 (Exhibit 5 to the CEL 1984 Form 10-K,
File No. 2-7909).
10.1.17 Agreement, dated September 1, 1985, With Respect To Amendment of
Agreement With Respect To Use Of Quebec Interconnection, dated
December 1, 1981, among certain NEPOOL utilities to include Phase
II facilities in the definition of "Project" (Exhibit 1 to the CEC
Form 10-Q (September 1985), File No. 2-30057).
10.1.17.1 Amendatory Agreement No. 3 to 10.1.17, as amended June 1, 1990
(Exhibit 1 to the CEC Form 10-Q (September 1990), File No. 2-
30057).
10.1.18 Preliminary Quebec Interconnection Support Agreement - Phase II
among certain New England electric utilities, dated June 1,1984
(Exhibit 6 to the CE Form 10-Q (June 1984), File No. 2-7749).
10.1.18.1 First, Second and Third Amendments to 10.1.18 as amended March 1,
1985, January 1, 1986 and March 1, 1987, respectively (Exhibit 1 to
the CEC Form 10-Q (March 1987), File No. 2-30057).
10.1.18.2 Fourth and Eighth Amendments to 10.1.18 as amended July 1, 1987 and
August 1, 1988, respectively (Exhibit 3 to the CEC Form 10-Q
(September 1988), File No. 2-30057).
10.1.18.3 Fifth, Sixth and Seventh Amendments to 10.1.18 as amended October
15, 1987, December 15, 1987 and March 1, 1988, respectively
(Exhibit 1 to the CEC Form 10-Q (June 1988), File No. 2-30057).
10.1.18.4 Ninth and Tenth Amendments to 10.1.18 as amended November 1, 1988
and January 15, 1989, respectively (Exhibit 2 to the CEC Form 10-K
for 1988, File No. 2-30057).
10.1.18.5 Eleventh Amendment to 10.1.18 as amended November 1, 1989 (Exhibit
4 to the CEC Form 10-K for 1989, File No. 2-30057).
10.1.18.6 Twelfth Amendment to 10.1.18 as amended April 1, 1990 (Exhibit 1 to
the CEC Form 10-Q (June 1990), File No. 2-30057).
10.1.19 Agreement to Preliminary Quebec Interconnection Support Agreement -
Phase II among Public Service Company of New Hampshire (PSNH), New
England Power Co., Boston Edison Co. and CEC whereby PSNH assigns a
portion of its interests under the original Agreement to the other
three parties, dated October 1, 1987 (Exhibit 2 to the CEC 1987
Form 10-K, File No. 2-30057).
PAGE 42
CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.20 Phase II Equity Funding Agreement for New England Hydro-
Transmission Electric Company, Inc. (New England Hydro
(Massachusetts) between New England Hydro and certain NEPOOL
utilities, dated June 1, 1985 (Exhibit 2 to the CEC Form 10-Q
(September 1985), File No. 2-30057).
10.1.21 Phase II Equity Funding Agreement for New England Hydro-
Transmission Corporation (New Hampshire Hydro) between New
Hampshire Hydro and certain NEPOOL utilities, dated June 1, 1985
(Exhibit 3 to the CEC Form 10-Q (September 1985), File No. 2-
30057).
10.1.21.1 Amendment No. 1 to 10.1.21 as amended May 1, 1986 (Exhibit 6 to the
CEC Form 10-Q (March 1987), File No. 2-30057).
10.1.21.2 Amendment No. 2 to 10.1.21 as amended September 1, 1987 (Exhibit 3
to the CEC Form 10-Q (September 1987), File No. 2-30057).
10.1.22 Phase II Massachusetts Transmission Facilities Support Agreement
dated June 1, 1985, refiled as a single agreement incorporating
Amendments 1 through 7 dated May 1, 1986 through January 1, 1989,
respectively, between New England Hydro-Transmission Electric
Company, Inc. (New England Hydro) and certain NEPOOL utilities
(Exhibit 2 the CEC Form 10-Q (September 1990), File No. 2-30057).
10.1.23 Phase II New Hampshire Transmission Facilities Support Agreement
dated June 1, 1985, refiled as a single agreement incorporating
Amendments 1 through 8 dated May 1, 1986 through January 1, 1990,
respectively, between New England Hydro-Transmission Corporation
(New Hampshire Hydro) and certain NEPOOL utilities (Exhibit 3 to
the CEC Form 10-Q (September 1990), File No. 2-30057).
10.1.24 Phase II New England Power AC Facilities Support Agreement between
New England Power and certain NEPOOL utilities, dated June 1, 1985
(Exhibit 6 to the CEC Form 10-Q (September 1985), File No. 2-
30057).
10.1.24.1 Amendments Nos. 1 and 2 to 10.1.24 as amended May 1, 1986 and
February 1, 1987, respectively (Exhibit 5 to the CEC Form 10-Q
(March 1987), File No. 2-30057).
10.1.24.2 Amendments Nos. 3 and 4 to 10.1.24 as amended June 1, 1987 and
September 1, 1987, respectively (Exhibit 5 to the CEC Form 10-Q
(September 1987), File No. 2-30057).
10.1.25 Phase II Boston Edison AC Facilities Support Agreement between
Boston Edison Company and certain NEPOOL utilities, dated June 1,
1985 (Exhibit 7 to the CEC Form 10-Q (September 1985), File No. 2-
30057).
10.1.25.1 Amendments Nos. 1 and 2 to 10.1.25 as amended May 1, 1986 and
February 1, 1987, respectively (Exhibit 2 to the CEC Form 10-Q
(March 1987), File No. 2-30057).
PAGE 43
CAMBRIDGE ELECTRIC LIGHT COMPANY
10.1.25.2 Amendments Nos. 3 and 4 to 10.1.25 as amended June 1, 1987 and
September 1, 1987, respectively (Exhibit 4 to the CEC Form 10-Q
(September 1987), File No. 2-30057).
10.1.26 Agreement Authorizing Execution of Phase II Firm Energy Contract
among certain NEPOOL utilities in regard to participation in the
purchase of power from Hydro Quebec, dated September 1, 1985
(Exhibit 8 to the CEC Form 10-Q (September 1985), File No. 2-
30057).
10.1.27 System Power Sales Agreement by and between Connecticut Light and
Power (CL&P), Western Massachusetts Electric Company (Northeast
Utilities companies), as sellers, and CEL, as buyer, of power in
excess of firm power customer requirements from the electric
systems of the Northeast Utilities companies, dated June 1, 1984,
as effective October 25, 1985 (Exhibit 1 to the CEL 1985 Form 10-K,
File No. 2-7909).
10.1.28 Power Sale Agreement dated November 1, 1988 by and between CEC
(buyer) and CL&P (seller), whereby buyer will purchase generating
capacity totaling 250 MW from various seller's units ("Slice of
System") for the term of November 1, 1989 to October 31, 1994
(Exhibit 3 to the CEC Form 10-K for 1988, File No. 2-30057).
10.1.29 Power Sale Agreement by and between Altresco Pittsfield, L. P. and
the Company for entitlement to the electric capacity and related
energy to be produced by a cogeneration facility located in
Pittsfield, Massachusetts, dated February 20, 1992 (Exhibit 1 to
the CEL Form 10-Q (September 1993), File No. 2-7909).
10.1.29.1 System Exchange Agreement by and among Altresco Pittsfield, L.P.,
the Company, Commonwealth Electric Company (CE) and New England
Power Company, dated July 2, 1993 (Exhibit 3 to the CE Form 10-Q
(September 1993), File No. 2-7749).
10.2 Other Agreements.
10.2.1 Pension Plan for Employees of Commonwealth Energy System and
Subsidiary Companies as amended and restated January 1, 1993
(Exhibit 1 to the System's Form 10-Q (September 1993), File No. 1-
7316).
10.2.2 Employees Savings Plan of Commonwealth Energy System and Subsidiary
Companies as amended and restated January 1, 1993 (Exhibit 2 to the
System's Form 10-Q (September 1993), File No. 1-7316).
10.2.3 New England Power Pool (NEPOOL) Agreement dated September 1, 1971
as amended through August 1, 1977 between NEGEA Service
Corporation, as agent for CEL, CEC, NBGEL and various other
electric utilities operating in New England, together with
amendments dated August 15, 1978, January 31, 1979 and February 1,
1980 (Exhibit 5(c)13 to the CES Form S-16 (April 1980), File No. 2-
64731).
PAGE 44
CAMBRIDGE ELECTRIC LIGHT COMPANY
10.2.3.1 Thirteenth Amendment to 10.2.3 dated September 1, 1981 (Exhibit 3
to the CES 1991 Form 10-K, File No. 1-7316).
10.2.3.2 Fourteenth through Twentieth Amendments to 10.2.3 as amended
December 1, 1981, June 1, 1982, June 15, 1983, October 1, 1983,
August 1, 1985, August 15, 1985 and September 1, 1985, respectively
(Exhibit 4 to the CES Form 10-Q (September 1985), File No. 1-7316).
10.2.3.3 Twenty-first Amendment to 10.2.3 as amended to January 1, 1986
(Exhibit 1 to the CES Form 10-Q (March 1986), File No. 1-7316).
10.2.3.4 Twenty-second Amendment to 10.2.3 as amended to January 1, 1986
(Exhibit 1 to the CES Form 10-Q (September 1986), File No. 1-7316).
10.2.3.5 Twenty-third Amendment to 10.2.3 as amended April 30, 1987 (Exhibit
1 to the CES Form 10-Q (June 1987), File No. 1-7316).
10.2.3.6 Twenty-fourth Amendment to 10.2.3 as amended March 1, 1988 (Exhibit
1 to the CES 1987 Form 10-K, File No. 1-7316).
10.2.3.7 Twenty-fifth Amendment to 10.2.3 as amended May 1, 1988 (Exhibit 1
to the CES Form 10-Q (March 1988), File No. 1-7316).
10.2.3.8 Twenty-sixth Amendment to 10.2.3 as amended March 15, 1989 (Exhibit
1 to the CES Form 10-Q (March 1989), File No. 1-7316).
10.2.3.9 Twenty-seventh Amendment to 10.2.3 as amended October 1, 1990
(Exhibit 3 to the CES 1990 Form 10-K, File No. 1-7316).
10.2.4 Guarantee Agreement by CEL (as guarantor) and MYA Fuel Company (as
initial lender) covering the unconditional guarantee of a portion
of the payment obligations of Maine Yankee Atomic Power Company
under a loan agreement and note initially between Maine Yankee and
MYA Fuel Company (Exhibit 3 to the CEL 1985 Form 10-K, File No. 2-
7909).
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
December 31, 1993.
PAGE 45
<TABLE>
SCHEDULE III
CAMBRIDGE ELECTRIC LIGHT COMPANY
INVESTMENTS IN, EQUITY IN EARNINGS OF, AND DIVIDENDS RECEIVED
FROM RELATED PARTIES
FOR THE YEAR ENDED DECEMBER 31, 1993
(Dollars in Thousands)
<CAPTION>
1993
Balance Balance
December 31, Equity December 31,
Name of Issuer and 1992 in Dividends 1993
Description of Investment Shares Amount Earnings Received Amount
<S> <C> <C> <C> <C> <C>
Common Stock
Connecticut Yankee
Atomic Power Company 15 750 $4 518 $ 563 $ 591 $4 490
Maine Yankee Atomic
Power Company 20 000 2 759 328 311 2 776
Vermont Yankee Nuclear
Power Corporation 9 801 1 336 178 197 1 317
Yankee Atomic Electric
Company 3 068 476 - - 476
Total $9 089 $1 069 $1 099 $9 059
Other Investments
Massachusetts Business
Development Corporation 500 5 5
Total $ 5 $ 5
<FN>
Under terms of the capital funds agreements and power contracts, no stock may be sold or transferred except
to another stockholder and, as such, no market exists for these securities.
See Note 4(d) of the Notes to Financial Statements included in Item 8 of this report for a discussion of the
permanent closing of the nuclear plant owned by Yankee Atomic Electric Company.
</TABLE>
PAGE 46
<TABLE>
SCHEDULE III
CAMBRIDGE ELECTRIC LIGHT COMPANY
INVESTMENTS IN, EQUITY IN EARNINGS OF, AND DIVIDENDS RECEIVED
FROM RELATED PARTIES
FOR THE YEAR ENDED DECEMBER 31, 1992
(Dollars in Thousands)
<CAPTION>
1992
Balance Balance
December 31, Equity December 31,
Name of Issuer and 1991 in Dividends 1992
Description of Investment Shares Amount Earnings Received Amount
<S> <C> <C> <C> <C> <C>
Common Stock
Connecticut Yankee
Atomic Power Company 15 750 $4 600 $ 721 $ 803 $4 518
Maine Yankee Atomic
Power Company 20 000 2 758 336 335 2 759
Vermont Yankee Nuclear
Power Corporation 9 801 1 325 208 197 1 336
Yankee Atomic Electric
Company 3 068 420 56 - 476
Total $9 103 $1 321 $1 335 $9 089
Other Investments
Massachusetts Business
Development Corporation 500 5 5
Total $ 5 $ 5
<FN>
Under terms of the capital funds agreements and power contracts, no stock may be sold or transferred except
to another stockholder and, as such, no market exists for these securities.
See Note 4(d) of the Notes to Financial Statements included in Item 8 of this report for a discussion of the
permanent closing of the nuclear plant owned by Yankee Atomic Electric Company.
</TABLE>
PAGE 47
<TABLE>
SCHEDULE III
CAMBRIDGE ELECTRIC LIGHT COMPANY
INVESTMENTS IN, EQUITY IN EARNINGS OF, AND DIVIDENDS RECEIVED
FROM RELATED PARTIES
FOR THE YEAR ENDED DECEMBER 31, 1991
(Dollars in Thousands)
<CAPTION>
1991
Balance Balance
December 31, Equity December 31,
Name of Issuer and 1990 in Dividends 1991
Description of Investment Shares Amount Earnings Received Redemption Amount
<S> <C> <C> <C> <C> <C> <C>
Common Stock
Connecticut Yankee
Atomic Power Company 15 750 $4 455 $ 775 $ 630 $ - $4 600
Maine Yankee Atomic
Power Company 20 000 2 735 362 339 - 2 758
Vermont Yankee Nuclear
Power Corporation 10 001 1 345 232 232 20 1 325
Yankee Atomic Electric
Company 3 068 416 61 57 - 420
Total $8 951 $1 430 $1 258 $ 20 $9 103
Other Investments
Connecticut Yankee
Atomic Power Company
Series B Debentures - $ 684 $ 684 $ -
Massachusetts Business
Development Corporation 500 5 - 5
Total $ 689 $ 684 $ 5
<FN>
In 1991, Vermont Yankee repurchased 2% of its common stock at $150 per share. The Company's original cost
was $100 per share resulting in a gain of $10,000 for this transaction. As of December 31, 1991, the
Company held 9,801 shares in Vermont Yankee.
Under terms of the capital funds agreements and power contracts, no stock may be sold or transferred except
to another stockholder and, as such, no market exists for these securities.
See Note 4(d) of the Notes to Financial Statements included in Item 8 of this report for a discussion of the
permanent closing of the nuclear plant owned by Yankee Atomic Electric Company.
</TABLE>
PAGE 48
<TABLE>
SCHEDULE V
CAMBRIDGE ELECTRIC LIGHT COMPANY
PROPERTY, PLANT AND EQUIPMENT (A)
FOR THE YEAR ENDED DECEMBER 31, 1993
<CAPTION>
Balance Retirements Balance
Beginning Additions Charged to End of
Classification of Year at Cost Reserve Other Transfers Year
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
ELECTRIC
Intangible plant $ 233 $ - $ - $ - $ - $ 233
Land and rights of way 732 3 - - - 735
Structures and leasehold
improvements 12 909 130 2 - - 13 037
Production equipment 22 995 174 44 - - 23 125
Transmission equipment 17 796 - - - - 17 796
Distribution equipment 81 624 3 031 733 - - 83 922
General equipment, vehicles
and other 933 40 7 - - 966
Total plant in service 137 222 3 378 786 - - 139 814
Construction work in progress 96 917 - - - 1 013
Total electric 137 318 4 295 786 - - 140 827
OTHER
Miscellaneous Physical Property 5 568 (16) 42 - - 5 510
Total Property, Plant
and Equipment $142 886 $ 4 279 $ 828 $ - $ - $146 337
<FN>
(A) Refer to Note 1 of Notes to Financial Statements for depreciation method and rates.
</TABLE>
PAGE 49
<TABLE>
SCHEDULE V
CAMBRIDGE ELECTRIC LIGHT COMPANY
PROPERTY, PLANT AND EQUIPMENT (A)
FOR THE YEAR ENDED DECEMBER 31, 1992
<CAPTION>
Balance Retirements Balance
Beginning Additions Charged to End of
Classification of Year at Cost Reserve Other Transfers Year
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
ELECTRIC
Intangible plant $ 233 $ - $ - $ - $ - $ 233
Land and rights of way 732 (35) - (35) - 732
Structures and leasehold
improvements 12 913 (3) 1 - - 12 909
Production equipment 22 402 734 165 - 24 22 995
Transmission equipment 17 796 - - - - 17 796
Distribution equipment 78 986 3 439 777 - (24) 81 624
General equipment, vehicles
and other 910 28 5 - - 933
Total plant in service 133 972 4 163 948 (35) - 137 222
Construction work in progress 744 (648) - - - 96
Total electric 134 716 3 515 948 (35) - 137 318
OTHER
Miscellaneous Physical Property 5 470 192 94 - - 5 568
Total Property, Plant
and Equipment $140 186 $ 3 707 $1 042 $(35) $ - $142 886
<FN>
(A) Refer to Note 1 of Notes to Financial Statements for depreciation method and rates.
</TABLE>
PAGE 50
<TABLE>
SCHEDULE V
CAMBRIDGE ELECTRIC LIGHT COMPANY
PROPERTY, PLANT AND EQUIPMENT (A)
FOR THE YEAR ENDED DECEMBER 31, 1991
<CAPTION>
Balance Retirements Balance
Beginning Additions Charged to End of
Classification of Year at Cost Reserve Transfers Year
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
ELECTRIC
Intangible plant $ 210 $ 23 $ - $ - $ 233
Land and rights of way 732 - - - 732
Structures and leasehold improvements 12 798 118 3 - 12 913
Production equipment 22 180 261 66 27 22 402
Transmission equipment 17 779 17 - - 17 796
Distribution equipment 75 267 4 903 1 157 (27) 78 986
General equipment, vehicles, and other 841 77 8 - 910
Total plant in service 129 807 5 399 1 234 - 133 972
Construction work in progress 1 492 (748) - - 744
Total electric 131 299 4 651 1 234 - 134 716
OTHER
Miscellaneous Physical Property 5 410 78 18 - 5 470
Total Property, Plant and Equipment $136 709 $ 4 729 $1 252 $ - $140 186
<FN>
(A) Refer to Note 1 of Notes to Financial Statements for depreciation method and rates.
</TABLE>
PAGE 51
<TABLE>
SCHEDULE VI
CAMBRIDGE ELECTRIC LIGHT COMPANY
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in Thousands)
<CAPTION>
Provision
Clearing
Balance at Accounts and Amortization of Balance
Beginning of Charged to Other Leasehold Removal at End
Classification Year Operations Income Improvements Retirements Cost Salvage of Year
YEAR ENDED DECEMBER 31, 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Electric $45 586 $3 795 $ - $ 47 $ 786 $ 861 $116 $47 897
Other 4 410 - - - 42 - 117 4 485
Total Accumulated
Depreciation $49 996 $3 795 $ - $ 47 $ 828 $ 861 $233 $52 382
YEAR ENDED DECEMBER 31, 1992
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Electric $43 576 $3 601 $ - $ 47 $ 948 $ 794 $104 $45 586
Other 4 439 - 309 - 94 244 - 4 410
Total Accumulated
Depreciation $48 015 $3 601 $309 $ 47 $1 042 $1 038 $104 $49 996
YEAR ENDED DECEMBER 31, 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Electric $41 761 $3 490 $ - $47 $1 234 $628 $140 $43 576
Other 4 177 - 299 - 18 19 - 4 439
Total Accumulated
Depreciation $45 938 $3 490 $299 $47 $1 252 $647 $140 $48 015
</TABLE>
PAGE 52
SCHEDULE VIII
CAMBRIDGE ELECTRIC LIGHT COMPANY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in Thousands)
Additions
Balance Provision Deductions Balance
Beginning Charged to Accounts at End
Description of Year Operations Recoveries Written-off of Year
Year Ended December 31, 1993
Allowance for
Doubtful Accounts $453 $257 $280 $499 $491
Year Ended December 31, 1992
Allowance for
Doubtful Accounts $309 $801 $ 1 $658 $453
Year Ended December 31, 1991
Allowance for
Doubtful Accounts $287 $449 $104 $531 $309
PAGE 53
SCHEDULE IX
CAMBRIDGE ELECTRIC LIGHT COMPANY
SHORT-TERM BORROWINGS (a)
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(Dollars in Thousands)
Maximum
Weighted Month-End Average Weighted
Category of Average Amount Amount Average
Aggregate Balance Interest Outstanding Outstanding Interest
Short-Term at End Rate at End During During the Rate During
Borrowings of Period of Period the Period Period(b) the Period(c)
December 31, 1993
Notes Payable
to Banks $2 000 3.1% $ 5 375 $ 1 850 3.3%
Notes Payable
to System $ - - $ 1 050 $ 81 6.0%
COM/Energy
Money Pool $1 305 3.2 $ 2 855 $ 737 3.2%
December 31, 1992
Notes Payable
to Banks $1 500 3.5% $21 600 $ 6 396 4.0%
Notes Payable
to System $ - - $ 705 $ 546 6.3%
COM/Energy
Money Pool $ - - $ 1 205 $ 592 3.7%
December 31, 1991
Notes Payable
to Banks $11 700 5.8% $15 625 $12 067 6.3%
Notes Payable
to System $ 655 6.5% $ 655 $ 495 8.3%
COM/Energy
Money Pool $ 885 4.6% $ 1 285 $ 907 5.8%
(a) Refer to Note 3 of Notes to Financial Statements filed under Item 8 of
this report for the general terms of each category of short-term
borrowings.
(b) The average amount outstanding during the period is determined by
averaging the level of month-end principal balances outstanding for the
prior thirteen-month period ending December 31.
(c) The weighted average interest rate during the period is determined by
averaging the interest rates in effect on all loans transacted for the
twelve-month period ended December 31.
PAGE 54
CAMBRIDGE ELECTRIC LIGHT COMPANY
FORM 10-K DECEMBER 31, 1993
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CAMBRIDGE ELECTRIC LIGHT COMPANY
(Registrant)
By: WILLIAM G. POIST
William G. Poist,
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Principal Executive Officers:
WILLIAM G. POIST March 30, 1994
William G. Poist,
Chairman of the Board and
Chief Executive Officer
R. D. WRIGHT March 28, 1994
Russell D. Wright,
President and Chief Operating Officer
Principal Financial Officer:
JAMES D. RAPPOLI March 30, 1994
James D. Rappoli,
Financial Vice President and Treasurer
Principal Accounting Officer:
JOHN A. WHALEN March 28, 1994
John A. Whalen, Comptroller
A majority of the Board of Directors:
WILLIAM G. POIST March 30, 1994
William G. Poist, Director
R. D. WRIGHT March 28, 1994
Russell D. Wright, Director
JAMES D. RAPPOLI March 30, 1994
James D. Rappoli, Director
PAGE 1
EXHIBIT 1
ADDITIONAL POWER CONTRACT, dated as of February 1, 1984, between VERMONT
YANKEE NUCLEAR POWER CORPORATION ("Vermont Yankee"), a Vermont corporation,
and CAMBRIDGE ELECTRIC LIGHT COMPANY (the "Purchaser").
It is agreed as follows:
1. Basic Understandings.
Vermont Yankee was organized in 1966 to provide for the supply of power
to its sponsoring utility companies (including the Purchaser), which utilities
are hereinafter called the "sponsors". It constructed a nuclear electric gen-
erating unit of the boiling water type, having a maximum net capability of
approximately 540 megawatts electric, at a site adjacent to the Connecticut
River at Vernon, Vermont (said unit being herein, together with the site and
all related facilities owned or to be owned by Vermont Yankee, referred to as
the "Unit"). On February 28, 1973 Vermont Yankee was issued a full-term,
operating license for the Unit from the Atomic Energy Commission (now the
Nuclear Regulatory Commission which, together with any successor agency or
agencies, is hereafter called the "NRC"), which license expires on December
11, 2007, and the Unit commenced commercial operation on November 30, 1972.
The Unit is operated to supply power to Vermont Yankee's sponsors, each
of which by a Power Contract dated as of February 1, 1968, as amended (collec-
tively the "Initial Power Contracts"), has undertaken to purchase a fixed
percentage of the capacity and output of the Unit for a term extending through
November 30, 2002. The names of the sponsors and their respective percentages
("entitlement percentages") of the capacity and output of the Unit are as
follows:
Entitlement
Percentage
Central Vermont Public Service Corporation . . . . 35.0%
Green Mountain Power Corporation . . . . . . . . . 20.0%
New England Power Company. . . . . . . . . . . . . 20.0%
The Connecticut Light and Power Company. . . . . . 9.5%
Central Maine Power Company. . . . . . . . . . . . 4.0%
Public Service Company of New Hampshire. . . . . . 4.0%
Western Massachusetts Electric Company . . . . . . 2.5%
Montaup Electric Company . . . . . . . . . . . . . 2.5%
Cambridge Electric Light Company . . . . . . . . . 2.5%
The sponsors have resold portions of their entitlement percentages of
capacity and output of the Unit under the Initial Power Contracts to other
utilities (the "secondary purchasers") on terms and conditions substantially
equivalent to those in the Initial Power Contracts: in 1969, the two Vermont
sponsors resold an aggregate of 7.426% of the Unit's capacity and output to
other utilities in Vermont; and in 1970 the non-Vermont sponsors resold an
aggregate of 4.5451% of the Unit's capacity and output to other New England
utilities outside of Vermont (collectively the "Resale Contracts"). In 1983
the Initial Power Contracts were amended to incorporate provisions for collec-
tion of funds to defray the ultimate cost of decommissioning the Unit, which
costs are being borne pro rata by said secondary purchasers under the Resale
Contracts.
PAGE 2
Vermont Yankee and its sponsors desire to provide for the orderly
continuation of the sale and purchase of the capacity and output of the Unit
during the useful life of the Unit to the extent it continues beyond the
termination date of the Initial Power Contracts and to provide appropriate
provisions for the collection of funds for and the payment of decommissioning
and any other costs with respect thereto both during and after the useful life
of the Unit. Vermont Yankee and its other sponsors are entering into Addi-
tional Power Contracts which are identical to this contract except for neces-
sary changes in the names of the parties.
2. Effective Date, Term and Waiver.
This contract shall become effective upon receipt by the Purchaser of
notice that Vermont Yankee has entered into additional power contracts, as
contemplated by Section 1 above, with each of its other sponsors. The opera-
tive term of this contract shall commence on December 1, 2002 notwithstanding
the fact that the useful service life of the Unit may have been terminated
prior to that date, and shall terminate upon the later to occur of (i) 30 days
after the date on which the last of the financial obligations of Vermont
Yankee which constitute elements of the purchase price calculated pursuant to
Section 7 of this contract has been extinguished by Vermont Yankee or (ii) 30
days after the date on which Vermont Yankee is finally relieved of any
obligations under the last of any licenses (operating and/or possessory) which
it now holds from, or which may hereafter be issued to it by, the NRC with
respect to the Unit under applicable provisions of the Atomic Energy Act of
1954, as amended from time to time (the "Act").
Vermont Yankee and the Purchaser acknowledge that, if the useful life of
the Unit is terminated prior to December 1, 2002, then only the provisions of
this contract applicable to decommissioning of the Unit will apply during the
operative term of this contract.
The Purchaser hereby irrevocably waives its right to extend the contract
term of its Initial Power Contract pursuant to subsections (a) or (b) of
Section 8 thereof.
3. Operation and Maintenance of the Unit.
Vermont Yankee will operate and maintain the Unit in accordance with
good utility practice under the circumstances and all applicable law, includ-
ing the applicable provisions of the Act and of any licenses issued thereunder
to Vermont Yankee. Within the limits imposed by good utility practice under
the circumstances and applicable law, the Unit will be operated at its maximum
capability and on a long hour use basis.
Outages for inspection, maintenance refueling and repairs and replace-
ments will be scheduled in accordance with good utility practice and insofar
as practicable shall be mutually agreed upon by Vermont Yankee and the
Purchaser. In the event of an outage, Vermont Yankee will use its best
efforts to restore the Unit to service as promptly as practicable.
4. Decommissioning.
After commercial operation of the Unit permanently ceases, Vermont
Yankee will decommission the Unit in a manner authorized by Vermont Yankee's
PAGE 3
board of directors and approved by the NRC in accordance with the Act and the
rules and regulations thereunder then in effect and by any agency having
jurisdiction over decommissioning of the Unit.
It is understood that, pursuant to the Initial Power Contracts and the
Resale Contracts, the sponsors and secondary purchasers are currently being
billed for Total Decommissioning Costs which as of the date of this contract,
are being accumulated in a separate fund which was established for the purpose
of reimbursing Vermont Yankee for Decommissioning Expenses incurred in the
process of decommissioning the Unit and that such billings are subject to
change in accordance with the provisions of the Initial Power Contracts
subject to the jurisdiction of FERC. It is contemplated that sufficient funds
will be accumulated pursuant to those contracts and paragraph 7 hereof to
reimburse Vermont Yankee for the full cost of decommissioning the Unit.
5. Purchaser's Entitlement.
The Purchaser will, throughout the term of this contract, be entitled
and obligated to take its entitlement percentage of the capacity and net
electrical output of the Unit, at whatever level the Unit is operated or
operable, whether more or less than 540 megawatts electric.
6. Deliveries and Metering.
The Purchaser's entitlement percentage of the output of the Unit will be
delivered to and accepted by it at the step-up substation at the site. All
deliveries will be made in the form of 3-phase, 60 cycle, alternating current
at a nominal voltage of 345,000 volts. The Purchaser will make its own
arrangements for the transmission of its entitlement percentage of the output
of the Unit.
Vermont Yankee will supply and maintain all necessary metering equipment
for determining the quantity and conditions of supply of deliveries under this
contract, will make appropriate tests of such equipment in accordance with
good utility practice and as reasonably requested by the Purchaser, and will
maintain the accuracy of such equipment within reasonable limits. Vermont
Yankee will furnish the Purchaser with such summaries of meter readings as the
Purchaser may reasonably request.
7. Payment.
With respect to each month commencing on or after December 1, 2002, the
Purchaser will pay Vermont Yankee an amount equal to the Purchaser's entitle-
ment percentage of the sum of (a) Vermont Yankee's total fuel costs for the
month with respect to the Unit, plus (b) the Total Decommissioning Costs for
the month with respect to the Unit, plus (c) Vermont Yankee's total operating
expenses for the month with respect to the Unit, plus (d) an amount equal to
one-twelfth of the composite percentage for such month of the net Unit invest-
ment as most recently determined in accordance with this Section 7.
"Composite percentage" shall be computed as of the last day of each
month during the term hereof (the "computation date") and for any month the
composite percentage shall be that computed as of the most recent computation
date. "Composite percentage" as of a computation date shall be the sum of (i)
the equity percentage as of such date multiplied by the percentage which
PAGE 4
equity investment as of such date is of the total capital as of such date;
plus (ii) the stated interest rate per annum of each principal amount of
indebtedness bearing a particular rate of interest outstanding on such date
for money borrowed from other than sponsors multiplied by the percentage which
such principal amount is of total capital as of such date.
"Equity percentage" as of any date after the commencement of the opera-
tive term hereof shall be that percentage which was the "equity percentage" in
effect on the last day of the term of the Initial Power Contracts or such
other percentage as may from time to time thereafter be approved by the
Federal Energy Regulatory Commission or any successor agency thereto ("FERC").
"Common stock equity investment" as of any date shall consist of equity
investment as of such date less the aggregate par value of all issues of
preferred stock outstanding on such date.
"Equity investment" as of any date shall consist of not less than the
sum of (i) all amounts theretofore paid to Vermont Yankee for all capital
stock theretofore issued (taken at the total par value thereof plus the total
of all amounts in excess of such par value paid thereon); plus all capital
contributions, loans and advances theretofore made to Vermont Yankee by its
sponsors, less the sum of any amounts distributed by Vermont Yankee to its
sponsors or stockholders in the form of stock repurchases or redemptions,
return of capital or repayments of loans and advances; plus (ii) any credit
balance in the capital surplus account (not included under (i)) and in the
earned surplus account on the books of Vermont Yankee as of such date.
"Total capital" as of any date shall be the equity investment plus the
total of all indebtedness then outstanding for money borrowed from other than
Vermont Yankee's sponsors.
"Uniform System" shall mean the Uniform System of Accounts prescribed by
the FERC for Class A and Class B Public Utilities and Licensees as from time
to time in effect.
Vermont Yankee's "fuel costs" for any month shall include (i) amounts
chargeable in accordance with the Uniform System in such month as amortization
of costs of fuel assemblies and components and burn-up of nuclear materials
for the Unit; plus (ii) all other amounts properly chargeable in accordance
with the Uniform System to fuel costs for the Unit less any applicable credits
thereto; plus(ii) to the extent not so chargeable all payments (or accruals
therefor) with respect to lease or other financing obligations incurred in
connection with such fuel assemblies and components, including nuclear materi-
als, for the Unit (provided such fuel assemblies and components are not
included in net Unit investment), and with the temporary or permanent storage
or disposal thereof.
Vermont Yankee's "operating expenses" shall include all amounts properly
chargeable to operating expense accounts (other than such amounts which are
included in Vermont Yankee's fuel costs) less any applicable credits thereto,
in accordance with the Uniform System; it being understood that for purposes
of this contract "operating expenses" shall include (i) depreciation accrual
at a rate at least sufficient to fully amortize the non-salvageable plant
investment over the estimated remaining useful life of the plant; and (ii)
obligations incurred in connection with the leasing of plant facilities.
PAGE 5
The "net Unit investment" shall consist, in each case with respect to
the Unit, of (i) the aggregate amount properly chargeable at the time in
accordance with the Uniform System to Vermont Yankee's electric plant accounts
(including construction work in progress) less the amount of any accumulated
provisions for depreciation thereof; plus (ii) the aggregate amount properly
chargeable at the time in accordance with the Uniform System to accounts
representing fuel assemblies and components (including nuclear materials) and
other materials and supplies, less the balance, if any, at the time of the
accumulated amortization thereof; plus (iii) such reasonable allowances for
prepaid items and cash working capital as may from time to time be determined
by Vermont Yankee. The net Unit investment shall be determined as of the
commencement of each calendar year, or, if Vermont Yankee elects, at more
frequent intervals.
"Total Decommissioning Costs" for any month shall mean the sum of (x) an
amount equal to all accruals in such month, as from time to time established
by Vermont Yankee and approved by its board of directors, to provide for the
ultimate payment of the Decommissioning Expenses of the Unit plus (y) Decom-
missioning Tax Liability for such month. It is understood (i) that such funds
may be held by Vermont Yankee or by an independent trust or other separate
fund as determined by said board of directors, (ii) that, upon compliance with
Section 17 hereof, the amount, custody and/or timing of such accruals may from
time to time during the term hereof be modified by said board of directors in
its discretion or to comply with applicable statutory or regulatory
requirements or to reflect changes in the amount,custody or timing of antici-
pated Decommissioning Expenses, and (iii) that the use of the term "to decom-
mission" herein encompasses compliance with all requirements (other than those
relating to spent nuclear fuel) of the NRC for permanent cessation of opera-
tion of a nuclear facility and any other activities reasonably related
thereto. "Decommissioning Expenses" shall include:
(1)All costs and expenses of removing the Unit from service, including
without limitation, dismantling, mothballing, removing radioactive
material (excluding spent nuclear fuel) to temporary and/or perma-
nent storage sites, decontaminating, restoring and supervising the
site, and any costs and expenses incurred in connection with pro-
ceedings before governmental regulatory authorities relating to any
authorization to decommission the Unit or remove the Unit from
service;
(2)All costs of labor and services whether directly or indirectly
incurred, including without limitation services of foremen, inspec-
tors, supervisors, surveyors, engineers, security personnel, coun-
sel and accountants, performed or rendered in connection with the
decommissioning of the Unit and the removal of the Unit from ser-
vice, and all costs of materials, supplies, machinery, construction
equipment and apparatus acquired or used (including rental charges
for machinery, equipment or apparatus hired) for or in connection
with the decommissioning of the Unit and the removal of the Unit
from service, and all administrative costs, including services of
counsel and financial advisers, of any applicable independent trust
or other separate fund; it being understood that any amount, exclu-
sive of proceeds of insurance, realized by Vermont Yankee as sal-
vage on any machinery, construction equipment and apparatus, the
cost of which was charged to Decommissioning Expense shall be
treated as a reduction of the amounts otherwise chargeable on
account of the costs of decommissioning of the Unit; and
PAGE 6
(3)All overhead costs applicable to the Unit during its decommission-
ing period including, without limiting the generality of the fore-
going, taxes (other than taxes on or in respect of income), charges
licenses, excises and assessments, casualties, surety bond premiums
and insurance premiums.
"Decommissioning Tax Liability" for any month shall be an amount estab-
lished by Vermont Yankee and approved by its board of directors to meet
possible income tax obligations, which amount shall not exceed: the amount to
be included in the clause (x) portion of Total Decommissioning Costs for such
month multiplied by a fraction whose numerator is equal to the combined
highest statutory Federal and state marginal income tax rate and whose denomi-
nator is equal to one minus the combined highest statutory Federal and state
marginal income tax rate.
Without limiting the generality of the foregoing, amounts expended or to
be paid with respect to decommissioning of the Unit or removal of the Unit
from service shall constitute part of the Decommissioning Expenses if they
are, or when paid will be, either (i) properly chargeable to any account
related to decommissioning of a nuclear generating unit in accordance with the
Uniform System or generally accepted accounting principles as then in effect,
or (ii) properly chargeable to decommissioning of a nuclear generating unit in
accordance with then applicable regulations of the NRC or the FERC or any
other regulatory agency having jurisdiction.
8. Billing.
Vermont Yankee will bill the Purchaser, as soon as practicable after the
end of each month, for all amounts payable by the Purchaser with respect to
the particular month pursuant to Section 7 hereof. Such bills will be
rendered in such detail as the Purchaser may reasonably request and may be
rendered on an estimated basis subject to corrective adjustments in subsequent
billing periods. All bills shall be due and payable when rendered and any
amount remaining unpaid 10 days following the date of issuance of bills should
bear interest at an annual rate equal to 2% in excess of the current prime
rate then in effect at The First National Bank of Boston, from the due date to
the date payment is received by Vermont Yankee.
9. Decommissioning Fund.
Vermont Yankee agrees to cause an appropriate decommissioning reserve to
be maintained in accordance with applicable regulatory requirements. As of
the date hereof, FERC has required an independent trust or other separate fund
to be created which has the necessary powers to hold and invest all funds
collected for the decommissioning of the Unit and to disburse the same to pay
or to reimburse Vermont Yankee for such costs when actually incurred for
decommissioning of the Unit or removal of the Unit from service. If during
the term of such trust or fund federal or state legislation or regulations are
promulgated which so permit or require or an alternative entity is created for
funding decommissioning of the Unit, such trust has the authority, with the
concurrence of Vermont Yankee, to transfer its trust estate to such newly
authorized entity for the purpose of providing for the decommissioning of the
Unit or removal of the Unit from service.
Vermont Yankee agrees to credit to, or cause to be credited to, the
PAGE 7
appropriate decommissioning reserve all funds collected hereunder for the
express purpose of decommissioning the Unit or removing the Unit from service
and further agrees that, after the tax consequences of decommissioning collec-
tions have been resolved, any funds collected hereunder to meet Decommission-
ing Tax Liability which are not used for that purpose, will be refunded to
Purchaser.
10. Cancellation of Contract.
If deliveries cannot be made to the Purchaser because either
(i) the Unit is damaged to the extent of being completely or sub-
stantially completely destroyed, or
(ii) the Unit is taken by exercise of the right of eminent domain
or a similar right or power, or
(iii) (a) the Unit cannot be used because of contamination, or
because a necessary license or other necessary public authorization
cannot be obtained or is revoked or because the utilization of such
a license or authorization is made subject to specified conditions
which are not met, and (b) the situation cannot be rectified to an
extent which will permit Vermont Yankee to make deliveries to the
Purchaser from the Unit;
then and in any such case, the Purchaser may cancel the provisions of this
contract except that in all cases other than those described in clause (ii)
above, the provisions relating to the payment of Total Decommissioning Costs
and of costs of permanent storage or disposal of spent nuclear fuel shall,
whether or not the Unit is operated or operable and notwithstanding any
earlier termination of the service life of the Unit, remain in full force and
effect until the expiration of the term hereof, it being recognized that such
costs represent deferred payments in connection with power theretofore deliv-
ered by Vermont Yankee hereunder. Such cancellation shall be effected by
written notice given by the Purchaser to Vermont Yankee. In the event of such
cancellation, all continuing obligations of the parties hereunder as to subse-
quently incurred costs of Vermont Yankee other than the obligations relating
to the payment and application of Total Decommissioning Costs and of costs of
permanent storage or disposal of spent nuclear fuel to the extent excluded
from such cancellation by the second preceding sentence, but including the
Purchaser's obligations to continue payments pursuant to clause (a)(other than
those related to the costs of permanent storage or disposal of spent nuclear
fuel, and clauses (c) and (d) of the first paragraph of Section 7 hereof,
shall cease forthwith. Notwithstanding the foregoing, the applicable provi-
sions of this contract shall continue in effect after the cancellation hereof
to the extent necessary to permit final billings and adjustments hereunder
with respect to obligations incurred through the date of cancellation and the
collection thereof. Any dispute as to the Purchaser's right to cancel this
contract pursuant to the foregoing provisions shall be referred to arbitration
in accordance with the provisions of Section 13.
Notwithstanding anything in this contract elsewhere contained, the
Purchaser may cancel this contract or be relieved of its obligations to make
payments hereunder only as provided in the next preceding paragraph of this
Section 10. Further, if for reasons beyond Vermont Yankee's reasonable
control, deliveries are not made as contemplated by this contract, Vermont
Yankee shall have no liability to the Purchaser on account of such non-
delivery.
PAGE 8
11. Insurance.
Vermont Yankee presently has in effect, and hereafter will at all times
maintain until the expiration of the term hereof, insurance to cover its
"public liability" for personal injury and property damage resulting from a
"nuclear incident" (as those terms are defined in the Act), with limits not
less than Vermont Yankee may be required to maintain to qualify for governmen-
tal indemnity under the Act and shall execute and maintain an indemnification
agreement with the NRC as provided by the Act. Vermont Yankee will also at
all times maintain such other types of liability insurance, including work-
men's compensation insurance in such amounts, as is customary in the case of
other similar electric utility companies, or as may be required by law.
Vermont Yankee will at all times keep insured such portions of the Unit
(other than the fuel assemblies and components, including nuclear materials)
as are of a character usually insured by electric utility companies similarly
situated and operating like properties, against the risk of a "nuclear inci-
dent" and such other risks as electric utility companies, similarly situated
and operating like properties, usually insure against; and such insurance
shall to the extent available be carried in amounts sufficient to prevent
Vermont Yankee from becoming a co-insurer. Vermont Yankee will at all times
keep its fuel assemblies and components (including nuclear materials) insured
against such risks and in such amounts as shall, in the opinion of Vermont
Yankee, provide adequate protection.
12. Audit.
Vermont Yankee's books and records (including metering records) shall be
open to reasonable inspection and audit by the Purchaser.
13. Arbitration.
In case any dispute shall arise as to the interpretation or performance
of this contract which cannot be settled by mutual agreement, such dispute
shall be submitted to arbitration. The parties shall if possible agree upon a
single arbitrator. In case of failure to agree upon an arbitrator within 15
days after the delivery by either party to the other of a written notice
requesting arbitration, either party may request the American Arbitration
Association to appoint the arbitrator. The arbitrator, after opportunity for
each of the parties to be heard, shall consider and decide the dispute and
notify the parties in writing of his decision. Such decision shall be binding
upon the parties, and the expenses of the arbitration shall be borne equally
by them.
14. Regulation.
This contract, and all rights, obligations and performance of the
parties hereunder, are subject to all applicable state and federal law and to
all duly promulgated orders and other duly authorized action of governmental
authority having jurisdiction in the premises.
15. Assignment.
This contract shall be binding upon and shall inure to the benefit of,
and may be performed by, the successors and assigns of the parties, except
PAGE 9
that no assignment, pledge or other transfer of this contract by either party
shall operate to release the assignor, pledgor or transferor from any of its
obligations under this contract unless consent to the release is given in
writing by the other party, or, if the other party has theretofore assigned,
pledged or otherwise transferred its interest in this contract, by the other
party's assignee, pledgee or transferee, or unless such transfer is incident
to a merger or consolidation with, or transfer of all or substantially all of
the assets of the transferor to, another sponsor which shall, as a part of
such succession, assume all the obligations of the transferor under this
contract.
16. Right of Setoff.
The Purchaser shall not be entitled to set off against the payments
required to be made by it under this contract (i) any amounts owed to it by
Vermont Yankee or (ii) the amount of any claim by it against Vermont Yankee.
However, the foregoing shall not affect in any other way the Purchaser's right
and remedies with respect to any such amounts owed to it by Vermont Yankee or
any such claim by it against Vermont Yankee.
17. Amendments.
Upon authorization by Vermont Yankee's board of directors of uniform
amendments to all the Additional Power Contracts with sponsors, Vermont Yankee
shall have the right to amend the provisions of Section 7 hereof by serving an
appropriate statement of such amendment upon the Purchaser and filing the same
with FERC (or such other regulatory agency as may have jurisdiction in the
premises) in accordance with the provisions of applicable laws and any rules
and regulations thereunder, and the amendment shall thereupon become effective
on the date specified therein, subject to any suspension order issued by such
agency. All other amendments to this contract shall be by mutual agreement
evidenced by a written amendment signed by the parties thereto.
18. Interpretation.
The interpretation and performance of this contract shall be in accor-
dance with and controlled by the law of the State of Vermont.
19. Addresses.
Except as the parties may otherwise agree, any notice, request, bill or
other communication from one party to the other, relating to this contract, or
the rights, obligations or performance of the parties hereunder, shall be in
writing and shall be effective upon delivery to the other party. Any such
communication shall be considered as duly delivered when delivered in person
or mailed by registered or certified mail, postage prepaid, to the respective
post office address of the other party shown following the signatures of such
other party hereto, or such other address as may be designated by written
notice given as provided in this Section 19.
20. Corporate Obligations.
This contract is the corporate act and obligation of the parties hereto,
and any claim hereunder against any stockholder, director or officer of either
party, as such, is expressly waived.
PAGE 10
21. All Prior Agreements Superseded.
This contract represents the entire agreement between the parties
relating to the subject matter hereof during the operative term hereof (i.e.,
post-December 1, 2002), and all previous agreements, discussions, communica-
tions and correspondence with respect to the subject matter are hereby
superseded and are of no further force and effect.
IN WITNESS WHEREOF the parties have executed this contract by their
respective officers thereunto duly authorized as of the date first above
written.
VERMONT YANKEE NUCLEAR POWER CORPORATION
By William F. Conway
President
R.D. 5, Ferry Road, Box 169
Brattleboro, Vermont 05301
CAMBRIDGE ELECTRIC LIGHT COMPANY
By E. G. Cheney
Financial Vice President
(Address)
675 Massachusetts Avenue
Cambridge, Massachusetts 02139
