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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, 1999
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.)
800 Boylston Street, Boston, Massachusetts 02199
(Address of principal executive offices) (Zip Code)
(617) 424-2000
(Registrant's telephone number, including area code)
One Main Street, Cambridge, Massachusetts 02142
(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, 1999
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, 1999 AND DECEMBER 31, 1998
ASSETS
(Dollars in thousands)
(Unaudited)
September 30, December 31,
1999 1998
PROPERTY, PLANT AND EQUIPMENT, at original cost $265,209 $265,612
Less - Accumulated depreciation and
amortization 77,633 77,081
187,576 188,531
Add - Construction work in progress 2,420 1,852
Nuclear fuel in process 1,730 1,568
191,726 191,951
INVESTMENTS
Equity in corporate joint venture 2,862 2,800
CURRENT ASSETS
Cash and cash equivalents 183 258,944
Advances to affiliates - 42,235
Accounts receivable-
Affiliates 2,765 13,642
Other 1,382 9,736
Inventories, at average cost 1,225 1,268
Prepaid income taxes 18,173 7,575
Other 849 1,543
24,577 334,943
DEFERRED CHARGES
Regulatory assets 17,655 18,745
Other 4,956 5,840
22,611 24,585
$241,776 $554,279
The accompanying notes are an integral part of these financial statements.
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CANAL ELECTRIC COMPANY
CONDENSED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
CAPITALIZATION AND LIABILITIES
(Dollars in thousands)
(Unaudited)
September 30, December 31,
1999 1998
CAPITALIZATION
Common Equity -
Common stock, $25 par value -
Authorized - 2,328,200 shares
Outstanding - 1,523,200 shares $ 38,080 $ 38,080
Amounts paid in excess of par value 8,321 8,321
Retained earnings 54,998 241,965
101,399 288,366
CAPITAL LEASE OBLIGATIONS 10,128 10,551
CURRENT LIABILITIES
Interim Financing -
Notes payable to banks 18,125 -
Advances from affiliates 21,235 -
39,360 -
Other Current Liabilities -
Accounts payable -
Affiliates 2,761 137,965
Other 1,997 31,327
Capital lease obligations 565 568
Accrued taxes and other 3,850 3,339
9,173 173,199
48,533 173,199
DEFERRED CREDITS
Accumulated deferred income taxes 65,112 64,383
Unamortized investment tax credits and other 16,604 17,780
81,716 82,163
COMMITMENTS AND CONTINGENCIES
$241,776 $554,279
The accompanying notes are an integral part of these financial statements.
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CANAL ELECTRIC COMPANY
CONDENSED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Dollars in thousands)
(Unaudited)
Three Months Ended Nine Months Ended
1999 1998 1999 1998
ELECTRIC OPERATING REVENUES 10,656 44,203 34,289 134,821
OPERATING EXPENSES
Fuel used in production 451 22,661 1,091 66,371
Electricity purchased for resale 124 136 393 417
Other operation and maintenance 2,539 8,359 9,100 28,165
Depreciation 1,785 5,039 5,244 15,116
Taxes -
Income 1,046 1,863 6,353 5,939
Local property 270 724 810 2,024
Payroll and other 43 177 286 594
6,258 38,959 23,277 118,626
OPERATING INCOME 4,398 5,244 11,012 16,195
OTHER INCOME
Additional gain from sale
of assets, net (270) - 6,263 -
Other (2,108) 51 (354) 403
(2,378) 51 5,909 403
INCOME BEFORE INTEREST CHARGES 2,020 5,295 16,921 16,598
INTEREST CHARGES
Long-term debt - 1,979 - 5,933
Other interest charges 440 49 710 347
440 2,028 710 6,280
NET INCOME 1,580 3,267 16,211 10,318
RETAINED EARNINGS -
Beginning of period 56,464 56,145 241,965 53,130
Dividends paid to parent (3,046) (2,895) (203,178) (6,931)
RETAINED EARNINGS -
End of period $54,998 $56,517 $ 54,998 $ 56,517
The accompanying notes are an integral part of these financial statements.
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CANAL ELECTRIC COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Dollars in thousands)
(Unaudited)
1999 1998
OPERATING ACTIVITIES
Net income $ 16,211 $10,318
Additional gain from sale of assets (10,306) -
Effects of noncash items -
Depreciation and amortization 7,001 16,861
Deferred income taxes and investment
tax credits, net 497 (1,347)
Earnings from corporate joint venture (332) (337)
Dividends from corporate joint venture 270 584
Change in working capital, exclusive of cash,
cash equivalents, advances to affiliates and
interim financing (154,656) 5,201
All other operating items 406 (1,539)
Net cash (used for) provided by operating activities (140,909) 29,741
INVESTING ACTIVITIES
Payments from affiliates 42,235 -
Additions to property, plant and equipment (752) (4,756)
Net cash provided by (used for)
investing activities 41,483 (4,756)
FINANCING ACTIVITIES
Proceeds from (payment of) short-term borrowings 18,125 (20,100)
Payment of dividends (203,178) (6,931)
Reimbursement of transaction costs 4,483 -
Sinking fund payments - (350)
Advances from affiliates 21,235 2,400
Net cash used for financing activities (159,335) (24,981)
Net increase (decrease) in cash and cash equivalents (258,761) 6
Cash and cash equivalents at beginning of period 258,944 18
Cash at end of period $ 183 $ 24
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest (net of capitalized amounts) $ 699 $ 5,659
Income taxes $ 16,461 $ 8,981
The accompanying notes are an integral part of these financial statements.
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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
NSTAR. NSTAR is the new holding company that was formed, effective
August 25, 1999, after receipt of all necessary approvals and upon
completion of a merger transaction between Commonwealth Energy System
(COM/Energy, formerly the parent of the Company) and BEC Energy (formerly
the parent company of Boston Edison Company). The merger creates an
energy delivery company, that includes the Company, serving approximately
1.3 million customers located in Massachusetts including more than one
million electric customers in 81 communities and 240,000 gas customers in
51 communities. NSTAR 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 is a wholesale electric generating company organized in
1902 under the laws of the Commonwealth of Massachusetts. On December
30, 1998, in response to the significant changes that have taken place in
the utility industry, COM/Energy sold substantially all of its non-
nuclear generating assets, including the Company's generating station, to
affiliates of The Southern Company of Atlanta, Georgia. The Company's
generating stations, located in Sandwich, Massachusetts consisted of two
units: Canal Unit 1, wholly-owned by the Company; and Canal Unit 2,
jointly-owned by the Company and Montaup Electric Company (Montaup) (an
unaffiliated company). The Company continues to have a 3.52% interest in
the Seabrook 1 nuclear power plant to provide a portion of the capacity
and energy needs of affiliates Cambridge Electric Light Company (Cam-
bridge) and Commonwealth Electric Company (Commonwealth).
The Company had 109 employees prior to the sale of Canal Units 1 and
2 on December 30, 1998; however, following the sale, the Company no
longer has any employees.
(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 1998 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, 1999 and 1998, reflect, in the opinion of the Company, all adjust-
ments 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
Income tax expense is recorded using the statutory rates in effect
applied to book income subject to tax recorded in the interim period.
(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).
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.
The principal regulatory assets included in deferred charges were as
follows:
September 30, December 31,
1999 1998
(Dollars in thousands)
Deferred income taxes $15,737 $15,737
Seabrook related costs 1,830 3,008
Other 88 -
$17,655 $18,745
(c) Divestiture of Generation Assets
The cost of transitioning to competition have been mitigated, in
part, by the sale of COM/Energy's non-nuclear generating assets. On May
27, 1998, COM/Energy agreed to sell substantially all of its non-nuclear
generating assets (984 MW) to affiliates of The Southern Company of
Atlanta, Georgia. The sale was conducted through an auction process that
was outlined in a restructuring plan filed with the DTE in November 1997
in conjunction with the state's industry restructuring legislation enact-
ed in 1997. The sale was approved by the DTE on October 30, 1998 and by
the FERC on November 12, 1998. Proceeds from the sale of the Company's
non-nuclear generating assets amounted to approximately $395 million or 6
times their book value of approximately $65.4 million. The proceeds from
the sale, net of book value, transaction costs and certain other adjust-
ments amounted to approximately $298 million and are being used to reduce
transition costs of Cambridge and Commonwealth related to electric
industry restructuring that otherwise would have been collected through a
non-bypassable transition charge. An adjustment of $5.1 million was
recorded in the first quarter of 1999 that reduced the book value to
$60.3 million. The Company has determined that this transaction was not
a taxable event because it provided no economic benefit to the Company.
COM/Energy established Energy Investment Services, Inc. as the
vehicle to invest the net proceeds from the sale of the Company's
generation assets. These proceeds are invested in a portfolio of
securities that is designed to maintain principal and earn a reasonable
return. Both the principal amount and income earned are being used to
reduce the transition costs that would otherwise be billed to customers
of Cambridge and Commonwealth.
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CANAL ELECTRIC COMPANY
(3) Commitments and Contingencies
Litigation
In the normal course of business, the Company is involved in various
legal matters. Management is unable to fully determine the range of
reasonably possible legal costs in excess of amounts accrued. Based on
the information currently available, it does not believe that it is
probable that any such additional costs will have a material impact on
its financial position. However, it is reasonably possible that addi-
tional legal costs that may result from a change in estimates could have
a material impact on the results of a reporting period in the near term.
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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, 1999 and 1998 and unit sales for these periods is shown below:
Three Months Ended Nine Months Ended
September 30, September 30,
1999 and 1998 1999 and 1998
Increase (Decrease)
(Dollars in thousands)
Electric Operating Revenues $(33,547) (75.9)% $(100,532) (74.6)%
Operating Expenses -
Fuel used in production (22,210) (98.0) (65,280) (98.4)
Electricity purchased
for resale (12) (8.8) (24) (5.8)
Other operation and maintenance (5,820) (69.6) (19,065) (67.7)
Depreciation (3,254) (64.6) (9,872) (65.3)
Taxes -
Federal and state income (817) (43.9) 414 7.0
Local property and other (588) (65.3) (1,522) (58.1)
(32,701) (83.9) (95,349) (80.4)
Operating Income (846) (16.1) (5,183) (32.0)
Other Income (2,429)(4,762.7) 5,506 1,366.3
Income Before Interest Charges (3,275) (61.9) 323 1.9
Interest Charges (1,588) (78.3) (5,570) (88.7)
Net Income $ (1,687) (51.6) $ 5,893 57.1
Unit Sales (MWH) Decrease (1,139,377) (92.7) (3,259,726) (93.8)
Three Months Ended Nine Months Ended
September 30, September 30,
MWH Unit Sales 1999 1998 1999 1998
Canal Unit 1 - 787,493 - 2,178,604
Canal Unit 2 - 362,514 - 1,076,068
Seabrook 1 90,244 79,614 215,788 220,842
90,244 1,229,621 215,788 3,475,514
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CANAL ELECTRIC COMPANY
Revenue, Fuel and Purchased Power
Operating revenues for the three and nine months ended September 30, 1999
decreased $33.5 million (75.9%) and $100.5 million (74.6%), respectively, due
to the sale of the Company's Unit 1 and 2 generation facilities on December
30, 1998.
The significant decline in fuel used in production of $22.2 million (98%)
and $65.3 million (98.4%) during the current three and nine-month periods
reflects the aforementioned sale of Units 1 and 2.
Other Operating Expenses
The decreases in other operation and maintenance and depreciation for the
three and nine months ended September 30, 1999 resulted from the sale of Units
1 and 2. Federal and state income taxes increased in the current nine-month
period due to a higher level of pre-tax income while federal and state income
taxes for the third quarter decreased due to a decline in pre-tax income. The
decrease for the current quarter and nine-month periods in local property and
other taxes reflects lower property taxes ($454,000 and $1.2 million) and
payroll and other taxes ($134,000 and $308,000), respectively, due to the sale
of Units 1 and 2.
Other Income
The significant increase in other income during the nine-month period was
primarily due to an additional gain, related to the sale of the Company's
generating assets, that resulted from certain adjustments to the assets' book
value ($5.1 million), and a reduction in transaction costs ($4 million)
associated with the retirement of the Company's long-term debt in 1998. Other
income for the current quarter and the year-to-date period reflects the
reversal of interest income on a portion of the proceeds associated with the
sale of the Company's generating assets that were ultimately provided to
affiliate Energy Investment Services, Inc. and will ultimately be utilized to
reduce transition costs to be billed to customers of Cambridge and Common-
wealth Electric.
Interest Charges
The significant decline in total interest charges for the current quarter
and nine-month period resulted from the retirement of the Company's long-term
debt with a portion of the proceeds from the sale of Units 1 and 2, offset, in
part, by interest on a higher level of short-term borrowings.
Merger with BEC Energy
NSTAR, an exempt public utility holding company, was created after
completion of a merger transaction between BEC Energy (BEC) and Commonwealth
Energy System (COM/Energy, the former parent of the Company) on August 25,
1999. The utility industry has continued to change in response to legislative
and regulatory mandates that are aimed at lowering prices for energy by
creating a more competitive marketplace. These pressures have resulted in an
increasing trend in the utility industry to seek competitive advantages and
other benefits through business combinations. NSTAR is focusing its utility
operations on the transmission and distribution of energy following the sale
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CANAL ELECTRIC COMPANY
of BEC's fossil generating facilities to Sithe Energies in May 1998, BEC's
nuclear generation facility to Entergy Nuclear Generating Company in July 1999
and substantially all of COM/Energy's generating facilities to Southern
Company in December 1998.
The utility companies of NSTAR form an energy delivery company serving
approximately 1.3 million customers located in Massachusetts, including more
than one million electric customers in 81 communities and 240,000 gas custom-
ers in 51 communities.
The merger became effective after receipt of various regulatory approv-
als. The Federal Energy Regulatory Commission approved the merger on June 24,
1999. The Nuclear Regulatory Commission approved the transfer of control of
the Company's interest in the Seabrook nuclear plant from COM/Energy to NSTAR
on August 11, 1999. The Securities and Exchange Commission issued its
approval on August 24, 1999.
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 Company and its affiliates (the companies) have been involved in Year 2000
compliancy since 1996. While the recent merger with BEC Energy has led to
some integrated planning efforts, the companies have essentially continued to
resolve Year 2000 issues independently of BEC Energy.
The companies have followed a five-phase process in its Year 2000 compli-
ance efforts, as follows: Awareness (through a series of internal announce-
ments to employees and through contacts with vendors); Inventory (all comput-
ers, applications and embedded systems that could potentially be affected by
the Year 2000 problem); Assessment (all applications or components and the
impact on overall business operations and a plan to correct deficiencies and
the cost to do so); Remediation (the modification, upgrade or replacement of
deficient hardware and software applications and infrastructure modifica-
tions); and Testing (a detailed, comprehensive testing program for the
modified critical component, system or software that involves the planning,
execution and analysis of results).
The companies' inventory phase required an assessment of all date sensi-
tive information and transaction processing computer systems and determined
that approximately 90% of their software systems needed some modifications or
replacement. Plans were developed, implemented, and all of these systems have
been modified, upgraded or replaced.
The companies have also inventoried their 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 companies have completed their
assessment of these non-information technology systems and determined that 20%
of these systems required remediation or replacement. The companies have
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CANAL ELECTRIC COMPANY
reported to the North American Electric Reliability Council (NERC) that they
met the NERC target date of June 30, 1999 for 100% readiness of all their
mission critical components required for the continued safe and reliable
delivery of electricity into the Year 2000. The companies' gas and other
operations are also at a 100% completion level for all mission critical issues
regarding Year 2000 readiness.
Modifying and testing the companies' information and transaction process-
ing systems from 1996 through 2000 is currently expected to cost approximately
$10.3 million, including approximately $8.3 million incurred through September
30, 1999. Year 2000 costs have been expensed as incurred and will continue to
be funded from operations.
In addition to their internal efforts, the companies have initiated formal
communications with their significant suppliers to determine the extent to
which the companies may be vulnerable to their suppliers' failure to correct
their own Year 2000 issues. The companies have ranked their vendors in terms
of importance and have received adequate responses from all of their "criti-
cal" and "high" rated vendors. Failure of the companies' significant suppli-
ers to address Year 2000 issues could have a material adverse effect on the
companies' 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 companies. Contact with all other vendors is continuing and inadequate
responses are being pursued by the companies.
In addition, parts of the global infrastructure, including national
banking systems, electrical power grids, gas pipelines, transportation facili-
ties, communications and governmental activities, may not be fully functional
after 1999. Infrastructure failures could significantly reduce the companies'
ability to acquire energy and their ability to serve their customers as ef-
fectively as they are now being served. The companies have identified the
elements of the infrastructure that are critical to their operations and have
requested and obtained information as to the expected Year 2000 readiness of
these elements.
The companies have completed the development of their Year 2000 contingen-
cy plans for all operational areas that may be effected by Year 2000 issues.
The companies' gas and electric operations currently have emergency operating
plans, as well as information technology disaster recovery plans, as compo-
nents of their standard operating procedures. These plans have been enhanced,
identifying potential Year 2000 risks to normal operations and the appropriate
response to these potential failures. These plans also include actions to be
taken in the event of third party and infrastructure failures with regard to
the Year 2000 event, although in certain cases, there may be no practical
alternative course of action available to the companies. The implementation
of the contingency plans will continue throughout the remainder of 1999.
The companies are working with other energy industry entities, both
regionally and nationally, with respect to Year 2000 readiness and is cooper-
ating in the development of local and wide-scale contingency planning.
While the companies believe their efforts to address the Year 2000 issue
will allow them to be successful in avoiding any material adverse effect on
the companies' operations or financial condition, they recognize that failing
to resolve Year 2000 issues on a timely basis would, in a "most reasonably
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CANAL ELECTRIC COMPANY
likely worst case scenario," significantly limit their ability to acquire and
distribute energy and process their daily business transactions for a period
of time, especially if such failure is coupled with third party or infra-
structure failures. Similarly, the companies could be significantly effected
by the failure of one or more significant suppliers, customers or components
of the infrastructure to conduct their respective operations after 1999.
Adverse affects on the companies 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 avail-
ability of key Year 2000 personnel, the readiness of third parties, and the
companies' 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 stated in the forward-looking state-
ments. Those factors include the ultimate impact of the merger, developments
in the legislative, regulatory and competitive environment, certain environ-
mental matters, demands for capital expenditures 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
Exhibits filed herewith:
Exhibit 27 - Financial Data Schedule.
27.1 - Schedule UT
Exhibit 99 - Additional Exhibits
99.1 - Report of Independent Accountants
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended
September 30, 1999.
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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)
R. J. WEAFER, JR.
Robert J. Weafer, Jr.
Vice President, Controller
and Chief Accounting
Officer
Date: November 15, 1999
<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 Canal Electric Company for the nine months ended September 30,
1999 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-31-1999
<PERIOD-END> SEP-30-1999
<PERIOD-TYPE> 9-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 191,726
<OTHER-PROPERTY-AND-INVEST> 2,862
<TOTAL-CURRENT-ASSETS> 24,577
<TOTAL-DEFERRED-CHARGES> 22,611
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 241,776
<COMMON> 38,080
<CAPITAL-SURPLUS-PAID-IN> 8,321
<RETAINED-EARNINGS> 54,998
<TOTAL-COMMON-STOCKHOLDERS-EQ> 101,399
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 39,360
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 10,128
<LEASES-CURRENT> 565
<OTHER-ITEMS-CAPITAL-AND-LIAB> 90,324
<TOT-CAPITALIZATION-AND-LIAB> 241,776
<GROSS-OPERATING-REVENUE> 34,289
<INCOME-TAX-EXPENSE> 6,353
<OTHER-OPERATING-EXPENSES> 16,924
<TOTAL-OPERATING-EXPENSES> 23,277
<OPERATING-INCOME-LOSS> 11,012
<OTHER-INCOME-NET> 5,909
<INCOME-BEFORE-INTEREST-EXPEN> 16,921
<TOTAL-INTEREST-EXPENSE> 710
<NET-INCOME> 16,211
0
<EARNINGS-AVAILABLE-FOR-COMM> 16,211
<COMMON-STOCK-DIVIDENDS> 203,178
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> (140,909)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
Exhibit 99.1
Report of Independent Accountants
To the Board of Directors of Canal Electric Company:
We have reviewed the accompanying condensed balance sheet of Canal Electric
Company as of September 30, 1999 and the related condensed statements of
income for the three and nine-month periods ended September 30, 1999 and
condensed cash flows for the nine-month period ended September 30, 1999. We
did not perform a review of the condensed statements of income for the three
and nine-month periods ended September 30, 1998 and cash flows for the nine-
month period ended September 30, 1998. These financial statements are the
responsibility of management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for accounting
and financial matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them to
be in conformity with generally accepted accounting principles.
Hartford, Connecticut PricewaterhouseCoopers LLP
November 15, 1999
