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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, 1998
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 2-30057
CANAL ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Massachusetts 04-1733577
(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, 1998
Common Stock, $25 par value 1,523,200 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
CANAL ELECTRIC COMPANY
CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
ASSETS
(Dollars in thousands)
September 30, December 31,
1998 1997
(Unaudited)
PROPERTY, PLANT AND EQUIPMENT, at original cost $470,674 $469,861
Less - Accumulated depreciation and
amortization 212,897 197,844
257,777 272,017
Add - Construction work in progress 4,857 2,228
Nuclear fuel in process 1,424 193
264,058 274,438
INVESTMENTS
Equity in corporate joint venture 2,828 3,075
CURRENT ASSETS
Cash 24 18
Accounts receivable-
Affiliates 7,616 12,159
Other 8,569 15,397
Electric production fuel oil 595 806
Prepaid property taxes 1,336 840
Other 2,550 2,277
20,690 31,497
DEFERRED CHARGES
Regulatory assets 15,552 17,413
Other 11,281 9,774
26,833 27,187
$314,409 $336,197
See accompanying notes.
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CANAL ELECTRIC COMPANY
CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
CAPITALIZATION AND LIABILITIES
(Dollars in thousands)
September 30, December 31,
1998 1997
(Unaudited)
CAPITALIZATION
Common Equity -
Common stock, $25 par value -
Authorized - 2,328,200 shares
Outstanding - 1,523,200 shares,
wholly-owned by Commonwealth
Energy System (Parent) $ 38,080 $ 38,080
Amounts paid in excess of par value 8,321 8,321
Retained earnings 56,517 53,130
102,918 99,531
Long-term debt, including premiums, less
current sinking fund requirements 83,568 83,917
186,486 183,448
CAPITAL LEASE OBLIGATIONS 10,800 11,227
CURRENT LIABILITIES
Interim Financing -
Notes payable to banks 750 20,850
Advances from affiliates 2,400 -
3,150 20,850
Other Current Liabilities -
Current sinking fund requirements 350 350
Accounts payable -
Affiliates 887 1,028
Other 16,460 21,335
Accrued taxes -
Income 248 2,054
Local property and other 1,668 844
Accrued interest 1,852 1,420
Other 5,282 5,328
26,747 32,359
29,897 53,209
DEFERRED CREDITS
Accumulated deferred income taxes 68,703 69,447
Unamortized investment tax credits and other 18,523 18,866
87,226 88,313
COMMITMENTS AND CONTINGENCIES
$314,409 $336,197
See accompanying notes.
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CANAL ELECTRIC COMPANY
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
1998 1997 1998 1997
ELECTRIC OPERATING REVENUES
Sales to affiliated companies $27,730 $33,075 $ 83,738 $ 95,382
Sales to non-affiliated companies 16,473 22,162 51,083 66,089
44,203 55,237 134,821 161,471
OPERATING EXPENSES
Fuel used in production 22,661 30,510 66,371 85,562
Electricity purchased for resale 136 1,488 417 5,467
Other operation and maintenance 8,359 9,183 28,165 27,476
Depreciation 5,039 5,065 15,116 15,196
Taxes -
Income 1,863 2,418 5,939 7,438
Local property 724 693 2,024 2,123
Payroll and other 177 190 594 642
38,959 49,547 118,626 143,904
OPERATING INCOME 5,244 5,690 16,195 17,567
OTHER INCOME 51 123 403 361
INCOME BEFORE INTEREST CHARGES 5,295 5,813 16,598 17,928
INTEREST CHARGES
Long-term debt 1,979 1,979 5,933 5,933
Other interest charges 49 241 347 900
2,028 2,220 6,280 6,833
NET INCOME 3,267 3,593 10,318 11,095
RETAINED EARNINGS -
Beginning of period 56,145 56,314 53,130 52,620
Dividends on common stock (2,895) (3,655) (6,931) (7,463)
RETAINED EARNINGS -
End of period $56,517 $56,252 $ 56,517 $ 56,252
See accompanying notes.
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CANAL ELECTRIC COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Dollars in thousands)
(Unaudited)
1998 1997
OPERATING ACTIVITIES
Net income $10,318 $11,095
Effects of noncash items -
Depreciation and amortization 16,861 17,736
Deferred income taxes and investment
tax credits, net (1,347) (844)
Earnings from corporate joint venture (337) (339)
Dividends from corporate joint venture 584 360
Change in working capital, exclusive of cash
and interim financing 5,201 8,303
All other operating items (1,537) (3,212)
Net cash provided by operating activities 29,741 33,099
INVESTING ACTIVITIES
Additions to property, plant and equipment (4,756) (3,955)
(inclusive of AFUDC)
FINANCING ACTIVITIES
Payment of short-term borrowings (20,100) (16,475)
Payment of dividends (6,931) (7,463)
Advances from (payments to) affiliates 2,400 (4,855)
Sinking fund payments (350) (350)
Net cash used for financing activities (24,981) (29,143)
Net increase in cash 6 1
Cash at beginning of period 18 12
Cash at end of period $ 24 $ 13
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of capitalized amounts) $ 5,659 $ 6,172
Income taxes $ 8,981 $ 6,952
See accompanying notes.
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CANAL ELECTRIC COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) General Information
Canal Electric 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 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 105 regular employees including 79 (75%) represented
by a collective bargaining agreement that will remain in effect through
May 31, 2001. Employee relations have generally been satisfactory.
The Company is a wholesale power company and operates two generating
units under life-of-the-unit power contracts on file with the Federal
Energy Regulatory Commission (FERC). The price of power is based on a
two-part rate consisting of a demand charge and an energy charge. The
demand charge covers all expenses except fuel costs and includes the re-
covery of the original investment. It also provides for any adjustments
to that investment over the economic lives of the units. The energy
charge is based on the cost of fuel and is billed to each purchaser in
proportion to its purchase of power. Purchasers are billed monthly.
The Company also procures bulk electric power at the request of and
for its affiliates thereby securing cost savings for their respective
customers by planning for a power supply on a single system basis.
On May 27, 1998, the System announced that three of its subsidiary
companies (Commonwealth Electric Company, Cambridge Electric Light
Company and the Company) selected affiliates of Southern Energy New
England, L.L.C., an affiliate of The Southern Company, to buy substan-
tially all of their non-nuclear electric generating assets in conjunction
with electric industry restructuring in Massachusetts. The plants being
sold include: Canal Unit 1 (566 mw) and a one-half interest in Canal Unit
2 (282.5 mw) located in Sandwich, MA and owned by the Company.
(2) Significant Accounting Policies
(a) Principles of Accounting
Generally, expenses which benefit more than one interim period are
allocated to other periods to more appropriately match revenues and
expenses. Income tax expense is recorded using the statutory rates in
effect applied to book income subject to tax recorded in the interim
period.
The unaudited financial statements for the periods ended September
30, 1998 and 1997, reflect, in the opinion of the Company, all adjust-
ments (consisting of only normal recurring accruals) 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.
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CANAL ELECTRIC COMPANY
The Company's significant accounting policies are described in Note 2
of Notes to Financial Statements included in its 1997 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.
(b) Regulatory Assets
The Company is regulated as to rates, accounting and other matters by
various authorities, including the FERC and the Massachusetts Department
of Telecommunications and Energy (DTE).
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 FERC has
permitted or is expected to permit recovery of specific costs over time.
In the event the criteria for applying SFAS No. 71 are no longer met, the
accounting impact would be an extraordinary, non-cash charge to opera-
tions of an amount that could be material. Criteria that give rise to
the discontinuance of SFAS No. 71 include: 1) increasing competition
restricting the Company'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 from cost based regulation to another form of
regulation. These criteria are reviewed on a regular basis to ensure the
continuing application of SFAS No. 71 is appropriate. Based on the
current evaluation of the various factors and conditions that are
expected to impact future cost recovery, the Company believes that its
regulatory assets are probable of future recovery.
The principal regulatory assets included in deferred charges were as
follows:
September 30, December 31,
1998 1997
(Dollars in thousands)
Deferred income taxes $13,212 $13,089
Seabrook related costs 2,340 4,324
$15,552 $17,413
In November 1997, the Commonwealth of Massachusetts enacted a
comprehensive electric utility industry restructuring bill. On November
19, 1997, the Company, together with Cambridge Electric Light Company
(Cambridge Electric) and Commonwealth Electric Company (Commonwealth)
filed a restructuring plan with the DTE. The plan, approved by the DTE
on February 27, 1998, provides that Commonwealth and Cambridge Electric,
beginning March 1, 1998, initiate a ten percent rate reduction for all
customer classes and allow customers to choose their energy supplier. As
part of the plan, the DTE authorized the recovery of certain strandable
costs and provides that certain future costs may be deferred to achieve
or maintain the rate reductions that the restructuring bill mandates.
The legislation gives the DTE the authority to determine the amount of
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CANAL ELECTRIC COMPANY
strandable costs that will be eligible for recovery. Costs that will
qualify as strandable costs and be eligible for recovery include, but are
not limited to, certain above market costs associated with generating
facilities, costs associated with long-term commitments to purchase power
at above market prices from independent power producers and regulatory
assets and associated liabilities related to the generation portion of
the electric business.
The cost of transitioning to competition will be mitigated, in part,
by the sale of the system's non-nuclear generating assets, including the
Company's Units 1 and 2. The sale was approved by the DTE on October 30,
1998 and by the FERC on November 12, 1998 (see the "Industry Restructur-
ing" section under Management's Discussion and Analysis of Results of
Operations for further discussion of the sale). The net proceeds from
the sale of these assets will be used to mitigate transition costs.
(3) Commitments and Contingencies
Construction
The Company is engaged in a continuous construction program presently
estimated at $19.3 million for the five-year period 1998 through 2002.
Of that amount, $10.5 million is estimated for 1998. As of September 30,
1998, construction expenditures, including an allowance for funds used
during construction, amounted to approximately $4.8 million. These
estimates include expenditures related to Units 1 and 2 which are to be
sold in 1998 pursuant to the restructuring plan approved by the DTE. The
Company expects to finance these expenditures with internally generated
funds and short-term borrowings.
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CANAL ELECTRIC COMPANY
Item 2. 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 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, 1998 and 1997 and unit sales for these periods is shown
below:
Three Months Ended Nine Months Ended
September 30, September 30,
1998 and 1997 1998 and 1997
Increase (Decrease)
(Dollars in thousands)
Electric Operating Revenues $(11,034) (20.0)% $(26,650) (16.5)%
Operating Expenses -
Fuel used in production (7,849) (25.7) (19,191) (22.4)
Electricity purchased for resale (1,352) (90.9) (5,050) (92.4)
Other operation and maintenance (824) (9.0) 689 2.5
Depreciation (26) (0.5) (80) (0.5)
Taxes -
Federal and state income (555) (23.0) (1,499) (20.2)
Local property and other 18 2.0 (147) (5.3)
(10,588) (21.4) (25,278) (17.6)
Operating Income (446) (7.8) (1,372) (7.8)
Other Income (72) (58.5) 42 11.6
Income Before Interest Charges (518) (8.9) (1,330) (7.4)
Interest Charges (192) (8.6) (553) (8.1)
Net Income $ (326) (9.1) $ (777) (7.0)
Unit Sales (MWH)
Increase (Decrease) (114,929) (8.5) (172,899) (4.7)
Three Months Ended Nine Months Ended
September 30, September 30,
MWH Unit Sales 1998 and 1997 1998 and 1997
Canal Unit 1 787,493 885,529 2,178,604 2,393,398
Canal Unit 2 362,514 323,818 1,076,068 879,452
Seabrook 1 79,614 88,697 220,842 215,649
Purchased for Resale - 46,506 - 159,914
1,229,621 1,344,550 3,475,514 3,648,413
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CANAL ELECTRIC COMPANY
Revenue, Fuel and Purchased Power
Operating revenues for the three and nine months ended September 30, 1998
decreased approximately $11 million (20%) and $26.7 million (16.5%), respec-
tively, due primarily to decreases in fuel used in production and electricity
purchased for resale. The change in unit sales during the current periods
reflects the timing of an inspection outage at Unit 1, the increased avail-
ability of Unit 2, the timing of refueling at Seabrook and the expiration of
contracts for the purchase of electricity on behalf of affiliated retail
distribution companies.
The decreases in fuel used in production during the current three and
nine-month periods reflects the lower average cost of fuel oil and the de-
creased availability of Unit 1. Fuel, purchased power and transmission costs
for the current three and nine months represented approximately 51% and 53%,
respectively, of operating revenues and averaged 1.9 cents and 2 cents per
KWH, respectively, as compared to 2.4 cents and 2.6 cents for the correspond-
ing periods a year ago.
Other Operating Expenses
During the current nine-month period, other operation and maintenance
increased by approximately $689,000 or 2.5%, due primarily to an increase in
maintenance ($2.3 million) primarily related to Unit 1, offset in part by a
decrease in other operation ($1.6 million) reflecting the absence of amortiza-
tion related to an abandoned nuclear unit ($584,000) and lower insurance and
benefits costs ($289,000). During the current quarter, other operation and
maintenance decreased by $824,000 (9%) reflecting lower maintenance related to
Seabrook 1 ($483,000) due to the timing of a refueling outage during 1997,
lower insurance and benefits costs ($95,000) and a decrease in maintenance
($104,000) primarily related to the timing of maintenance on Unit 1. Federal
and state income taxes decreased due to lower levels of pretax income.
Interest Charges
Total interest charges decreased for both current periods due to lower
average levels of short-term borrowings.
Industry Restructuring
On November 25, 1997, the Governor of Massachusetts signed into law the
Electric Industry Restructuring Act (the Act). This legislation provided,
among other things, that customers of retail electric utility companies who
take standard offer service receive a 10 percent rate reduction and be allowed
to choose their energy supplier, effective March 1, 1998. The Act also
provides that utilities be allowed full recovery of transition costs subject
to review and an audit process. The rate reduction mandated by the legisla-
tion increases to 15 percent effective September 1, 1999 for customers who
continue to take standard offer service. A statewide ballot referendum that
sought to repeal the legislation was defeated by a wide margin on November 3
of this year.
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CANAL ELECTRIC COMPANY
The Company, together with retail affiliates Cambridge Electric and
Commonwealth, filed a comprehensive electric restructuring plan with the DTE
in November 1997, that was substantially approved by the DTE in February 1998.
The divestiture of the Company's non-nuclear generation assets is an integral
part of the Company's restructuring plan and is consistent with the Act.
In March 1997, the Company, together with Cambridge Electric and Common-
wealth, had submitted a report to the DTE that detailed the proposed auction
process for selling their electric generation assets and the entitlements
associated with purchased power contracts. The auction process provided a
market-based approach to maximizing stranded cost mitigation and minimizing
the transition costs that retail customers will have to pay for stranded cost
recovery. A request for bids from interested parties was issued in August
1997 and an Offering Memorandum followed in October 1997. Potential bidders
examined all pertinent information related to the generating facilities and
purchased power contracts in order to prepare and submit their first round of
bids in mid-December. Final binding bids were submitted in May 1998.
On May 27, 1998, the System announced that three of its subsidiary
companies (Commonwealth, Cambridge Electric and the Company) selected affili-
ates of Southern Energy New England, L.L.C. (Southern Energy), an affiliate of
The Southern Company of Atlanta, Georgia, to buy substantially all of their
non-nuclear electric generating assets for approximately $462 million (subject
to certain adjustments at closing). These facilities represent 984 megawatts
(mw) of electric capacity and have an approximate book value of $79 million.
The plants being sold include: Canal Unit 1 (566 mw) and a one-half
interest in Canal Unit 2 (282.5 mw) located in Sandwich, MA and owned by the
Company; the Kendall Station facility (67 mw) and the adjacent Kendall Jets
(46 mw), located in Cambridge, MA and owned by Cambridge Electric; five diesel
generators (13.8 mw) in Oak Bluffs and West Tisbury on the island of Martha's
Vineyard that are owned by Commonwealth, and a 1.4 percent joint-ownership
interest (8.9 mw) in Wyman Unit No. 4 located in Yarmouth, ME, also owned by
Commonwealth.
On July 31, 1998, a formal divestiture filing was submitted to the FERC
and the DTE that requested approval of the sale of the generating assets to
Southern Energy. On October 30, 1998, the DTE approved the system's sale of
its generating assets to Southern Energy. The DTE, however, deferred ruling
on the allocation of proceeds from the sale of the Company's Units 1 and 2
between Cambridge Electric and Commonwealth Electric and on the rate of return
to be paid to customers on the net proceeds from the sale over an eleven-year
period. These issues are not expected to impact the asset sale that is
scheduled to close in the fourth quarter. The FERC approved the sale on
November 12, 1998.
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 installa-
tion of expensive air and water pollution control equipment. These regula-
tions have had an impact on the Company's operations in the past and could
have an impact on future operations, capital costs and construction schedules
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CANAL ELECTRIC COMPANY
of major facilities. However, the Company's electric generating facilities
are to be sold at auction in 1998 pursuant to the restructuring plan approved
by the DTE.
Year 2000
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any computer
program that has date sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in a temporary
inability to process transactions or engage in normal business activities.
The system has been involved in Year 2000 compliancy since 1996.
The system, on a coordinated basis and with the assistance of RCG Informa-
tion Technologies and other consultants, is addressing the Year 2000 issue.
The system has inventoried and assessed all date sensitive information and
transaction processing computer systems and determined that a substantial
portion of its software needed to be modified or replaced. Plans have been
developed and are being implemented to correct and test all affected systems,
with priorities assigned based on the importance of the activity. The system
has identified the software and hardware installations that will be necessary.
All installations are expected to be completed and tested by mid-1999. The
system has also inventoried its non-information technology systems that may be
date sensitive, (facilities, electric and gas operations, energy
supply/production and distribution), that use embedded technology such as
micro-controllers and micro-processors. The system anticipates that these
systems will be updated or replaced as necessary and tested by mid-1999.
Modifying and testing the system's information and transaction processing
systems from 1996 through 2000 is currently expected to cost $6 to $7 million,
including approximately $900,000 incurred through 1997 and $1.6 million spent
during the first nine months of 1998. Approximately $1.2 million is expected
to be spent in the fourth quarter of this year and the balance of $2.5 to $3
million in 1999 and 2000. Year 2000 costs have been expensed as incurred and
will continue to be funded from operations.
The system has initiated formal communications with its significant
suppliers to determine the extent to which the system may be vulnerable to
their failure to correct their own Year 2000 issues. The system has not
received enough responses to its survey to make an accurate assessment of the
Year 2000 readiness of its suppliers. Failure of the system's significant
suppliers to address Year 2000 issues could have a material adverse effect on
the system's operations, although it is not possible at this time to quantify
the amount of business that might be lost or the costs that could be incurred
by the system.
In addition, parts of the global infrastructure, including national
banking systems, electrical power grids, gas pipelines, transportation
facilities, communications and governmental activities, may not be fully
functional after 1999. Infrastructure failures could significantly reduce the
system's ability to acquire energy and its ability to serve its customers as
effectively as they are now being served. The system is identifying elements
of the infrastructure that are critical to its operations and is obtaining
information as to the expected Year 2000 readiness of these elements.
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CANAL ELECTRIC COMPANY
The system has started its contingency planning for critical operational
areas that might be affected by the Year 2000 issue if compliance by the
system is delayed. System gas and electric operations currently have emergen-
cy operating plans as well as information technology disaster recovery plans
as components of its standard operating procedures. These plans will be
enhanced to identify potential Year 2000 risks to normal operations and the
appropriate reaction to these potential failures including contingency plans
that may be required for any third parties that fail to achieve Year 2000
compliance. All necessary contingency plans are expected to be completed by
early 1999, although in certain cases, especially infrastructure failures,
there may be no practical alternative course of action available to the
system.
The system is working with other energy industry entities, both regionally
and nationally with respect to Year 2000 readiness and is cooperating in the
development of local and wide-scale contingency planning.
While the system believes its efforts to address the Year 2000 issue will
be successful in avoiding any material adverse effect on the system's opera-
tions or financial condition, it recognizes that failing to resolve Year 2000
issues on a timely basis would, in a "most reasonably likely worst case
scenario," significantly limit its ability to acquire and distribute energy
and process its daily business transactions for a period of time, especially
if such failure is coupled with third party or infrastructure failures.
Similarly, the system could be significantly affected by the failure of one or
more significant suppliers, customers or components of the infrastructure to
conduct their respective operations after 1999. Adverse effects on the system
could include, among other things, business disruption, increased costs, loss
of business and other similar risks.
The foregoing discussion regarding Year 2000 project timing, effective-
ness, implementation and costs includes forward-looking statements that are
based on management's current evaluation using available information. Factors
that might cause material changes include, but are not limited to, the
availability of key Year 2000 personnel, the readiness of third parties, and
the system's ability to respond to unforeseen Year 2000 complications.
Forward-Looking Statements
This discussion contains statements which, to the extent it is not a
recitation of historical fact, constitute "forward-looking statements" and is
intended to be subject to the safe harbor protection provided by the Private
Securities Litigation Reform Act of 1995. A number of important factors
affecting the Company's business and financial results could cause actual
results to differ materially from those reflected in the forward-looking
statements or projected amounts. Those factors include developments in the
legislative, regulatory and competitive environment, certain environmental
matters, demands for capital and the availability of cash from various
sources.
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CANAL ELECTRIC COMPANY
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
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, 1998.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
September 30, 1998.
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CANAL ELECTRIC COMPANY
SIGNATURE
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.
CANAL ELECTRIC COMPANY
(Registrant)
Principal Financial Officer:
JAMES D. RAPPOLI
James D. Rappoli,
Financial Vice President
and Treasurer
Date: November 13, 1998
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheet, statement of income, statement of retained earnings and
statement of cash flows contained in Form 10-Q of Canal Electric Company for
the nine months ended September 30, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000016906
<NAME> CANAL ELECTRIC COMPANY
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 264,058
<OTHER-PROPERTY-AND-INVEST> 2,828
<TOTAL-CURRENT-ASSETS> 20,690
<TOTAL-DEFERRED-CHARGES> 26,833
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 314,409
<COMMON> 38,080
<CAPITAL-SURPLUS-PAID-IN> 8,321
<RETAINED-EARNINGS> 56,517
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0
0
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0
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0
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</TABLE>
