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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549-1004
Form 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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)
(Former name, address and fiscal year, if changed since last report.)
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 November 1, 1997
Common Stock, $25 par value 346,600 shares
The Company meets the conditions set forth in General Instruction H(1)(a) and
(b) of Form 10-Q as a wholly-owned subsidiary and is therefore filing this
Form with the reduced disclosure format.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CAMBRIDGE ELECTRIC LIGHT COMPANY
CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
ASSETS
(Dollars in thousands)
September 30, December 31,
1997 1996
(Unaudited)
PROPERTY, PLANT AND EQUIPMENT, at original cost $162 452 $161 331
Less - Accumulated depreciation 63 337 61 499
99 115 99 832
Add - Construction work in progress 940 546
100 055 100 378
INVESTMENTS
Equity in nuclear electric power companies 10 152 9 403
Other 5 5
10 157 9 408
CURRENT ASSETS
Cash 890 143
Accounts receivable
Affiliates 755 1 452
Customers 12 079 11 285
Unbilled revenues 3 359 2 751
Prepaid taxes -
Income 1 175 968
Property 2 580 1 704
Inventories and other 2 178 2 023
23 016 20 326
DEFERRED CHARGES
Regulatory Assets 73 954 42 781
Other 2 047 2 258
76 001 45 039
$209 229 $175 151
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CAMBRIDGE ELECTRIC LIGHT COMPANY
CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
CAPITALIZATION AND LIABILITIES
(Dollars in thousands)
September 30, December 31,
1997 1996
(Unaudited)
CAPITALIZATION
Common Equity -
Common stock, $25 par value -
Authorized and outstanding -
346,600 shares, wholly-owned by
Commonwealth Energy System (Parent) $ 8 665 $ 8 665
Amounts paid in excess of par value 27 953 27 953
Retained earnings 11 226 9 233
47 844 45 851
Long-term debt, including premiums, less
maturing debt and current sinking fund
requirements 17 402 17 503
65 246 63 354
CURRENT LIABILITIES
Interim Financing -
Notes payable to banks 19 375 18 725
Advances from affiliates 7 895 5 065
Maturing long-term debt - 4 260
27 270 28 050
Other Current Liabilities -
Current sinking fund requirements 100 100
Accounts payable
Affiliates 5 168 4 429
Other 5 679 8 216
Accrued local property and other taxes 3 455 1 705
Accrued interest 196 475
Other 5 608 3 738
20 206 18 663
47 476 46 713
DEFERRED CREDITS
Accumulated deferred income taxes 14 846 14 355
Yankee Atomic purchased power contract 2 694 3 466
Connecticut Yankee purchased power contract 30 021 35 879
Maine Yankee purchased power contract 37 596 -
Unamortized investment tax credits and other 11 350 11 384
96 507 65 084
COMMITMENTS AND CONTINGENCIES
$209 229 $175 151
See accompanying notes.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
1997 1996 1997 1996
ELECTRIC OPERATING REVENUES $35 721 $33 229 $98 834 $90 984
OPERATING EXPENSES
Electricity purchased for resale,
transmission and fuel 23 388 21 750 66 250 59 261
Other operation and maintenance 6 547 5 214 21 158 17 175
Depreciation 1 119 1 086 3 357 3 258
Taxes -
Income 1 181 1 370 1 317 2 641
Local property 776 785 2 310 2 286
Payroll and other 242 178 706 643
33 253 30 383 95 098 85 264
OPERATING INCOME 2 468 2 846 3 736 5 720
OTHER INCOME 335 420 1 360 2 032
INCOME BEFORE INTEREST CHARGES 2 803 3 266 5 096 7 752
INTEREST CHARGES
Long-term debt 362 431 1 199 1 809
Other interest charges 474 412 1 338 950
Allowance for borrowed funds
used during construction (13) (12) (23) (49)
823 831 2 514 2 710
NET INCOME 1 980 2 435 2 582 5 042
RETAINED EARNINGS -
Beginning of period 9 246 8 522 9 233 7 561
Dividends on common stock - - (589) (1 646)
RETAINED EARNINGS -
End of period $11 226 $ 8 522 $11 226 $10 957
See accompanying notes.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Dollars in thousands)
(Unaudited)
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2 582 $ 5 042
Effects of noncash items -
Depreciation and amortization 3 357 3 258
Deferred income taxes and investment tax
credits, net (446) 92
Earnings from corporate joint ventures (884) (908)
Dividends from corporate joint ventures 135 617
Change in working capital, exclusive of cash and
interim financing (400) 468
All other operating items 988 (2 392)
Net cash provided by operating activities 5 332 6 177
CASH FLOWS FOR INVESTING ACTIVITIES
Additions to property, plant and equipment
(exclusive of AFUDC) (3 092) (2 850)
Allowance for borrowed funds used during
construction (23) (49)
Net cash used for investing activities (3 115) (2 899)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of dividends (589) (1 646)
Proceeds from short-term borrowings 650 15 775
Advances from affiliates 2 830 3 185
Long-term debt issues refunded (4 260) (20 000)
Sinking funds payments (101) (102)
Net cash used for financing activities (1 470) (2 788)
Net increase (decrease) in cash 747 490
Cash at beginning of period 143 239
Cash at end of period $ 890 $ 729
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of capitalized amounts) $ 2 770 $ 3 216
Income taxes $ 1 122 $ 3 049
See accompanying notes.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) General Information
Cambridge Electric Light Company (the Company) is a wholly-owned subsid-
iary of Commonwealth Energy System. The parent company is referred to in
this report as the "System" and together with its subsidiaries is collec-
tively referred to as "the system." The System is an exempt public utility
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 and several nonregulated companies.
The Company has 142 regular employees including 106 (75%) represented by
a collective bargaining unit. The existing collective bargaining agreement
remains in effect until September 1, 1998. Employee relations have
generally been satisfactory.
During the second quarter of 1997, the system initiated a voluntary
personnel reduction program. For additional information, see the "Personnel
Reduction Program" section under Management's Discussion and Analysis of
Results of Operations.
(2) Significant Accounting Policies
(a) Principles of Accounting
The Company's significant accounting policies are described in Note 2 of
Notes to Financial Statements included in its 1996 Annual Report on
Form 10-K filed with the Securities and Exchange Commission. For interim
reporting purposes, the Company follows these same basic accounting policies
but considers each interim period as an integral part of an annual period
and makes allocations of certain expenses to interim periods based upon
estimates of such expenses for the year.
The unaudited financial statements for the periods ended September 30,
1997 and 1996 reflect, in the opinion of the Company, all adjustments
(consisting of only normal recurring accruals, except for those described in
the "Personnel Reduction Program" section under Management's Discussion and
Analysis of Results of Operations) necessary to summarize fairly the results
for such periods. In addition, certain prior period amounts are
reclassified from time to time to conform with the presentation used in the
current period's financial statements.
Income tax expense is recorded using the statutory rates in effect
applied to book income subject to tax recorded in the interim period.
The results for interim periods are not necessarily indicative of
results for the entire year because of seasonal variations in the consump-
tion of energy and the accrual of the costs associated with the Personnel
Reduction Program referred to above.
(b) Regulatory Assets and Liabilities
The Company is regulated as to rates, accounting and other matters by
various authorities including the Federal Energy Regulatory Commission
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CAMBRIDGE ELECTRIC LIGHT COMPANY
(FERC) and the Massachusetts Department of Public Utilities (DPU).
Based on the current regulatory framework, the Company accounts for the
economic effects of regulation in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 71, "Accounting for
the Effects of Certain Types of Regulation." The Company has established
various regulatory assets in cases where the DPU and/or the FERC have
permitted or are expected to permit recovery of specific costs over time.
Similarly, regulatory liabilities established by the Company are required to
be refunded to customers over time. Effective January 1, 1996, the Company
adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of." SFAS No. 121 imposes stricter
criteria for regulatory assets by requiring that such assets be probable of
future recovery at each balance sheet date. SFAS No. 121 did not have an
impact on the Company's financial position upon adoption. This result may
change as modifications are made to the current regulatory framework due to
ongoing electric industry restructuring efforts in Massachusetts. If all or
a separable portion of the Company's operations becomes no longer subject to
the provisions of SFAS No. 71, a write-off of related regulatory assets and
liabilities would be required, unless some form of transition cost recovery
continues through rates established and collected for the Company's
remaining regulated operations. In addition, the Company would be required
to determine any impairment to the carrying costs of deregulated plant and
inventory assets. However, pending Massachusetts legislation provides for
recovery of stranded costs, subject to review. For additional information
relating to industry restructuring, see the "Electric Industry
Restructuring" section under Management's Discussion and Analysis of Results
of Operations.
The principal regulatory assets included in deferred charges were as
follows:
September 30, December 31,
1997 1996
(Dollars in thousands)
Maine Yankee unrecovered plant
and decommissioning costs $37 596 $ -
Connecticut Yankee unrecovered plant
and decommissioning costs 30 021 35 879
Yankee Atomic unrecovered plant
and decommissioning costs 2 694 3 466
Postretirement benefits costs
including pensions 3 027 2 988
Other 616 448
$73 954 $42 781
The regulatory liabilities, reflected in the accompanying Balance
Sheets and related to deferred income taxes, were $3.2 million at
September 30, 1997 and December 31, 1996.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
(2) Commitments and Contingencies
(a) Construction Program
The Company is engaged in a continuous construction program presently
estimated at $27 million for the five-year period 1997 through 2001. Of
that amount, $5.9 million is estimated for 1997. As of September 30, 1997
the Company's actual construction expenditures amounted to approximately
$3.1 million including an allowance for funds used during construction.
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
securities.
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 regulations.
(b) Maine Yankee Nuclear Power Plant
The Company has a 4% equity ownership interest (approximately $3
million at September 30, 1997), with a power entitlement of 31.2 MW, in a
nuclear power plant located in Wiscasset, Maine. The plant, operated by
Maine Yankee Atomic Power Company (Maine Yankee), has been out of service
since an outage that began in December of 1996. On August 6, 1997, the
Board of Directors of Maine Yankee voted to permanently cease power
operations and begin the process of decommissioning the plant. The
decision to shut down the plant was based on an economic analysis of the
costs, risks and uncertainties associated with operating the plant
compared to those associated with closing and decommissioning the plant.
Based upon regulatory precedent, Maine Yankee believes that it will be
permitted to continue to collect from its power purchasers (including the
Company) decommissioning costs, unrecovered plant investment and other
costs associated with the permanent closure of the plant over the remain-
ing period of the plant's operating license that expires in 2008. The
Company does not believe the ultimate outcome of the early closing of this
plant will have a material adverse effect on its operations and believes
that recovery of these FERC-approved costs would continue to be allowed in
its rates at the retail level. Therefore, the Company recorded a
liability for its estimated share of decommissioning costs and a
corresponding regulatory asset in the third quarter.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
Item 2. Management's Discussion and Analysis of Results of Operations
The following is a discussion of major factors which have affected
operating revenues, expenses and net income during the periods included in the
accompanying condensed statements of income. This discussion should be read
in conjunction with the Notes to Condensed Financial Statements appearing
elsewhere in this report.
A summary of the period to period changes in the principal items included
in the condensed statements of income for the three and nine months ended
September 30, 1997 and 1996 and unit sales for these periods is shown below:
Three Months Ended Nine Months Ended
September 30, September 30,
1997 and 1996 1997 and 1996
Increase (Decrease)
(Dollars in thousands)
Electric Operating Revenues $ 2 492 7.5 % $ 7 850 8.6 %
Operating Expenses -
Electricity purchased for
resale, transmission and fuel 1 638 7.5 6 989 11.8
Other operation and maintenance 1 333 25.6 3 983 23.2
Depreciation 33 3.0 99 3.0
Taxes -
Federal and state income (189) (13.8) (1 324) (50.1)
Local property and other 55 5.7 87 3.0
2 870 9.5 9 834 11.5
Operating Income (378) (13.3) (1 984) (34.7)
Other Income (85) (20.2) (672) (33.1)
Income Before Interest Charges (463) (14.2) (2 656) (34.3)
Interest Charges (8) (1.0) (196) (7.2)
Net Income $ (455) (18.7) $(2 460) (48.8)
Unit Sales (MWH)
Retail 12 295 3.7 19 432 2.0
Wholesale (2 598) (4.1) 14 956 8.9
Total unit sales 9 697 2.4 34 388 3.1
The following is a summary of unit sales for the periods indicated:
Unit Sales (MWH)
Three Months Nine Months
Period Ended Total Retail Wholesale Total Retail Wholesale
September 30,
1997 409 792 348 987 60 805 1 156 843 974 145 182 698
September 30,
1996 400 095 336 692 63 403 1 122 455 954 713 167 742
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CAMBRIDGE ELECTRIC LIGHT COMPANY
Operating Revenues, Electricity Purchased For Resale, Transmission and Fuel
For the nine months ended September 30, 1997 operating revenue increased
approximately $7.9 million or 8.6% due primarily to increases in electricity
purchased for resale ($7.5 million) and fuel costs ($1 million), offset in
part by a decrease in transmission ($1.5 million). During the third quarter
of 1997, operating revenue increased approximately $2.5 million or 7.5% due
primarily to increases in electricity purchased for resale ($1.2 million),
fuel costs ($218,000) and transmission ($227,000). Also contributing to the
increase in both periods were higher unit sales.
Total unit sales for the current nine-month period increased 3.1% due to
higher retail sales (2%), reflecting increases in sales to residential and
commercial customers, offset in part by lower sales to industrial customers.
Also affecting the increase in unit sales were higher wholesale sales to the
New England Power Pool.
During the current quarter and first nine months of 1997, purchased power
costs increased approximately $1.2 million (6.3%) and $7.5 million (14.6%) due
to higher fuel costs and higher costs for replacement power reflecting the
permanent shutdown of Connecticut Yankee during 1996 and the absence of power
from Maine Yankee which had been out of service since December of 1996 and
will be permanently shut down. Also included in purchased power is an
increase in purchases from affiliate Canal Electric Company's Unit 1 and 2
reflecting the increased availability of these units.
Operating Expenses
For the current quarter and nine-month period, operation and maintenance
increased $1,333,000 or 25.6% and $3,983,000 or 23.2%, respectively. The
increase in the nine-month period was primarily due to a one-time charge ($2.5
million) related to a Personnel Reduction Program initiated during the second
quarter (as further discussed below). Also affecting the increase in the
current three and nine-month periods were higher insurance and benefit costs
of $602,000 and $389,000, respectively and higher costs related to automated
meter reading equipment of approximately $100,000 and $300,000, respectively.
The significant decreases in federal and state income taxes for the nine-month
period was due to a lower level of pretax income.
Other Income and Interest Charges
The decrease in other income for the nine-month period was primarily due
to the absence of a gain relating to the 1996 sale of parcels of land
($664,000).
Interest charges for the current nine-month period declined by 7.2% due to
lower long-term interest costs reflecting the repayment of a $20 million
(9.97%) long-term debt issue during the second quarter of 1996, the effect of
which was partially offset by a higher average level of short-term borrowings.
During the quarter, interest charges were virtually unchanged reflecting the
aforementioned retirement of long-term debt offset by the higher average level
of short-term borrowings.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
Personnel Reduction Program
As initially discussed in the Company's 1996 Annual Report on Form 10-K
filed with the Securities and Exchange Commission, the Company announced the
details of a system-wide voluntary Personnel Reduction Program (PRP) in May
1997. The goal of the PRP is to achieve a reduced, more efficient and more
productive workforce in response to the significant regulatory changes facing
the System. This action followed the consolidation of the system's electric
and gas operations. The expectation is that the system's workforce will be
reduced by 15% to 20%.
The PRP was offered to substantially all regular and part-time employees
of the system. Eligibility for employees covered by collective bargaining
agreements was subject to negotiation. The system reserves the right to limit
the number of participants to 300; however, the system expects the final
participation level to exceed this count.
The program provides severance based on years of service, the continuation
of certain health and dental insurance for specified periods and limited
reimbursement for certain educational and/or outplacement services.
To date, approximately 8% of the Company's employees have voluntarily
terminated employment with the Company as a result of the PRP. The Company
estimates that the cost of termination benefits as described above, including
a portion of costs for certain affiliates but excluding generation-related
costs that are being addressed separately as part of the industry restructur-
ing process, will approximate $2.5 million which was recorded in the second
quarter and had an after-tax income impact of $1.5 million. The payback
period is expected to be less than one year.
Electric Industry Restructuring
On December 30, 1996 the DPU issued a final order announcing its "Model
Rules and Legislative Proposal" as a guide in the creation of a competitive
market for electric generation in Massachusetts. Legislative proposals
concerning electric industry restructuring were filed by the Governor of the
Commonwealth of Massachusetts on February 24, 1997, and by the Massachusetts
Legislature's Joint Committee on Electric Utility Restructuring on March 20,
1997 that ultimately evolved into the proposal issued on August 4, 1997 by the
Senate Chairman of the Joint Committee on Government Regulations.
Additionally, during the past year, three Massachusetts electric utilities
announced negotiated restructuring settlements with the Massachusetts Attorney
General. Generally, these original proposals and settlement agreements
included, among other things, provisions for a 10% reduction in customer
charges, divestiture of non-nuclear generating assets, recovery of stranded
costs through a non-bypassable access charge and an implementation date of
January 1, 1998.
Subsequently, on October 3, 1997, the House Chairman of the Joint
Committee on Government Regulations issued another proposal that included,
among other things, a provision calling for a 15% reduction in rates for
customers taking standard offer service from the utility over a seven-year
period, the establishment of an auditing board within the DPU that would
review the stranded costs that would be included in each company's non-
bypassable access charge, unbundled rates as of January 1, 1998 and
implementation of customer choice of energy supplier by March 1, 1998.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
On October 29, 1997, a joint proposal was filed by the chairpersons of the
Joint Committee on Government Regulations which essentially reflected the
provisions previously proposed. This proposal was then forwarded to the Ways
and Means Committee of the House of Representatives for further review and
amendment. The House Ways and Means Committee then sent the amended
legislative proposal to the House of Representatives (the House). On November
10, 1997, after a considerable number of additional amendments were made by
members of the House, the legislation was passed in the House by a vote of 157
to 3. Provisions of this legislation include, among other things, a 10%
discount on standard offer service and retail choice of energy supplier
effective March 1, 1998, with a subsequent increase in the discount on
standard offer service to 15% upon completion of divestiture of non-nuclear
generating assets and securitization of net non-mitigable stranded costs
(which, for the Company, are primarily the result of above-market purchased
power contracts with non-utility generators); and, recovery of stranded costs
subject to review and an audit process. A Senate version of electric industry
restructuring legislation is expected shortly.
The proposed legislation is lengthy, complex and subject to change before
it is finalized. The Company cannot yet determine the final impact on its
operations and financial condition. The final legislation must also be
approved by the Massachusetts House and Senate and signed by the Governor of
Massachusetts. While the Company is encouraged by the legislation's treatment
of stranded cost recovery, the mandated customer discount could have a
significant impact on future cash flows. The system is preparing a proposed
restructuring plan in anticipation of final legislation being enacted.
Auction Process
On March 31, 1997, the system submitted a report to the DPU which detailed
the proposed auction process for selling its electric generation assets and
entitlements. The process includes a standard, sealed-bid auction for
generation assets and purchased power contracts. The auction process would
provide a market-based approach to maximizing stranded cost mitigation and
minimizing the access charges that ratepayers will have to pay for stranded
cost recovery. A request for bids from interested parties was issued during
August and in October an Offering Memorandum was issued. The system expects
that the final bidders will be chosen by year-end and that the entire process,
including regulatory approvals, will be completed no later than the end of
1998.
Provisions of Statement of Financial Accounting Standards No. 71
As described in Note 2(b) of the Notes to Condensed Financial Statements,
the Company complies with the provisions of Statement of Financial Accounting
Standards (SFAS) No. 71, "Accounting for the Effects of Certain Types of
Regulation." In the event the Company is somehow unable to meet the criteria
for following SFAS No. 71, the accounting impact would be an extraordinary,
non-cash charge to operations in an amount that could be material. Criteria
that could give rise to the discontinuance of SFAS No. 71 include: 1)
increasing competition restricting the system's ability to establish prices to
recover specific costs, and 2) a significant change in the current manner in
which rates are set by regulators. The Company monitors these criteria to
ensure that the continuing application of SFAS No. 71 is appropriate.
Recently, the Securities and Exchange Commission has questioned the ability of
certain utilities continuing the application of SFAS No. 71 where legislation
provided for the transition to retail competition. The issue of when and how
to discontinue the application of SFAS No. 71 by utilities during transition
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CAMBRIDGE ELECTRIC LIGHT COMPANY
to competition was referred to the Financial Accounting Standards Board's
Emerging Issues Task Force and guidance was issued in July 1997. Based on the
current evaluation of the various factors and conditions that are expected to
impact future cost recovery, the Company believes that its utility operations
remain subject to SFAS No. 71 and its regulatory assets, including those
related to electric generation, remain probable of future recovery.
<PAGE>
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CAMBRIDGE ELECTRIC LIGHT COMPANY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is an intervenor in a pending appeal at the
Massachusetts Supreme Judicial Court (SJC) filed by the
Massachusetts Institute of Technology (MIT)involving a DPU decision
approving a customer transition charge (CTC) for the recovery of
stranded investment costs. On September 18, 1997, the SJC announced
its decision remanding the matter to the DPU for further
consideration. The SJC stated that, although recovery of prudent
and verifiable stranded costs by utility companies is in the public
interest and consistent with the Public Utility Regulatory Policies
Act, the insufficiencies of the DPU's subsidiary findings precluded
the SJC from undertaking a meaningful review of the DPU's
calculations that formed the basis of the customer transition
charge. Among the issues that the SJC directed the DPU to consider
further are: the methodology for calculation of stranded costs, why
75% of stranded costs were allocated to MIT rather than 100%, the
prudence of the stranded costs incurred by the Company, and whether
the Company took the necessary mitigation efforts to reduce stranded
costs. With the SJC's remand of the order to the DPU, the parties
have been discussing a standstill agreement. The standstill
agreement would not resolve questions about the ultimate level of
CTC payments or what the final determination will be with respect to
the CTC upon remand to the DPU. The standstill agreement, if
finalized and approved by the SJC, would govern the obligations of
MIT to pay the CTC, subject to reconciliation, during the term of
the DPU's remand proceeding. This issue is discussed more fully in
the Company's 1996 Annual Report on Form 10-K. At this time,
management is unable to predict the outcome of this proceeding.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule.
Filed herewith as Exhibit 1 is the Financial Data Schedule for the
nine months ended September 30, 1997.
Filed herewith as Exhibit 2 is the restated Financial Data Schedule
for the nine months ended September 30, 1996.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
September 30, 1997.
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CAMBRIDGE ELECTRIC LIGHT COMPANY
SIGNATURES
Pursuant to the requirements 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)
Principal Financial and
Accounting Officer:
JAMES D. RAPPOLI
James D. Rappoli,
Financial Vice President
and Treasurer
Date: November 14, 1997
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet, statement of income and statement of cash flows contained in
Form 10-Q of Cambridge Electric Light Company for the nine months ended
September 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000016573
<NAME> CAMBRIDGE ELECTRIC LIGHT COMPANY
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 100,055
<OTHER-PROPERTY-AND-INVEST> 10,157
<TOTAL-CURRENT-ASSETS> 23,016
<TOTAL-DEFERRED-CHARGES> 76,001
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 209,229
<COMMON> 8,665
<CAPITAL-SURPLUS-PAID-IN> 27,953
<RETAINED-EARNINGS> 11,226
<TOTAL-COMMON-STOCKHOLDERS-EQ> 47,844
0
0
<LONG-TERM-DEBT-NET> 17,402
<SHORT-TERM-NOTES> 27,272
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 100
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 116,611
<TOT-CAPITALIZATION-AND-LIAB> 209,229
<GROSS-OPERATING-REVENUE> 98,834
<INCOME-TAX-EXPENSE> 1,317
<OTHER-OPERATING-EXPENSES> 93,781
<TOTAL-OPERATING-EXPENSES> 95,098
<OPERATING-INCOME-LOSS> 3,736
<OTHER-INCOME-NET> 1,360
<INCOME-BEFORE-INTEREST-EXPEN> 5,096
<TOTAL-INTEREST-EXPENSE> 2,514
<NET-INCOME> 2,582
0
<EARNINGS-AVAILABLE-FOR-COMM> 2,582
<COMMON-STOCK-DIVIDENDS> 589
<TOTAL-INTEREST-ON-BONDS> 1,199
<CASH-FLOW-OPERATIONS> 5,332
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains restated summary financial information extracted from
the balance sheet, statement of income and statement of cash flows contained
in Form 10-Q of Cambridge Electric Light Company for the nine months ended
September 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<RESTATED>
<CIK> 0000016573
<NAME> CAMBRIDGE ELECTRIC LIGHT COMPANY
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 99,055
<OTHER-PROPERTY-AND-INVEST> 9,520
<TOTAL-CURRENT-ASSETS> 20,188
<TOTAL-DEFERRED-CHARGES> 11,713
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 140,476
<COMMON> 8,665
<CAPITAL-SURPLUS-PAID-IN> 27,953
<RETAINED-EARNINGS> 10,957
<TOTAL-COMMON-STOCKHOLDERS-EQ> 47,575
0
0
<LONG-TERM-DEBT-NET> 17,503
<SHORT-TERM-NOTES> 24,060
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 4,360
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 46,978
<TOT-CAPITALIZATION-AND-LIAB> 140,476
<GROSS-OPERATING-REVENUE> 90,984
<INCOME-TAX-EXPENSE> 2,641
<OTHER-OPERATING-EXPENSES> 82,623
<TOTAL-OPERATING-EXPENSES> 85,264
<OPERATING-INCOME-LOSS> 5,720
<OTHER-INCOME-NET> 2,032
<INCOME-BEFORE-INTEREST-EXPEN> 7,752
<TOTAL-INTEREST-EXPENSE> 2,710
<NET-INCOME> 5,042
0
<EARNINGS-AVAILABLE-FOR-COMM> 5,042
<COMMON-STOCK-DIVIDENDS> 1,646
<TOTAL-INTEREST-ON-BONDS> 1,809
<CASH-FLOW-OPERATIONS> 6,177
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
