<PAGE>
As filed with the Securities and Exchange Commission on July 8, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------
THE CONNECTICUT LIGHT AND POWER COMPANY
(Exact name of registrant as specified in its charter)
Connecticut 4911 06-0303850
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification Number)
incorporation or Classification Code Number)
organization)
-----------------
Selden Street
Berlin, Connecticut 06037
(860) 665-5000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-----------------
Robert P. Wax, Senior Vice President, Secretary and General Counsel
The Connecticut Light and Power Company
Selden Street, Berlin, Connecticut 06037
(860) 665-5000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------
Copy to:
JEFFREY C. MILLER, Esq. PAULA L. HERMAN, Esq.
Northeast Utilities Service Company Day, Berry & Howard
P.O. Box 270 CityPlace I
Hartford, CT 06141-0270 Hartford, CT 06103-3499
(860) 665-3532 (860) 275-0270
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
-----------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================
Title of Each Class of Amount to be Maximum Offering Maximum Aggregate Amount of
Securities to be Registered Registered Price Per Unit(1) Offering Price(1) Registration Fee
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
First and Refunding Mortgage
7 3/4% Bonds, 1997 Series C $200,000,000 100% $200,000,000 $60,607
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(2) under the Securities Act of 1933, as amended,
using the book value of the securities to be exchanged as of June 30, 1997.
-----------------
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY
FORM S-1
REGISTRATION STATEMENT
CROSS-REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Form S-1 Item Caption or Location
Number and Caption in Prospectus
------------------ -------------
<S> <C>
1. Forepart of the Registration Facing Page; Outside Front Cover Page
Statement and Outside Front Cover.. of Prospectus
2. Inside Front and Outside Back Cover Inside Front Cover Page of
Pages of Prospectus................ Prospectus; Available Information;
Outside Back Cover Page of Prospectus
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed Prospectus Summary; Risk Factors;
Charges............................ Selected Consolidated Financial Data
4. Use of Proceeds.................... Prospectus Summary; Use of Proceeds
5. Determination of Offering Price.... Not Applicable
6. Dilution........................... Not Applicable
7. Selling Security Holders........... Not Applicable
8. Plan of Distribution............... Outside Front Cover Page of
Prospectus; Plan of Distribution; The
Exchange Offer
9. Description of Securities to be
Registered......................... Outside Front Cover Page of
Prospectus; Description of the New
Bonds
10. Interests of Named Experts and
Counsel............................ Legal Matters and Experts
11. Information with Respect to the
Registrant......................... Prospectus Summary; Risk Factors;
Selected Consolidated Financial Data;
Management's Discussion and Analysis
of Financial Condition and Results of
Operations; Business; Management;
Description of the New Bonds;
Financial Statements
12. Disclosure of Commission Position
on Indemnification for Securities
Act Liability...................... Not Applicable
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement becomes+
+effective. This prospectus shall not constitute an offer to sell or the +
+solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws of +
+any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS Subject to completion:
Dated July __, 1997
Offer For All Outstanding
First and Refunding Mortgage Bonds,
1997 Series B Due June 1, 2002
In Exchange For
First and Refunding Mortgage 7 3/4% Bonds,
1997 Series C Due June 1, 2002
Each Issued By
THE CONNECTICUT LIGHT AND POWER COMPANY
--------------------
The Exchange Offer will expire at 5:00 p.m.,
New York City time, on ________ ___, 1997
unless extended.
--------------------
The Connecticut Light and Power Company, a Connecticut corporation
(the Company or CL&P), hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (which together constitute the Exchange Offer), to exchange an
aggregate principal amount of up to $200,000,000 of its First and Refunding
Mortgage 7 3/4% Bonds, 1997 Series C Due June 1, 2002 (the New Bonds) for a
like principal amount of its issued and outstanding First and Refunding
Mortgage Bonds, 1997 Series B Due June 1, 2002 (the Old Bonds and together
with the New Bonds, the Bonds). The Company will not receive any proceeds
from the Exchange Offer and will pay all the expenses incident to the
Exchange Offer. The New Bonds will be issued under, and entitled to the
benefits of, the Indenture (as defined) governing the Old Bonds. The New
Bonds are identical in all material respects to the Old Bonds, except for
the elimination of certain transfer restrictions, registration rights and
interest rate provisions relating to the Old Bonds. The New Bonds are being
offered hereunder in order to satisfy certain obligations of the Company
contained in a Registration Rights Agreement dated as of June 19, 1997 (the
Registration Rights Agreement).
The Company will accept for exchange any and all Old Bonds validly
tendered and not withdrawn prior to 5:00 p.m. New York City time on
____________, 1997, unless extended (as so extended, the Expiration Date).
The Bonds will mature on June 1, 2002 and will bear interest from June
1, 1997 at the rate of 7 3/4% per annum. Interest will be payable
semiannually on June 1 and December 1, commencing December 1, 1997 at the
principal office of the Trustee in New York City, to registered owners at
the close of business on the May 15 or November 15, as the case may be,
preceding such June 1 or December 1, or if such record date is a legal
holiday or a day on which banks are authorized to close in New York City,
on the next preceding day which is not a legal holiday or a day on which
banks are so authorized to close.
--------------------
See "Risk Factors" beginning on page 13 for a discussion of certain risks
that should be considered by holders of Old Bonds in considering whether to
tender their Old Bonds in the Exchange Offer.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is July __, 1997.
<PAGE>
The New Bonds will be redeemable at the option of the Company, as a
whole or in part, at a redemption price equal to the greater of (i) 100% of
their principal amount and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon discounted
to the date of redemption on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Yield (as defined),
plus in each case accrued interest to the date of redemption.
Tenders of Old Bonds pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date. Subject to certain conditions,
the Company may terminate the Exchange Offer. In the event the Company
terminates the Exchange Offer and does not accept for exchange any Old
Bonds, the Company will promptly return the Old Bonds to the Holders
thereof. See "The Exchange Offer."
The Old Bonds were sold to Morgan Stanley & Co. Incorporated and
Salomon Brothers Inc (collectively, the Initial Purchasers) in the Original
Offering (as defined), in a transaction not registered under the Securities
Act of 1933, as amended (the Securities Act), in reliance upon the
exemption provided in Section 4(2) of the Securities Act. The Initial
Purchasers subsequently placed the Old Bonds with "qualified institutional
buyers," as defined in Rule 144A under the Securities Act. Accordingly,
the Old Bonds may not be reoffered, resold or otherwise transferred in the
United States unless so registered or unless an applicable exemption from
the registration requirements of the Securities Act is available. The New
Bonds are being offered hereunder in order to satisfy the obligations of
the Company under the Registration Rights Agreement.
Based on interpretations by the staff of the Securities and Exchange
Commission (the Commission) issued to other issuers in similar contexts,
New Bonds issued pursuant to the Exchange Offer in exchange for Old Bonds
may be offered for resale, resold and otherwise transferred by holders
thereof (other than any such holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities
Act provided that such New Bonds are acquired in the ordinary course of
such holders' business and such holders have no arrangement with any person
to participate in the distribution of such New Bonds.
Each broker-dealer that receives New Bonds for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Bonds. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of New Bonds received in exchange for Old Bonds
where such Old Bonds were acquired as a result of market-making activities
or other trading activities. The Company has agreed, for a period of 180
days after the Expiration Date, that it will make this Prospectus available
to any broker-dealer for use in connection with any such resale. See "Plan
of Distribution."
Prior to this Exchange Offer, there has been no public market for the
New Bonds. The Company does not intend to list the New Bonds on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the
New Bonds will develop. See "Risk Factors--Market for the New Bonds."
Moreover, to the extent that Old Bonds are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered but
unaccepted Old Bonds could be adversely affected. If a market for the New
Bonds should develop, the New Bonds could trade at a discount from their
face amount. There can be no assurance that an active public market for the
New Bonds will develop.
Holders whose Old Bonds are not tendered and accepted in the Exchange
Offer will continue to hold such Old Bonds and will be entitled to all the
rights and preferences, and will be subject to the limitations applicable
thereto under the Indenture (as herein defined) and, with respect to
transfer, under the Securities Act. See "Risk Factors--Consequences of
Failure to Exchange."
-2-
<PAGE>
THIS PROSPECTUS (PROSPECTUS) DOES NOT CONSTITUTE AN OFFER TO SELL, OR
THE SOLICITATION OF AN OFFER TO BUY, ANY OF THE NEW BONDS OFFERED HEREBY BY
ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO
MAKE AN OFFERING OR A SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION
SET FORTH HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE NEW BONDS, INCLUDING THE
MERITS AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED,
APPROVED OR DISAPPROVED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR
REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT
CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMPANY IS NOT MAKING ANY REPRESENTATION TO ANY OFFEREE OR
PURCHASER OF THE NEW BONDS REGARDING THE LEGALITY OF AN INVESTMENT BY SUCH
OFFEREE OR PURCHASER UNDER APPROPRIATE LEGAL INVESTMENT OR SIMILAR LAWS.
EACH INVESTOR SHOULD CONSULT WITH HIS OWN ADVISORS AS TO LEGAL, TAX,
BUSINESS, FINANCIAL AND RELATED ASPECTS OF A PURCHASE OF THE NEW BONDS.
--------------------
-3-
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-1 (the Registration Statement) under the Securities Act for the
registration of the New Bonds offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, does not contain all the
information set forth in the Registration Statement, certain portions of
which are omitted from the Prospectus as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the New Bonds offered hereby, reference is made to the
Registration Statement, including the exhibits thereto, and financial
statements and notes filed as a part thereof. Statements made in this
Prospectus concerning the contents of any documents referred to herein are
not necessarily complete. With respect to each such document filed with
the Commission as an exhibit to the Registration Statement, reference is
made to the exhibit for a more complete description of the matter involved,
and each such statement shall be deemed qualified in its entirety by such
reference.
The Company is subject to the periodic reporting and certain other
informational requirements of the Securities Exchange Act of 1934, as
amended (Exchange Act) and files periodic reports and other information
with the Commission. The Registration Statement in which this Prospectus
is included and the exhibits and schedules thereto, as well as such
reports and other information filed by the Company with the Commission may
be inspected and copied at prescribed rates, at the public reference
facility of the Commission, at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, or at the Commission's regional
offices at 7 World Trade Center, 13th Floor, New York, New York 10048, and
CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such material also can be obtained by mail from the
public reference facilities of the Commission, at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
In addition, the aforementioned material can be inspected at the offices of
The New York Stock Exchange, Inc., 20 Broad Street, New York, New York
10005. The Commission also maintains a Website that contains reports and
other information regarding registrants, such as the Company, that file
electronically with the Commission. The address of such site is
(http://www.sec.gov/).
Anyone who receives this Prospectus may obtain a copy of the Indenture
and the Registration Rights Agreement (as defined herein) without charge by
writing to Theresa H. Allsop, Assistant Secretary, at the Company's
principal executive offices at Selden Street, Berlin, Connecticut 06037-
1616 or by telephone at 860/665-3019.
FORWARD-LOOKING STATEMENTS
Certain statements contained in this Prospectus are "forward-looking
statements" within the meaning of the Securities Act and the Exchange Act,
such as forecasts and projections of expected future performance or
statements of plans and objectives of the Company and/or the Northeast
Utilities (NU) System (System). Although such forward-looking statements
have been based on
-4-
<PAGE>
reasonable assumptions, there is no assurance that the expected results
will be achieved, and actual results could differ materially from these
statements. Some of the factors that could cause actual results to differ
materially include, but are not limited to: governmental and regulatory
actions and initiatives; the impact of deregulation and increased
competition in the industry; generating plant performance; weather
conditions; fuel prices and availability; general economic conditions,
including the effects of inflation; and technological changes.
-5-
<PAGE>
PROSPECTUS SUMMARY
The following material is qualified in its entirety by, and should be
considered in conjunction with, the detailed information and financial
statements appearing elsewhere in this Prospectus.
The Company
The Company, a Connecticut corporation organized in 1907, is a wholly-
owned subsidiary of NU. The Company is the largest electric utility in
Connecticut and is engaged principally in the production, purchase,
transmission, distribution and sale of electricity at retail for
residential, commercial, industrial and municipal purposes to approximately
1.1 million customers in 149 cities and towns in Connecticut.
<TABLE>
<CAPTION>
The Exchange Offer
<S> <C>
Old Bonds............ The Old Bonds were sold by the Company to the Initial
Purchasers on June 26, 1997 (the Issue Date) pursuant to
an exemption from or in transactions not subject to the
registration requirements of the Securities Act and
applicable state securities laws. The Initial Purchasers
resold the Old Bonds to "qualified institutional buyers,"
as defined in Rule 144A under the Securities Act. The
Registration Statement of which this Prospectus is a part
relates only to the registration of the New Bonds in
exchange for the Old Bonds.
Registration Rights.. The Company and the Initial Purchasers entered into a
Registration Rights Agreement, dated as of June 19, 1997
(Registration Rights Agreement), which grants the holders
of the Old Bonds certain exchange and registration
rights. The New Bonds are being offered hereunder in
order to satisfy the obligations of the Company under the
Registration Rights Agreement.
The Exchange Offer... Up to $200,000,000 aggregate principal amount of the New
Bonds are being offered in exchange for a like principal
amount of the Old Bonds. No accrued interest will be paid
on the Old Bonds upon the exchange thereof, but interest
will accrue on the New Bonds from June 1, 1997. Holders
of the Old Bonds to whom this Exchange Offer is made have
special rights under the Registration Rights Agreement
that will terminate upon the consummation of the Exchange
Offer. For procedures for tendering the Old Bonds, see
"The Exchange Offer."
</TABLE>
-6-
<PAGE>
<TABLE>
<S> <C>
Based on interpretations by the staff of the Commission
set forth in certain no-action letters issued by the
Commission to third parties, the Company believes that
New Bonds issued pursuant to the Exchange Offer in
exchange for Old Bonds may be offered for resale, resold
and otherwise offered by any holder thereof (other than
any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and (except as
set forth below) the prospectus delivery provisions of
the Securities Act, provided that such New Bonds are
acquired in the ordinary course of such holder's business
and that such holder does not intend to participate and
has no arrangement or understanding with any person to
participate in the distribution of such New Bonds. Both
(i) broker-dealers and (ii) holders of Old Bonds who are
considering tendering Old Bonds in order to participate
in the distribution of the New Bonds should see "Risk
Factors--Consequences of Failure to Exchange,""The
Exchange Offer--Purpose and Effect of the Exchange Offer"
and "--Resales of the New Bonds" and "Plan of
Distribution" for information concerning certain
requirements that may apply to their activities.
New Bonds............ The New Bonds are identical in all material respects to
the Old Bonds, except for the elimination of certain
transfer restrictions, registration rights and interest
rate provisions. The New Bonds will be represented by a
global security registered in the name of The Depository
Trust Company (DTC) or its nominee. Book-entry interests
in the global security will be shown on, and transfers
thereof will be effected only through, records maintained
by DTC or its nominee.
Conditions of the
Exchange Offer...... The Exchange Offer is not conditioned upon any minimum
principal amount of Old Bonds being tendered for exchange
except that Old Bonds may be tendered only in integral
multiples of US$1,000 principal amount. Notwithstanding
any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue
New Bonds in exchange for, any Old Bonds and may
terminate or amend the Exchange Offer, at any time prior
to the consummation of the Exchange Offer if: (i) the
Exchange Offer would violate applicable law or any
applicable interpretation of the staff of the Commission,
(ii) an action or proceeding is instituted or threatened
in any court or by any governmental agency which
</TABLE>
-7-
<PAGE>
<TABLE>
<S> <C>
might materially impair the ability of the Company to
proceed with the Exchange Offer or a material adverse
development has occurred in any existing action or
proceeding with respect to the Company, or (iii) all
governmental approvals which the Company deems necessary
for the consummation of the Exchange Offer have not been
obtained. See "The Exchange Offer--Certain Conditions to
the Exchange Offer."
Tenders; Expiration
Date; Withdrawal.... The Exchange Offer will expire at 5:00 p.m., New York
City time, on __________, 1997, or such later date and
time to which it is extended (as so extended, the
Expiration Date). The tender of Old Bonds pursuant to the
Exchange Offer may be withdrawn at any time prior to the
Expiration Date. Any Old Bonds not accepted for exchange
for any reason will be returned without expense to the
tendering holder thereof as promptly as practicable after
expiration or termination of the Exchange Offer.
Procedures for
Tendering Old
Bonds............... Each holder of Old Bonds desiring to accept the Exchange
Offer must complete and sign the Letter of Transmittal in
accordance with the instructions contained herein and
therein, and mail or deliver the Letter of Transmittal,
together with the Old Bonds and any other required
documents to the Exchange Agent (as defined herein) at
the address set forth herein and in the Letter of
Transmittal prior to 5:00 p.m., New York City time, on
the Expiration Date. By executing the Letter of
Transmittal, each holder will represent to the Company
that, among other things, the New Bonds acquired pursuant
to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such New
Bonds, whether or not such person is the holder, that
neither the holder nor any such other person has any
arrangement or understanding with any person to
participate in the distribution of such New Bonds and
that neither the holder nor any such other person is an
"affiliate" of the Company, as defined under Rule 405 of
the Securities Act.
Consequences of
Failure to
Exchange............ Holders of Old Bonds eligible to participate who do not
exchange their Old Bonds for New Bonds pursuant to the
Exchange Offer will not have any further registration
rights and such Old Bonds will continue to be subject to
the restrictions on
</TABLE>
-8-
<PAGE>
<TABLE>
<S> <C>
transfer as set forth in the legend thereon as a consequence of the
issuance of the Old Bonds pursuant to exemptions from, or
in transactions not subject to, the registration
requirements of the Securities Act and applicable state
securities laws. The Company does not currently
anticipate that it will register the Old Bonds under the
Securities Act. Accordingly, the market for such Old
Bonds could be highly illiquid. See "Risk Factors-
Consequences of Failure to Exchange."
Guaranteed Delivery
Procedures.......... Holders of Old Bonds who wish to tender their Old Bonds
and (i) whose Old Bonds are not immediately available or
(ii) who cannot deliver their Old Bonds, the Letter of
Transmittal and any other documents required by the
Letter of Transmittal to the Exchange Agent (or comply
with the procedures for book-entry transfers) prior to
5:00 p.m., New York City time, on the Expiration Date,
must tender their Old Bonds according to the guaranteed
delivery procedures set forth in "The Exchange Offer--
Guaranteed Delivery Procedures."
Acceptance of Old
Bonds and Delivery
of New Bonds........ Subject to the satisfaction or waiver of all conditions
of the Exchange Offer, the Company will accept for
exchange any and all Old Bonds that are properly tendered
in the Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Bonds issued
pursuant to the Exchange Offer will be delivered in
exchange for the applicable Old Bonds accepted in the
Exchange Offer promptly following the Expiration Date.
See "The Exchange Offer--Acceptance of Old Bonds for
Exchange; Delivery of New Bonds."
Federal Income Tax
Consequences........ The exchange pursuant to the Exchange Offer will not
result in any income, gain or loss to the holders of the
Bonds or the Company for federal income tax purposes. See
"Certain Federal Income Tax Considerations."
Use of Proceeds...... There will be no cash proceeds to the Company from the
exchange pursuant to the Exchange Offer.
Exchange Agent....... Bankers Trust Company has agreed to act as Exchange Agent
for the Exchange Offer.
</TABLE>
-9-
<PAGE>
Summary Description of the New Bonds
<TABLE>
<S> <C>
Interest Rate........ 7 3/4% per annum.
Interest Payment
Dates............... June 1 and December 1, commencing December 1, 1997
Maturity............. June 1, 2002.
Security............. The New Bonds will be secured by the Indenture (as
defined herein), which constitutes a first mortgage lien
(subject to liens permitted by the Indenture, including
liens and encumbrances existing at the time of
acquisition by the Company) on substantially all of the
Company's physical property and franchises, including the
Company's generating stations (but not including the
Company's interest in the plants of the four regional
nuclear generating companies described herein) and its
transmission and distribution facilities.
Optional Redemption.. The New Bonds will be redeemable at any time on not less
than 30 days notice by the Company, in whole or in part,
at a redemption price equal to the greater of (i) 100% of
the principal amount thereof, and (ii) the sum of the
present values of the remaining scheduled payments of
principal and interest thereon, plus accrued interest to
the date of redemption, if any. See "Description of the
New Bonds--Redemption Provisions."
Sinking Fund
Redemption.......... There will be no sinking fund requirements.
Form and
Denomination........ The New Bonds will be issued in fully registered form
without coupons in denominations of US$1,000 and integral
multiples thereof. The New Bonds will be represented by a
single permanent Global Security, registered in the name
of Cede & Co., as nominee of DTC. See "Book-Entry;
Delivery and Form."
Use of Proceeds...... The Company will receive no cash proceeds from the
issuance of the New Bonds. The net proceeds from the sale
of the Old Bonds were or will be used for the repayment
of the Company's short term debt incurred for general
working capital purposes, including costs associated with
the current outages at Millstone.
</TABLE>
For additional information regarding the New Bonds, see "Description of the New
Bonds."
-10-
<PAGE>
Risk Factors
See "Risk Factors" beginning on page 13 for a discussion of certain
risks that should be considered by holders of Old Bonds in evaluating
whether to tender the Old Bonds.
-11-
<PAGE>
Summary Consolidated Financial Data
(thousands, except percentages and ratios)
<TABLE>
<CAPTION>
12 Months
Ended
March 31, 1997 Year Ended December 31,
------------- --------------------------------
(unaudited) 1996 1995 1994
---- ---- ----
<S> <C> <C> <C> <C>
Income Summary:
Operating Revenues............ $2,363,013 $2,397,460 $2,387,069 $2,328,052
Operating (Loss) Income....... (7,057) 29,773 324,026 286,948
Net (Loss) Income............ (119,520) (80,237) 205,216 198,288
Total Assets (end of period)... $6,275,896 $6,244,036 $6,045,631 $6,217,457
<CAPTION>
As of March 31, 1997
---------------------------------------
(unaudited)
As % of Adjusted
Actual Adjusted (a) Capitalization
------ ------------ --------------
<S> <C> <C> <C>
Capitalization Summary:
Long-Term Debt (including current
maturities)...................... $2,040,773 $2,240,773 58.82%
Preferred Stock Subject to Mandatory
Redemption....................... 155,000 155,000 4.07%
Preferred Stock Not Subject to
Mandatory Redemption............. 116,200 116,200 3.05%
Common Stockholder's Equity 1,297,490 1,297,490 34.06%
---------- ---------- --------
Total Capitalization............. $3,609,463 $3,809,463 100.00%
========== ========== ========
<CAPTION>
12 Months Ended
March 31, 1997 Year Ended December 31,
-------------- ------------------------------------------------
(unaudited) 1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges (b).................... (0.13)(c) 0.30(c) 3.64 3.65 2.71 2.96
</TABLE>
(a) Adjusted to reflect the sale of $200 million principal amount of the Bonds.
The issuance of the New Bonds will not affect the Company's capitalization.
(b) The "Earnings" component of the "Ratio of Earnings to Fixed Charges"
represents the aggregate of net income or loss, taxes based on income,
investment tax credit adjustments, and fixed charges. "Fixed Charges"
represent the aggregate of interest (whether capitalized or expensed),
related amortizations, and the interest component of leases.
(c) For the twelve-month periods ended December 31, 1996 and March 31, 1997,
the ratio of earnings to fixed charges reflects the effects of additional
costs, including replacement power costs, associated with the outages at
the three Millstone units. For such periods, earnings were inadequate to
cover fixed charges; the additional earnings required to bring the ratio of
earnings to fixed charges to 1.0 for such periods would have been
$102,872,000 and $171,463,000, respectively. See "Risk Factors."
-12-
<PAGE>
RISK FACTORS
Prospective investors should consider carefully all of the
information set forth in this Prospectus, including the following risks,
before investing in the New Bonds.
Nuclear Plant Outages and Liquidity
As a result of the prolonged outages at the three Millstone
nuclear units (Millstone) located in Waterford, Connecticut, the Company
faced an extremely difficult year in 1996 and continues to face some of the
most severe regulatory scrutiny and financial challenges in the history of
the United States nuclear industry, including numerous civil lawsuits and
criminal investigations and regulatory proceedings, requesting among other
things license revocation. These outages have resulted in significantly
increased expenditures for replacement power and work undertaken at
Millstone. The length of the outages and the high costs of the recovery
efforts weakened the Company's 1996 earnings, balance sheet and cash flows
and continue to have an adverse impact on the Company's financial
condition.
The Company currently anticipates having Millstone 3 ready for
restart around the end of the third quarter of 1997, Millstone 2 in the
fourth quarter of 1997, and Millstone 1 in the first quarter of 1998.
Restart of each unit is contingent upon, among other things, the
affirmative vote of the Commissioners of the Nuclear Regulatory Commission
(NRC). Management hopes that Millstone 3 can begin operating by the end of
1997. There can be no assurances, however, that the Company's expectations
will be met. If the return to service of one or more of the Millstone
units is delayed substantially, or if any needed waivers or modifications
to the Company's financing arrangements are not forthcoming on reasonable
terms, or if the Company encounters additional significant costs or other
significant deviations from management's current assumptions, resulting in
the Company's inability to meet its cash requirements, management would
take actions to reduce costs and to obtain additional sources of funds.
The availability of these funds would be dependent upon general market
conditions and the Company's and the System's credit and financial
condition at that time. Both Moody's Investors Service (Moody's) and
Standard and Poor's Corporation (S&P) have recently downgraded the
Company's senior debt to Ba1 and BB+, respectively.
Management has committed not to seek recovery of the portion of
these costs attributable to the failure to meet industry standards in
operating Millstone. In light of that commitment, and in recognition of
the NRC's watch list designation of Millstone and that numerous internal
and external reports have been critical of the operation of Millstone,
management believes that the Company will not seek rate recovery of a
substantial portion of such costs. While the Company believes that it is
entitled to recovery of a portion of the costs that have been and will be
incurred, and intends to apply for recovery of such costs, the Connecticut
Department of Public Utility Control (DPUC) on June 27, 1997 orally granted
summary judgment in a prudence proceeding disallowing recovery by the
Company of substantially all of its Millstone outage related costs.
Management currently does not intend to request any such recoveries until
after the Millstone units begin returning to service, so it is unlikely
that any additional revenues from any permitted recovery
-13-
<PAGE>
of these costs will be available while the units are out of service to
contribute to funding the recovery efforts.
In a separate proceeding, the DPUC ordered the Company to submit
studies by July 1, 1997 that analyze the economic benefits from continued
operation of Millstone 1 and 2. On July 1, 1997, the Company submitted
continued unit operation studies to the DPUC showing that, under base case
assumptions, Millstone 1 will have a value to System customers (as compared
to the cost of shutting down the unit and incurring replacement power
costs) of approximately $70 million during the remaining thirteen years of
its operating license and Millstone 2 will have a value to System customers
(on the same assumptions as used with Millstone 1) of approximately $500
million during the remaining eighteen years of its operating license. Two
other cases submitted to the DPUC based on higher assumed operation and
maintenance (O&M) costs, which the Company considers less likely, indicated
that Millstone 1 would be uneconomic in varying degrees. At the present
time, the Company expects to continue operating both Millstone 1 and
Millstone 2 for the remaining terms of their respective operating licenses;
however, the Company cannot predict the outcome of this proceeding.
In addition, the DPUC is required to review a utility's rates
every four years if there has not been a rate proceeding during such
period. On June 16, 1997, the Company filed with the DPUC certain
financial information consistent with the DPUC's filing requirements
applicable to such four year review. The Company expects hearings before
the DPUC with respect to such review to begin during the summer of 1997.
The Company cannot predict the outcome of this proceeding.
No formal claims have been made, but management believes that it
is possible that some or all of the non-NU owners of Millstone 3 will
assert liability on the part of the System for the additional costs non-NU
owners have borne as a result of the current outage. At March 31, 1997,
the costs related to this potential litigation were estimated to be $13
million for incremental operating and maintenance costs and between $49
million and $57 million for replacement power costs. These costs are
likely to increase as long as Millstone 3 remains out of service. NU will
vigorously contest such suits if they are brought.
For more information, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Business--Overview of
Nuclear and Related Financial Matters," "--Electric Operations--Nuclear
Plant Performance and Regulatory Oversight," "--Competition and Cost
Recovery," "--Rates" and "--Financing Program--Financing Limitations," and
"Legal Proceedings."
Industry Restructuring and Competition
Competition in the energy industry continues to grow as a result
of legislative and regulatory action, technological advances, relatively
high electric rates in certain regions of the country, including New
England, surplus generating capacity and the increased availability of
natural gas. These competitive pressures are particularly strong in the
System's service territories, where legislators and regulatory agencies
have been at the forefront of the restructuring movement.
-14-
<PAGE>
Changes in the industry are expected to place downward pressure on prices
and to increase customer choice through competition.
Although the Company continues to operate predominantly in a
state-approved franchise territory under traditional cost-of-service
regulation, restructuring initiatives in the State of Connecticut have
created uncertainty with respect to future rates and the recovery of
"strandable investments." Strandable investments are expenditures that
have been made by utilities in the past to meet their public service
obligations, with the expectation that they would be recovered from
customers in the future. However, under certain circumstances these costs
might not be recoverable from customers in a fully competitive electric
utility industry. The Company continues to believe such costs will be
recoverable. The Company is particularly vulnerable to strandable
investments because of (i) the Company's relatively high investment in
nuclear generating capacity, which had a high initial cost to build, (ii)
state-mandated purchased power arrangements priced above market, and (iii)
significant regulatory assets, which are those costs that have been
deferred by state regulators for future collection from customers. As of
March 31, 1997, the Company's net investment in nuclear generating
capacity, excluding its investment in certain regional nuclear companies,
was $2.3 billion, and its regulatory assets were approximately $1.3
billion. The Company's exposure to strandable investments and above-market
purchased power obligations exceeds its shareholder's equity. The
Company's ability to compete in a restructured environment would be
negatively affected unless the Company were able to recover substantially
all of the past investments and commitments. Unless amortization levels
are changed from currently scheduled rates, the Company's regulatory assets
are expected to be substantially decreased over the next five years.
For more information regarding electric industry restructuring,
see "Business--Competition and Cost Recovery," "Business--Rates" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Regulatory Accounting and Assets
The accounting policies of the Company conform to generally
accepted accounting principles applicable to rate regulated enterprises and
reflect the effects of the ratemaking process in accordance with Statement
of Financial Accounting Standards (SFAS) No. 71, "Accounting for the
Effects of Certain Types of Regulation." Assuming a cost-of-service based
regulatory structure, regulators may permit incurred costs, normally
treated as expenses, to be deferred and recovered through future revenues.
Through their actions, regulators may also reduce or eliminate the value of
an asset, or create a liability.
Recently, the Commission has questioned the ability of certain
utilities to continue to follow SFAS No. 71 in light of state legislation
regarding the transition to retail competition. The industry expects
guidance on this issue from the Financial Accounting Standards Board's
Emerging Issues Task Force in the near future. The Company is not yet
subject to a transition plan. Criteria that could give rise to
discontinuation of the application of SFAS No. 71 include: (1) increasing
competition which significantly restricts the Company's ability to charge
prices which allow it to
-15-
<PAGE>
recover operating costs, earn a fair return on invested capital and recover
the amortization of regulatory assets, and (2) a significant change in the
manner in which rates are set by the DPUC from cost-based regulation to
some other form of regulation. In the event the Company determines it no
longer meets the criteria for following SFAS No. 71, the Company would be
required to write off its regulatory assets and liabilities. At March 31,
1997, the Company's regulatory assets were approximately $1.3 billion. In
addition, the Company would be required to evaluate whether the changes in
the competitive and regulatory environment which led to discontinuing the
application of SFAS No. 71 would also result in an impairment of the net
book value of the Company's long-lived assets in accordance with SFAS No.
121, "Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of."
SFAS No. 121 requires the evaluation of long-lived assets,
including regulatory assets, for impairment when certain events occur or
when conditions exist that indicate the carrying amounts of assets may not
be recoverable. SFAS No. 121 requires that any long-lived assets which
are no longer probable of recovery through future revenues be revalued
based on estimated future cash flows. If the revaluation is less than the
book value of the asset, an impairment loss would be charged to earnings.
Management continues to believe that it is probable that the Company will
recover its investments in long-lived assets, including regulatory assets,
through future revenues. This conclusion may change in the future as
competitive factors influence wholesale and retail pricing in the electric
utility industry or if the cost-of-service based regulatory structure were
to change.
Environmental Regulation
The Company is subject to federal, state and local regulations
with respect to water quality, air quality, toxic substances, hazardous
waste and other environmental matters. Similarly, the Company's major
generation and transmission facilities may not be constructed or
significantly modified without a review by the applicable state agency of
the environmental impact of the proposed construction or modification. See
"Business--Other Regulatory and Environmental Matters--Environmental
Regulation."
Environmental requirements could hinder the construction of new
generating units, transmission and distribution lines, substations, and
other facilities. Changing environmental requirements could also require
extensive and costly modifications to the Company's existing generating
units and transmission and distribution systems, and could limit operations
and/or raise operating costs significantly. As a result, the Company may
incur significant additional environmental costs, greater than amounts
included in reserves, in connection with the generation and transmission of
electricity and the storage, transportation and disposal of by-products and
wastes. The Company may also encounter significantly increased costs to
remedy the environmental effects of prior waste handling activities. The
cumulative long-term cost impact of increasingly stringent environmental
requirements cannot accurately be estimated.
-16-
<PAGE>
Market for the New Bonds
The New Bonds are a new issue of securities with no established
trading market, and the Company does not intend to apply for listing of the
New Bonds on a national securities exchange, but has been advised by the
Initial Purchasers that they presently intend to make a market in the New
Bonds, as permitted by applicable law and regulations. The Initial
Purchasers are not obligated, however, to make a market in the New Bonds,
and any such market making may be discontinued at any time at the sole
discretion of the Initial Purchasers. Accordingly, no assurance can be
given as to the liquidity of the trading market for the New Bonds.
Consequences of Failure to Exchange
Holders of Old Bonds who do not participate in the Exchange Offer
will continue to be subject to the restrictions on transfer of the Old
Bonds as set forth in the legend thereon. In general, the Old Bonds may
not be offered or sold, unless registered under, except pursuant to an
exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently
anticipate that it will register the Old Bonds under the Securities Act.
Based on interpretations of the Securities Act by the staff of the
Commission, New Bonds issued pursuant to the Exchange Offer in exchange for
Old Bonds may be offered for resale, resold, or otherwise transferred by
holders thereof (other than any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Bonds are acquired in the ordinary
course of such holders' business and such holders have no arrangement with
any person to participate in the distribution of such New Bonds.
Notwithstanding the foregoing, each broker-dealer that receives New Bonds
for its own account pursuant to the Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such New Bonds.
The Letter of Transmittal states that by so acknowledging and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with any resale of New Bonds received in
exchange for Old Bonds where such Old Bonds were acquired by such broker-
dealer as a result of market-making activities or other trading activities
(other than Old Bonds acquired directly from the Company). The Company has
agreed that, for a period of 180 days from the consummation of the Exchange
Offer, it will make this Prospectus available to any broker-dealer for use
in connection with any such resale. See "Plan of Distribution."
Compliance with Exchange Offer Procedures
To participate in the Exchange Offer and to avoid the
restrictions on transfer of the Old Bonds, holders of Old Bonds must
transmit a properly completed Letter of Transmittal, including all other
documents required by such Letter of Transmittal, to the Exchange Agent at
the address set forth below under "The Exchange Offer--Exchange Agent" on
or prior to the Expiration Date. In addition, either (i) certificates for
such Old Bonds must be received by the Exchange Agent along with the Letter
of Transmittal, or (ii) a timely confirmation of a book-entry transfer of
such Old
-17-
<PAGE>
Bonds, if such procedure is available, into the Exchange Agent's account at
the DTC pursuant to the procedure for book-entry transfer described herein,
must be received by the Exchange Agent prior to the Expiration Date, or
(iii) the holder must comply with the guaranteed delivery procedures
described herein.
THE COMPANY
The Company, a Connecticut corporation organized in 1907, is a
wholly-owned subsidiary of NU. Four wholly-owned operating subsidiaries of
NU--the Company, Public Service Company of New Hampshire (PSNH), Western
Massachusetts Electric Company (WMECO) and Holyoke Water Power Company
(HWP)--furnish electric service in portions of Connecticut and New
Hampshire and in western Massachusetts. A fifth wholly-owned subsidiary of
NU, North Atlantic Energy Corporation (NAEC), owns a 35.98 percent interest
in the Seabrook nuclear generating facility (Seabrook) in Seabrook, New
Hampshire and sells its share of the output and capacity of Seabrook to
PSNH. The Company is the largest electric utility in Connecticut and is
engaged principally in the production, purchase, transmission, distribution
and sale of electricity at retail for residential, commercial, industrial
and municipal purposes to approximately 1.1 million customers in 149 cities
and towns in Connecticut.
The principal executive offices of the Company are located at
Selden Street, Berlin, Connecticut 06037-1616 (telephone 860/665-5000).
THE ORIGINAL OFFERING
On June 26, 1997, in the Original Offering, the Company issued
and sold to the Initial Purchasers $200,000,000 in aggregate principal
amount of the Old Bonds. The Old Bonds were sold pursuant to exemptions
from or in transactions not subject to the registration requirements of the
Securities Act and applicable state securities laws. The Initial
Purchasers subsequently placed the Old Bonds with "qualified institutional
buyers," as defined in Rule 144A under the Securities Act. See "The
Exchange Offer." The Company received approximately $197 million of net
proceeds from the Original Offering. The entire net proceeds of the
Original Offering were or will be used for general working capital
purposes, including costs associated with the current outages at Millstone.
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
The Old Bonds were sold to Initial Purchasers in the Original
Offering in a transaction not registered under the Securities Act, in
reliance upon the exemption provided in Section 4(2) of the Securities Act.
The Initial Purchasers subsequently placed the Old Bonds with "qualified
institutional buyers," as defined in Rule 144A under the Securities Act.
Accordingly, the Old Bonds may not be reoffered, resold or otherwise
transferred in the United States unless so registered or unless an
applicable exemption from the registration requirements of the Securities
Act is available.
-18-
<PAGE>
The New Bonds are being offered hereunder in order to satisfy the
obligations of the Company under the Registration Rights Agreement.
Capitalized terms used under this heading and not otherwise defined shall
have the meaning set forth in the Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, the Company
agreed, for the benefit of the holders of the Old Bonds, that (i) unless
the Exchange Offer would not be permitted by applicable law or Commission
policy, the Company would use its best efforts to have a registration
statement (the Exchange Offer Registration Statement) on the appropriate
form under the Securities Act, with respect to an offer to exchange the Old
Bonds for a like aggregate amount of New Bonds declared effective by the
Commission on or prior to 150 days after the date of original issuance of
the Old Bonds (the Issue Date) and (ii) if obligated to file the Shelf
Registration Statement (defined below), the Company will file prior to 30
days after such filing obligation arises and use its best efforts to cause
the Shelf Registration Statement to be declared effective by the Commission
on or prior to 150 days after such obligation arises. The Registration
Statement of which this Prospectus is a part is intended to satisfy the
Company's obligation to file an Exchange Offer Registration Statement.
In the event that any change in law or currently prevailing
interpretations of law by the Commission's staff do not permit the Company
to effect the Exchange Offer, or if for any reason the Exchange Offer is
not consummated within 180 days of the Issue Date and the holders of a
majority in principal amount of the Old Bonds so request, or if a holder of
the Old Bonds notifies the Company that (a) due to a change in law or
policy it is not entitled to participate in the Exchange Offer; (b) due to
a change in law or policy it may not resell the Exchange Bonds acquired by
it in the Exchange Offer to the public without delivering a prospectus and
the prospectus contained in the Exchange Offer Registration Statement is
not appropriate or available for such resales by such Holder or (c) it is a
broker-dealer and owns Bonds acquired directly from the Company or any
affiliate of the Company, the Company agreed to use its best efforts to
cause to be filed a registration statement (the Shelf Registration
Statement) with respect to the resale of such Old Bonds or New Bonds, as
the case may be. The Company further agreed to use its best efforts to
keep such Shelf Registration Statement continuously effective, supplemented
and amended until the second anniversary of the Issue Date or such shorter
period that will terminate when all the Old Bonds covered by the Shelf
Registration Statement have been sold pursuant thereto or cease being
Bonds.
If (a) the Company fails to consummate the Exchange Offer within
180 days after the Issue Date, or (b) the Shelf Registration Statement or
the Exchange Offer Registration Statement is declared effective but
thereafter, subject to certain exceptions, ceases to be effective or usable
in connection with the Exchange Offer or resales of Old Bonds, as the case
may be, during the periods specified in the Registration Rights Agreement
(each such event referred to in clauses (a) and (b) above, a Registration
Default), then the interest rate on transfer restricted bonds will increase
(Additional Interest), with respect to the first 90-day period immediately
following the occurrence of such Registration Default by 0.50% per annum
and will increase by an additional 0.50% per annum with respect to each
subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of 1.50% per annum. Following the cure of all
Registration
-19-
<PAGE>
Defaults, the accrual of Additional Interest will cease and the interest
rate will revert to the original rate.
Based on interpretations by the staff of the Commission issued to
other issuers in similar contexts, the Company believes that New Bonds
issued pursuant to the Exchange Offer in exchange for Old Bonds may be
offered for resale, resold and otherwise transferred by any holder of such
New Bonds (other than any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Bonds are acquired in the ordinary
course of such holder's business and such holder has no arrangement or
understanding with any person to participate in the distribution of such
New Bonds. Each holder is required to acknowledge in the Letter of
Transmittal that it is not engaged in, and does not intend to engage in, a
distribution of the New Bonds. Any holder who tenders in the Exchange
Offer for the purpose of participating in a distribution of the New Bonds
must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale transaction.
Each broker-dealer that receives New Bonds for its own account
pursuant to the Exchange Offer will also be required to acknowledge that
(i) Old Bonds tendered by it in the Exchange Offer were acquired in the
ordinary course of its business as a result of market-making or other
trading activities, and (ii) it will deliver a prospectus in connection
with any resale of New Bonds received in the Exchange Offer. The Letter of
Transmittal will also state that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Bonds received in exchange
for Old Bonds where such Old Bonds were acquired by such broker-dealer as a
result of market-making activities or other trading activities (other than
Old Bonds acquired directly from the Company). The Company has agreed
that, for a period of 180 days after Consummation of the Exchange Offer, it
will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
Notwithstanding the foregoing, based on the above-mentioned interpretations
by the staff of the Commission, the Company believes that broker-dealers
who acquired the Old Bonds directly from the Company and not as a result of
market-making activities or other trading activities cannot rely on such
interpretations by the staff of the Commission and must, in the absence of
an exemption, comply with the registration and prospectus delivery
requirements of the Securities Act in connection with secondary resales of
the New Bonds. Such broker-dealers may not use this Prospectus, as it may
be amended or supplemented from time to time, in connection with any such
resales of the New Bonds.
Terms of the Exchange Offer; Period for Tendering Old Bonds
Upon the terms and subject to the conditions set forth in this
Prospectus and in the accompanying Letter of Transmittal (which together
constitute the Exchange Offer), the Company will accept for exchange Old
Bonds which are properly tendered on or prior to the Expiration Date and
not withdrawn as permitted below. As used herein, the term "Expiration
Date" means 5:00
-20-
<PAGE>
p.m., New York City time, on __________, 1997; provided, however, that if
the Company, in its sole discretion, has extended the period of time for
which the Exchange Offer is open, the term "Expiration Date" means the
latest time and date to which the Exchange Offer is extended.
As of the date of this Prospectus, $200,000,000 aggregate
principal amount of the Old Bonds was outstanding. This Prospectus,
together with the Letter of Transmittal, is first being sent to all holders
of Old Bonds known to the Company on or about __________, 1997. The
Company's obligation to accept Old Bonds for exchange pursuant to the
Exchange Offer is subject to certain conditions as set forth under "--
Certain Conditions to the Exchange Offer" below.
The Company expressly reserves the right, at any time or from
time to time, to extend the period of time during which the Exchange Offer
is open, and thereby delay acceptance for exchange of any Old Bonds, by
giving oral or written notice of such extension to the holders thereof.
During any such extension, all Old Bonds previously tendered will remain
subject to the Exchange Offer and may be accepted for exchange by the
Company. Any Old Bonds not accepted for exchange for any reason will be
returned without expense to the tendering holder thereof as promptly as
practicable after the expiration or termination of the Exchange Offer.
Procedures for Tendering Old Bonds
The tender to the Company of Old Bonds by a holder thereof as set
forth below and acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the
accompanying Letter of Transmittal. Except as set forth below, a holder
who wishes to tender Old Bonds for exchange pursuant to the Exchange Offer
must transmit a properly completed and duly executed Letter of Transmittal,
including all other documents required by such Letter of Transmittal, to
Bankers Trust Company (the Exchange Agent), at the address set forth below
under "Exchange Agent" on or prior to the Expiration Date. In addition,
either (i) certificates for such Old Bonds must be received by the Exchange
Agent along with the Letter of Transmittal, or (ii) a timely confirmation
of a book-entry transfer (a Book-Entry Confirmation) of such Old Bonds, if
such procedure is available, into the Exchange Agent's account at the DTC
(the Book-Entry Transfer Facility) pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent on or
prior to the Expiration Date, or (iii) the holder must comply with the
guaranteed delivery procedures described below. THE METHOD OF DELIVERY OF
OLD BONDS, LETTERS OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT
THE ELECTION AND RISK OF THE HOLDERS. INSTEAD OF DELIVERY BY MAIL, IT IS
RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO
LETTERS OF TRANSMITTAL OR OLD BONDS SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal,
as the case may be, must be guaranteed unless the Old Bonds surrendered for
exchange pursuant thereto are tendered (i) by a registered holder of the
Old Bonds who has not completed the box entitled "Special Issuance
-21-
<PAGE>
Instructions" or "Special Delivery Instructions" on the Letter of
Transmittal, or (ii) for the account of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an officer or correspondent in
the United States (collectively, Eligible Institutions.) In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantees must be by an
eligible guarantor institution which is a member of one of the following
recognized Medallion Signature Guarantee Programs: the Securities Transfer
Agents Medallion Program (STAMP), the New York Stock Exchange Medallion
Signature Program (MSP) or the Stock Exchanges Medallion Program (SEMP)
(collectively, Eligible Guarantor Institutions). If Old Bonds are
registered in the name of a person other than a signer of the Letter of
Transmittal, the Old Bonds surrendered for exchange must be endorsed by, or
be accompanied by a written instrument or instruments of transfer or
exchange, in satisfactory form as determined by the Company in its sole
discretion, duly executed by the registered holder with the signature
thereon guaranteed by an Eligible Guarantor Institution.
All questions as to the validity, form, eligibility (including
time of receipt), acceptance and withdrawal of Old Bonds tendered for
exchange will be determined by the Company in its sole discretion, which
determination shall be final and binding. The Company reserves the
absolute right to reject any and all tenders of any particular Old Bonds
not properly tendered or to not accept any particular Old Bonds which
acceptance might, in the judgment of the Company or its counsel, be
unlawful. The Company also reserves the absolute right to waive any
defects, irregularities or conditions of the Exchange Offer as to any
particular Old Bonds either before or after the Expiration Date (including
the right to waive the ineligibility of any holder who seeks to tender Old
Bonds in the Exchange Offer). The interpretation of the terms and
conditions of the Exchange Offer as to any particular Old Bonds either
before or after the Expiration Date (including the Letter of Transmittal
and the instructions thereto) by the Company shall be final and binding on
all parties. Unless waived, any defects or irregularities in connection
with tenders of Old Bonds for exchange must be cured within such reasonable
period of time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give
notification of any defect or irregularity with respect to any tender of
Old Bonds for exchange, nor shall any of them incur any liability for
failure to give such notification.
If the Letter of Transmittal is signed by a person or persons
other than the registered holder or holders of Old Bonds, such Old Bonds
must be endorsed or accompanied by appropriate powers of attorney in either
case signed exactly as the name or names of the registered holder or
holders appear on the Old Bonds.
If the Letter of Transmittal or any Old Bonds or powers of
attorney are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in fiduciary
or representative capacity, such persons should so indicate when signing
and, unless waived by the Company, proper evidence satisfactory to the
Company of their authority to so act must be submitted.
-22-
<PAGE>
By tendering, each holder will represent to the Company that,
among other things (i) the New Bonds acquired pursuant to the Exchange
Offer are being obtained in the ordinary course of business of the person
receiving such New Bonds, whether or not such person is the holder, (ii)
neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such
New Bonds, and (iii) neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the
Company. Each broker-dealer that receives New Bonds for its own account in
exchange for Old Bonds will also acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection
with any resale of such New Bonds.
Acceptance of Old Bonds for Exchange; Delivery of New Bonds
Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will accept, promptly after the Expiration
Date, all Old Bonds properly tendered and will issue the New Bonds promptly
after acceptance of the Old Bonds. See "--Certain Conditions to the
Exchange Offer" below. For purposes of the Exchange Offer, the Company
shall be deemed to have accepted properly tendered Old Bonds for exchange
when as and if the Company has given oral or written notice thereof to the
Exchange Agent.
In all cases, issuance of New Bonds for Old Bonds that are
accepted for exchange pursuant to the Exchange Offer will be made only
after timely receipt by the Exchange Agent of certificates for such Old
Bonds or a timely Book-Entry Confirmation of such Old Bonds into the
Exchange Agent's account at the Book-Entry Transfer Facility, a properly
completed and duly executed Letter of Transmittal and all other required
documents. If any tendered Old Bonds are not accepted for any reason set
forth in the terms and conditions of the Exchange Offer or if Old Bonds are
submitted for a greater principal amount than the holder desires to
exchange, such unaccepted or non-exchanged Old Bonds will be returned
without expense to the tendering holder thereof (or, in the case of Old
Bonds tendered by book-entry transfer into the Exchange Agent's account at
the Book-Entry Transfer Facility pursuant to the book-entry procedures
described below, such non-exchanged Old Bonds will be credited to an
account maintained with such Book-Entry Transfer Facility) as promptly as
practicable after the expiration or termination of the Exchange Offer.
Book-entry Transfer
The Exchange Agent will make a request to establish an account
with respect to the Old Bonds at the Book-Entry Transfer Facility for
purposes of the Exchange Offer within two business days after the date of
this Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of Old
Bonds by causing the Book-Entry Transfer Facility to transfer such Old
Bonds into the Exchange Agent's account at the Book-Entry Transfer Facility
in accordance with such Book-Entry Transfer Facility's procedures for
transfer. However, although delivery of Old Bonds may be effected through
book-entry transfer at the Book-Entry Transfer Facility, the Letter of
Transmittal, together with any required signature guarantees and any other
required documents, must, in any case, be transmitted to and received by
-23-
<PAGE>
the Exchange Agent at one of the addresses set forth below under "Exchange
Agent" on or prior to the Expiration Date or the guaranteed delivery
procedures described below must be complied with.
Guaranteed Delivery Procedure
If a registered holder of the Old Bonds desires to tender such
Old Bonds and the Old Bonds are not immediately available, or time will not
permit such holder's Old Bonds or other required documents to reach the
Exchange Agent before the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if
(i) the tender is made through an Eligible Institution, (ii) prior to the
Expiration Date, the Exchange Agent received from such Eligible Institution
a properly completed and duly executed Letter of Transmittal and Notice of
Guaranteed Delivery, substantially in the form provided by the Company (by
mail or hand delivery), setting forth the name and address of the holder of
Old Bonds, the certificate number or numbers of such Old Bonds and the
principal amount of Old Bonds tendered, stating that the tender is being
made thereby and guaranteeing that within five business days after the
Expiration Date, the certificates for all physically tendered Old Bonds, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be,
the Letter of Transmittal and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (iii) the certificates for all physically tendered Old Bonds, in
proper form for transfer, or a Book-Entry Confirmation, as the case may be,
and all other documents required by the Letter of Transmittal are received
by the Exchange Agent within five business days after the Expiration Date.
Withdrawal Rights
Tenders of Old Bonds may be withdrawn at any time prior to the
Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal
must be received by the Exchange Agent at the address set forth below under
"Exchange Agent." Any such notice of withdrawal must specify the name of
the person having tendered the Old Bonds to be withdrawn, identify the Old
Bonds to be withdrawn (including the principal amount of such Old Bonds),
and (where certificates for Old Bonds have been transmitted) specify the
name in which such Old Bonds are registered, if different from that of the
withdrawing holder. If certificates for Old Bonds have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of
such certificates the withdrawing holder must also submit the serial
numbers of the particular certificates to be withdrawn and a signed notice
of withdrawal and signatures guaranteed by an Eligible Institution unless
such holder is an Eligible Institution. If Old Bonds have been tendered
pursuant to the procedure for book-entry transfer described above, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Old Bonds
and otherwise comply with the procedures of such facility. All questions
as to the validity, form and eligibility (including time of receipt) of
such notices will be determined by the Company, whose determination shall
be final and binding on all parties. Any Old Bonds so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any Old Bonds which have been tendered for exchange but
which are not exchanged for any reason will be returned to the holder
thereof without cost to such holder (or, in
-24-
<PAGE>
the case of Old Bonds tendered by book-entry transfer procedures described
above, such Old Bonds will be credited to an account maintained at such
Book-Entry Transfer Facility for the Old Bonds) as soon as practicable
after returned by following one of the procedures described under
"--Procedures for Tendering Old Bonds" above at any time on or prior to the
Expiration Date.
Certain Conditions to the Exchange Offer
Notwithstanding any other provision of the Exchange Offer, the
Company shall not be required to accept for exchange, or to issue New Bonds
in exchange for, any Old Bonds and may terminate or amend the Exchange
Offer, at any time prior to the consummation of the Exchange Offer if: (i)
the Exchange Offer would violate applicable law or any applicable
interpretation of the staff of the Commission, (ii) an action or proceeding
is instituted or threatened in any court or by any governmental agency
which might materially impair the ability of the Company to proceed with
the Exchange Offer or a material adverse development has occurred in any
existing action or proceeding with respect to the Company, or (iii) all
governmental approvals which the Company deems necessary for the
consummation of the Exchange Offer have not been obtained.
If the Company determines in its sole discretion that the
conditions to the Exchange Offer are not satisfied, the Company may (i)
refuse to accept any Old Bonds and return all tendered Old Bonds to the
tendering holders, (ii) extend the Exchange Offer and retain all Old Bonds
tendered prior to 5:00 p.m. New York City time, on the Expiration Date,
subject, however, to the rights of holders to withdraw such Old Bonds (see
"--Withdrawal Rights") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all validly tendered Old Bonds.
If such waiver constitutes a material change to the Exchange Offer, the
Company will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered holders, and the
Company will extend the Exchange Offer for a period of five to 10 business
days, depending upon the significance of the waiver and the manner of
disclosure to the registered holders, if the Exchange Offer would otherwise
expire during such five to 10 business day period.
Termination of Certain Rights
Holders of the Old Bonds to whom this Exchange Offer is made have
special rights under the Registration Rights Agreement that will terminate
upon the consummation of the Exchange Offer. The Registration Rights
Agreement provides that certain rights under such agreement shall terminate
upon the occurrence of (i) the filing with the Commission of the Exchange
Offer Registration Statement, (ii) the effectiveness under the Securities
Act of the Exchange Offer Registration Statement, and (iii) the
consummation of the Exchange Offer.
Exchange Agent
Bankers Trust Company has been appointed as the Exchange Agent
for the Exchange Offer. All executed Letters of Transmittal should be
directed to the Exchange Agent at the address set forth below. Questions
and requests for assistance, requests for additional copies of this
Prospectus or
-25-
<PAGE>
of the Letter of Transmittal and requests for Notices of Guaranteed
Delivery should be directed to the Exchange Agent addressed as follows:
By Mail:
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attn:
By Hand or Overnight Delivery:
Bankers Trust Company
Four Albany Street
New York, New York 10006
Attn:
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN
ADDRESS OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
Fees and Expenses
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or in person by officers
and regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will
pay the Exchange Agent reasonable and customary fees for its services and
will reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The fees and expenses incident to the Exchange Offer will be paid by
the Company. Such expenses include fees and expenses of the Exchange Agent
and Trustee, accounting and legal fees and printing costs, among others.
-26-
<PAGE>
Consequences of Failure to Exchange
Holders of Old Bonds eligible to participate who do not exchange their
Old Bonds for New Bonds pursuant to the Exchange Offer will not have any
further registration rights and such Old Bonds will continue to be subject
to the restrictions on transfer as set forth in the legend thereon as a
consequence of the issuance of the Old Bonds pursuant to exemptions from,
or in transactions not subject to, the registration requirements of the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Old Bonds under the
Securities Act. See "Risk Factors-Consequences of Failure to Exchange."
Resales of the New Bonds
With respect to resales of New Bonds, based on an interpretation by
the staff of the Commission set forth in no-action letters issued to third
parties, the Company believes that a holder (other than a person that is an
affiliate of the Company within the meaning of Rule 405 under the
Securities Act) who exchanges Old Bonds for New Bonds in the ordinary
course of business and who is not participating, does not intend to
participate, and has no arrangement or understanding with any person to
participate, in the distribution of the New Bonds, will be allowed to
resell the New Bonds to the public without further registration under the
Securities Act and without delivering to the purchasers of the New Bonds a
prospectus that satisfies the requirements of Section 10 thereof. However,
if any holder acquires New Bonds in the Exchange Offer for the purpose of
distributing or participating in a distribution of the New Bonds, such
holder cannot rely on the position of the staff of the Commission
enunciated in Exxon Capital Holdings Corporation (available May 13, 1988)
or similar no-action letters or any similar interpretive letters and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction, unless an
exemption from registration is otherwise available. Further, each broker-
dealer that receives New Bonds for its own account in exchange for Old
Bonds, where such Old Bonds were acquired by such broker-dealer as a result
of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Bonds.
The Shelf Registration Statement
In the event that applicable law or applicable interpretations of the
staff of the Commission do not permit the Company to effect the Exchange
Offer, or if a holder of the Bonds is not permitted to participate in the
Exchange Offer or does not receive freely tradeable New Bonds pursuant to
the Exchange Offer or is an affiliate of the Company, the Company will file
a Shelf Registration Statement prior to 30 days after such filing
obligation arises, relating to all Bonds for which the holders have
provided the necessary information. The Company will use its best efforts
to have the Shelf Registration Statement declared effective within 150 days
after such obligation arises and to keep the Shelf Registration Statement
continuously effective until two years after the Issue Date or such shorter
period that will terminate when all the registrable Bonds covered by the
Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or otherwise cease being registrable Bonds
-27-
<PAGE>
The summary herein of the material provisions of the Registration
Rights Agreement is believed by the Company to be accurate and complete in
all material respects, but is subject to and is qualified in its entirety
by reference to, all provisions of the Registration Rights Agreement which
provisions are incorporated by reference herein. A copy of the Registration
Rights Agreement has been filed with the Commission as an Exhibit to the
Registration Statement of which this Prospectus is a part.
Accounting Treatment
The New Bonds will be recorded at the same carrying value as the Old
Bonds, which is face value, as reflected in the Company's accounting
records on the date of the exchange. Accordingly, no gain or loss for
accounting purposes will be recognized. The expenses of the Exchange Offer
and the unamortized expenses related to the issuance of the Old Bonds will
be amortized over the term of the New Bonds.
-28-
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL DATA/(a)/
- -------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
For the Three Months
Ended March 31, For the Year Ended December 31,
------------------------- -------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------------------------- -------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues.......... $ 624,908 $ 659,355 $2,397,460 $2,387,069 $2,328,052 $2,366,050 $2,316,451
Operating Income............ 23,148 59,977 29,773 324,026 286,948 241,655 288,088
Net (Loss) Income........... (6,431) 32,851 (80,237) 205,216 198,288 191,449/(b)/ 206,714
Cash Dividends on
Common Stock.............. 5,990 60,259 138,608 164,154 159,388 160,365 164,277
<CAPTION>
At March 31, At December 31,
------------------------- -------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------------------------- -------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Total Assets................ $6,275,896 $5,933,992 $6,244,036 $6,045,631 $6,217,457 $6,397,405 $5,582,831
Long-Term Debt/(c)/......... 2,040,773 1,824,204 2,038,521 1,822,018 1,823,690 2,057,280 2,087,936
Preferred Stock Not
Subject to Mandatory
Redemption................ 116,200 116,200 116,200 116,200 166,200 166,200 231,196
Preferred Stock
Subject to Mandatory
Redemption/(c)/........... 155,000 155,000 155,000 155,000 230,000 230,000 200,000
Obligations Under
Capital Leases/(c)/....... 156,432 161,747 155,708 172,264 175,969 177,418 197,404
</TABLE>
a) Reclassifications of prior data have been made to conform with the current
presentation.
b) Includes the cumulative effect of change in accounting for municipal
property tax expense, which increased earnings for common shares by $47.7
million.
c) Includes portion due within one year.
-29-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This following discussion and analysis of the results of operations
for the three months ended March 31, 1997 and the three years ended
December 31, 1996 contains management's assessment of the Company's
financial condition and the principal factors having an impact on the
results of operations. This discussion should be read in conjunction with
the Company's Consolidated Financial Statements and footnotes appearing
elsewhere in this Prospectus.
Earnings Overview
The outages at the three Millstone nuclear units (Millstone) have
resulted in significantly increased expenditures for replacement power and
work undertaken at Millstone, which resulted in a net loss for the Company
for the year 1996 and the first quarter of 1997. In 1997, while all three
units are out of service, the Company expects to continue operating at a
loss. The combination of higher expenditures and the uncertainty
surrounding when the units will return to service made it necessary to
ensure that access to adequate cash levels would be available for the
duration of the outages. Management has taken various actions to address
NU's nuclear program and liquidity issues; however, these areas continue to
be a serious challenge.
The Company faces future uncertainty with the rapidly moving trend
toward industry restructuring. While restructuring had little direct impact
on 1996 or the first quarter 1997 financial results, it creates an
environment of significant uncertainty and financial risk for the coming
years. As discussed in further detail in "--Restructuring," the financial
treatment that strandable investments will be accorded will impact the
Company's ability to compete in a restructured environment.
Millstone Outages
The Company has an 81 percent ownership interest in Millstone 1 and 2
and a 52.93 percent ownership interest in Millstone 3. Millstone 1, 2 and 3
have been out of service since November 4, 1995, February 21, 1996 and
March 30, 1996, respectively.
Subsequent to its January 31, 1996, announcement that Millstone had
been placed on its watch list, the NRC has stated that the units cannot
return to service until independent, third-party verification teams have
reviewed the actions taken to improve the design, configuration and
employee concerns issues that prompted the NRC to place the units on its
watch list. Upon successful completion of these reviews, the NRC must
approve the restart of each unit through a formal commission vote.
Management took several key steps toward improving NU's nuclear
program during 1996 and will continue to place a high priority on its
recovery in 1997. The NU Board of Trustees (NU Board) formed a committee in
April 1996, to provide high-level oversight of the safety and effectiveness
of NU's nuclear operations, progress toward resolving open NRC issues and
progress
-30-
<PAGE>
in resolving employee, community and customer concerns. In September 1996,
Bruce D. Kenyon was appointed President and Chief Executive Officer of
Northeast Nuclear Energy Company (NNECO), a wholly-owned subsidiary of NU
that operates Millstone, and retired Admiral David M. Goebel was selected
to serve as Vice President for Nuclear Oversight. In early 1997, Neil S.
Carns was selected to serve as Senior Vice President and Chief Nuclear
Officer to oversee Millstone operations. Shortly after his arrival, Mr.
Kenyon unveiled a reorganization of NU's nuclear organization that includes
executives loaned from unaffiliated utility companies.
Millstone 3 has been designated as the lead unit for restart.
Millstone 2 remains on a schedule to be ready for restart shortly after
Millstone 3. To provide the resources and focus for Millstone 3, the work
on the restart of Millstone 1 will be reduced until late in 1997 when the
full work effort will be resumed.
Management believes that Millstone 3 will be ready for restart around
the end of the third quarter of 1997, Millstone 2 in the fourth quarter of
1997 and Millstone 1 in the first quarter of 1998. Because of the need for
completion of independent inspections and reviews and for the NRC to
complete its processes before the NRC Commissioners can vote on permitting
a unit to restart, the actual beginning of operations is expected to take
several months beyond the time when a unit is declared ready for restart.
The NRC's internal schedules at present indicate that a meeting of the
Commissioners to act upon a Millstone 3 restart request could occur by mid-
December if NU, the independent review teams and NRC staff concur that the
unit is ready for restart by that time. Management hopes that Millstone 3
can begin operating by the end of 1997.
Based on a recent review of the work efforts and budgets, management
believes that the overall 1997 nuclear spending levels - both nuclear O&M
expenditures and associated support services and capital expenditures -
will be approximately the same as previously estimated. However, 1997
nuclear O&M expenditures and related support services are expected to
increase slightly, while 1997 capital expenditures are expected to
decrease. Management also believes that it is possible that 1997 nuclear
spending will increase somewhat as the detailed work needed to restore the
units to service progresses. A portion of the increased nuclear O&M
expenditures in 1997 will be reserved in the second quarter of 1997. The
Company's share of nonfuel O&M costs for Millstone in 1996 totalled $322
million, including $93 million for incremental costs related to the outages
and $50 million reserved for future costs. Nonfuel O&M costs have been and
will continue to be absorbed by the Company without adjustment to its
current rates.
Although 1998 nuclear operating budgets have not been established at
this time, management believes that the nuclear spending levels at
Millstone will be reduced considerably from 1997 levels, although they will
be higher than before the station was placed on the NRC's watch list. The
actual level of 1998 spending will depend on when the units return to
operation and the cost of restoring them to service. Management will
continue to evaluate the costs to be incurred in 1998 to determine whether
adjustments to the existing reserves are required.
-31-
<PAGE>
Replacement power costs for the Company averaged approximately $28
million per month during the first quarter of 1997 and are projected to
average approximately $24 million per month for the remainder of 1997.
Replacement power costs for the Millstone units expensed in 1996 were $216
million, which was a substantial portion of the total 1996 replacement
power costs. The Company will continue to expense its replacement power
costs in 1997. See "Risk Factors--Nuclear Plant Outages and Liquidity,"
"--Rate Matters" and "Business--Overview of Nuclear and Related Financial
Matters" and "--Rates" for information relating to the Company's ability to
recover these replacement power costs.
As a result of the nuclear situation, a number of civil lawsuits,
criminal investigations and regulatory proceedings have been initiated,
including litigation by NU's shareholders. In addition, there is the
potential for claims by the non-NU owners of Millstone 3 for the costs
associated with the current outage. To date, no reserves have been
established for existing or potential litigation. See "Legal Proceedings"
and the notes to the Company's Consolidated Financial Statements, Note 11B,
for further information on litigation.
Capacity
During 1996 and continuing into 1997, the System companies have taken
measures to improve their capacity position. The Company anticipates
spending approximately $55 million for additional capacity-related costs in
1997, of which $37 million is expected to be expensed. The projected 1997
capacity-related expenditures have increased from previous estimates due to
additional improvements to existing fossil units and the Company's
estimated share of costs to reactivate generating units in New England. In
the first quarter of 1997, the Company spent approximately $14 million to
ensure adequate generating capacity, of which $5 million was expensed.
During 1996, the Company spent approximately $60 million of which $42
million was expensed.
Assuming normal weather conditions and generating unit availability,
management expects that the Company will have sufficient capacity to meet
peak load demands in the summer of 1997. If there are high levels of
unplanned outages at other units in New England, or if any transmission
lines used to import power from other states are unavailable, at times of
peak load demand, the Company and the other New England utilities may have
to resort to operating procedures designed to reduce customer demand.
The Company has a 12 percent ownership interest in the Maine Yankee
nuclear generating facility (MY). MY is projected to incur substantially
increased costs over the balance of 1997 while the unit is not operating.
On May 27, 1997, MY announced that it was considering permanent closure of
the plant based on economic concerns and uncertainty about the operation of
the plant. MY disclosed that it would reduce spending to a level that would
preserve the option of restarting the plant or closing it. The Company's
share of replacement-power costs while MY is out of service is projected to
average approximately $1.5 million per month.
-32-
<PAGE>
Liquidity and Capital Resources
Cash provided from operations decreased approximately $194 million in
the first quarter of 1997, compared to the first quarter of 1996, primarily
due to higher 1997 cash operating costs related to the Millstone outages,
and the pay down of the 1996 year end accounts payable balance. The year-
end accounts payable balance was relatively high due to costs related to a
severe December storm and costs associated with the Millstone outages that
had been incurred but not yet paid by the end of 1996. Net cash from
financing activities increased approximately $306 million, primarily due to
an increase in short-term borrowings through the use of the $200 million
accounts receivable facility established in 1996. Net cash from financing
activities was also impacted by lower cash dividends on common shares. Cash
used for investments increased approximately $112 million primarily due to
higher investments in the Money Pool (defined below).
Cash provided from operations decreased by approximately $229 million
in 1996 compared to 1995, primarily due to higher cash operating costs
related to the Millstone outages and costs associated with ensuring
adequate generating capacity, partially offset by higher retail sales and
lower income tax payments. Cash flows from operations were also impacted by
a sharp increase in the level of accounts payable principally caused by
costs related to a severe December 1996 storm and costs associated with the
Millstone outages that had not been paid by year end. Net cash used for
financing activities decreased by approximately $350 million in 1996,
primarily due to higher long-term debt issuances, lower repayment of short-
term debt and lower common dividend payments. Cash used for investments
increased by approximately $122 million in 1996, primarily due to an
increase in investments under the Money Pool.
During 1996, the Company took various actions to ensure that it will
have access to adequate cash resources, at reasonable cost. The Company
completed two bond issues totaling $222 million, one of which was issued in
anticipation of the maturity of approximately $193 million of bonds in
April, 1997. The Company established a facility under which it may sell up
to $200 million of its billed and unbilled accounts receivable. As of March
31, 1997, $200 million had been sold using this facility. Additionally, NU,
the Company and WMECO entered into a new $313.75 million three-year
revolving credit agreement (the New Credit Agreement). Under the New Credit
Agreement, NU has a contractual short-term borrowing limit of $150 million,
the Company has a limit of $313.75 million and WMECO has a limit of $150
million. The overall limit for all borrowers is $313.75 million.
Some of the borrowing facilities contain financial covenants that must
be satisfied before borrowings can be made and for outstanding borrowings
to remain outstanding. On May 30, 1997, the First Amendment and Waiver
became effective for the New Credit Agreement. This amendment permits
$313.75 million of credit to remain available to the Company and WMECO
through the securing of such borrowings with first mortgage bonds. Interest
coverage and common equity ratios were also loosened to enable the
companies to meet certain financial tests. The Company will be able to
borrow up to approximately $225 million on the strength of bonds it has
provided as collateral for borrowings under the revolving credit agreement.
WMECO will be able to borrow up to approximately $90 million on the basis
of bonds it has provided as collateral and NU, which
-33-
<PAGE>
as a holding company cannot issue first mortgage bonds, will be able to
borrow up to $50 million if the Company, WMECO and NU consolidated
financial statements meet certain interest coverage tests for two
consecutive quarters.
On April 1, 1997, $193 million of the Company's first mortgage bonds
matured. The Company funded the maturity with cash available and from long-
term debt issuances that took place in 1996 in anticipation of this
maturity.
In April, 1997, Moody's downgraded most of the securities ratings of
the Company because of the extended Millstone outages. In May, 1997, S&P
further downgraded the Company's securities as a result of the Connecticut
legislature failing to approve a utility restructuring bill during the
recently completed legislative session. As a result, all System securities
are currently rated below investment grade by Moody's and S&P. These
actions will adversely affect the availability and cost of funds for the
System companies.
On April 17, 1997, the holders of approximately $38 million of notes
issued by NU's real estate company (Rocky River Realty Company or RRR)
notified RRR that it wished RRR to repurchase the notes. The notes are
secured by real estate leases between RRR as lessor and Northeast Utilities
Service Company (NUSCO) as lessee. The leases provide for the acceleration
of rent equal to RRR's note obligations if RRR is unable to repay the
obligation. On July 1, 1997, RRR received a commitment for the purchase of
approximately $12 million of the notes and RRR intends to repurchase the
remaining $26 million of notes on July 14, 1997. The Company may be billed
by NUSCO for its proportionate share of the accelerated lease obligations
when RRR repurchases the notes. The Company does not expect the resolution
of this matter to have a material adverse impact on its financial condition
or liquidity. See the notes to the Company's Consolidated Financial
Statements, Note 11G for further information.
On June 21, 1996, the Company entered into an operating lease with a
third party to acquire the use of four turbine generators having an
installed cost of approximately $70 million. During the first quarter of
1997, the Company determined that it would not be in compliance with
financial coverage tests required under the lease agreement based on
projections of its 1997 financial results. The Company has requested
waivers of this covenant from the lessor, and the matter is pending. If the
Company is unable to negotiate mutually satisfactory lease revisions, it
expects to have sufficient liquidity to purchase the turbine generators
from the lessor. The purchase price for the turbine generators would be
slightly less than the installed cost of $70 million.
Each major company in the System finances its own needs. Neither the
Company nor WMECO has any agreements containing cross defaults based on
events or occurrences involving NU, PSNH or NAEC. Similarly, neither PSNH
nor NAEC has any agreements containing cross defaults based on events or
occurrences involving NU, the Company or WMECO. Nevertheless, it is
possible that investors will take negative operating results or regulatory
developments at one company in the System into account when evaluating
other companies in the System. That could, as a practical matter and
despite the contractual and legal separations among the NU companies,
negatively affect each company's access to the financial markets.
-34-
<PAGE>
If the return to service of one or more of the Millstone units is
delayed substantially, or if the needed waivers or modifications discussed
above are not forthcoming on reasonable terms, or if some borrowing
facilities become unavailable because of difficulties in meeting borrowing
conditions, or if the system encounters additional significant costs or any
other significant deviations from management's current assumptions, the
currently available borrowing facilities could be insufficient to meet all
of the system's cash requirements. In those circumstances, management would
take actions to reduce costs and cash outflows and would attempt to take
other actions to obtain additional sources of funds. The availability of
these funds would be dependent upon the general market conditions and the
Company's and the System's credit and financial condition at the time.
Restructuring
The movement toward electric industry restructuring continues to gain
momentum nationally as well as within Connecticut. Factors that are driving
the move toward restructuring, in the Northeast in particular, include
legislative and regulatory actions and relatively high electricity prices.
These actions will impact the way that the Company has historically
conducted its business.
Although the Company continues to operate under cost-of-service based
regulation, various restructuring initiatives in Connecticut have created
uncertainty with respect to future rates and the recovery of strandable
investments. Strandable investments are regulatory assets or other assets
that would not be economical in a competitive environment. The Company has
exposure to strandable investments for its investment in high-priced
nuclear generating plants, state mandated purchased power arrangements that
are priced above the market and significant regulatory assets that
represent costs deferred by state regulators for future recovery. The
Company's exposure to strandable investments and purchased power
obligations exceeds its shareholder's equity. The Company's ability to
compete in a restructured environment would be negatively affected unless
the Company were able to recover substantially all of these past
investments and commitments.
On June 4, 1997, the Connecticut Legislature completed its session
without passage of a proposed electric industry restructuring bill. The
legislature may consider restructuring legislation in the future.
The Company follows accounting principles in accordance with Statement
of Financial Accounting Standards (SFAS) No. 71, "Accounting for the
Effects of Certain Types of Regulation," which allows the economic effects
of rate regulation to be reflected. Recently, the Commission has questioned
the ability of certain utilities to remain on SFAS No. 71 in light of state
legislation regarding the transition to retail competition. The industry
expects guidance on this issue from the Financial Accounting Standards
Board's Emerging Issues Task Force in the near future. While there are
restructuring initiatives pending in Connecticut, the Company is not yet
subject to transition plans.
If future competition or regulatory actions cause any portion of its
operations to no longer be subject to SFAS No. 71, the Company would no
longer be able to recognize regulatory assets and
-35-
<PAGE>
liabilities for that portion of its business unless these costs would be
recoverable by a portion of the business remaining on cost-of-service based
regulation. Under its current regulatory environment, management believes
that the Company's use of SFAS No. 71 remains appropriate.
If events create uncertainty about the recoverability of any of the
Company's remaining long-lived assets, the Company would be required to
determine the fair value of its long-lived assets, including regulatory
assets, in accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The
implementation of SFAS 121 did not have a material impact on the Company's
financial position or results of operations as of December 31, 1996.
Management believes it is probable that the Company will recover its
investments in long-lived assets through future revenues. This conclusion
may change in the future as competitive factors influence wholesale and
retail pricing in the electric utility industry or if the cost-of-service
based regulatory structure were to change. See "Risk Factors--Regulatory
Accounting and Assets."
Competition
In addition to legislative and regulatory actions, competition in the
electric utility industry continues to grow at a rapid pace as a result of
technological advances; relatively high electricity prices in certain
regions of the country, including New England; surplus generating capacity;
and the increased availability of natural gas. Competitive forces in the
electric utility industry have already caused some customers to choose
alternative energy suppliers or relocate outside of the Company's
territory. In response, the Company is preparing for a competitive
environment by expanding previously established programs and developing new
ways to fortify its relationships with existing customers and attract new
customers, both within and outside its service territory.
The Company has continued to negotiate long-term power supply
arrangements with certain large commercial and industrial retail customers
that require an incentive to locate or expand their operations within the
Company's service territory, are considering leaving or reducing operations
in the service territory, are facing short-term financial problems, or are
considering generating their own electricity. Approximately 10 percent of
the Company's commercial and industrial retail revenues were under
negotiated rate agreements at the end of 1996. These negotiated rate
reductions amounted to approximately $19 million in 1996 and 1995. These
activities are expected to continue in 1997.
During 1996, the System devoted significantly more resources to its
retail marketing organization, whose primary mission is to provide value
added energy solutions to customers. Training was emphasized for its 170
new employees, the majority of whom are account executives charged with
developing tailored solutions for the System's customers and positioning NU
as a valuable partner for the future. The ability of these account
executives to obtain an intimate understanding of customers' needs and
concerns and provide value added energy solutions will play a key role in
the System's ability to effectively compete in the future.
-36-
<PAGE>
Revenue erosion from traditional retail electric sales may be
significant after restructuring. While margins on retail electric sales are
likely to be thin, utilities can compete successfully if they are allowed
to recover their strandable investments. During 1997 and beyond, the System
plans to continue to participate in state sanctioned retail access
programs; invest in new unregulated businesses; develop new energy-related
products and services; and pursue strategic alliances with companies in
various energy-related fields, including fuel supply and management, power
quality, energy efficiency and load management services. Strategic
alliances will allow NU subsidiaries to enter markets that provide access
to new product lines and technologies that complement the System's current
products and services.
Rate Matters
In July 1996, the DPUC approved a rate settlement agreement with the
Company (the Settlement). Under the Settlement, the Company froze base
rates until at least December 31, 1997, accelerated the amortization of
regulatory assets by $73 million in 1996 and between $54 million and $68
million in 1997, and extended the depreciable lives of transmission and
distribution assets by ten years. Additionally, the Settlement terminated
all pending litigation, as of March 31, 1996, among the parties that could
potentially affect the Company's rates. The Settlement does not impact
costs incurred subsequent to March 31, 1996 that are associated with the
Millstone outages. The Settlement reduced 1996 earnings by approximately
$35 million. The impact on 1997 earnings is not significant.
In October 1996, the DPUC issued a final order establishing an Energy
Adjustment Clause (EAC), which replaced both the Company's fossil-fuel
adjustment clause and its generation utilization adjustment clause (GUAC).
The EAC, which is designed to calculate the difference between actual fuel
costs and fuel costs collected through base rates, took effect on January
1, 1997. The order includes an incentive mechanism which disallows recovery
of the first $9 million of actual fuel costs in excess of base rate levels,
but permits the Company to retain the first $9 million in actual fuel costs
below base rate levels.
In connection with an ongoing management audit of the Company,
including matters related to the NRC watch list designation, the two
consulting firms hired by the DPUC to review such matters issued reports in
December 1996 that were highly critical of NU's management of its nuclear
program. The results of these reports may affect future DPUC positions with
respect to the System's nuclear related operations and costs.
Despite an earlier procedural order indicating that prudence hearings
on the current nuclear outages at Millstone would take place after the
nuclear plants return to service, on January 15, 1997, the DPUC notified
the Company that it would be conducting its prudence review of nuclear cost
recovery issues in multiple phases. The first phase, covering the period
April 1 through June 30, 1996, was in progress when various intervenors
moved for summary judgment with respect to the costs for the entire outage.
On June 27, 1997, the DPUC orally granted summary judgment in the prudence
docket, disallowing recovery of substantially all of the costs associated
with the ongoing outages at Millstone. The Company has projected that its
share of the total costs for the Millstone outages, including
-37-
<PAGE>
replacement power, operation and maintenance and capacity reliability
projects, will be about $990 million. The Company had not requested cost
recovery and had said that it did not expect to seek recovery for a
substantial portion of these costs and did not intend to request any cost
recovery until the units had returned to operation. Any requests by the
Company for recovery would include only costs for projects the Company
would have undertaken under normal operating conditions or that provide
long-term value for the Company's customers. The DPUC did leave open the
possibility for the Company in a future rate case to seek recovery of up to
$40 million of capital costs associated with capacity reliability projects.
The Company currently expects to appeal the decision to the Connecticut
Superior Court. The Company has expensed, and continues to expense, the
bulk of the Millstone outage costs as they are incurred. Therefore, the
Company does not expect this decision to have a material financial impact
on projected 1997 results.
In a separate proceeding, the DPUC ordered the Company to submit
studies by July 1, 1997 that analyze the economic benefits from continued
operation of Millstone 1 and 2. The DPUC stated that these studies were
necessary in light of the uncertainty regarding restart dates of the units
and the costs associated with returning these units to operation. On July
1, 1997, the Company submitted continued unit operation studies to the DPUC
showing that, under base case assumptions, Millstone 1 will have a value to
System customers (as compared to the cost of shutting down the unit and
incurring replacement power costs) of approximately $70 million during the
remaining thirteen years of its operating license and Millstone 2 will have
a value to System customers (on the same assumptions as used with Millstone
1) of approximately $500 million during the remaining eighteen years of its
operating license. Two other cases submitted to the DPUC based on higher
assumed O&M costs, which the Company considers less likely, indicated that
Millstone 1 would be uneconomic in varying degrees. At the present time,
the Company expects to continue operating both Millstone 1 and Millstone 2
for the remaining terms of their respective operating licenses; however,
the Company cannot predict the outcome of this proceeding.
In addition, the DPUC is required to review a utility's rates every
four years if there has not been a rate proceeding during such period. On
June 16, 1997, the Company filed with the DPUC certain financial
information consistent with the DPUC's filing requirements applicable to
such four year review. The Company expects hearings before the DPUC with
respect to such review to begin during the summer of 1997. The Company
cannot predict the outcome of this proceeding.
Nuclear Decommissioning
The Company has a 34.5 percent ownership interest in the Connecticut
Yankee nuclear generating facility (CY). On December 4, 1996, the CYAPC
Board of Directors voted unanimously to cease permanently the production of
power at CY. The decision to retire CY from commercial operation was based
on an economic analysis of the costs of operating it compared to the costs
of closing it and incurring replacement power costs over the remaining
period of CY's operating license, which expires in 2007. The economic
analysis showed that closing CY and incurring replacement power costs
produced substantial savings.
-38-
<PAGE>
CYAPC has undertaken a number of regulatory filings intended to
implement the decommissioning. In late December 1996, CYAPC filed an
amendment to its power contracts with the Federal Energy Regulatory
Commission (FERC) to clarify the obligations of its purchasing utilities
following the decision to cease power production. At December 31, 1996, the
Company's share of these obligations was approximately $263 million,
including the cost of decommissioning and the recovery of existing assets.
Management expects that the Company will continue to be allowed to recover
such FERC-approved costs from its customers. Accordingly, the Company has
recognized its share of the estimated costs as a regulatory asset, with a
corresponding obligation, on its balance sheets.
The Company's estimated cost to decommission its shares of Millstone
1, 2 and 3 and Seabrook is approximately $858 million in year end 1996
dollars. These costs are being recognized over the lives of the respective
units with a portion being currently recovered through rates. As of
December 31, 1996, the market value of the contributions already made to
the decommissioning trusts, including their investment returns, was
approximately $297 million.
See the notes to the Company's Consolidated Financial Statements,
Note 3, for further information on nuclear decommissioning, including the
Company's share of costs to decommission the regional nuclear generating
units.
Environmental Matters
The Company is potentially liable for environmental cleanup costs at a
number of sites inside and outside its service territory. To date, the
future estimated environmental remediation liability has not been material
with respect to the earnings or financial position of the Company. At March
31, 1997, the Company had recorded an environmental reserve of
approximately $8 million, the most probable amount as required by
SFAS No. 5, "Accounting for Contingencies."
See the notes to the Company's Consolidated Financial Statements, Note
11C, for further information on environmental matters.
Risk Management Instruments
The Company uses fuel price management instruments to reduce a portion
of the fuel price risk associated with certain of its long-term negotiated
energy contracts. The Company's fuel price management instruments seek to
minimize exposure associated with rising fuel prices and effectively fix
the cost of fuel and maintain the profitability of certain of its long-term
negotiated contract sales.
These instruments are not used for trading purposes. The differential
paid or received as fuel prices change is recognized in income when
realized.
As of March 31, 1997, the Company had outstanding fuel price
management instruments with a total notional value of approximately $215
million. The settlement amounts associated with
-39-
<PAGE>
the instruments increased fuel expense by approximately $0.9 million for
the first quarter of 1997. Since March 31, 1997, the Company has entered
into additional fuel price management agreements with a total notional
value of approximately $75 million. As of December 31, 1996, the Company
had outstanding fuel-price management instruments with a total notional
value of approximately $229 million. The settlement amounts associated with
the instruments reduced fuel expense by approximately $7.5 million for the
Company during 1996. The Company's fuel-price management instruments seek
to minimize exposure associated with rising fuel prices and effectively fix
the cost of fuel and profitability of certain of its long-term negotiated
contract sales.
For further information on risk management instruments, see the notes
to the Company's Consolidated Financial Statements, Note 12.
Results Of Operation
Comparison of the First Quarter of 1997 to the First Quarter of 1996
The Company had a net loss of approximately $6 million in the first
quarter of 1997 compared to net income of approximately $33 million in the
first quarter of 1996. The first quarter loss was primarily attributable to
replacement-power expenditures for the Millstone units in the first quarter
of 1997. In 1996, two of the Millstone units were operating for some part
of the first quarter. First quarter 1997 earnings were also negatively
affected by a much milder winter. Retail kilowatt-hour sales for the
quarter decreased 3.2 percent from 1996. Although nuclear operation and
maintenance spending was higher in 1997, this impact was offset by reserves
for nuclear expenditures recognized in 1996.
Total operating revenues decreased in 1997, primarily due to lower
fuel recoveries and lower retail sales, partially offset by lower
conservation reserves. Fuel recoveries decreased $32 million primarily due
to lower recoveries under the Company's fuel clause. Lower reserves for
over-recoveries of demand-side-management costs increased revenues by $10
million.
Fuel, purchased and net interchange power expense increased in 1997,
primarily due to higher replacement-power costs in 1997 due to the nuclear
outages, partially offset by the timing of the recognition of costs under
the Company's fuel clause.
Other O&M expenses decreased in 1997. The major factors were the
recognition of nuclear reserves in the first quarter of 1996 ($31 million)
and spending against these reserves in the first quarter of 1997 ($23
million); lower recognition of nuclear refueling outage costs primarily as
a result of the Settlement discussed above under "--Rate Matters" ($10
million) and lower pension, benefit and storm costs ($7 million), partially
offset by higher costs associated with the Millstone outages ($41 million);
and higher 1997 costs associated with meeting capacity requirements ($5
million).
Amortization of regulatory assets, net increased in 1997, primarily
due to the completion of cogeneration deferrals in 1996 and increased
amortization in 1997 ($14 million); and higher
-40-
<PAGE>
amortizations as a result of the Settlement ($8 million), partially offset
by the completion of the amortization of phase-in costs for Seabrook in
1996 ($3 million).
Federal and state income taxes decreased in 1997, primarily due to
lower book taxable income.
Comparison of 1996 to 1995
The Company had a net loss of approximately $80 million in 1996,
compared to net income of approximately $205 million in 1995. The 1996 loss
was primarily due to costs related to the ongoing outages at Millstone
which totaled approximately $400 million and reduced the Company's 1996
earnings by approximately $232 million. These costs included replacement
power, higher 1996 Millstone O&M costs, a reserve recognized in 1996 for
1997 expenditures to return the Millstone units to service and costs
associated with ensuring adequate generating capacity. In addition, 1996
earnings decreased due to the impact of the Company's approved rate
settlement agreement, higher recognition of cogeneration costs and higher
nonnuclear O&M costs. These decreases were partially offset by higher
retail sales and lower recognition of Millstone 3 phase-in costs.
Total operating revenues increased in 1996, primarily due to higher
retail sales and regulatory decisions, partially offset by lower fuel
recoveries and lower wholesale revenues. Retail sales increased 1.8 percent
($29 million) primarily due to modest economic growth in 1996. Regulatory
decisions increased revenues by $15 million primarily due to the mid-1995
retail rate increase, partially offset by 1996 reserves for over-recoveries
of demand side management costs. Fuel recoveries decreased $24 million
primarily due to lower average fossil fuel prices. Wholesale revenues
decreased $18 million primarily due to higher recognition in 1995 of lump-
sum payments for the termination of a long-term contract and capacity sales
contracts that expired in 1995.
Fuel, purchased and net interchange power expense increased in 1996,
primarily due to replacement power due to the nuclear outages and the 1996
write-off of GUAC balances under the Settlement, partially offset by lower
nuclear generation and the timing of the recognition of costs under the
Company's fuel clauses.
Other O&M expenses increased in 1996, primarily due to higher costs
associated with the Millstone outages ($143 million, including $50 million
reserved for future costs) and 1996 costs to ensure adequate generating
capacity ($39 million). In addition, these costs reflect higher storm and
reliability expenditures, higher recognition of conservation expenses and
higher marketing costs.
Higher plant balances and higher decommissioning levels in 1996 were
partially offset by longer depreciable lives of transmission and
distribution assets under the Settlement.
Amortization of regulatory assets, net increased in 1996, primarily
due to lower cogeneration deferrals and the accelerated amortization of
regulatory assets as a result of the Settlement, partially offset by the
completion of the Millstone 3 phase-in amortization in 1995.
-41-
<PAGE>
Federal and state income taxes decreased in 1996, primarily due to
lower book taxable income, partially offset by 1995 tax benefits from a
favorable tax ruling.
Although the change in 1996 was not significant, deferred nuclear
plants return decreased in 1995, primarily due to the completion of the
Millstone 3 phase-in in 1995.
Other, net increased in 1996, primarily due to higher income on
temporary cash investments in 1996.
Comparison of 1995 to 1994
Total operating revenues increased in 1995, primarily due to
regulatory decisions and higher fuel recoveries, partially offset by lower
retail sales and wholesale revenues. Revenues related to regulatory
decisions increased $61 million primarily due to the effects of the mid-
1994 and 1995 retail rate increases and higher recoveries for demand side
management costs. Fuel and purchased power cost recoveries increased $25
million primarily due to higher energy costs and the recovery of GUAC
costs. Wholesale revenues decreased $16 million primarily due to capacity
sales contracts that expired in 1994.
Fuel, purchased and net interchange power expense increased in 1995,
primarily due to higher fossil generation and higher priced outside energy
purchases from other utilities.
Other O&M expenses increased in 1995, primarily due to higher
recognition of conservation expense, higher recognition of post-retirement
benefit costs and higher capacity charges from the regional nuclear
generating units, partially offset by higher reserves for excess/obsolete
inventory in 1994 and lower maintenance costs at the fossil units.
Depreciation increased in 1995, primarily due to higher plant
balances and higher decommissioning levels.
Amortization of regulatory assets, net decreased in 1995, primarily
due to higher cogeneration deferrals in 1995 and the completion during 1994
of the amortization of a 1993 cogeneration buyout, partially offset by
higher 1995 amortization of Millstone 3 and Seabrook 1 phase-in costs.
Federal and state income taxes decreased in 1995, primarily due to
tax benefits from a favorable tax ruling, partially offset by higher book
taxable income.
Other, net decreased in 1995, primarily due to the 1993 property tax
accounting change as ordered in the 1993 rate decision. The allocation of
this change to customers occurred in 1994 and amortization began in 1995.
Minority interest in income of subsidiary increased in 1995,
primarily due to the issuance of Monthly Income Preferred Securities in
1995.
-42-
<PAGE>
BUSINESS
Overview of Nuclear and Related Financial Matters
On January 29, 1996, Millstone was placed on the NRC's watch list as a
Category 2 facility. As set forth below, the Company has significant
financial and capacity interests in Millstone. Facilities in Category 2
have been identified by the NRC as having weaknesses that warrant increased
attention until the licensee, NNECO, demonstrates a period of improved
performance. Millstone was subsequently reclassified as a Category 3
facility, which requires NNECO to receive formal NRC Commissioners'
approval to restart any of the units. Millstone 1, 2 and 3 have been out of
service since November 4, 1995, February 21, 1996 and March 30, 1996,
respectively. Following these decisions, the System faced in 1996, and
continues to face, some of the most severe regulatory scrutiny and
financial challenges in the history of the United States nuclear industry,
including numerous civil lawsuits and criminal investigations and
regulatory proceedings. See "Risk Factors--Nuclear Plant Outages and
Liquidity" and "Legal Proceedings."
Millstone 1, a 660-MW boiling water reactor, and Millstone 2, an 870-
MW pressurized water reactor, are each owned 81 percent by the Company and
19 percent by WMECO. Millstone 3, a 1,154-MW pressurized water reactor, is
jointly owned by the Company (52.93 percent), WMECO (12.24 percent), PSNH
(2.85 percent) and other New England utilities.
The System companies have initiated a number of changes in the
management of the System's nuclear program to address the problems at
Millstone. In April 1996, the NU Board announced the formation of a
special committee of the NU Board to provide high-level oversight of the
safety and effectiveness of NU's nuclear operations and the progress toward
resolving open NRC issues and employee, community and customer concerns.
The committee consists exclusively of outside trustees. It is chaired by
E. Gail de Planque, who is a former NRC Commissioner. In light of
substantial NU Board activities associated with the current nuclear
situation, the NU Board elected Elizabeth T. Kennan in 1996 as Lead Trustee
to facilitate the extensive ongoing communications and activities between
the NU Board and management. In addition, on June 17, 1997, the
shareholders elected William F. Conway, a nuclear power industry
consultant, and former executive with several power companies, to the NU
Board.
In response to various internal reports and other reviews that focused
on nuclear management as a fundamental cause for the decline in the
performance of Millstone, the NU Board elected Bruce D. Kenyon as
President--Nuclear Group of NU, in September 1996. Following this
appointment, management unveiled a reorganization of NU senior nuclear
management at each of the nuclear power units that the System operates.
The new management team, including executives loaned from unaffiliated
utility companies with excellent nuclear programs, has focused in the near-
term on the recovery efforts of Millstone and improving nuclear oversight
and the System's employee concerns program. In January 1997, Neil S. Carns
was elected to the position of Senior Vice President and Chief Nuclear
Officer of NNECO to oversee the operations of Millstone. Both Mr. Kenyon
and Mr. Carns have extensive experience at other utilities with reputations
for excellent nuclear operation.
-43-
<PAGE>
The new nuclear management team has developed comprehensive plans for
restarting each of the Millstone units. The Company currently anticipates
having Millstone 3 ready to restart around the end of the third quarter of
1997, Millstone 2 in the fourth quarter of 1997, and Millstone 1 in the
first quarter of 1998. Restart of each unit is contingent upon, among
other things, the affirmative vote of the Commissioners of the NRC, which
could occur by mid-December 1997 for Millstone 3. Management hopes that
Millstone 3 can begin operating by the end of 1997. There can be no
assurances, however, that the Company's expectations will be met. Because
of the need for completion of independent inspections and reviews and for
the NRC to complete its processes before the NRC Commissioners can vote on
permitting a unit to restart, the actual beginning of operations is
expected to take several months beyond the time a unit is declared ready
for restart.
Before and following notification to the NRC that a unit is ready to
resume operations, management expects that the NRC staff will conduct
extensive reviews and inspections, and before such notification,
independent corrective action verification teams also will inspect each
unit. The System also will need to comply with an NRC order regarding the
development of a comprehensive employee concerns program, which will need
to be reviewed by an independent third party. Furthermore, because of the
length of the outages, management cannot estimate the time it will take for
the units to resume full power after NRC approval to restart.
For more information regarding specific regulatory actions related to
NU's nuclear units and the December 4, 1996 decision of the board of
directors of Connecticut Yankee Atomic Power Company (CYAPC) to retire CY
from commercial operation, see "--Electric Operations--Nuclear Generation."
For information regarding actions taken to meet System capacity needs
caused by the Millstone outages, see "--Electric Operations--Distribution
and Load."
As a result of the extended Millstone outages, the System companies
have incurred and will continue to bear substantial costs at least until
the three Millstone units have been restarted. Most of the costs are being
borne by the Company and WMECO, which have the greatest investment share of
the Millstone units. In 1996, the Company expensed a total of
approximately $322 million for Millstone-related non-fuel O&M costs, which
included among other costs $93 million for non-fuel incremental O&M costs
related to the Millstone outages and $50 million reserved for future
Millstone incremental O&M costs.
Management believes that the overall 1997 nuclear spending levels for
both nuclear O&M expenditures and associated support services and capital
expenditures will be approximately the same as previously estimated.
However, 1997 nuclear O&M expenditures and related support services are
expected to increase slightly, while 1997 capital expenditures are expected
to decrease. Management also believes that it is possible that 1997 nuclear
spending will increase somewhat as the detailed work needed to restore the
units to service progresses. For further information concerning estimated
1997 spending levels, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and notes to the Company's
Consolidated Financial Statements, Notes 11B and 11E.
-44-
<PAGE>
The Company also expensed approximately $216 million for replacement
power costs in 1996. Monthly replacement power costs for the Company
attributable to the Millstone outages averaged approximately $28 million
during the first quarter of 1997, and are projected to average
approximately $24 million per month for the remainder of 1997. The Company
expensed a significant portion of its 1996 replacement power costs related
to the nuclear outages and it is continuing to expense 1997 replacement
power costs.
Management has committed not to seek recovery of the portion of these
costs attributable to the failure to meet industry standards in operating
Millstone. In light of that commitment, management believes that the
Company will not seek rate recovery of a substantial portion of such costs.
While the Company believes that it is entitled to recovery of a portion of
the costs that have been and will be incurred, and intends to apply for
recovery of such costs, the DPUC on June 27, 1997 orally granted summary
judgment in a prudence proceeding disallowing recovery by the Company of
substantially all of its Millstone outage related costs. Management
currently does not intend to request any such recoveries until after the
Millstone units begin returning to service, so it is unlikely that any
additional revenues from any permitted recovery of these costs will be
available while the units are out of service to contribute to funding the
recovery efforts.
The Company has arranged a variety of borrowing facilities to fund its
cash requirements, including the nuclear recovery efforts. See "--
Financing Program--1997 Financing Requirements." The length of the
Millstone outages and the high costs of the recovery efforts weakened the
Company's 1996 earnings, balance sheet and cash flows, and they continue to
have a significant negative impact on the Company's earnings. The Company
had a net loss of approximately $6 million in the first quarter of 1997.
In 1997, while all three units are out of service the Company expects to
continue operating at a loss. Management believes that the borrowing
facilities that are currently in place provide the Company with adequate
access to the funds needed to bring the Millstone units back to service if
those units begin operating close to the currently envisioned schedules and
if the other assumptions, on which management has based its planning, do
not substantially change.
If the return to service of one or more Millstone units is delayed
substantially, or if any needed waivers or modifications to the Company's
financing arrangements are not forthcoming on reasonable terms, or if the
Company encounters additional significant costs or other significant
deviations from management's current assumptions, the currently available
borrowing facilities could be insufficient to meet all of the Company's
cash requirements, and some facilities could become unavailable because of
difficulties in meeting borrowing conditions. In those circumstances,
management would take actions to reduce costs and cash outflows and would
attempt to take actions to arrange additional sources of funds. The
availability of such sources would be dependent on general market
conditions and the Company's and the System's credit and financial
condition at the time. Both Moody's and S&P have recently downgraded the
Company's senior debt to Ba1 and BB+, respectively.
-45-
<PAGE>
Electric Operations
Distribution and Load
The System companies own and operate a fully integrated electric
utility business. The Company's retail electric service territory covers
approximately 4,400 square miles and has an estimated total population of
approximately 2.5 million. The Company furnishes retail electric franchise
service in 149 cities and towns in Connecticut. In December 1996 the
Company furnished retail electric franchise service to approximately 1.1
million customers.
The following table shows the sources of the Company's 1996 electric
revenues based on categories of customers:
<TABLE>
<CAPTION>
<S> <C>
Residential............................... 42%
Commercial................................ 35
Industrial................................ 13
Wholesale*................................ 8
Other..................................... 2
---
Total..................................... 100%
</TABLE>
* Includes capacity sales
Through December 31, 1996, the all-time peak demand on the System was
6,358 MW, which occurred on August 2, 1995. At the time of the peak, the
System's generating capacity, including capacity purchases, was 8,035 MW.
System energy requirements were met in 1996 and 1995 as set forth
below:
<TABLE>
<CAPTION>
Source 1996 1995
------ ---- ----
<S> <C> <C>
Nuclear..................... 28% 52%
Oil......................... 12 4
Coal........................ 11 10
Hydroelectric............... 5 3
Natural gas................. 3 5
NUGs........................ 13 13
Purchased-power............. 28 13
---- ----
100% 100%
</TABLE>
The actual changes in retail KWh sales for the last two years and
the forecasted sales growth estimates for the ten-year period 1996 through
2006, in each case exclusive of wholesale revenues, for the Company are set
forth below:
-46-
<PAGE>
<TABLE>
<CAPTION>
1996 compared to 1995 compared to Forecast 1996-2006
1995 1994 Compound Rate of Growth
---------------- ---------------- -----------------------
<S> <C> <C>
1.8% (.3)% 1.1%
</TABLE>
Retail electric sales for the Company rose by 1.8 percent in 1996
compared to 1995, primarily due to moderate growth in the residential and
commercial classes, which increased by 2.0 and 2.9 percent, respectively,
in 1996. Industrial sales decreased by 1.0 percent in 1996. Weather has
had a minimal effect on 1996 growth rates because the increase in winter
heating requirements due to abnormally cold winter weather was offset by
the decrease in summer cooling requirements due to a relatively cool
summer.
In spite of further defense and insurance curtailments, moderate
growth is forecasted to resume over the next ten years. The forecasted
annual growth rate for the Company of one percent is significantly below
historic rates due to a general slow down of economic growth in the region
and, in part, because of forecasted savings from Company-sponsored DSM
programs that are designed to minimize operating expenses for Company
customers and reduce their demand for electricity. The forecasted ten-year
annual growth rate of the Company sales would be approximately 1.7 percent
if the Company did not pursue DSM programs at the forecasted levels. See "-
-Rates" for information about rate treatment of DSM costs.
The Company also acts as both a buyer and a seller of electricity in
the highly competitive wholesale electricity market in the Northeastern
United States (Northeast). The Company's revenues from long-term contracts
were $188 million in 1995 and $177 million in 1996, and are expected to be
at approximately the same level in 1997. The Company's most important
wholesale market at this time remains New England.
With the System's generating capacity of 8,034 MW (which includes the
Millstone units) as of January 1, 1997 (including the net of capacity sales
to and purchases from other utilities, and approximately 660 MW of capacity
purchased from NUGs under existing contracts), the System expects to meet
reliably its projected annual peak load growth of 1.6 percent until at
least the year 2010 without adding new capacity.
The System companies operate and dispatch their generation as provided
in the New England Power Pool (NEPOOL) Agreement (as defined below). In
1996, the peak demand on the NEPOOL system was 19,507 MW in August, which
was 992 MW below the 1995 peak load of 20,499 MW in July of that year.
NEPOOL has projected that there will be an increase in demand in 1997 and
estimates that the summer 1997 peak load could reach 21,390 MW.
Management expects that the System and NEPOOL will have sufficient
capacity to meet peak load demands for New England even if Millstone, the
Maine Yankee nuclear unit (MY) and the 300 MW Long Island Cable are not
operational at any time during the 1997 summer season, so long as the
remaining generating units and transmission systems in Connecticut and the
New England region have normal operability. If high levels of unplanned
outages in New England were
-47-
<PAGE>
to occur, or if any of the System's transmission lines used to import power
from other states were unavailable at times of peak load demand, NU and the
other New England utilities may have to resort to operating procedures
designed to reduce load. The Company spent approximately $60 million in
1996 to reduce the risk of unplanned outages and expects to spend
approximately $55 million in 1997. Most of the money budgeted for 1997
will be used to improve the System's network of transmission lines to
increase imports into Connecticut and for lease payments for additional
capacity.
Regional and System Coordination
The System companies and most other New England utilities are parties
to an agreement (NEPOOL Agreement), which coordinates the planning and
operation of the region's generation and transmission facilities. System
transmission lines form part of the New England transmission system linking
System generating plants with one another and with the facilities of other
utilities in the Northeast and Canada. The generating facilities of all
NEPOOL participants are dispatched as a single system through the New
England Power Exchange, a central dispatch facility. The NEPOOL Agreement
provides for a determination of the generating capacity responsibilities of
participants and certain transmission rights and responsibilities.
NEPOOL's objectives are to assure that the bulk power supply of New England
and adjoining areas conforms to proper standards of reliability, to attain
maximum practical economy in the bulk power supply system consistent with
such reliability standards and to provide for equitable sharing of the
resulting benefits and costs.
Pursuant to the NEPOOL Agreement, if a participant is unable to meet
its capacity responsibility obligations, the participant is required to pay
NEPOOL a deficiency charge based on the cost of a proxy generating unit .
In the event that none of the Millstone units is returned to service by
November 1, 1997, the System companies could be required to begin paying
this deficiency charge under the NEPOOL Agreement. Management, however,
expects to meet its capacity responsibility obligations even if the
Millstone units do not return to service as currently scheduled through
purchased power contracts with other utilities and/or reactivating System
fossil generating units and thus avoid the deficiency charge. The costs of
these alternative plans cannot be estimated at this time.
A restated and revised NEPOOL Agreement, providing for pool-wide open
access transmission tariff and a proposal for the creation of an
Independent System Operator (ISO), became effective on March 1, 1997.
Under these new arrangements (1) the ISO, a non-profit corporation, whose
board of directors and staff will not be controlled by or affiliated with
market participants, will ensure the reliability of the NEPOOL transmission
system, administer the NEPOOL tariff and oversee the efficient and
competitive functioning of the regional power market, (2) the NEPOOL tariff
will provide for non-discriminatory open access to the regional
transmission network at one rate regardless of transmitting distance for
all transactions, and (3) the new NEPOOL Agreement will establish a broader
governance structure for NEPOOL and develop a more open, competitive market
structure.
-48-
<PAGE>
There are two agreements that determine the manner in which costs and
savings are allocated among the System companies. Under an agreement among
CL&P, WMECO and HWP (Initial System Companies), such parties pool their
electric production costs and the costs of their principal transmission
facilities (NUG&T). Pursuant to the merger agreement between NU and PSNH,
the Initial System Companies and PSNH entered into a ten-year sharing
agreement (Sharing Agreement), expiring in June 2002, that provides, among
other things, for the allocation of the capability responsibility savings
and energy expense savings resulting from a single-system dispatch through
NEPOOL.
Transmission Access and FERC Regulatory Changes
On April 24, 1996, FERC issued its final open access rule (the Rule)
to promote competition in the electric industry. As required by the Rule,
all public utilities that own, control or operate facilities used for
transmitting electric energy in interstate commerce must file an open
access, non-discriminatory transmission tariff and take transmission
service for their own new wholesale sales and purchases under the open
access tariffs. The Rule also requires public utilities to develop and
maintain a same-time information system that will give existing and
potential transmission users the same access to transmission information
that the public utility enjoys, and requires public utilities to separate
transmission from generation marketing functions and communications. The
Rule also supports full recovery of legitimate, prudent and verifiable
wholesale strandable investments. On February 26, 1997, FERC reaffirmed
the Rule with a few minor clarifications.
On July 8, 1996, NU refiled its transmission tariffs to conform with
the minimum terms and conditions set forth in the Rule. On December 31,
1996, NU filed amendments to its transmission tariff and several other
compliance filings to meet the Rule's year-end requirements, including
standards of conduct ensuring that transmission and wholesale generation
personnel function independently. As of January 3, 1997, NU operates
pursuant to the requirements of the standards of conduct and participates
in a NEPOOL-wide Open Access Same-Time Information System, which provides
transmission customers with electronic access to information on available
capacity, tariffs and other information. On January 22, 1997, NU refiled
its transmission tariff to account for certain transmission services that
would be provided by NEPOOL under the new NEPOOL Agreement (discussed
above), which was filed on December 31, 1996.
In 1996, the Company collected approximately $30 million in
incremental transmission revenues from other electric utility generators.
Fossil Fuels
In 1996, 12 percent and 11 percent of the System's generation was oil
and coal-derived, respectively. The Company's residual oil-fired
generation stations used approximately 5.8 million barrels of oil in 1996.
The Company obtained the majority of its oil requirements in 1996 through
contracts with several large, independent oil companies. Those contracts
allow for some spot purchases when market conditions warrant. Spot
purchases represented approximately 15 percent of the Company's fuel oil
purchases in 1996. The contracts expire annually or biennially. The
-49-
<PAGE>
Company currently does not anticipate any difficulties in obtaining
necessary fuel oil supplies on economic terms.
The Company has four generating stations, aggregating approximately
2,060 MW, which can fully or partially burn either residual oil or natural
gas, as economics, environmental concerns or other factors dictate. The
Company is currently converting two of the four units at its oil-fired
Middletown Station in Connecticut comprising approximately 350 MW of
capacity to a dual-fuel generating facility. The Company expects the
conversion to be completed in the summer of 1997. The Company has contracts
with the local gas distribution companies where the dual-fuel generating
units are located, under which natural gas is made available by those
companies on an interruptible basis. In addition, gas for the Company's
Devon and Montville generating stations is being purchased directly from
producers and brokers on an interruptible basis and transported through the
interstate pipeline system and the local gas distribution company. The
Company expects that interruptible natural gas will continue to be
available for its dual-fuel electric generating units on economic terms and
will continue to economically supplement fuel oil requirements.
Nuclear Generation
General
Certain System companies have ownership interests in four operating
nuclear units, Millstone 1, 2 and 3 and Seabrook 1, and equity interests in
four regional nuclear companies (the Yankee Companies) that separately own
CY, MY, Vermont Yankee (VY) and the Yankee Rowe nuclear generating facility
(Yankee Rowe). System companies operate the three Millstone units and
Seabrook 1. Yankee Rowe was permanently removed from service in 1992, and
CY was permanently removed from service on December 4, 1996. The System
companies will have responsibility for administering the decommissioning of
CY.
The Company and WMECO own 100 percent of Millstone 1 and 2 as tenants
in common. Their respective ownership interests in each unit are 81 percent
and 19 percent.
The Company, PSNH and WMECO have agreements with other New England
utilities covering their joint ownership as tenants in common of Millstone
3. The Company's ownership interest in the unit is 52.93 percent, PSNH's
ownership interest in the unit is 2.85 percent and WMECO's interest is
12.24 percent. NAEC and the Company have 35.98 percent and 4.06 percent
ownership interests, respectively, in Seabrook. The Millstone 3 and
Seabrook joint ownership agreements provide for pro-rata sharing by the
owners of each unit of the construction and operating costs, the electrical
output and the associated transmission costs. The Company and WMECO,
through NNECO as agent, operate Millstone 3 at cost, and without profit,
under a sharing agreement that obligates them to utilize good utility
operating practice and requires the joint owners to share the risk of
employee negligence and other risks pro rata in accordance with their
ownership shares. The sharing agreement provides that the Company and WMECO
would only be liable for damages to the non-NU owners for a deliberate
breach of the agreement pursuant to authorized corporate action.
-50-
<PAGE>
The Company, PSNH, WMECO and other New England electric utilities are
the stockholders of the Yankee Companies. Each Yankee Company owns a
single nuclear generating unit. The stockholder-sponsors of each Yankee
Company are responsible for proportional shares of the operating costs of
the respective Yankee company and are entitled to proportional shares of
the electrical output. The relative rights and obligations with respect to
the Yankee Companies are approximately proportional to the stockholders'
percentage stock holdings, but vary slightly to reflect arrangements under
which nonstockholder electric utilities have contractual rights to some of
the output of particular units. The Yankee Companies and the Company's,
PSNH's and WMECO's stock ownership percentages in the Yankee Companies are
set forth below:
<TABLE>
<CAPTION>
CL&P PSNH WMECO System
---- ---- ----- ------
<S> <C> <C> <C> <C>
Connecticut Yankee Atomic
Power Company (CYAPC).................... 34.5% 5.0% 9.5% 49.0%
Maine Yankee Atomic Power
Company (MYAPC).......................... 12.0% 5.0% 3.0% 20.0%
Vermont Yankee Nuclear
Power Corporation (VYNPC)................ 9.5% 4.0% 2.5% 16.0%
Yankee Atomic Electric
Company (YAEC)........................... 24.5% 7.0% 7.0% 38.5%
</TABLE>
The Company is obligated to provide its percentage of any additional
equity capital necessary for the Yankee Companies, but does not expect to
need to contribute additional equity capital in the future. The Company
believes that the two remaining operating plants, MY and VY, could require
additional external financing in the next several years to finance
construction expenditures, nuclear fuel and for other purposes. Although
the ways in which MYAPC and VYNPC would attempt to finance these
expenditures, if they are needed, have not been determined, the Company
could be asked to provide further direct or indirect financial support for
these companies. For information regarding additional capital requirements
at MY and related watch list costs, see "--Nuclear Plant Performance and
Regulatory Oversight--Yankee Units--Maine Yankee."
The operators of Millstone 1, 2 and 3, MY, VY and Seabrook 1 hold full
power operating licenses from the NRC. As holders of licenses to operate
nuclear reactors, the Company, WMECO, North Atlantic Energy Service
Corporation (NAESCO), NNECO and the Yankee Companies are subject to the
jurisdiction of the NRC. The NRC has broad jurisdiction over the design,
construction and operation of nuclear generating stations, including
matters of public health and safety, financial qualifications, antitrust
considerations and environmental impact. The NRC issues 40-year initial
operating licenses to nuclear units and NRC regulations permit renewal of
licenses for an additional 20-year period.
-51-
<PAGE>
The NRC also regularly conducts generic reviews of technical and other
issues, a number of which may affect the nuclear plants in which System
companies have interests. The cost of complying with any new requirements
that may result from these reviews cannot be estimated at this time, but
such costs could be substantial. For information regarding recent actions
taken by the NRC with respect to the System's nuclear units, see "--
Overview of Nuclear and Related Financial Matters" and "--Nuclear
Generation--Nuclear Plant Performance and Regulatory Oversight."
Nuclear Plant Performance and Regulatory Oversight
Millstone Units
Millstone 1, 2 and 3 are located in Waterford, Connecticut and have
license expirations of October 6, 2010, July 31, 2015 and November 25,
2025, respectively and are currently out of service. These units are
presently on the NRC's watch list as Category 3 plants, the lowest such
category. Plants in this category are required to receive formal NRC
Commissioners' approval to resume operations.
Millstone 1 began a planned refueling and maintenance outage on
November 4, 1995. Millstone 2 was shut down on February 21, 1996 as a
result of an engineering evaluation that determined that some valves could
be inoperable in certain emergency scenarios. On March 30, 1996, Millstone
3 was shut down by NNECO following an engineering evaluation which
determined that four safety-related valves would not be able to perform
their design function during certain postulated events.
Each of these outages has been extended in order to respond to various
NRC requests to describe actions taken, including the resolution of
specific technical issues, and to ensure that future operation of the units
will be conducted in accordance with the terms and conditions of their
operating licenses, NRC regulations and their Updated Final Safety Analysis
Report. The System also must demonstrate that it maintains an effective
corrective action program for Millstone, as required by NRC regulations, to
identify and resolve conditions that are adverse to safety or quality. For
more information regarding nuclear management changes and costs related to
the outages, see "--Overview of Nuclear Matters and Related Financial
Matters."
Based upon management's current plans, it is estimated that Millstone
3 will be ready for restart around the end of the third quarter of 1997,
Millstone 2 in the fourth quarter of 1997, and Millstone 1 in the first
quarter of 1998. Prior to and following notification to the NRC that the
units are ready to resume operations, management expects that the NRC staff
will conduct extensive reviews and inspections, and prior to such
notification, independent corrective action verification teams (as
discussed more fully below) also will inspect each unit. The System also
will need to comply with an NRC order regarding the implementation of a
comprehensive employee concerns program, which will need to be reviewed by
an independent third party (as discussed more fully below). The units will
not be allowed to restart without an affirmative vote of the NRC
Commissioners following completion of these reviews and inspections.
Because of the need for completion of independent inspections and reviews
and for the NRC to complete its processes before
-52-
<PAGE>
the NRC Commissioners can vote on permitting a unit to restart, the actual
beginning of operations is expected to take several months beyond the time
when a unit is declared ready for restart. The NRC Commissioners' vote on
a Millstone 3 restart request could occur by mid-December if NU, the
independent review teams and NRC staff concur that the unit is ready for
restart by that time. Management hopes that Millstone 3 can begin operating
by the end of 1997. Because of the length of the outages, however,
management cannot estimate the time it will take for the units to resume
full power after NRC approval to restart.
On August 14, 1996, the NRC issued an order confirming NNECO's
agreement to conduct an Independent Corrective Action Verification Program
(ICAVP) prior to the restart of each of the Millstone units. The order
requires that an independent, third-party team, whose appointment is
subject to NRC approval, verify the results of the corrective actions taken
to resolve identified design and configuration management issues. NNECO has
submitted to the NRC its selection of an ICAVP contractor for each of the
units and the NRC has approved those selections. The ICAVP for Millstone 3
began on May 27, 1997, as scheduled. On June 30, 1997, the Company
announced that Millstone 2 was ready to begin the ICAVP, as scheduled, and
requested that the NRC identify the particular systems to be reviewed by
the Millstone 2 ICAVP contractor.
In the fall of 1996, the NRC established a Special Projects Office to
oversee inspection and licensing activities at Millstone. The Special
Projects Office is responsible for (1) licensing and inspection activities
at Millstone, (2) oversight of the independent corrective action
verification program, (3) oversight of NU's corrective actions related to
safety issues involving employee concerns, and (4) inspections necessary to
implement NRC oversight of the plants' restart activities.
On December 5, 1996, the NRC conducted an enforcement conference
regarding numerous apparent regulatory violations at Millstone that were
discovered during routine and special inspections at the units between
November 1995 and November 1996. It is likely that this proceeding will
result in the issuance of notices of violation and the imposition of
significant civil penalties for each of the Millstone units.
In addition to the various technical and design basis issues at
Millstone, the NRC continues to focus on the System's response to employee
concerns at the units. On October 24, 1996, the NRC issued an order that
requires NNECO to devise and implement a comprehensive plan for handling
safety concerns raised by Millstone employees and for assuring an
environment free from retaliation and discrimination. The NRC also ordered
NNECO to contract for an independent third party to oversee this
comprehensive plan. The members of the independent third-party organization
must not have had any direct previous involvement with activities at
Millstone and must be approved by the NRC. Oversight by the third-party
group will continue until NNECO demonstrates, by performance, that the
conditions leading to this order have been corrected. NNECO has submitted
to the NRC its selection of the third-party oversight organization and the
NRC has approved that selection. NNECO has submitted to the NRC its
comprehensive employee concerns plan.
On March 7, 1997, the NRC issued a letter to NNECO confirming NNECO's
commitment to evaluate and correct problems identified within its licensed
operator training programs at
-53-
<PAGE>
Millstone and CY. On June 27, 1997, NNECO temporarily suspended all nuclear
training programs at Millstone to address programmatic deficiencies
identified by NNECO and NRC inspectors during reviews of the System's
training programs at Millstone and CY. The decision to suspend the nuclear
training programs was primarily based on a determination that there is
insufficient feedback between work functions and training so as to ensure
training programs are appropriately refined to reflect such items as
changing needs and experience. Management has not yet determined when the
various training programs will be fully operational, but is currently
developing a list of priorities for programs to get back on line.
Management does not believe at this time that the suspension will affect
the System's schedule for restarting the Millstone units. See "Legal
Proceedings--NRC Office of Investigations and U.S. Attorney Investigations
and Related Matters."
Nuclear management is investigating the cause of a temperature rise in
the Millstone 3 spent fuel pool that occurred during the last week of June
1997. Preliminary analysis indicates that the cause of the event was an
incomplete changeover from one cooling system to another. Nuclear
management does not believe that this incident, when considered in
isolation, presented a significant safety issue, but is taking steps to
prevent it from recurring and identify lessons to be learned from the
event. The NRC has been informed of the event but is not expected to impose
any material sanctions on the Company. However, the event has indicated to
nuclear management that further focus on operational matters will be
necessary to ensure proper operation of the units.
For information regarding replacement power costs and incremental
nuclear O&M costs associated with the extended Millstone outages, see "Risk
Factors--Nuclear Plant Outages and Liquidity" and "--Overview of Nuclear
and Related Financial Matters." For information regarding the
recoverability of these costs, see "--Rates." For information regarding the
1996 nuclear workforce reduction, see "Employees." For information
regarding criminal investigations by the NRC's Office of Investigations
(OI) and the Office of the U.S. Attorney for the District of Connecticut
related to various matters at Millstone and CY; certain citizens petitions
related to NU's nuclear operations; and potential joint owner litigation
related to the extended outages, see "Legal Proceedings."
Seabrook
Seabrook 1, a 1,148-MW pressurized-water reactor, has a license
expiration date of October 17, 2026. The Seabrook operating license expires
40 years from the date of issuance of authorization to load fuel, which was
about three and one-half years before Seabrook's full-power operating
license was issued. The System will determine at the appropriate time
whether to seek recapture of some or all of this period from the NRC and
thus add up to an additional three and one-half years to the operating term
for Seabrook. In 1996, Seabrook operated at a capacity factor of 96.5
percent. On June 28, 1997, the unit completed a planned refueling and
maintenance outage that lasted 50 days.
On October 9, 1996, the NRC issued a request for information
concerning all nuclear plants in the United States, except the three
Millstone units and CY, which had previously received such
-54-
<PAGE>
requests. Such information will be used to verify that these facilities
are being operated and maintained in accordance with NRC regulations and
the unit's specific licenses. The NRC has indicated that the information
will be used to determine whether future inspection or enforcement
activities are warranted for any plant. NAESCO has submitted its response
to the NRC's request with respect to Seabrook. Seabrook's operations have
not been restricted by the request. The NRC's April 1996 comprehensive
review found Seabrook to be a well-operated facility without any major
safety issues or weaknesses and noted that it would reduce its future
inspections in a number of areas as a result of its findings.
Yankee Units
Connecticut Yankee. CY, a 582-MW pressurized-water reactor, has a
license expiration date of June 29, 2007. On July 22, 1996, CY began an
unscheduled outage as a precautionary measure to evaluate the plant's
service water system, which provides cooling water to certain critical
plant components. On August 8, 1996, after evaluating certain other pending
technical and regulatory issues, CY's management decided to delay the
restart of the unit and to begin a scheduled September refueling outage.
The refueling outage was accelerated in order to allow time to resolve the
pending issues.
On December 4, 1996, the board of directors of CYAPC voted unanimously
to retire CY. The decision to shut down CY was based on economic analyses
that showed that shutting down the unit prematurely and incurring
replacement power costs could produce potential savings compared to the
costs of operating it over the remaining period of the unit's operating
license. These analyses indicated that this shutdown decision could produce
savings in excess of $130 million on a net present value basis. These
analyses did not consider the costs of addressing concerns about CY's
design and licensing basis raised by the NRC during the summer of 1996
similar to those raised at Millstone. If these costs had been considered,
the economic analyses would have favored shutdown by an even greater
margin. CYAPC has undertaken a number of regulatory filings intended to
implement the decommissioning. For more information regarding the CYAPC
revised decommissioning estimate that was submitted to FERC in December
1996, see "--Decommissioning."
In late December 1996, CY filed amendments to its power contracts with
FERC to clarify any obligations of its purchasing utilities, including the
Company. This filing estimated the unrecovered obligations, including the
funding of decommissioning, to be approximately $762.8 million. On February
27, 1997, FERC approved an order for hearing which, among other things,
accepted CY's contract amendments for filing and suspended the new rates
for a nominal period. The new rates became effective March 1, 1997, subject
to a refund. At March 31, 1997, the Company's share of the CY unrecovered
contractual obligation which also has been recorded as a regulatory asset,
was $248.3 million.
Based upon FERC regulatory precedent, CYAPC believes it will be
allowed to continue to collect from its power purchasers, including the
Company, WMECO and PSNH, CYAPC's decommissioning costs, the owners'
unrecovered investments in CYAPC, and other costs associated
-55-
<PAGE>
with the permanent closure of the plant over the remaining period of its
NRC operating license. Management in turn expects that the Company, WMECO
and PSNH will continue to be allowed to recover such FERC-approved costs
from their customers.
On May 12, 1997 the NRC staff assessed a $650,000 fine against CYAPC
for more than 70 alleged violations of regulatory requirements, which CYAPC
paid on June 13, 1997. Most of the violations cited by the NRC pertain to
numerous longstanding deficiencies in engineering programs and practices,
as well as errors related to an event involving a nitrogen buildup in the
reactor vessel in 1996.
As confirmed by the NRC on March 4, 1997, CYAPC has agreed to
undertake various steps to resolve deficiencies and weaknesses in the
radiation protection program at CY. Management does not believe that this
undertaking will have a material adverse effect on the System companies or
CYAPC.
Maine Yankee. MY, a 870-MW pressurized-water reactor, has a license
expiration date of October 21, 2008. MY's operating license expires 40
years from the date of issuance of the construction permit, which was about
four years before MY's full-power operating license was issued. If
appropriate, MYAPC will determine whether to seek recapture of this
construction period from the NRC and add it to the term of the MY operating
license. In 1996, MY operated at a capacity factor of 65.5 percent.
By order issued on January 3, 1996, the NRC suspended MY's authority
to operate at full power and limited MY to operating at 90 percent power
pending the NRC's review and approval of a computer code application used
at MY. The plant was taken out of service on December 5, 1996 after finding
that certain cables did not have the proper separation required by the
plant's design and licensing basis to protect them during accident
conditions. MYAPC has agreed not to restart the plant until it completes a
number of actions required by the NRC and prior to receiving NRC approval.
On January 29, 1997, the NRC announced that MY had been placed on the
NRC's watch list as a Category 2 plant. Plants in this category have been
identified as having weaknesses that warrant increased NRC attention until
the licensee demonstrates a period of improved performance. The NRC cited a
number of deficiencies in the engineering design to support operations at
MY, which were identified by an independent safety assessment team during
the latter half of 1996. Although MY has developed a plan and initiated
steps to correct the problems, including entering into an agreement with
Entergy Corporation to acquire outside management expertise in the
operation of the facility, the NRC indicated that increased agency
attention was still needed. On May 27, 1997, MY announced that it was
considering permanent closure of the plant based on economic concerns and
uncertainty about the operation of the plant. MY disclosed that it would
reduce spending to a level that would preserve the option of restarting the
plant or closing it.
-56-
<PAGE>
The Company cannot determine whether or when MY will return to service
and expects that, if the decision is made to restart the plant, there will
be substantial costs associated with the NRC's actions that cannot be
accurately estimated at this time.
Vermont Yankee. VY, a 514-MW boiling water reactor, has a license
expiration date of March 21, 2012. In 1996, VY operated at a capacity
factor of 81.4 percent. VY had a 57-day planned refueling outage during
1996 that ended on November 1, 1996. The unit expects to begin a 56-day
planned refueling and maintenance outage on September 28, 1998.
Yankee Rowe. In 1992, YAEC's owners voted to shut down Yankee Rowe
permanently based on an economic evaluation of the cost of a proposed
safety review, the reduced demand for electricity in New England, the price
of alternative energy sources and uncertainty about certain regulatory
requirements. The power contracts between the Company, PSNH, WMECO, and
other owners and YAEC permit YAEC to recover from each its proportional
share of the Yankee Rowe shutdown and decommissioning costs. For more
information regarding the decommissioning of Yankee Rowe, see "--
Decommissioning."
Nuclear Insurance
The NRC requires nuclear plant licensees to maintain a minimum of
$1.06 billion in nuclear property and decontamination insurance coverage.
The NRC requires that proceeds from the policy following an accident that
exceed $100 million will first be applied to pay expenses. The insurance
carried by the licensees of the Millstone units, Seabrook 1, CY, MY and VY
meets the NRC's requirements. YAEC has obtained an exemption for Yankee
Rowe from the $1.06 billion requirement and currently carries $25 million
of insurance that otherwise meets the requirements of the rule. CYAPC
expects to seek a similar exemption for CY in 1997. For more information
regarding nuclear insurance, see "Commitments and Contingencies--Nuclear
Insurance Contingencies" in the notes to the Company's Consolidated
Financial Statements, Note 11D.
Nuclear Fuel
The supply of nuclear fuel for the System's existing units requires
the procurement of uranium concentrates, followed by the conversion,
enrichment and fabrication of the uranium into fuel assemblies suitable for
use in the System's units. The majority of the System companies' uranium
enrichment services requirements is provided under a long-term contract
with the United States Enrichment Corporation (USEC), a wholly-owned United
States government corporation. The majority of Seabrook's uranium
enrichment services requirements is furnished through a Russian trading
company. The System expects that uranium concentrates and related services
for the units operated by the System and for the other units in which the
System companies are participating, that are not covered by existing
contracts, will be available for the foreseeable future on reasonable terms
and prices.
In August 1995, NAESCO filed a complaint in the United States Court of
Federal Claims challenging the propriety of the prices charged by the USEC
for uranium enrichment services
-57-
<PAGE>
procured for Seabrook Station in 1993. The complaint is an appeal of the
final decision rendered by the USEC contracting officer denying NAESCO's
claims, which range from $2.5 to $5.8 million, and will likely be
considered along with similar complaints that are pending before the court
on behalf of 13 other utilities. The NAESCO complaint has been suspended
pending the outcome of an appeal in another proceeding involving a similar
complaint.
As a result of the Energy Act, the United States commercial nuclear
power industry is required to pay the United States Department of Energy
(DOE), through a special assessment for the costs of the decontamination
and decommissioning of uranium enrichment plants owned by the United States
government, no more than $150 million per annum for 15 years beginning in
1993. Each domestic nuclear utility's payment is based on its pro rata
share of all enrichment services received by the United States commercial
nuclear power industry from the United States government through October
1992. Each year, the DOE adjusts the annual assessment using the Consumer
Price Index. The Energy Act provides that the assessments are to be treated
as reasonable and necessary current costs of fuel, which costs shall be
fully recoverable in rates in all jurisdictions. The Company's total share
of the estimated assessment was approximately $49.2 million at March 31,
1997 and December 31, 1996. Management believes that the DOE assessments
against the Company will be recoverable in future rates. Accordingly, the
Company has recognized these costs as a regulatory asset, with a
corresponding obligation on its consolidated balance sheet.
In June 1995, the United States Court of Federal Claims held that, as
applied to YAEC, the Uranium Enrichment Decontamination and Decommissioning
Fund is an unlawful add-on to the bargained-for contract price for enriched
uranium. As a result of that ruling, the federal government would be
required to refund the approximately $3.0 million that YAEC has paid into
the fund since its inception. On May 6, 1997, the United States Court of
Appeals for the Federal Circuit issued a 2-1 panel decision reversing the
Court of Federal Claims' decision. YAEC has filed a motion for rehearing en
banc with the Appeals Court. NU is evaluating the applicability of these
decisions to the $21 million that the System companies have already paid
into the fund for the System companies' obligation to pay such special
assessments in the future.
Nuclear fuel costs associated with nuclear plant operations include
amounts for disposal of nuclear waste. The System companies include in
their nuclear fuel expense spent fuel disposal costs accepted by the DPUC,
NHPUC and DPU in rate case or fuel adjustment decisions. Spent fuel
disposal costs also are reflected in FERC-approved wholesale charges.
High-Level Radioactive Waste
The Nuclear Waste Policy Act of 1982 (NWPA) provides that the federal
government is responsible for the permanent disposal of spent nuclear
reactor fuel and high-level waste. As required by the NWPA, electric
utilities generating spent nuclear fuel (SNF) and high-level waste are
obligated to pay fees into a fund which would be used to cover the cost of
siting, constructing, developing and operating a permanent disposal
facility for this waste. The System companies have been paying for such
services for fuel burned starting in April 1983 on a quarterly basis since
July 1983. The DPUC, NHPUC and DPU permit the fee to be recovered through
rates.
-58-
<PAGE>
In return for payment of the fees prescribed by the NWPA, the federal
government is to take title to and dispose of the utilities' high-level
wastes and spent nuclear fuel. The NWPA provides that a disposal facility
be operational and for the DOE to accept nuclear waste for permanent
disposal in 1998. On March 3, 1997 CYAPCO, NAESCO and NUSCO intervened as
parties in a lawsuit brought in the U.S. Court of Appeals for the District
of Columbia Circuit by 35 nuclear utilities in late January, seeking
additional action based on the DOE's assertion that it expects to be unable
to begin acceptance of spent nuclear fuel for disposal by January 31, 1998.
Among other requests for relief, the lawsuit requests that utilities be
relieved of their contractual obligation with DOE to pay fees into the
Nuclear Waste Fund and be authorized to place such fee payments into escrow
"unless and until" DOE begins accepting spent fuel for disposal. The DOE's
current estimate for an available site is 2010.
Until the federal government begins accepting nuclear waste for
disposal, operating nuclear generating plants will need to retain high-
level waste and spent fuel onsite or make some other provisions for their
storage. With the addition of new storage racks, storage facilities for
Millstone 3 are expected to be adequate for the projected life of the unit.
With the implementation of currently planned modifications, the storage
facilities for Millstone 1 and 2 are expected to be adequate (maintaining
the capacity to accommodate a full-core discharge from the reactor) until
2003 and 2004, respectively. Fuel consolidation, which has been licensed
for Millstone 2, could provide adequate storage capability for the
accommodation of all of the SNF at CY. In addition, other licensed
technologies, such as dry storage casks or on-site transfers, are being
considered to accommodate spent fuel storage requirements. With the current
installation of new racks in its existing spent fuel pool, Seabrook is
expected to have spent fuel storage capacity until at least 2010.
MYAPC believes it has adequate storage capacity through MY's current
licensed operating life. The storage capacity of the spent fuel pool at VY
is expected to be reached in 2005 and the available capacity of the pool is
expected to be able to accommodate full-core removal until 2001.
Because the Yankee Rowe plant was permanently shut down in February
1992, YAEC is considering the construction of a temporary facility to store
the spent nuclear fuel produced by the Yankee Rowe plant over its operating
lifetime until that fuel is removed by the DOE.
Low-Level Radioactive Waste
The System currently has contracts to dispose its low-level
radioactive waste (LLRW) at two privately operated facilities in Clive,
Utah and in Barnwell, South Carolina. Because access to LLRW disposal may
be lost at any time, the System has plans that will allow for onsite
storage of LLRW for at least five years. Neither Connecticut nor New
Hampshire has developed alternatives to out-of-state disposal of LLRW to
date. Both Maine and Vermont are in the process of implementing an
agreement with Texas to provide access to an LLRW disposal facility that is
to be developed in that state. All three states plan to form an LLRW
compact that is currently awaiting approval by Congress.
-59-
<PAGE>
Decommissioning
Based upon the System's most recent comprehensive site-specific
updates of the decommissioning costs for each of the three Millstone units
and for Seabrook, the recommended decommissioning method continues to be
immediate and complete dismantlement of those units at their retirement.
The table below sets forth the estimated Millstone and Seabrook
decommissioning costs for the Company. The estimates are based on the
latest site studies, escalated to March 31, 1997 dollars.
<TABLE>
<CAPTION>
(Millions)
<S> <C>
Millstone 1 $320.1
Millstone 2 282.5
Millstone 3 248.2
Seabrook 18.5
------
Total $869.3
</TABLE>
As of March 31, 1997, the Company recorded balances (at market) in its
external decommissioning trust funds as follows:
<TABLE>
<CAPTION>
(Millions)
<S> <C>
Millstone 1 $145.2
Millstone 2 95.6
Millstone 3 64.1
Seabrook 2.3
------
Total $307.2
</TABLE>
In 1986, the DPUC approved the establishment of separate external
trusts for the currently tax-deductible portions of decommissioning expense
accruals for Millstone 1 and 2 and for all expense accruals for Millstone
3. The DPUC has authorized the Company to collect its current
decommissioning estimate for the three Millstone units from customers. This
estimate includes an approximate 16 percent contingency factor for the
decommissioning cost of each unit.
The decommissioning cost estimates for the Company's nuclear units are
reviewed and updated regularly to reflect inflation and changes in
decommissioning requirements and technology. Changes in requirements or
technology, or adoption of a decommissioning method other than immediate
dismantlement, could change these estimates. The Company attempts to
recover sufficient amounts through its allowed rates to cover its expected
decommissioning costs. Only the portion of currently estimated total
decommissioning costs that has been accepted by the DPUC and FERC is
reflected in rates of the Company. Based on present estimates, and assuming
its nuclear units operate to the end of their respective license periods,
the Company expects that the decommissioning trust funds will be
substantially funded when those expenditures have to be made.
-60-
<PAGE>
CYAPC, YAEC, VYNPC and MYAPC are all collecting revenues for
decommissioning from their power purchasers. The table below sets forth the
Company's estimated share of decommissioning costs of the Yankee units. The
estimates are based on the latest site studies, escalated to December 31,
1996 dollars. For information on the equity ownership of the System
companies in each of the Yankee units, see "--Electric Operations--Nuclear
Generation--General."
<TABLE>
<CAPTION>
(Millions)
<S> <C>
VYNPC $ 34.8
YAEC* 42.5
CYAPC* 263.2
MYAPC 44.3
------
Total $384.8
</TABLE>
* As discussed more fully below, the costs shown include all remaining
decommissioning costs and other closing costs associated with the
early retirement of Yankee Rowe and CY as of December 31, 1996. If
the decision is made to retire MY rather than to incur the expenses
required to return the plant to service, decommissioning costs may
increase. See "--Electric Operations--Nuclear Generation--Yankee
Units--Maine Yankee." The Company expects to recover all
decommissioning costs from its customers pursuant to FERC tariffs.
As of March 31, 1997, the Company's share of the respective external
decommissioning trust fund balances (at market), which have been recorded
on the books of each of the respective Yankee Companies, is as follows:
<TABLE>
<CAPTION>
(Millions)
<S> <C>
VYNPC $ 15.5
YAEC 30.0
CYAPC 73.1
MYAPC 20.1
------
Total $138.7
</TABLE>
Effective January 1996, YAEC began billing its sponsors, including
CL&P, WMECO and PSNH, amounts based on a revised estimate approved by the
FERC that assumes decommissioning by the year 2000. This revised estimate
was based on continued access to the Barnwell, South Carolina, low-level
radioactive waste facility, changes in assumptions about earnings on
decommissioning trust investments, and changes in other decommissioning
cost assumptions.
-61-
<PAGE>
CYAPC accrues decommissioning costs on the basis of immediate
dismantlement at retirement. In late December 1996, CYAPC made a filing
with FERC to amend the wholesale power contracts between the owners of the
facility, and revise decommissioning cost estimates and other cost
estimates for the facility. The amendments clarify the owners' entitlement
to full recovery of amounts previously invested and the ongoing costs of
maintaining the plant in accordance with NRC rules until decommissioning
begins, and ensures that decommissioning will continue to be funded through
June 2007, the full license term, despite the unit's early shutdown. On
February 26, 1997, FERC approved a draft order setting for hearing the
prudence of the decision to close CY. On February 27, 1997, FERC approved
an order for hearing which, among other things, accepted CYAPC's contract
amendments for filing and suspended the new rates for a nominal period. The
new rates became effective March 1, 1997, subject to refund. FERC will
determine the prudence of CYAPC's decision to retire the plant before it
finally determines the justness and reasonableness of CYAPC's proposed
amended power contract rates.
For more information regarding nuclear decommissioning, see "Nuclear
Decommissioning" in the notes to the Company's Consolidated Financial
Statements, Note 3.
Competition and Cost Recovery
Competition in the energy industry continues to grow as a result of
legislative and regulatory action, technological advances, relatively high
electric rates in certain regions of the country, including New England,
surplus generating capacity and the increased availability of natural gas.
These competitive pressures are particularly strong in the System's service
territories, where legislators and regulatory agencies have been at the
forefront of the restructuring movement.
A major risk of competition for the Company is "strandable
investments." These are expenditures that have been made by utilities in
the past to meet their public service obligations, with the expectation
that they would be recovered from customers in the future. However, under
certain circumstances these costs might not be recoverable from customers
in a fully competitive electric utility industry. The Company is
particularly vulnerable to strandable investments because of (i) the
Company's relatively high investment in nuclear generating capacity, which
had a high initial cost to build, (ii) state-mandated purchased power
arrangements priced above market, and (iii) significant regulatory assets,
which are those costs that have been deferred by state regulators for
future collection from customers. See "Risk Factors--Industry Restructuring
and Competition."
As of March 31, 1997, the Company's net investment in nuclear
generating capacity, excluding its investment in certain regional nuclear
companies, was approximately $2.3 billion, and in its regulatory assets was
approximately $1.3 billion. The Company expects to recover substantially
all of its nuclear investment and its regulatory assets from customers. The
Company is currently collecting its nuclear investment through depreciation
charges approved by the DPUC. See "Depreciation" in the notes to the
Company's Consolidated Financial Statements. Unless amortization levels are
changed from currently scheduled rates, the Company's regulatory assets are
expected to be substantially decreased in the next five years. Although the
Company continues to operate predominantly in a state-approved franchise
territory under traditional cost-of-service
-62-
<PAGE>
regulation, restructuring initiatives in the State of Connecticut have
created uncertainty with respect to future rates and the recovery of
strandable investments. See "Risk Factors--Regulatory Accounting and
Assets."
In 1995 regulators in Connecticut concluded that electric utilities
should be allowed a reasonable opportunity to recover strandable
investments. Various electric utility restructuring legislative proposals
were introduced in the Connecticut Legislature in 1997. On June 4, 1997,
the Connecticut Legislature completed its most recent session without
passage of a proposed electric restructuring bill. The legislature may
consider restructuring legislation in the future.
Notwithstanding these legislative and regulatory initiatives, the
System has developed, and is continuing to develop, a number of marketing
initiatives to retain and continue to serve its existing customers. In
particular, the System has been devoting increasing attention in recent
years to negotiating long-term power supply arrangements with certain large
commercial and industrial retail customers. Approximately 10 percent of the
Company's commercial and industrial retail revenues were under negotiated
rate agreements at the end of 1996. The Company was a party to negotiated
rate agreements which accounted for approximately $19 million of rate
reductions in 1996. The average term of these agreements is approximately
5.2 years.
The System has expanded its retail marketing organization to provide
value-added solutions to its customers. The System devoted significantly
more resources to its retail marketing efforts in 1996 than in prior years.
In particular, NUSCO hired approximately 170 new employees as part of its
retail sales organization. The new employees will allow the System to have
more direct contact with customers in order to develop tailor-made
solutions for customers' energy needs. In addition, the System companies,
as well as other NU subsidiaries, received orders from the Commission and
FERC in 1996 that increased their flexibility to market and broker
electricity, gas, oil and other forms of energy throughout the United
States and to provide various services related thereto.
Rates
General
The Company's retail rates are subject to the jurisdiction of the
DPUC. Connecticut law provides that revised rates may not be put into
effect without the prior approval of the DPUC. Connecticut law also
authorizes the DPUC to order a rate reduction under certain circumstances
before holding a full-scale rate proceeding. The DPUC is further required
to review a utility's rates every four years if there has not been a rate
proceeding during such period. On June 16, 1997, the Company filed with the
DPUC certain financial information consistent with the DPUC's filing
requirements applicable to such four year review. The Company expects
hearings before the DPUC with respect to such review to begin during the
summer of 1997. Based on recently enacted legislation, if the DPUC approves
performance-based incentives for a particular company, the DPUC will
include in such an order periodic monitoring and review of the Company's
performance in lieu of the four-year review.
-63-
<PAGE>
On July 1, 1996, the DPUC approved a settlement agreement (Settlement)
that had been jointly submitted to the DPUC by the Company, the Connecticut
Office of Consumer Counsel (OCC) and the independent Prosecutorial Division
of the DPUC. The Settlement provides that the Company's base rates will be
frozen until at least December 31, 1997. The Settlement provides that
during the rate freeze, the Company's target return on equity (ROE) will be
10.7 percent, but the Settlement does not alter Company's allowed ROE of
11.7 percent. One-third of earnings above the target ROE will be refunded
to customers. The Settlement also accelerated the amortization of the
Company's regulatory assets ($73 million in 1996 and $54 to $68 million in
1997). As of March 31, 1997, the Company's regulatory assets totaled
approximately $1.3 billion.
The Settlement terminated all outstanding litigation pending as of
March 31, 1996 among the parties that potentially could affect the
Company's rates. Such litigation included appeals by the Company and the
OCC from the Company's 1993 rate case decision, appeals from the DPUC's
decisions concerning the 1992-1993 and 1993-1994 fuel-recovery periods,
nuclear operating prudence review proceedings pending at the time of the
settlement, and OCC's appeal from the DPUC guidelines adopted in 1995
allowing additional flexibility in negotiating special rates with electric
customers. In exchange, the Company agreed not to seek recovery from its
customers of approximately $115 million in uncollected nuclear costs
incurred before March 31, 1996.
The Settlement does not affect issues to be addressed by the DPUC in
future restructuring proceedings and the recovery of costs related to the
ongoing Millstone outages. For information regarding the prudence
proceeding related to nuclear operations for the period March 31, 1996 to
June 30, 1996. See "--Rates--CL&P Adjustment Clauses and Prudence."
Electric Industry Restructuring in Connecticut
Pursuant to legislation introduced in 1995, a legislative task force
was created to consider electric industry restructuring in Connecticut.
Although the members of the task force did not come to a consensus on
restructuring, the task force's December 1996 report included several
recommendations on legislation, including, among other things, legislation
to enable securitization of strandable investments; reduction of tax
burdens incorporated in electric rates; reduction of rate impacts of
government-mandated contracts with NUGs; and elimination of obsolete
regulation. On June 4, 1997, the Connecticut Legislature completed its most
recent session without passage of a proposed electric industry
restructuring bill. The legislature may consider restructuring legislation
in the future.
CL&P Adjustment Clauses and Prudence
On October 8, 1996, the DPUC issued its final order establishing an
EAC in place of the Company's existing Fuel Adjustment Clause and
Generation Utilization Adjustment Clause (GUAC). The EAC took effect on
January 1, 1997. The EAC is designed to reconcile and adjust every six
months the difference between actual fuel costs and the fuel revenue
collected through base rates. The EAC includes an incentive mechanism that
disallows recovery of the first $9 million in fuel costs that exceeds base
levels and permits the Company to retain the first $9 million in fuel
-64-
<PAGE>
cost savings. The EAC also designates a 60 percent nuclear capacity factor
floor. When the six-month nuclear capacity factor falls below 60 percent,
related energy costs are deferred to the subsequent EAC period for
consideration for recovery. Finally, the costs to serve nonfirm wholesale
transactions will continue to be removed from the calculation of fuel costs
at actual marginal cost.
On December 31, 1996, the DPUC issued a decision approving the
Company's request to recover $25 million, excluding replacement power costs
(see below), through the GUAC for the period April 1-July 31, 1996. The $25
million will be recovered over a twelve-month period beginning January 1,
1997. On June 6, 1997, the Company filed with the DPUC a request to recover
approximately $28 million of fuel costs for the period August 1, 1996
through April 30, 1997, through the EAC, which includes $5.3 million of
fuel costs from 1996, which would have been recovered through the GUAC.
Pursuant to a DPUC order in the prudence proceeding discussed below, the
filing excluded any fuel cost associated with the current outages at
Millstone. On the same date, the DPUC issued a procedural order, which
stated that the Company could not include CY replacement power costs in its
EAC until the DPUC concluded its prudence investigation, discussed more
fully below, and that this prudence decision would be directly affected by
the on-going FERC proceeding regarding the decision to retire CY before the
expiration of its operating license. The Company revised its EAC filing on
June 13, 1997 to identify approximately $17 million of CY fuel costs. See
"--Nuclear Plant Performance and Regulatory Oversight--Yankee Units--
Connecticut Yankee" and "--Decommissioning."
In connection with an ongoing management audit of the Company,
including matters related to the NRC watch list designation, the two
consulting firms hired by the DPUC to review such matters issued reports in
December 1996 that were highly critical of NU's management of its nuclear
program. The results of these reports may affect future DPUC positions with
respect to the System's nuclear related operations and costs.
Despite an earlier procedural order indicating that prudence hearings
on the current nuclear outages at Millstone would take place after the
nuclear plants return to service, on January 15, 1997, the DPUC notified
the Company that it would be conducting its prudence review of nuclear cost
recovery issues in multiple phases. The first phase, covering the period
April 1 through June 30, 1996, was in progress when various intervenors
moved for summary judgment with respect to the costs for the entire outage.
On June 27, 1997, the DPUC orally granted summary judgment in the prudence
docket, disallowing recovery of substantially costs associated with the
ongoing outages at Millstone. The Company has projected that its share of
the total costs for the Millstone outages, including replacement power,
operation and maintenance and capacity reliability projects, will be about
$990 million. The Company had not requested cost recovery and had said that
it did not expect to seek recovery for a substantial portion of these costs
and did not intend to request any cost recovery until the units had
returned to operation. Any requests by the Company for recovery would
include only costs for projects the Company would have undertaken under
normal operating conditions or that provide long-term value for the
Company's customers. The DPUC did leave open the possibility for the
Company in a future rate case to seek recovery of up to $40 million of
capital costs associated with capacity reliability projects. The Company
currently expects to appeal the decision to the Connecticut Superior Court.
The Company does not expect this decision to have any immediate a material
financial impact on 1997 results. The Company has expensed, and continues
to expense, the bulk of the Millstone outage costs as they are incurred.
Therefore, the Company does not expect this decision to have a material
financial impact on projected 1997 results.
-65-
<PAGE>
In a separate proceeding, the DPUC ordered the Company to submit
studies by July 1, 1997 that analyze the economic benefits from the
continued operation of Millstone 1 and 2. The DPUC stated that these
studies were necessary in light of the uncertainty regarding restart dates
of the units and the costs associated with returning these units to
operation. On July 1, 1997, the Company submitted continued unit operation
studies to the DPUC showing that, under base case assumptions, Millstone 1
will have a value to System customers (as compared to the cost of shutting
down the unit and incurring replacement power costs) of approximately $70
million during the remaining thirteen years of its operating license and
Millstone 2 will have a value to System customers (on the same assumptions
as used with Millstone 1) of approximately $500 million during the
remaining eighteen years of its operating license. Two other cases
submitted to the DPUC based on higher assumed O&M costs, which the Company
considers less likely, indicated that Millstone 1 would be uneconomic in
varying degrees. At the present time, the Company expects to continue
operating both Millstone 1 and Millstone 2 for the remaining terms of their
respective operating licenses; however, the Company cannot predict the
outcome of this proceeding.
In May 1996, the Connecticut state legislature enacted legislation to
create the Nuclear Energy Advisory Council (NEAC), a volunteer group of
fourteen members. The NEAC was charged with conducting a broad review of
safety and operations of the System's four Connecticut nuclear units and to
advise the Governor, the legislature and affected municipalities on these
issues. The NEAC issued its first report on February 7, 1997, which
provided a wide range of preliminary recommendations, including legislation
and additional public hearings related to nuclear spent fuel, federal
congressional hearings, review by the Connecticut Attorney General of the
NRC's oversight of the System's nuclear operations and the requirement for
a state nuclear plant resident inspector. These recommendations are similar
to various legislative proposals currently pending at the state legislature
related to nuclear oversight, operations and cost recovery. Management
cannot predict the ultimate effect of this report or such proposed
legislation.
Demand-Side Management
The Company provides demand-side management (DSM) programs for its
residential, commercial and industrial customers. The Company is allowed to
recover DSM costs in excess of costs reflected in base rates over periods
ranging from approximately two to ten years.
On April 9, 1996, the DPUC issued an order approving the Company's
budget of $37.1 million for 1996 DSM expenditures, which will be recovered
over a 2.43-year amortization period. In November 1996, the Company filed
its 1996 DSM program and forecasted conservation adjustment mechanism (CAM)
for 1997 with the DPUC. The filing proposed expenditures of $36 million in
1997. In April 1997, the DPUC approved 1997 expenditures of $36 million.
The Company's unrecovered DSM costs at December 31, 1996, excluding
carrying costs, which are collected currently, were approximately $90
million.
-66-
<PAGE>
Resource Plans
Construction
The Company's construction program in the period 1997 through 2001 is
estimated as follows:
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
(Millions)
$148 $180 $164 $163 $170
</TABLE>
The 1997 data include costs of approximately $18 million related to
upgrading the Company's transmission facilities to meet capacity needs
caused by the extended Millstone outages. See "--Electric Operations--
Distribution and Load."
The construction program data shown above include all anticipated
capital costs necessary for committed projects and for those reasonably
expected to become committed, regardless of whether the need for the
project arises from environmental compliance, nuclear safety, reliability
requirements or other causes. The construction program's main focus is
maintaining and upgrading the existing transmission and distribution system
and nuclear and fossil-generating facilities.
The construction program data shown above generally include the
anticipated capital costs necessary for fossil-generating units to operate
at least until their scheduled retirement dates. Whether a unit will be
operated beyond its scheduled retirement date, be deactivated or be retired
on or before its scheduled retirement date is regularly evaluated in light
of the System's needs for resources at the time, the cost and availability
of alternatives and the costs and benefits of operating the unit compared
with the costs and benefits of retiring the unit. Retirement of certain of
the units could, in turn, require substantial compensating expenditures for
other parts of the System's bulk power supply system. Those compensating
capital expenditures have not been fully identified or evaluated and are
not included in the table.
Future Needs
The System periodically updates its long-range resource needs through
its integrated demand and supply planning process. While the System does
not foresee the need for any new major generating facilities at least until
2010, it has reactivated some older facilities and leased additional
facilities in 1996 to supplement its capacity requirements due to the
extended Millstone outages.
The System's long-term plans rely, in part, on certain DSM programs.
These System companies-sponsored measures, including installations to date,
are projected to lower the System summer peak load in 2010 by 703 MW and
lower the winter peak load as of January 1, 2011 by 482 MW. See "--Rates"
for information about rate treatment of DSM costs.
-67-
<PAGE>
In addition, System companies have long-term arrangements to purchase
the output from certain NUGs under federal and state laws, regulations and
orders mandating such purchases. NUGs supplied 660 MW of firm capacity in
1996. The System companies, including the Company, do not expect to
purchase additional new capacity from NUGs for the foreseeable future. See
"Cogeneration Costs" in the notes to the Company's Consolidated Financial
Statements, Note 1L, for information regarding the Company's renegotiation
of one of its purchased-power agreements.
The System's need for new resources may be affected by premature
retirements of existing generating units, regulatory approval of the
continued operation of certain fossil fuel units past scheduled retirement
dates, and the possible deactivation of plants resulting from environmental
compliance costs, licensing decisions and other regulatory matters. The
System's need for new resources also may be substantially affected by
restructuring of the electric industry. For more information regarding
restructuring, see "--Rates."
Financing Program
Recent Financing Activity
On May 21, 1996, the Connecticut Development Authority issued $62
million of tax-exempt pollution control revenue bonds. Concurrent with
that issuance, the proceeds of the bonds were loaned to the Company for the
reimbursement of a portion of the Company's share of the previously
incurred costs of financing, acquiring, constructing, and installing
pollution control, sewage, and solid waste disposal facilities at Millstone
3. The bonds were issued with an initial variable interest rate of 3.7
percent per annum, which is reset on a weekly basis. The bonds will mature
on May 1, 2031 and may bear, at the Company's discretion, a variable or
fixed interest rate, which may not exceed 12 percent. The bonds were
originally backed by a five-year letter of credit, which was secured by a
second mortgage on the Company's interest in Millstone 1. On January 23,
1997, the letter of credit was replaced with an insurance facility and a
standby bond purchase agreement. The second mortgage was replaced with the
issuance of $62 million of First and Refunding Mortgage Bonds, 1996 Series
B, bearing the same interest rate as the underlying bonds.
On June 21, 1996, the Company entered into an operating lease
agreement for the Company to acquire the use of four turbine generators
having an installed cost of approximately $70 million. The initial lease
term is for a five-year period. The lease agreement provides for five
consecutive renewal options under which the Company may lease the turbines
for five additional twelve-month terms. The rental payments are based on a
30-day floating interest rate plus 1 percent. The interest rate averaged
6.4 percent during 1996. Upon termination of the lease agreement,
ownership of the turbines will remain with the lessor, unless the Company
exercises its purchase option. During the first quarter of 1997, the
Company determined that it would not be in compliance with financial
coverage tests required under the lease agreement, based on projections of
its 1997 financial results. The Company has requested waivers of this
covenant from the lessor, and the matter is pending. If the Company is
unable to negotiate satisfactory lease revisions, it expects to have
sufficient liquidity to purchase the turbine generators from the lessor.
The purchase price for the turbine generators would be slightly less than
the installed cost of $70 million.
-68-
<PAGE>
On June 25, 1996, the Company issued $160 million of First and
Refunding Mortgage Bonds, 1996 Series A. The 1996 Series A Bonds bear
interest at an annual rate of 7.875%, and will mature on June 1, 2001. The
net proceeds from the issuance and sale of the 1996 Series A Bonds, plus
funds from other sources, were used to repay approximately $193.3 million
in principal amount of the Company's Series UU bonds, which matured April
1, 1997.
On July 11, 1996, the Company entered into an agreement to sell up to
$200 million of fractional undivided percentage interests in eligible
accounts receivable with limited recourse. The agreement provides for a
loss reserve pursuant to which additional customer receivables are
allocated to the purchaser on an interim basis, to protect against bad
debt. To the extent actual loss experience of the pool receivables exceeds
the loss reserve, the purchaser absorbs the excess. For receivables sold,
the Company has retained collection and servicing responsibilities as agent
for the purchaser. In order to comply with new accounting requirements,
effective January 1, 1997, the Company's receivables agreement is being
restructured.
On November 21, 1996, NU, the Company and WMECO entered into a new
three-year Revolving Credit Agreement (the New Credit Agreement) with a
group of banks. On May 30, 1997, the New Credit Agreement was amended to
reflect (i) the provision by the Company of first mortgage bonds in the
principal amount of $225,000,000 and by WMECO of first mortgage bonds in
the principal amount of $90,000,000 as collateral for their respective
obligations under the New Credit Agreement (ii) revised financial covenants
consistent with NU's, the Company's and WMECO's financial forecasts, and
(iii) an upfront payment to the lenders in order to maintain commitments
under the New Credit Agreement. Following such amendment, the Company is
able to borrow up to approximately $225,000,000 (which may increase to
approximately $313,750,000 with the provision of additional first mortgage
bonds as collateral in an amount which would bring the total Company
collateral to $313,750,000) and WMECO will be able to borrow up to
approximately $90,000,000 (which may increase to approximately $150,000,000
with the provision of additional first mortgage bonds as collateral in an
amount which would bring total WMECO collateral to $150,000,000), subject
to a total borrowing limit of $313,750,000 for all three borrowers. NU
will be able to borrow up to $50,000,000 when each of the parties to the
New Credit Agreement has maintained a consolidated operating income to
consolidated interest expense ratio of at least 2.50 to 1 for two
consecutive fiscal quarters. For information regarding issues related to
financial covenants under the New Credit Agreement, see "--Financing
Limitations" below.
On April 17, 1997, the holders of approximately $38 million of notes
issued by NU's real estate company (Rocky River Realty Company or RRR)
notified RRR that it wished RRR to repurchase the notes. The notes are
secured by real estate leases between RRR as lessor and Northeast Utilities
Service Company (NUSCO) as lessee. The leases provide for the acceleration
of rent equal to RRR's note obligations if RRR is unable to repay the
obligation. On July 1, 1997, RRR received a commitment for the purchase of
approximately $12 million of the notes and RRR intends to repurchase the
remaining $26 million of notes on July 14, 1997. The Company may be
billed by NUSCO for its proportionate share of the accelerated lease
obligations when RRR repurchases the notes. The Company does not expect
the resolution of this matter to have a material adverse impact on its
-69-
<PAGE>
financial condition or liquidity. See the notes to the Company's
Consolidated Financial Statements, Note 11G for further information.
Total Company debt, including short term and capitalized lease
obligations, was $2.4 billion as of March 31, 1997, compared with $2.19
billion as of December 31, 1996. For more information regarding Company
financing, see the notes to the Company's Consolidated Financial Statements
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
In April, 1997, Moody's downgraded most of the securities ratings of
the Company and WMECO because of the extended Millstone outages. In May,
1997, S&P downgraded the Company and WMECO securities as a result of the
Connecticut legislature's failure to approve a utility restructuring bill
during the recently completed legislative session. As a result, all
Company securities are currently rated below investment grade by Moody's
and S&P. These actions will adversely affect the availability and cost of
funds for the Company.
1997 Financing Requirements
The Company's aggregate capital requirements for 1997, exclusive of
requirements under the Niantic Bay Fuel Trust (NBFT) are approximately as
follows:
<TABLE>
<CAPTION>
(Millions)
<S> <C>
Construction $148
Nuclear Fuel 5
Maturities 204
----
Total $357
</TABLE>
For further information on NBFT and the Company's financing of its
nuclear fuel requirements, see "Leases" in the notes to the Company's
Consolidated Financial Statements. For further information on the
Company's 1997 and five-year financing requirements, see "Long-Term Debt"
in the notes to the Company's Consolidated Financial Statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." For further information concerning the Company's financing of
operations, see "--Overview of Nuclear and Related Financial Matters" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Financing Limitations
The Company's charter and many of its borrowing facilities contain
financial limitations (as discussed more fully below) that must be
satisfied before borrowings can be made and for outstanding borrowings to
remain outstanding.
-70-
<PAGE>
The amount of short term borrowings that may be incurred by the
Company is subject to periodic approval by the Commission under the Public
Utility Holding Company Act of 1935 (the Holding Company Act).
As of January 1, 1997, the Company's maximum authorized short term
borrowing limit was $375 million. At December 31, 1996, the Company had no
short-term borrowings outstanding. At March 31, 1997, the Company had
short term borrowings of $200 million.
The supplemental indentures under which NU issued $175 million in
principal amount of 8.58 percent amortizing notes in December 1991 and $75
million in principal amount of 8.38 percent amortizing notes in March 1992
contain restrictions on dispositions of certain System companies' stock,
limitations of liens on NU assets and restrictions on distributions on and
acquisitions of NU stock. Under these provisions, neither NU nor the
Company may dispose of voting stock of the Company other than to NU or
another System company, except that the Company may sell voting stock for
cash to third persons if so ordered by a regulatory agency so long as the
amount sold is not more than 19 percent of the Company's voting stock after
the sale.
The Company's charter contains preferred stock provisions restricting
the amount of unsecured debt the Company may incur. As of March 31, 1997,
the Company's charter permits the Company to incur an additional $321
million of unsecured debt.
In connection with NU's acquisition of PSNH, the DPUC imposed certain
financial conditions intended to prevent NU from relying on the Company's
resources if the PSNH acquisition strained NU's financial condition. The
principal conditions provided for a DPUC review if the Company's common
equity ratio falls to 36 percent or below, require NU to obtain DPUC
approval to secure NU financings with the Company's stock or assets and
obligate NU to use its best efforts to sell the Company's preferred or
common stock to the public if NU cannot meet the Company's need for equity
capital. If, at any time, the Company projects that its common equity
ratio as of the end of the next fiscal quarter will be below 36% or plans
to take any action that will result or can reasonably be expected to result
in reducing the above ratio below 36% then the Company is required to
notify the DPUC in writing at least 45 days before such action is taken or
event is anticipated to occur. The DPUC may conduct a proceeding after its
receipt of the Company's notice. At March 31, 1997, the Company's common
equity ratio was 36.3 percent. The Company does not expect to meet this
condition as of June 30, 1997 and has notified the DPUC in accordance with
the foregoing requirement.
While not directly restricting the amount of short term debt that the
Company, WMECO, RRR, NNECO and NU may incur, the revolving credit
agreements to which the Company, WMECO, HWP, RRR, NNECO and NU are parties
provide that the lenders are not required to make additional loans, and
that the maturity of indebtedness can be accelerated, if NU (on a
consolidated basis) does not meet a common equity ratio test that requires,
in effect, that NU's consolidated common equity (as defined) be not less
than 30 percent for any three consecutive fiscal quarters. At March 31,
1997, NU's common equity ratio was 32.7 percent.
-71-
<PAGE>
Additionally, under the New Credit Agreement, the Company is
prohibited from incurring additional debt unless it is able to demonstrate,
on a pro forma basis for the prior quarter and going forward, that its
equity ratio will be at least 31 percent of its total capitalization
through December 31, 1997 and 32 percent thereafter. At March 31, 1997,
the Company's common equity ratio was 33.2 percent. Beginning in the
fourth quarter of 1997, the Company must demonstrate that its ratio of
operating income to interest expense will be at least 1.25 to 1 through
December 31, 1997; 1.50 to 1 from January 1, 1998 through June 30, 1998;
2.00 to 1 from July 1, 1998 through September 30, 1998 and 2.50 to 1
thereafter. For the three month period ending March 31, 1997, the
Company's interest coverage ratio (computed in accordance with the New
Credit Agreement) was 2.06 to 1.
The Indenture provides that additional bonds may not be issued, except
for certain refunding purposes, unless earnings (as defined in the
Indenture and before income taxes) are at least twice the pro forma annual
interest charges on outstanding bonds and certain prior lien obligations
and the bonds to be issued. The Company's 1996 earnings do not permit it
to meet those earnings coverage tests, but as of May 31, 1997, after giving
effect to the amendment of the Indenture to eliminate requirements for the
sinking and improvement fund previously set forth therein, and after giving
effect to the issue of the Old Bonds, the Company would be able to issue up
to approximately $113 million of additional first mortgage bonds on the
basis of previously issued but refunded bonds, without having to meet the
earnings coverage test.
The preferred stock provisions of the Company's charter also prohibit
the issuance of additional preferred stock (except for refinancing
purposes) unless income before interest charges (as defined and after
income taxes and depreciation) is at least 1.5 times the pro forma annual
interest charges on indebtedness and the annual dividend requirements on
preferred stock that will be outstanding after the additional stock is
issued. The Company is currently unable to issue additional preferred
stock under these provisions.
The supplemental indentures under which the Company's first mortgage
bonds have been issued limit the amount of cash dividends and other
distributions the Company can make to NU out of its retained earnings. As
of March 31, 1997, the Company's retained earnings were $4.9 million below
the required level for payment of dividends, and the Company is not
expected to be able to declare any dividends under these provisions in
1997.
Certain subsidiaries of NU, including the Company, have established a
money pool (Money Pool), a system for the pooling of funds established by
certain of the System Companies to provide a more effective use of their
cash resources and to reduce outside short-term borrowings. NUSCO
administers the Money Pool as agent for the participating companies.
Short-term borrowing needs of the participating companies (except NU) are
first met with available funds of other member companies, including funds
borrowed by NU from third parties. NU may lend to, but not borrow from,
the Money Pool. Investing and borrowing subsidiaries receive or pay
interest based on the average daily Federal Funds rate, except that
borrowings based on loans from NU bear interest at NU's cost. Funds may be
withdrawn or repaid to the Money Pool at any time without prior notice.
-72-
<PAGE>
Other Regulatory and Environmental Matters
Environmental Regulation
General
The System and its subsidiaries are subject to federal, state and
local regulations with respect to water quality, air quality, toxic
substances, hazardous waste and other environmental matters. Similarly, the
System's major generation and transmission facilities may not be
constructed or significantly modified without a review by the applicable
state agency of the environmental impact of the proposed construction or
modification. Compliance with environmental laws and regulations,
particularly air and water pollution control requirements, may limit
operations or require substantial investments in new equipment at existing
facilities. See "--Resource Plans" for a discussion of the System's
construction plans.
Surface Water Quality Requirements
The Federal Clean Water Act (CWA) requires "point source" discharge of
pollutants into navigable waters to obtain a National Pollutant Discharge
Elimination System (NPDES) permit from the United States Environmental
Protection Agency (EPA) or state environmental agency specifying the
allowable quantity and characteristics of its effluent. System facilities
have all required NPDES permits in effect. Compliance with NPDES and state
water discharge permits has necessitated substantial expenditures and may
require further expenditures because of additional requirements that could
be imposed in the future. For information regarding ongoing criminal and
civil investigations by the Office of the U.S. Attorney for the District of
Connecticut and the Connecticut Attorney General related to allegations
that there were some violations of certain facilities' NPDES permits, see
"Legal Proceedings."
In October 1995, the Connecticut Department of Environmental
Protection (CDEP) issued a consent order to the Company and the Long Island
Lighting Company (LILCO) requiring those companies to address leaks of
dielectric fluids from the Long Island cable, which is jointly owned by the
Company and LILCO. This cable enables the Company to interchange up to 300
MW of capacity with LILCO. In May 1996, the consent order was modified to
address issues relating to a leak, which occurred in January 1996. The
modified order requires the Company and LILCO to study and propose
alternatives for the prevention, detection and mitigation of leaks from the
cable and to evaluate the ecological effects of leaks on the environment.
Alternatives to be studied include cable replacement and alternative
dielectric fluids. These studies are ongoing. The System will incur
additional costs to meet the requirements of the order and to meet any
subsequent CDEP requirements that may result from these studies. These
costs, as well as the long-term future and cost-effectiveness of the cable
operation subsequent to any additional CDEP requirements, cannot be
estimated at this time.
The United States Attorney's Office in New Haven, Connecticut has
commenced an investigation and issued subpoenas to the Company, NU, NUSCO,
CONVEX and LILCO seeking
-73-
<PAGE>
documents relating to operation and maintenance of the cable and the most
recent leaks from the cable described above. The government has not
revealed the scope of its investigation, so management cannot evaluate the
likelihood of a criminal proceeding being initiated at this time. However,
management is aware of nothing that would suggest that any System company,
officer or employee has engaged in conduct that would warrant a criminal
proceeding. For information regarding a lawsuit related to discharges from
the cable, see "Legal Proceedings."
The ultimate cost impact of the CWA and state water quality
regulations on the Company cannot be estimated because of uncertainties
such as the impact of changes to the effluent guidelines or water quality
standards. Additional modifications, in some cases extensive and involving
substantial cost, may ultimately be required for some or all of the
Company's generating facilities.
The Federal Oil Pollution Act of 1990 (OPA 90) sets out the
requirements for facility response plans and periodic inspections of spill
response equipment at facilities that can cause substantial harm to the
environment by discharging oil or hazardous substances into the navigable
waters of the United States and onto adjoining shorelines. The System
companies, including the Company, are currently in compliance with the
requirements of OPA 90.
OPA 90 includes limits on the liability that may be imposed on persons
deemed responsible for release of oil. The limits do not apply to oil
spills caused by negligence or violation of laws or regulations. OPA 90
also does not preempt state laws regarding liability for oil spills. In
general, the laws of the states in which the Company owns facilities and
through which the Company transports oil could be interpreted to impose
strict liability for the cost of remediating releases of oil and for
damages caused by releases. The System currently carries general liability
insurance in the total amount of $100 million per occurrence for oil
spills.
Air Quality Requirements
The Clean Air Act Amendments of 1990 (CAAA) impose stringent
requirements on emissions of sulfur dioxide (SO2) and nitrogen oxide (NOX)
for the purpose of controlling acid rain and ground level ozone. In
addition, the CAAA address the control of toxic air pollutants.
Installation of continuous emissions monitors (CEMs) and expanded
permitting provisions also are included.
Existing and future federal and state air quality regulations,
including recently proposed standards, could hinder or possibly preclude
the construction of new, or the modification of existing, fossil units in
the System's service area and could raise the capital and operating cost of
existing units. The ultimate cost impact of these requirements on the
System cannot be estimated because of uncertainties about how EPA and the
states will implement various requirements of the CAAA.
Nitrogen Oxide. Title I of the CAAA identifies NOX emissions as a
--------------
precursor of ambient ozone. Connecticut, Massachusetts and New Hampshire,
as well as other Northeastern states, currently exceed the ambient air
quality standard for ozone. Pursuant to the CAAA, states exceeding the
ozone standard must implement plans to address ozone nonattainment. All
three
-74-
<PAGE>
states have issued final regulations to implement Phase I reduction
requirements and the System has met these requirements. Compliance with
Phase I requirements has cost the System a total of approximately $41
million including $10 million for the Company. Compliance has been
achieved using a combination of currently available technology, combustion
efficiency improvements and emissions trading. Compliance costs for Phase
II, effective in 1999, are expected to result in an additional cost of
approximately $5 million for the Company.
Sulfur Dioxide. The CAAA mandates reductions in SO2 emissions to
--------------
control acid rain. These reductions are to occur in two phases. First,
certain high SO2 emitting plants were required to reduce their emissions
beginning in 1995. All Phase I units have been allocated SO2 allowances
for the period 1995-1999. These allowances are freely tradable. One
allowance entitles a source to emit one ton of SO2. No unit may emit more
SO2 than the amount for which it has allowances. The only System units
subject to the Phase I reduction requirements are PSNH's Merrimack Units 1
and 2. Newington Station in New Hampshire and Mt. Tom Station in
Massachusetts are conditional Phase I units, which means that the System
can decide to include these plants as Phase I units during any year and
obtain allowances for that year. The System included these plants as Phase
I units in 1996.
On January 1, 2000, the start of Phase II, a nationwide cap of 8.9
million tons per year of utility SO2 emissions will be imposed and existing
units will be granted allowances to emit SO2. Most of the System companies'
allocated allowances will substantially exceed their expected SO2 emissions
for 2000 and subsequent years, except for PSNH, which expects to purchase
additional SO2 allowances.
New Hampshire and Massachusetts have each instituted acid rain control
laws that limit SO2 emissions. The System is meeting the new SO2
limitations by using natural gas and/or lower sulfur coal in its plants.
Under the existing fuel adjustment clauses in Connecticut, New Hampshire
and Massachusetts, the System should be able to recover the additional fuel
costs of compliance with the CAAA and state laws from its customers.
Management does not believe that the acid rain provisions of the CAAA
will have a significant impact on the System's overall costs or rates due
to the very strict limits on SO2 emissions already imposed by Connecticut,
New Hampshire and Massachusetts. In addition, management believes that
Title IV of the CAAA (acid rain) requirements for NOX limitations will not
have a significant impact on System costs due to the more stringent NOX
limitations resulting from Title I of the CAAA discussed above.
EPA, Connecticut, New Hampshire and Massachusetts regulations also
include other air quality standards, emission standards and monitoring and
testing and reporting requirements that apply to the System's generating
stations. They require new or modified fossil fuel-fired electric
generating units to operate within stringent emission limits. The System
could incur additional costs to meet these requirements, which costs cannot
be estimated at this time.
-75-
<PAGE>
Air Toxics. Title III of the CAAA directed EPA to study air toxics
----------
and mercury emissions from fossil fired steam electric generation units to
determine if they should be regulated. EPA exempted these plants from the
hazardous air pollutant program pending completion of the studies, expected
in 1997 or 1998. Should EPA determine that such generating plants'
emissions must be controlled to the same extent as emissions from other
sources under Title III, the System, including the Company, could be
required to make substantial capital expenditures to upgrade or replace
pollution control equipment, but the amount of these expenditures cannot be
readily estimated.
Toxic Substances and Hazardous Waste Regulations
PCBs. Under the federal Toxic Substances Control Act of 1976 (TSCA),
----
EPA has issued regulations that control the use and disposal of
polychlorinated biphenyls (PCBs). PCBs had been widely used as insulating
fluids in many electric utility transformers and capacitors before TSCA
prohibited any further manufacture of such PCB equipment. System companies
have taken numerous steps to comply with these regulations and have
incurred increased costs for disposal of used fluids and equipment that are
subject to the regulations.
In general, the System sends fluids with concentrations of PCBs equal
to or higher than 500 ppm to an unaffiliated company to dispose of using
approved methods. Electrical capacitors that contain PCB fluid are sent
off-site to dispose of through burning in high temperature incinerators
approved by EPA. The System disposes of solid wastes containing PCBs in
secure chemical waste landfills.
Asbestos. Federal, Connecticut, New Hampshire and Massachusetts
--------
asbestos regulations have required the System to expend significant sums in
the past on removal of asbestos, including measures to protect the health
of workers and the general public and to properly dispose of asbestos
wastes. Asbestos removal costs for the System are not expected to be
material in 1997.
RCRA. Under the federal Resource Conservation and Recovery Act of
----
1976, as amended (RCRA), the generation, transportation, treatment, storage
and disposal of hazardous wastes are subject to EPA regulations.
Connecticut, New Hampshire and Massachusetts have adopted state regulations
that parallel RCRA regulations but in some cases are more stringent. The
procedures by which System companies handle, store, treat and dispose of
hazardous wastes are regularly revised, where necessary, to comply with
these regulations.
Hazardous Waste Liability. As many other industrial companies have
-------------------------
done in the past, System companies disposed of residues from operations by
depositing or burying such materials on-site or disposing of them at off-
site landfills or facilities. Typical materials disposed of include coal
gasification waste, fuel oils, gasoline and other hazardous materials that
might contain PCBs. It has since been determined that deposited or buried
wastes, under certain circumstances, could cause groundwater contamination
or create other environmental risks. The System has recorded a liability
for what it believes is, based upon currently available information, its
estimated environmental remediation costs for waste disposal sites for
which the System companies expect to bear legal liability, and continues to
evaluate the environmental impact of its former disposal practices. Under
-76-
<PAGE>
federal and state law, government agencies and private parties can attempt
to impose liability on System companies for such past disposal. As of
March 31, 1997, the liability recorded by the Company for its estimated
environmental remediation costs for known sites needing remediation,
including those sites described below, exclusive of recoveries from
insurance or third parties, was approximately $7.6 million. These costs
could be significantly higher if alternative remedies become necessary.
Under the federal Comprehensive Environmental, Response, Compensation
and Liability Act of 1980, as amended, commonly known as Superfund, EPA has
the authority to cleanup or order cleanup of hazardous waste sites and to
impose the cleanup costs on parties deemed responsible for the hazardous
waste activities on the sites. Responsible parties include the current
owner of a site, past owners of a site at the time of waste disposal, waste
transporters and waste generators. It is EPA's position that all
responsible parties are jointly and severally liable, so that any single
responsible party can be required to pay the entire costs of cleaning up
the site. As a practical matter, however, the costs of cleanup are usually
allocated by agreement of the parties, or by the courts on an equitable
basis among the parties deemed responsible, and several federal appellate
court decisions have rejected EPA's position on strict joint and several
liability. Superfund also contains provisions that require System companies
to report releases of specified quantities of hazardous materials and
require notification of known hazardous waste disposal sites. System
companies are in compliance with these reporting and notification
requirements.
The System currently is involved in two Superfund sites in
Connecticut, one in Kentucky, one in New Jersey and two in New Hampshire.
The level of study of each site and the information about the waste
contributed to the site by the System and other parties differs from site
to site. Where reliable information is available that permits the System to
make a reasonable estimate of the expected total costs of remedial action
and/or the System's likely share of remediation costs for a particular
site, those cost estimates are provided below. All cost estimates were
made in accordance with generally accepted accounting principles where
remediation costs were probable and reasonably estimable. Any estimated
costs disclosed for cleaning up the sites discussed below were determined
without consideration of possible recoveries from third parties, including
insurance recoveries. Where the System has not accrued a liability, the
costs either were not material or there was insufficient information to
accurately assess the System's exposure.
At two Connecticut sites, the Beacon Heights and Laurel Park
landfills, the major parties formed coalitions and joined as defendants a
number of other parties including "Northeast Utilities (Connecticut Light
and Power)". Litigation on both sites was consolidated in a single case in
the federal district court. In 1993, the coalitions' claims against a
number of defendants including NU (CL&P) were dismissed. In 1994, the
Beacon Heights Coalition indicated that they would not pursue NU (CL&P) as
a defendant. As a result, the Company does not expect to incur cleanup
costs for the Beacon Heights site. Meanwhile, the coalitions appealed the
1993 federal district court dismissal, which was overturned. A petition
for rehearing was filed and it is unlikely the district court will take
further action until the petition is resolved. In any event, the Company's
liability at the Laurel Park site is expected to be minimal because of the
non-hazardous nature and small volume of the materials that were sent
there.
-77-
<PAGE>
The System had sent a substantial volume of LLRW from Millstone 1,
Millstone 2 and CY to the Maxey Flats nuclear waste disposal site in
Fleming County, Kentucky. On April 18, 1996, the U.S. District Court for
the Eastern District of Kentucky approved a consent decree between EPA and
members of the Maxey Flats PRP Steering Committee, including System
companies, and several federal government agencies, including DOE and the
Department of Defense as well as the Commonwealth of Kentucky. The System
has recorded a liability for future remediation costs for this site based
on its share of ultimate remediation costs under the tentative agreement.
The System's liability at the site has been assessed at slightly over $1
million.
The Company, as successor to The Hartford Electric Light Company
(HELCO), has been named as one of over 100 defendants in a cost recovery
action filed in the federal district court in New Jersey. Plaintiffs have
not disclosed the amount of the recovery they are seeking and, due to the
nature of HELCO's limited dealings with the plaintiffs, the Company
believes its liability is minimal.
As discussed below, in addition to the remediation efforts for the
above-mentioned Superfund sites, the System has been named as a PRP and is
monitoring developments in connection with several state environmental
actions.
In 1987, CDEP published a list of 567 hazardous waste disposal sites
in Connecticut. The Company owns two sites on this list. The Company has
spent approximately $2.7 million, as of December 31, 1996, completing
investigations and limited remediation at these sites. Both sites were
formerly used by CL&P predecessor companies for the manufacture of coal gas
(also known as town gas sites) from the late 1800s to the 1950s. This
process resulted in the production of coal tar and creosote residues and
other byproducts, which, when not sold for other industrial or commercial
uses, were frequently deposited on or near the production facilities. Site
investigations have been completed at these sites and discussions with
state regulators are in progress to address the need and extent of
remediation necessary to protect public health and the environment.
One of the sites is a 25.8-acre site located in the south end of
Stamford, Connecticut. Site investigations have located coal tar deposits
covering approximately 5.5 acres and having a volume of approximately
45,000 cubic yards. A final risk assessment report for the site was
completed in January 1994. The System is currently considering
redevelopment of the site in cooperation with the local municipality as
part of the State of Connecticut's Urban Sites Program. Several remedial
options have been evaluated to remediate the site, if necessary to
accommodate redevelopment. The estimated cost of remediation and
institutional controls ranges from $5 to $8 million.
The second site is a 3.5-acre former coal gasification facility that
currently serves as an active substation in Rockville, Connecticut. Site
investigations have located creosote and other polyaromatic hydrocarbon
contaminants. The Company has provided to the CDEP and local officials the
Company's plan to determine whether any remediation of the site will be
necessary or advisable.
-78-
<PAGE>
As part of the 1989 divestiture of the Company's gas business, site
investigations were performed for properties that were transferred to
Yankee Gas Services Company (Yankee Gas). The Company agreed to accept
liability for any required cleanup for the three sites it retained. These
three sites include Stamford and Rockville (discussed above) and
Torrington, Connecticut. At the Torrington site, investigations have been
completed and the cost of any remediation, if necessary, is not expected to
be material. The Company and Yankee Gas also share a site in Winsted,
Connecticut and any liability for required cleanup there. The Company and
Yankee Gas will share the costs of cleanup of sites formerly used in the
Company's gas business but not currently owned by either of them.
In the past, the System has received other claims from government
agencies and third parties for the cost of remediating sites not currently
owned by the System but affected by past System disposal activities and may
receive more such claims in the future. The System expects that the costs
of resolving claims for remediating sites about which it has been notified
will not be material, but cannot estimate the costs with respect to sites
about which it has not been notified.
Electric and Magnetic Fields
In recent years, published reports have discussed the possibility of
adverse health effects from electric and magnetic fields (EMF) associated
with electric transmission and distribution facilities and appliances and
wiring in buildings and homes. Most researchers, as well as numerous
scientific review panels considering all significant EMF epidemiological
and laboratory research to date, agree that current information remains
inconclusive, inconsistent and insufficient for risk assessment of EMF
exposures. Most recently, a review issued in October 1996 by the U.S.
National Academy of Sciences concluded "that the current body of evidence
does not show that exposure to these fields presents a human-health
hazard." Based on this information management does not believe that a
causal relationship between EMF exposure and adverse health effects has
been established or that significant capital expenditures are appropriate
to minimize unsubstantiated risks. The System is closely monitoring
research and government policy developments.
The System supports further research into the subject and is
voluntarily participating in the funding of the ongoing National EMF
Research and Public Information Dissemination Program. If further
investigation were to demonstrate that the present electricity delivery
system is contributing to increased risk of cancer or other health
problems, the industry could be faced with the difficult problem of
delivering reliable electric service in a cost-effective manner while
managing EMF exposures. In addition, if the courts were to conclude that
individuals have been harmed and that utilities are liable for damages, the
potential monetary exposure for all utilities, including the System
companies, could be enormous. Without definitive scientific evidence of a
causal relationship between EMF and health effects, and without reliable
information about the kinds of changes in utilities' transmission and
distribution systems that might be needed to address the problem, if one is
found, no estimates of the cost impacts of remedial actions and liability
awards are available.
-79-
<PAGE>
The Connecticut Interagency EMF Task Force (Task Force) last provided
a report to the state legislature in January 1995. The Task Force
advocated a policy of "voluntary exposure control," which involves
providing people with information to enable them to make individual
decisions about EMF exposure. Neither the Task Force, nor any Connecticut
state agency, has recommended changes to the existing electrical supply
system. The Task Force is required to provide another report to the
legislature by 1998. The Connecticut Siting Council (Siting Council)
previously adopted a set of EMF "Best Management Practices," which are now
considered in the justification, siting and design of new or modified
transmission lines and substations. In 1996, the Siting Council concluded
a generic proceeding in which it conducted a comparative life-cycle cost
analysis of overhead and underground transmission lines, pursuant to a law
that was adopted in 1994 in part due to public EMF concerns. This
proceeding is expected to be referenced in future comparisons of overhead
and underground alternatives to proposed transmission line projects.
EMF has become increasingly important as a factor in facility siting
decisions in many states, and local EMF concerns occasionally make the news
when utilities propose new or changed facilities. In prior years, various
bills involving EMF were introduced in the Massachusetts and Connecticut
legislatures with no action taken. No such bills were introduced in either
state in 1996.
The Company has been the focus of media reports since 1990 charging
that EMF associated with a substation and related distribution lines in
Guilford, Connecticut are linked with various cancers and other illnesses
in several nearby residents. See "Legal Proceedings" for information about
two suits brought by plaintiffs who now or formerly lived near that
substation.
FERC Hydro Project Licensing
Federal Power Act licenses may be issued for hydroelectric projects
for terms of 30 to 50 years as determined by FERC. Upon the expiration of
a license, any hydroelectric project so licensed is subject to reissuance
by FERC to the existing licensee or to others upon payment to the licensee
of the lesser of fair value or the net investment in the project plus
severance damages less certain amounts earned by the licensee in excess of
a reasonable rate of return.
The System companies hold FERC licenses for 19 hydroelectric projects
aggregating approximately 1,375 MW of capacity, located in Connecticut,
Massachusetts and New Hampshire.
The Company's FERC licenses for operation of the Falls Village and
Housatonic Hydro Projects expire in 2001. The relicensing process was
initiated in August of 1996 with the issuance of a Notice of Intent (NOI)
to the FERC indicating the intention of the Company to relicense both
projects. An Initial Consultation Document (ICD) was issued to consulting
agencies in September 1996 and two public meetings were held in early
November 1996 to discuss relicensing issues. The Company is awaiting the
submittal of resource agency comments.
FERC has issued a notice indicating that it has authority to order
project licensees to decommission projects that are no longer economic to
operate. FERC has not required any such project decommissioning to date.
The potential costs of decommissioning a project, however, could
-80-
<PAGE>
be substantial. It is likely that this FERC decision will be appealed if,
and when, they attempt to exercise this authority.
EMPLOYEES
As of December 31, 1996, the System companies had 8,842 full and part-
time employees on their payrolls, of which 2,194 were employed by the
Company, 1,279 by PSNH, 497 by WMECO, 92 by HWP, 1,274 by NNECO, 2,692 by
NUSCO and 814 by NAESCO. NU, NAEC, Charter Oak, Mode 1 and Select Energy
Inc. have no employees.
In 1995 and early 1996, the System implemented a program to reduce the
nuclear organization's total workforce by approximately 220 employees,
which included both early retirements and involuntary terminations. The
pretax cost of the program was approximately $8.7 million. For information
regarding the criminal investigations by the NRC's Office of Investigation
and the Office of the U.S. Attorney for the District of Connecticut related
to this workforce reduction, see "Legal Proceedings."
In December 1996, the System announced a voluntary separation program
affecting approximately 1,100 employees. The separations will be effected
between April 1, 1997 and March 1, 1998. The estimated cost of the program
is approximately $7 million.
Approximately 2,200 employees of the Company, PSNH, WMECO, NAESCO and
HWP are covered by 11 union agreements, which expire between October 1,
1997 and May 31, 1999.
PROPERTIES
The Company's principal plants and other properties are located either
on land which is owned in fee or on land, as to which the Company owns
perpetual occupancy rights adequate to exclude all parties except possibly
state and federal governments, which has been reclaimed and filled pursuant
to permits issued by the United States Army Corps of Engineers. In
addition, the Company has certain substation equipment, data processing
equipment, nuclear fuel, gas turbines, nuclear control room simulators,
vehicles, and office space that are leased. With few exceptions, the
Company's lines are located on or under streets or highways, or on
properties either owned or leased, or in which the Company has appropriate
rights, easements, or permits from the owners.
Substantially all of the Company's properties are subject to the lien
of the Indenture, subject to the exceptions described herein. See
"Description of the New Bonds--Security." In addition, the Company's
interest in Millstone 1 is subject to second liens for the benefit of
lenders under agreements related to pollution control revenue bonds.
Various of these properties are also subject to minor encumbrances which do
not substantially impair the usefulness of the properties to the Company.
The Company believes its properties to be well maintained and in good
operating condition.
-81-
<PAGE>
Transmission and Distribution System
At December 31, 1996, the System companies owned 103 transmission and
416 distribution substations that had an aggregate transformer capacity of
25,200,069 kilovolt amperes (kVa) and 9,127,367 kVa, respectively, 3,057
circuit miles of overhead transmission lines ranging from 69 kilovolt (kV)
to 345 kV, and 192 cable miles of underground transmission lines ranging
from 69 kV to 138 kV; 32,649 pole miles of overhead and 1,958 conduit bank
miles of underground distribution lines; and 398,452 line transformers in
service with an aggregate capacity of 16,472,221 kVa.
Electric Generating Plants
As of March 31, 1997, the electric generating plants, including leased
property, of the Company and the Company's entitlements in the generating
plants of the two operating Yankee regional nuclear generating companies
were as follows:
<TABLE>
<CAPTION>
Claimed
Year Capability*
Plant Name (Location) Type Installed (kilowatts)
- --------------------- ---- --------- -----------
<S> <C> <C> <C>
Millstone (Waterford, CT)
Unit 1 Nuclear 1970 524,637
Unit 2 Nuclear 1975 708,345
Unit 3 Nuclear 1986 606,453
Seabrook (Seabrook, NH) Nuclear 1990 47,175
MY (Wiscasset, ME) Nuclear 1972 94,725
VY (Vernon, VT) Nuclear 1972 45,353
---------
Total Nuclear-Steam Plants (6 Units) 2,026,688
Total Fossil-Steam Plants (10 Units) 1954-73 1,869,370
Total Hydro-Conventional (25 Units) 1903-55 98,970
Total Hydro-Pumped Storage (7 Units) 1928-73 905,150
Total Internal Combustion (21 Units) 1966-96 601,510
---------
Total CL&P Generating
Plant (69 Units) 5,501,688
=========
</TABLE>
* Claimed capability represents winter ratings as of March 31, 1997
Franchises
For more information regarding recent regulatory and legislative
decisions and initiatives that may affect the terms under which the Company
provides electric service in its franchised territory, see "--Rates--
Electric Industry Restructuring in Connecticut," and "Legal Proceedings."
Subject to the power of alteration, amendment or repeal by the General
Assembly of Connecticut and subject to certain approvals, permits and
consents of public authority and others
-82-
<PAGE>
prescribed by statute, the Company has, subject to certain exceptions not
deemed material, valid franchises free from burdensome restrictions to sell
electricity in the respective areas in which it is now supplying such
service.
In addition to the right to sell electricity as set forth above, the
franchises of the Company include, among others, rights and powers to
manufacture, generate, purchase, transmit and distribute electricity, to
sell electricity at wholesale to other utility companies and municipalities
and to erect and maintain certain facilities on public highways and
grounds, all subject to such consents and approvals of public authority and
others as may be required by law. The franchises of the Company include
the power of eminent domain.
LEGAL PROCEEDINGS
Litigation Relating to Electric and Magnetic Fields
NU and the Company are currently involved in two lawsuits alleging
physical and emotional damages from exposure to "electromagnetic radiation"
generated by the defendants. Management believes that the allegations that
EMF caused or contributed to the plaintiffs' illnesses are not supported by
scientific evidence. One of these cases has been resolved in NU and the
Company's favor at the trial level, but it has been appealed and is now
pending at the Connecticut Supreme Court.
Southeastern Connecticut Regional Resources Recovery Authority (SCRRRA)--
Application of the Municipal Rate
This matter involves three separate disputes over the rates that apply
to the Company's purchases of the generation of the SCRRRA project in
Preston, Connecticut. A favorable ruling on all of these matters could
result in savings to Company customers of approximately $20 million over
the terms of the agreement with the SCRRRA. FERC has ruled in the Company's
favor in one of these matters, but this decision has been appealed to the
United States D.C. Circuit Court of Appeals. A final ruling in this
decision in favor of the Company would also resolve the second dispute. A
Connecticut Superior Court, however, has ruled in favor of the SCRRRA in
the final dispute. The Company appealed this decision to the Connecticut
Appellate Court, and the Connecticut Supreme Court has transferred the
appeal to itself.
Connecticut DPUC-CL&P's Petition for Declaratory Ruling Regarding Proposed
Retail Sales of Electricity by Texas--Ohio Power, Inc. (TOP)
On August 3, 1995, the Company filed a petition for declaratory
rulings with the DPUC to determine whether TOP, which built a small
cogeneration plant in Manchester, Connecticut, can sell electricity from
the facility to two Company retail customers in Manchester. On December 6,
1995, the DPUC ruled that, because TOP's project would not use the public
streets, it did not require specific legislative authorization to make
retail sales of electricity. In February 1997, the Hartford
-83-
<PAGE>
Superior Court upheld the DPUC's decision. The Company has appealed the
decision to the Connecticut Appellate Court.
Tax Litigation
In 1991, the Town of Haddam performed a town-wide revaluation of the
CYAPC property in that town. Based on the report of the engineering firm
hired by the town to perform the revaluation, Haddam determined that the
full fair-market value of the property, as of October 1, 1991, was $840
million. At that time, CY's net-book value was $245 million. On September
5, 1996, a Connecticut court ruled that Haddam had over-assessed CY at
three and a half times its proper assessment. The decision set the plant's
fair market value at $235 million. CYAPC estimated that the town owed it
approximately $16.2 million in refunds, including accrued interest, for
taxes that were overpaid from July 31, 1992 through July 31, 1996. On May
9, 1997, Haddam and CYAPC reached an agreement regarding the repayment of
property taxes due CYAPC for the tax years beginning October 1, 1991
through October 1, 1995. Haddam has agreed to repay to CYAPC an amount
totaling $13,990,000 which is inclusive of taxes and interest for those
years. As part of this negotiated settlement, Haddam has paid CYAPC
$2,000,000 and may bond all or part of the remaining $11,990,000.
Long Island Cable--Citizen's Suit
On April 4, 1996, a citizen's suit against Long Island Lighting
Company (LILCO), a non-affiliate of NU, the Company (collectively, the
Companies) and NUSCO was filed in Federal District Court in Connecticut.
The suit alleges the Companies are in violation of the Federal Clean Water
Act because they are maintaining an unpermitted discharge of pollutants
from the Long Island Cable and claims the pollutants are an imminent danger
to the environment and public health. The suit asks the Court, among other
things, to enjoin further operation of the Long Island Cable without a
permit and to impose a civil penalty of $25,000 for each violation. On
April 23, 1997, the Company, NUSCO, LILCO and the Long Island Soundkeeper
Fund, Inc. jointly filed a Stipulation of Dismissal in Federal District
Court, which settled this suit. The settlement will not impose material
costs on the Company or any other System companies.
Connecticut Municipal Electric Energy Cooperative (CMEEC) Dispute
This matter involves a dispute with CMEEC over its obligations under
its Millstone Units 1 & 2 contract with the Company, under which CMEEC has
a 3.49 percent life-of-unit interest in each of the units. CMEEC and the
Company have been negotiating since May 1996 over issues related to
Millstone Units 1 & 2 and have taken preliminary steps to prepare for
arbitration of the matter. Since October 1996, CMEEC has failed to make
payment on its obligations of approximately $1.6 million per month,
claiming that the Company materially breached its contractual obligations,
and requesting arbitration of the issues. The Company has denied the
allegations and filed a petition on July 1, 1997 requesting the Connecticut
Superior Court to order CMEEC to pay its outstanding obligations (about
$13.3 million) and make continuing payments while the arbitration action is
proceeding.
-84-
<PAGE>
Millstone 3--Potential Joint Owner Litigation
This matter involves claims that the non-NU owners of Millstone 3 could
potentially bring against the System companies for the costs associated
with the current extended outage of this facility.
The non-NU owners of Millstone 3 have been paying their monthly shares of
the cost of that unit since it went out of service in March 1996, but have
reserved their rights to contest whether the NU System companies have any
responsibility for the additional costs the non-NU owners have borne as a
result of the extended outage. No formal claims have been made, but it is
possible that some or all of the non-NU owners will assert liability on the
part of the System companies. The Company and WMECO, through NNECO as
agent, operate Millstone 3 at cost, and without profit, under a Sharing
Agreement that obligates them to utilize good utility operating practices
and requires the joint owners to share the risk of employee negligence and
other risks pro-rata in accordance with their ownership shares. The
Sharing Agreement also provides that the Company and WMECO would only be
liable for damages to the non-NU owners for a deliberate breach of the
agreement pursuant to authorized corporate action. The non-NU owners have
retained a team of technical and regulatory experts to review and monitor
activities at Millstone 3. As representatives of Millstone 3 joint owners,
NU is cooperating fully with the team.
NRC--Section 2.206 Petitions
Spent Fuel Pool Off-Load Practices 2.206 Petition: In August 1995, a
petition was filed with the NRC under Section 2.206 of the NRC's
regulations by the organization We the People and a NUSCO employee. The
petitioners maintained that NU's historic practice of off-loading the full
reactor core at Millstone 1 resulted in spent fuel pool heat loads in
excess of the pool's NRC-approved cooling capability, and asserted that the
practice was a knowing and willful violation of NRC requirements. The
petitioners also filed a supplemental petition concerning refueling
practices at Millstone 2 and 3 and Seabrook Station.
On December 26, 1996, the Acting Director of the Office of Nuclear
Reactor Regulation issued a partial decision granting, in part, the
petition. The decision, which is limited to the NRC staff's technical
review of the issues raised by petitioners, concluded that the design of
the spent fuel pool and related system at Millstone 1 was adequate, and
that the full core off-load practices at that unit, Millstone 3 and
Seabrook were safe. The petitioners' assertions regarding Millstone 2 were
not substantiated. The Director further concluded that the regulatory
actions taken by the NRC to date regarding the three Millstone units,
including the imposition of an Independent Corrective Action Verification
Program prior to restart, were broader than the actions requested by
petitioners and thus constituted a partial grant of petitioners' request.
Issues of wrongdoing raised in the petition remain under consideration by
the NRC staff, and will not be addressed until after the U.S. Attorney has
concluded its investigation of the spent fuel pool issues and decided
whether to commence criminal proceedings. See "--NRC Office of
Investigations and U.S. Attorney Investigations and Related Matters" below.
-85-
<PAGE>
In March 1997, a Section 2.206 petition was filed with the NRC seeking
enforcement action and the placement of certain restrictions on the
decommissioning activities at the CY nuclear power plant. Specifically,
the petitioners requested that the NRC issue a civil monetary penalty to
assure compliance with radiation protection requirements, and that CY's
license be modified to prohibit any decommissioning activities for a six
month period following any radiological contamination event. In addition,
petitioners requested that CY be placed on the NRC's "watch list."
Management is currently evaluating whether and how to respond to this
petition.
Other 2.206 Petitions: Two petitions under Section 2.206 have been filed
with the NRC requesting various actions be taken with respect to the
operating licenses for Millstone Units 1, 2 and 3 and CY, including
revocation and suspension, and other enforcement action due to alleged
mismanagement of the units and violations of NRC regulations that
petitioners allege have jeopardized public health and safety. While
management believes that the NRC is already addressing a number of the
issues raised in these petitions, it cannot predict the ultimate outcome of
these petitions.
NRC Office of Investigations and U.S. Attorney Investigations and Related
Matters
The NRC's Office of Investigations (OI) has been examining various
matters at Millstone and CY, including but not limited to procedural and
technical compliance matters and employee concerns. One of these matters
has been referred, and others may be referred, to the Office of the U.S.
Attorney for the District of Connecticut (U.S. Attorney) for possible
criminal prosecution. The referred matter concerns full core off-load
procedures and related matters at Millstone (see "--NRC--Section 2.206
Petitions"). The U.S. Attorney is also reviewing possible criminal
violations arising out of certain of NNECO's other activities at Millstone
and CY, including the 1996 nuclear workforce reduction and its licensed
operator training programs.
The U.S. Attorney, together with the U.S. EPA and the Connecticut
Attorney General, is also investigating possible criminal violations of
federal environmental laws at certain NU facilities, including Millstone.
NU has been informed by the government that it is a target of the
investigation, but that no one in senior management is either a target or a
subject of the investigation.
Management does not believe that any System company or officer has
engaged in conduct that would warrant a federal criminal prosecution. NU
intends to fully cooperate with the OI and the U.S. Attorney in their
ongoing investigations.
Connecticut DEP
The Connecticut Department of Environmental Protection (DEP) has referred
to the Connecticut Attorney General a series of alleged environmental
violations at Millstone for a possible civil penalty action. Management
does not believe that this action will have a material adverse impact on
the System.
-86-
<PAGE>
Other Legal Proceedings
The following sections of this Prospectus discuss additional legal
proceedings: see "Business--Overview of Nuclear Matters and Related
Financial Matters" for information regarding NRC watch list issues;
"Business--Rates" for information about the Company's rate and fuel clause
adjustment clause proceedings, various state restructuring proceedings and
civil lawsuits related thereto; "Business--Electric Operations--
Transmission Access and FERC Regulatory Changes" for information about
proceedings relating to power and transmission issues; "Business--Electric
Operations--Nuclear Generation" and "Business--Electric Operations--Nuclear
Plant Performance and Regulatory Oversight" for information related to
nuclear plant performance, nuclear fuel enrichment pricing, high-level and
low-level radioactive waste disposal, decommissioning matters and NRC
regulation; and "Business--Other Regulatory and Environmental Matters" for
information about proceedings involving surface water and air quality,
toxic substances and hazardous waste, electric and magnetic fields,
licensing of hydroelectric projects, and other matters.
-87-
<PAGE>
MANAGEMENT AND COMPENSATION
Executive Officers and Directors
The following table sets forth certain information concerning the
executive officers and directors of the Company as of the date of this
Prospectus.
<TABLE>
<CAPTION>
First Elected First Elected
Name Positions Held an Officer a Director
- -------------------- --------------- ---------- ----------
<S> <C> <C> <C>
Robert G. Abair D - 01/01/89
John H. Forsgren EVP, CFO, D 02/01/96 06/10/96
Bernard M. Fox CH, D 05/15/81 05/01/83
William T. Frain, Jr. D - 02/01/94
Cheryl W. Grise SVP, CAO, D 06/01/91 01/01/94
Barry Ilberman VP 02/01/89 -
John B. Keane VP, TR, D 08/01/92 08/01/92
Bruce D. Kenyon P, D 09/03/96 09/03/96
Francis L. Kinney SVP 04/24/74 -
Hugh C. MacKenzie P, D 07/01/88 06/06/90
John J. Roman VP, CONT 04/01/92 -
Robert P. Wax SVP, SEC, GC 08/01/92 -
<CAPTION>
Key:
- ---
<S> <C> <C> <C>
AC - Assistant Clerk
CAO - Chief Administrative Officer EVP - Executive Vice President
CEO - Chief Executive Officer GC - General Counsel
CFO - Chief Financial Officer P - President
CH - Chairman SEC - Secretary
CONT - Controller SVP - Senior Vice President
D - Director TR - Treasurer
VP - Vice President
<CAPTION>
Name Age Business Experience During Past 5 Years
- ------------------- --- ---------------------------------------
<S> <C> <C>
Robert G. Abair (1) 58 Elected Vice President and Chief Administrative Officer of WMECO in 1988.
John H. Forsgren (2) 50 Elected Executive Vice President and Chief Financial Officer of NU, CL&P, PSNH, WMECO
and NAEC February, 1996; previously Managing Director of Chase Manhattan Bank since
1995; and Senior Vice President-Chief Financial Officer of Euro Disney, The Walt Disney
Company.
</TABLE>
-88-
<PAGE>
<TABLE>
<S> <C> <C>
Bernard M. Fox (3) 54 Elected Chairman of the Board, President and Chief Executive Officer of NU, Chairman of
CL&P, PSNH, WMECO and NAEC, and Chief Executive Officer of PSNH and NAEC in 1995;
previously Vice Chairman of CL&P and WMECO, and Vice Chairman and Chief Executive
Officer of NAEC since 1994; Chief Executive Officer of NU, CL&P, PSNH, WMECO and NAEC in
1993; President and Chief Operating Officer of NU, CL&P and WMECO in 1990 and NAEC since
1991; Vice Chairman of PSNH since 1992.
William T. Frain, Jr.(4) 55 Elected President and Chief Operating Officer of PSNH in 1994; previously Senior Vice
President of PSNH since 1992.
Cheryl W. Grise 44 Elected Senior Vice President and Chief Administrative Officer of CL&P, PSNH and NAEC,
and Senior Vice President of WMECO in 1995; previously Senior Vice President-Human
Resources and Administrative Services of CL&P, WMECO and NAEC since 1994;
Vice President-Human Resources of NAEC since 1992.
Barry Ilberman (5) 47 Elected Vice President-Corporate and Environmental Affairs of CL&P, PSNH, WMECO and NAEC
in 1994; previously Vice President-Corporate Planning of CL&P, WMECO since 1992.
John B. Keane (6) 50 Elected Vice President and Treasurer of NU, CL&P, PSNH, WMECO and NAEC in 1993;
previously Vice President, Secretary and General Counsel-Corporate of NU, CL&P and WMECO
since 1992; Vice President, Assistant Secretary and General Counsel-Corporate of PSNH
and NAEC, Vice President, Secretary and General Counsel-Corporate of NU and CL&P, and
Vice President, Secretary, Assistant Clerk and General Counsel-Corporate of WMECO since
1992.
Bruce D. Kenyon (7) 54 President and Chief Executive Officer of NAEC and President-Nuclear Group of CL&P, PSNH
and WMECO since 1996; previously President and Chief
</TABLE>
-89-
<PAGE>
<TABLE>
<S> <C> <C>
Operating Officer of South Carolina Electric and Gas Company from 1990.
Francis L. Kinney (8) 64 Elected Senior Vice President-Governmental Affairs of CL&P, WMECO and NAEC in 1994;
previously Vice President-Public Affairs of NAEC since 1992.
Hugh C. MacKenzie (9) 55 Elected President-Retail Business Group of NU February, 1996 and President of CL&P and
WMECO in 1994; previously Senior Vice President-Customer Service Operations of CL&P and
WMECO since 1990.
John J. Roman 43 Elected Vice President and Controller of NU, CL&P, PSNH, WMECO and NAEC in 1995;
previously Assistant Controller of CL&P, PSNH, WMECO and NAEC since 1992.
Robert P. Wax 48 Elected Senior Vice President, Secretary and General Counsel of NU, CL&P, PSNH, NAEC and
WMECO in 1997. Previously elected Vice President, Secretary and General Counsel of PSNH
and NAEC in 1994; elected Vice President, Secretary and General Counsel of NU and CL&P
and Vice President, Secretary, Assistant Clerk and General Counsel of WMECO in 1993;
previously Vice President, Assistant Secretary and General Counsel of PSNH and NAEC
since 1993; previously Vice President and General Counsel-Regulatory of NU, CL&P, PSNH,
WMECO and NAEC since 1992.
</TABLE>
(1) Member-Advisory Committee, Bank of Boston Springfield/Pioneer Valley.
(2) Director of Connecticut Yankee Atomic Power Company.
(3) Director of The Institute of Living, the Institute of Nuclear Power
Operations, the Connecticut Business and Industry Association, Fleet
Financial Group, Inc., CIGNA Corporation, Connecticut Yankee Atomic Power
Company, Edison Electric Institute, Hartford Hospital, The Dexter
Corporation, a Trustee of Mount Holyoke College and The Hartford Courant
Foundation and a Fellow and Founder of the American Leadership Forum.
(4) Director of the Business and Industry Association of New Hampshire, the
Greater Manchester Chamber of Commerce; Trustee of Optima Health, Inc. and
Saint Anselm College.
(5) Director of Connecticut Yankee Atomic Power Company.
(6) Director of Maine Yankee Atomic Power Company, Vermont Yankee Nuclear
Power Corporation, Yankee Atomic Electric Company and Connecticut Yankee
Atomic Power Company, Member-Advisory Committee, Fleet Bank Connecticut.
-90-
<PAGE>
(7) Trustee of Columbia College and Director of Connecticut Yankee Atomic
Power Company.
(8) Director of Mid-Conn Bank.
(9) Director of Connecticut Yankee Atomic Power Company.
There are no family relationships between any director or executive
officer and any other director or executive officer of NU, the Company, PSNH,
WMECO or NAEC.
-91-
<PAGE>
Executive Compensation and Employment Agreements
The Company does not directly compensate any executive officer. The
following table presents the cash and non-cash compensation received by the
CEO and the next four highest paid executive officers of the System (and
indicates the position held by such officer in the Company), and by a
retired executive officer who would have been among the five highest paid
executive officers but for his retirement, in accordance with rules of the
Securities and Exchange Commission (Commission):
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
Options/ Payouts
Re- Stock Long Term All
Other stricted Appreci- Incentive Other
Annual Stock ation Program Compen-
Name and Salary Compensa- Awards Rights Payouts sation($)
Principal Position Year ($) Bonus($) tion($) ($) (#) ($) (1)
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard M. Fox 1996 551,300 None None None None 65,420 7,500
Chairman 1995 551,300 246,168 None None None 130,165 7,350
(Note 2) 1994 544,459 308,896 None None None 115,771 4,500
Bruce D. Kenyon 1996 144,231 400,000 None 499,762 None None None
President-Nuclear (Note 3)
Group (Note 2) 1995 None None None None None None None
1994 None None None None None None None
John H. Forsgren 1996 305,577 None 62,390 80,380 None None None
Executive Vice President (Note 4) (Note 4)
and Chief Financial 1995 None None None None None None None
Officer (Note 2) 1994 None None None None None None None
Hugh C. MacKenzie 1996 264,904 None None None None 19,834 7,500
President-Retail 1995 247,665 128,841 None None None 46,789 7,350
Business Group 1994 245,832 113,416 None None None 40,449 4,500
(Note 2)
</TABLE>
-92-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ted C. Feigenbaum 1996 248,858 (Note 5) None None None 14,770 7,222
(Note 2) 1995 185,300 126,002 None None None None 5,553
1994 183,331 47,739 None None None None 4,500
Robert E. Busch 1996 300,385 None None None None 26,747 2,637,500
Formerly President- (Note 6)
Energy-Resources Group 1995 350,000 147,708 None None None 63,100 7,350
of NU, CL&P, WMECO 1994 346,122 173,366 None None None 44,073 4,500
and PSNH and formerly
President of NAEC
(Note 6)
</TABLE>
Notes:
1. "All Other Compensation" consists of employer matching contributions
under the Northeast Utilities Service Company 401(k) Plan, generally
available to all eligible employees. It also includes, in the case of
Mr. Busch, certain payments made to him pursuant to the terms of his
separation agreement with Northeast Utilities Service Company (see
Note 6).
2. See "Management and Compensation" for information on the directorships
and officer positions held by each active individual named in the
summary compensation table with each of the registrants.
3. The restricted stock will vest when Millstone Station is removed from
the NRC's "watch list," provided that this occurs within three years
of Mr. Kenyon's commencement of employment and the SRLP and INPO
ratings of Seabrook Station have not materially changed from their
1996 levels. Dividends accruing on these shares are reinvested in
additional shares subject to the same restrictions. At the end of
1996, Mr. Kenyon owned 39,585 restricted shares with a market value of
$519,555, plus a $9,896 dividend that was reinvested into an
additional 740 restricted shares on January 2, 1997.
4. The "other annual compensation" consists of tax payments on a
restricted stock award. The restricted stock will vest on January 1,
1999. Dividends accruing on these shares are reinvested in additional
shares subject to the same restrictions. At the end of 1996, Mr.
Forsgren owned 5,305 restricted shares with a market value of $69,621,
plus a $1,326 dividend that was reinvested into an additional 99
restricted shares on January 2, 1997.
5. Awards under the 1996 short term incentive program of the Northeast
Utilities Executive Incentive Plan have not yet been made. Based on
preliminary estimates of corporate performance, no short term awards
will be made.
6. Mr. Busch left the Company during 1996. Pursuant to his separation
agreement with Northeast Utilities Service Company, Mr. Busch received
cash payments of $880,000 during 1996 and $220,000 during 1997, a
supplemental retirement benefit with a present value of $1,400,000,
continued medical coverage for himself and his family with a present
value of $100,000 and career planning with a value of $30,000. See
"Employment Contracts and Termination of Employment Arrangements,"
below.
-93-
<PAGE>
Pension Benefits
The following table shows the estimated annual retirement benefits
payable to an executive officer of the registrant upon retirement, assuming
that retirement occurs at age 65 and that the officer is at that time not
only eligible for a pension benefit under the Northeast Utilities Service
Company Retirement Plan (the Retirement Plan) but also eligible for the
make-whole benefit and the target benefit under the Supplemental Executive
Retirement Plan for Officers of Northeast Utilities System Companies (the
Supplemental Plan). The Supplemental Plan is a non-qualified pension plan
providing supplemental retirement income to system officers. The make-
whole benefit under the Supplemental Plan, available to all officers, makes
up for benefits lost through application of certain tax code limitations on
the benefits that may be provided under the Retirement Plan, and includes
as "compensation" awards under the Executive Incentive Compensation Program
and the Executive Incentive Plan and deferred compensation (as earned). The
target benefit further supplements these benefits and is available to
officers at the Senior Vice President level and higher who are selected by
the Board of Trustees of Northeast Utilities to participate in the target
benefit and who remain in the employ of Northeast Utilities companies until
at least age 60 (unless the Board of Trustees sets an earlier age). Each
of the executive officers of Northeast Utilities named in the Summary
Compensation Table is currently eligible for a target benefit, except Mr.
Kenyon, whose Employment Agreement provides a specially calculated
retirement benefit, based on his previous arrangement with South Carolina
Electric and Gas. If Mr. Kenyon retires with at least three but less than
five years of service with NU, he will be deemed to have five years of
service. In addition, if Mr. Kenyon retires with at least three years of
service with NU, he will receive a lump sum payment of $500,000.
The benefits presented below are based on a straight life annuity
beginning at age 65 and do not take into account any reduction for joint
and survivorship annuity payments.
Annual Target Benefit
<TABLE>
<CAPTION>
Final Average
Compensation Years of Credited Service
------------ -------------------------
15 20 25 30 35
-- -- -- -- --
<S> <C> <C> <C> <C> <C>
$200,000 $ 72,000 $ 96,000 $120,000 $120,000 $120,000
250,000 90,000 120,000 150,000 150,000 150,000
300,000 108,000 144,000 180,000 180,000 180,000
350,000 126,000 168,000 210,000 210,000 210,000
400,000 144,000 192,000 240,000 240,000 240,000
450,000 162,000 216,000 270,000 270,000 270,000
500,000 180,000 240,000 300,000 300,000 300,000
600,000 216,000 288,000 360,000 360,000 360,000
700,000 252,000 336,000 420,000 420,000 420,000
800,000 288,000 384,000 480,000 480,000 480,000
900,000 324,000 432,000 540,000 540,000 540,000
</TABLE>
-94-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
1,000,000 360,000 480,000 600,000 600,000 600,000
1,100,000 396,000 528,000 660,000 660,000 660,000
1,200,000 432,000 576,000 720,000 720,000 720,000
</TABLE>
Final average compensation for purposes of calculating the target
benefit is the highest average annual compensation of the participant
during any 36 consecutive months compensation was earned. Compensation
taken into account under the target benefit described above includes
salary, bonus, restricted stock awards, and long-term incentive payouts
shown in the Summary Compensation Table, but does not include employer
matching contributions under the 401(k) Plan. In the event that an
officer's employment terminates because of disability, the retirement
benefits shown above would be offset by the amount of any disability
benefits payable to the recipient that are attributable to contributions
made by NU and its subsidiaries under long term disability plans and
policies.
As of December 31, 1996, the five executive officers named in the
Summary Compensation Table had the following years of credited service for
retirement compensation purposes: Mr. Fox-32, Mr. Kenyon-0, Mr. Forsgren-
0, Mr. MacKenzie-31, and Mr. Feigenbaum-10. Assuming that retirement were
to occur at age 65 for these officers, retirement would occur with 43, 11,
15, 41 and 29 years of credited service, respectively. Mr. Fox has
announced that he will retire in the second half of 1997.
Employment Contracts and Termination of Employment Arrangements
Officer Agreements
Northeast Utilities Service Company (NUSCO) has entered into
employment agreements (the Officer Agreements) with each of the named
executive officers (except for Mr. Fox--see separate description below) and
certain other executive officers and directors of the registrants. The
Officer Agreements are also binding on NU and on each majority-owned
subsidiary of NU with at least fifty employees on its direct payroll.
Each Officer Agreement obligates the officer to perform such duties as
may be directed by the NUSCO Board of Directors or the NU Board, protect
the System's confidential information, and refrain, while employed by the
System and for a period of time thereafter, from competing with the Company
in a specified geographic area. Each Officer Agreement provides that the
officer's base salary will not be reduced below certain levels without the
consent of the officer, that the officer will participate in specified
benefits under the Supplemental Executive Retirement Plan (see Pension
Benefits, above), in the applicable divisional officer executive incentive
programs or the Stock Price Recovery Program, as the case may be, under the
Executive Incentive Plan (see Report on Executive Compensation, above),
and, beginning on January 1, 1999, if the employment term has not ended, in
each short term and long term incentive compensation program established by
the System for such senior level executives generally, at an incentive
opportunity level not less than that in effect for the officer as of
January 1, 1996 (or January 1, 1997 for certain officers).
-95-
<PAGE>
Each Officer Agreement provides for automatic one-year extensions of
the employment term unless at least six months' notice of non-renewal is
given by either party. The employment term may also be ended by the System
for "cause", as defined, at any time (in which case no target benefit, if
any, shall be due the officer under the Supplemental Executive Retirement
Plan), or by the officer on thirty days' prior written notice for any
reason. Absent "cause", the System may remove the officer from his or her
position on sixty days' prior written notice, but in the event the officer
is so removed and signs a release of all claims against the System, the
officer will receive one or two years' base salary and annual incentive
payments, specified employee welfare and pension benefits, and vesting of
stock appreciation rights, options and restricted stock.
Under the terms of an Officer Agreement, upon any termination of
employment of the officer within two years following a change in control,
as defined, if the officer signs a release of all claims against the System
the officer will be entitled to certain payments including two or three
times base salary and annual incentive payments, specified employee welfare
and pension benefits, and vesting of stock appreciation rights, options and
restricted stock. Certain of the change in control provisions may be
modified by the Board of Trustees prior to a change in control, on at least
two years' notice to the affected officer(s).
Besides the terms described above, Mr. Forsgren's Officer Agreement
provides for a starting salary of $350,000 per year and a $100,000
restricted stock grant. Mr. Feigenbaum's Officer Agreement provides for a
starting salary of $250,000 per year. Mr. Kenyon's Officer Agreement
provides for an initial starting salary of at $500,000 per year, a $500,000
restricted stock grant and a $400,000 cash signing bonus (See Summary
Compensation Table, above). Mr. Kenyon's Officer Agreement also provides
for a special retirement benefit (described above in Pension Benefits)
instead of a target benefit and a make-whole benefit under the Supplemental
Plan, and a special short term incentive compensation program in lieu of a
portion of the Stock Price Recovery Program. Under this incentive program
Mr. Kenyon will be eligible to receive a payment up to 100 percent of base
salary depending on his fulfillment of certain incentive goals for each of
the years ending August 31, 1997 and August 31, 1998, and for the 16 month
period ending December 31, 1999.
Transition and Retirement Agreement
In 1992, NU entered into an agreement with Mr. Fox (the 1992
Agreement) to provide for an orderly chief executive officer succession.
The agreement states that if Mr. Fox is terminated without cause, he will
be entitled to two years' base pay; specified employee welfare benefits; a
supplemental retirement benefit equal to the difference between the target
benefit he would be entitled to receive if he had reached the age of 55 on
the termination date and the actual target benefit to which he is entitled
as of the termination date; and a target benefit under the Supplemental
Executive Retirement Plan, notwithstanding that he might not have reached
age 60 on the termination date and notwithstanding other forfeiture
provisions of that plan.
In January 1997, NU entered into a Transition and Retirement Agreement
(the Transition Agreement) with Mr. Fox to reflect his election to retire
on the later of August 1, 1997 and the date
-96-
<PAGE>
his successor is elected. The Transition Agreement is intended to
supersede the 1992 Agreement at the time of Mr. Fox's retirement. The
Transition Agreement obligates Mr. Fox to maintain the confidentiality of
System information during his employment and following his retirement, and
not to compete with the System for certain periods of time in specified
geographic areas.
The Transition Agreement provides that Mr. Fox will be engaged as a
consultant to the Board of Trustees of NU for 24 months following his
retirement, with a fee of $500,000 for the first 12 months and $300,000 for
the second 12 months, payable in full notwithstanding Mr. Fox's death or
disability during such period or the occurrence of a change in control, as
defined. The Transition Agreement also provides that Mr. Fox will be
entitled to a target benefit under the Supplemental Executive Retirement
Plan (actuarially reduced, if applicable, to reflect payments beginning
prior to age 57), and for vesting of all stock appreciation rights granted
to him in the Stock Price Recovery Program. All payments and benefits
under the Transition Agreement are conditioned on Mr. Fox signing a release
of claims against the System "and all related parties" with respect to
matters arising out of his employment with the System, and the System
releasing Mr. Fox from all civil liability which may arise from his being
or having been a Trustee or officer of NU and its subsidiaries, except for
any liability which has been or may be asserted against Mr. Fox by the
System as the result of an investigation conducted upon the demand of a
shareholder or by a shareholder on behalf of the System. Both the 1992
Agreement and the Transition Agreement are binding on each majority-owned
subsidiary of NU with at least fifty employees on its direct payroll.
Separation Agreement
NUSCO entered into a Separation Agreement with Mr. Busch in August
1996 in connection with the termination of Mr. Busch's employment. The
agreement provided for a severance payment of two times annual
compensation, and specified supplemental employee welfare and pension
benefits. It provides for confidentiality restrictions on Mr. Busch and a
two year non-competition period in specified geographic locations. It
includes a release by Mr. Busch of claims against the System and a release
by the System of claims against Mr. Busch, except such as might be brought
as the result of an investigation conducted upon the demand of a
shareholder or on behalf of the System by shareholders. NUSCO's
obligations under this agreement are binding on each majority-owned
subsidiary of NU with at least fifty employees on its direct payroll.
The descriptions of the various agreements set forth above are for
purpose of disclosure in accordance with the disclosure rules of the
Commission and shall not be controlling on any party; the actual terms of
the agreements themselves determine the rights and obligations of the
parties.
Compensation of Directors
No Director of the Company receives any compensation for service as a
Director.
-97-
<PAGE>
DESCRIPTION OF THE NEW BONDS
General
The terms of the New Bonds are identical in all material respects
with the terms of the Old Bonds, except for the elimination of certain
transfer restrictions, registration rights and interest rate provisions
relating to the Old Bonds.
The Old Bonds are, and the New Bonds will be issued under and
secured by the Indenture of Mortgage and Deed of Trust dated as of May 1,
1921 between the Company and Bankers Trust Company, Trustee, as heretofore
supplemented and amended, and which, as it is to be further supplemented by
the Sixty-Eighth Supplemental Indenture (which is hereinafter referred to
as the Sixty-Eighth Supplemental Indenture), is hereinafter called the
Indenture. The summary description of the provisions of the Indenture
which follows does not purport to be complete or to cover all the
provisions thereof. Copies of the Indenture and the form of Sixty-Eighth
Supplemental Indenture have been filed as exhibits to, or incorporated by
reference in, the Registration Statement of which this Prospectus is a part
(the Registration Statement) and reference is made thereto for a complete
statement of the applicable provisions. Article and section references
herein are to provisions of the original Indenture as heretofore amended
unless otherwise indicated.
The Trustee acts as a depository bank of, makes loans to, and
performs other services for the Company and other companies in the System
in the ordinary course of business.
The New Bonds will be issued initially under a book-entry only
system, registered in the name of Cede & Co., as registered bondholder and
nominee for DTC. DTC will act as securities depositary for the New Bonds.
Individual purchases of Book-Entry Interests (as herein defined) in any New
Bonds will be made in book-entry form. Purchasers of Book-Entry Interests
in New Bonds will not receive certificates representing their interests in
such New Bonds. So long as Cede & Co., as nominee of DTC, is the
bondholder, references herein to the bondholders or registered owners will
mean Cede & Co., rather than the owners of Book-Entry Interests in New
Bonds. See "Book-Entry; Delivery and Form" herein for certain information
regarding DTC and DTC's book-entry only system.
General Terms of New Bonds
The New Bonds will mature on June 1, 2002 and will bear interest from
June 1, 1997 at the rate of 7 3/4% per annum. Interest will be payable
semiannually on June 1 and December 1, commencing December 1, 1997 at the
principal office of the Trustee in New York City, to registered owners at
the close of business on the May 15 or November 15, as the case may be,
preceding such June 1 or December 1, or if such record date is a legal
holiday or a day on which banks are authorized to close in New York City,
on the next preceding day which is not a legal holiday or a day on which
banks are so authorized to close.
The New Bonds will be issued only in the form of fully registered
bonds without coupons in denominations of US$1,000 or integral multiples
thereof and may be presented for exchange for a like aggregate principal
amount of the same series of New Bonds of other authorized
-98-
<PAGE>
denominations and for transfer at the principal office of the Trustee in
New York City without payment in either case of any charge other than for
any tax or other governmental charges required to be paid by the Company.
Security
The Indenture constitutes a first mortgage lien (subject to liens
permitted by the Indenture, including liens and encumbrances existing at
the time of acquisition by the Company) on substantially all of the
Company's physical property and franchises, including the Company's
generating stations (but not including the Company's interest in the plants
of the four regional nuclear generating companies described under
"Business--Electric Operations--Nuclear Generation--General") and its
transmission and distribution facilities. Subject to the provisions of the
Federal Bankruptcy Code, the Indenture will also constitute a lien on
after-acquired property. The Indenture also permits after-acquired property
to be subject to liens prior to that of the Indenture. The security
afforded by the Indenture is for the equal and ratable protection of all
the Company's presently outstanding bonds and any bonds which may hereafter
be issued under the Indenture, including the Bonds. (The granting clauses
and (S)(S)6.04 and 6.05.)
Under certain limited circumstances, the lien of the Indenture on
real property in Connecticut acquired by the Company after June 3, 1985
could be subordinated to a lien in favor of the State of Connecticut
pursuant to a Connecticut law (Connecticut General Statutes Section 22a-
452a) providing for such a lien for reimbursement for expenses incurred in
containing, removing or mitigating hazardous waste.
Also, under certain limited circumstances the lien of the Indenture
on real property in Massachusetts could be subordinated to a lien in favor
of the Commonwealth of Massachusetts pursuant to the Massachusetts Oil and
Hazardous Materials Release Prevention and Response Act, commonly known as
the Massachusetts Superfund.
Further, under certain limited circumstances, the lien of the
Indenture on real property in New Hampshire, personal property located
thereon and business revenues generated therefrom could be subordinated to
a lien in favor of the State of New Hampshire pursuant to New Hampshire
Revised Statutes Annotated 147B:10-b, as amended, for expenses incurred in
containing or removing hazardous waste or materials, and any necessary
mitigation of damages with respect to hazardous waste or materials.
If the Trustee exercises its rights to foreclose on the collateral,
the transferral of required governmental approvals to a purchaser or new
operator of the Company's generating facilities, particularly nuclear and
hydro generating facilities, will require additional governmental
proceedings and consequent delays. There can be no assurance that such
transfers would be approved.
-99-
<PAGE>
Redemption Provisions
The New Bonds will be redeemable at the option of the Company, as a
whole or in part, at any time upon at least 30 days and not more than 60
days prior written notice (which notice may state that it is subject to the
receipt of redemption moneys by the Trustee on or before the date fixed for
redemption and which notice shall be of no effect unless such moneys are so
received on or before such date) at a redemption price equal to the greater
of (i) 100% of their principal amount and (ii) the sum of the present
values of the remaining scheduled payments of principal and interest
thereon discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Yield, plus in each case accrued interest to the date of
redemption (the Redemption Date).
"Treasury Yield" means, with respect to any Redemption Date, the rate
per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker having a maturity comparable
to the remaining term of the New Bonds that would be utilized, at the time
of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to
the remaining term of the New Bonds. "Independent Investment Banker" means
Morgan Stanley & Co. Incorporated or, if such firm is unwilling or unable
to select the Comparable Treasury Issue, an independent investment banking
institution of national standing selected by the Company and appointed by
the Trustee.
"Comparable Treasury Price" means, with respect to any Redemption
Date (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal
amount) on the third business day preceding such Redemption Date, as set
forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
business day, (A) the average of the Reference Treasury Quotations, or (B)
if the Trustee obtains fewer than four Reference Treasury Dealer
Quotations, the average of all such Quotations. "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and any
Redemption Date, the average, as determined by the Trustee, of the bid and
asked prices for the Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Trustee by
such Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such Redemption Date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co.
Incorporated, Salomon Brothers Inc and another Primary Treasury Dealer (as
defined herein) at the option of the Company, provided, however, that if
any of the foregoing shall cease to be a primary U.S. Government
-100-
<PAGE>
Securities dealer in New York City (a Primary Treasury Dealer), the Company
shall substitute therefor another Primary Treasury Dealer.
Issuance of Additional Bonds; Earnings Coverage
The Indenture permits, subject to various conditions and restrictions
set forth therein, the issuance of an unlimited amount of additional first
mortgage bonds. Additional bonds may be issued under the Indenture (a) to
refund other bonds or certain prior lien obligations, or (b) on the basis
of a certification of unbonded property additions, or (c) against the
deposit of an equal amount of cash with the Trustee. The aggregate amount
of first mortgage bonds (including two collateral series which secure an
identical principal amount of other outstanding debt of the Company)
outstanding on May 31, 1997 was $1,546,000,000.
Additional bonds may be issued to the extent of 60% (or such greater
percent, not exceeding 66-2/3%, as may be authorized by the Commission
under the Holding Company Act of unbonded property additions ((S)3.54).
Additional bonds may also be issued to finance 60% (or such greater
percent, not exceeding 66-2/3%, as may be authorized by the Commission
under the Holding Company Act) of the bondable amount of the Company's
interest in the inventory of nuclear fuel required for a nuclear generating
plant ((S)3.55).
Except in the case of certain refunding issues, the Company may not
issue additional bonds unless its net earnings, as defined and as computed
without deducting income taxes, for 12 consecutive calendar months during
the period of 15 consecutive calendar months immediately preceding the
first day of the month in which the application to the Trustee for
authentication of additional bonds is made were at least twice the annual
interest charges on all the Company's outstanding bonds, including the
proposed additional bonds, and any outstanding prior lien obligations
((S)3.58). On the basis of this formula, based on the bonds and prior lien
obligations outstanding as of March 31, 1997, the earnings coverage was
negative and equalled (.45). The additional earnings required to bring the
ratio of earnings to fixed charges to 2.0 for the twelve-month period ended
March 31, 1997 would have been $294,995,000.
Where cash is deposited with the Trustee as a basis for the issue of
bonds, it may be withdrawn against 60% (or such greater percent, not
exceeding 66-2/3%, as may be authorized by the Commission under the Holding
Company Act) of bondable property additions or against the deposit of bonds
or prior lien obligations that would otherwise be available to be made the
basis of the issue of additional bonds. Such cash may also be used to
purchase or redeem bonds of any series as the Company may designate
((S)3.56).
As of March 31, 1997, the Company had unbonded property additions
available that would support the issuance of additional bonds in the
principal amount of $555,031,563, subject to the net earnings and other
requirements of the Indenture. The Bonds are being issued on the basis of
previously retired bonds.
-101-
<PAGE>
Other Financial Restrictions
In addition to the foregoing restrictions, there are additional
limitations upon the creation and/or issuance by the Company of long-term
debt securities. Under certain bank and bank reimbursement agreements,
lenders are not required to make additional loans or the maturity of
indebtedness can be accelerated if the Company does not meet an equity
ratio that requires, in effect, that the Company's common equity (as
defined) be at least 27 percent of its total capitalization.
On March 31, 1992, the DPUC issued a decision approving NU's
acquisition of PSNH, which occurred on June 5, 1992. The DPUC's approval
included several conditions designed principally to insulate the Company's
customers from possible financial risks associated with NU's investment in
PSNH. Among the conditions is a requirement that the Company use its best
efforts to maintain the amount of common equity in the Company's capital
structure (including short term debt in excess of 7 percent of total
capitalization) above 36 percent. The Company must notify the DPUC if the
ratio is projected to fall below 36 percent, in which case the DPUC may
conduct a review of the Company's financial condition. At March, 1997, the
Company's equity ratio (so calculated) was 36.3%. The Company does not
expect to meet this condition at June 30, 1997 and has so notified the DPUC
in accordance with the foregoing requirement. Also, in future rate cases,
the Company will be required to accept a methodology for determining the
Company's cost of capital for ratemaking purposes without regard to NU's
cost of capital if the DPUC finds that the Company's actual debt costs are
unduly influenced by effects of the PSNH acquisition. These conditions are
to remain in effect until the later of May 15, 1998 and the time at which
PSNH achieves investment grade ratings for its first mortgage bonds and a
common equity to total capitalization ratio of at least 30 percent.
Renewal and Replacement Fund
If, as at the end of any year, the aggregate amount expended by the
Company for property additions since December 31, 1966 is less than the
"replacement fund requirement" (referred to below) for the same period, the
Company is required to make up the deficit by depositing cash with the
Trustee, or by depositing with the Trustee bonds or prior lien obligations
which would otherwise be available as a basis for the issue of additional
bonds or by certifying unbonded property additions taken at 100% of the
amount certified. At the request of the Company, any cash so deposited may
be used to purchase or redeem (at the applicable Special Redemption Price)
bonds of such series as the Company may designate. A replacement fund
deficit may thereafter be offset by expenditures in a later year in excess
of the requirement for such year and thereupon the Company will be
entitled, to the extent of such offset, to the return of cash, bonds or
prior lien obligations deposited to make up the deficit or to reinstate as
bondable any property additions certified for such purpose ((S)6.06).
The replacement fund requirement is computed on an annual basis, and
is equal, for each year, to 2.25% of the average of the amounts carried on
the Company's books for depreciable property at the beginning and end of
the year ((S)1.01 (pp)). As of March 31, 1997, the Company's
-102-
<PAGE>
expenditures for property additions had exceeded the replacement fund
requirement by $4,262,068,539.
Withdrawal or Application of Cash
Cash deposited with the Trustee pursuant to the sinking and
improvement fund or replacement fund requirements may, at the Company's
option, be withdrawn against a certification of unbonded property
additions, or against the deposit of bonds or prior lien obligations which
would otherwise be available to be made the basis of the issue of
additional bonds or may be applied to the purchase or redemption (at the
applicable Special Redemption Price) of bonds of such series as the Company
may designate ((S)(S)6.06, 6.14 and 9.04). When the cash to be withdrawn
has been deposited under the replacement fund requirement, a withdrawal
equal to 100% is permitted ((S)6.06).
Dividend Restrictions
The Indenture contains restrictions on the payment of common stock
dividends, which were included in certain Supplemental Indentures at the
time of issuance of prior series of bonds. The Supplemental Indenture dated
as of July 1, 1992, which contains restrictions applicable so long as any
Series VV Bonds, maturing July 1, 1999, are outstanding, currently contains
the most restrictive provision. Under this provision, the aggregate amount
which may be declared, paid or otherwise applied by the Company as
dividends or other distributions on its common stock (other than by way of
stock dividends or when an equal amount of cash is received concurrently as
a capital contribution or on the sale of common stock) or to the purchase
or other acquisition of common stock may not exceed earned surplus (as
defined, and after deducting accrued preferred stock dividends) accumulated
after June 30, 1993, plus $207,000,000, plus such further amount as may be
authorized by the Commission under the Holding Company Act. Pursuant to
these provisions, unrestricted earned surplus at March 31, 1997 was
negative, and would have amounted to approximately ($4,911,244).
Similar dividend restrictions are binding on the Company so long as
certain prior series of the Company's bonds are outstanding.
Default
The Indenture provides that the following events will constitute
"events of default" thereunder: failure to pay principal; failure for 90
days to pay interest; failure to perform any of the other Indenture
covenants for 90 days after notice to the Company; failure to perform any
covenant contained in any lien securing prior lien obligations if such
default permits enforcement of the lien; and certain events in bankruptcy,
insolvency or receivership ((S)10.02). The Indenture requires the Company
to deliver to the Trustee an annual officers' certificate as to compliance
with certain provisions of the Indenture ((S)6.16).
-103-
<PAGE>
The Indenture provides that, if any event of default exists, the
holders of a majority in principal amount of the bonds outstanding may,
after tender to the Trustee of indemnity satisfactory to it, direct the
sale of the mortgaged property ((S)10.04).
Modification of the Indenture
The Indenture may be supplemented or amended to convey additional
property, to state indebtedness of companies merged, to add further
limitations to the Indenture, to evidence a successor company, or to make
such provision in regard to questions arising under the Indenture as may be
necessary or desirable and not inconsistent with its terms ((S)14.01).
The Indenture also permits the modification, with the consent of
holders of 66-2/3% of the bonds affected, of any provision of the
Indenture, except that (a) no such modification may effect a reduction of
such percentage or the creation of a lien prior to or concurrent with that
of the Indenture unless all bondholders consent, (b) no bondholder who
refuses to consent may be deprived of his security, and (c) the Company's
obligations as to the maturities, payment of principal, interest or premium
and other terms of payment may not be modified unless all affected
bondholders consent ((S)14.03).
BOOK-ENTRY; DELIVERY AND FORM
The New Bonds will be issued in fully-registered form.
The description which follows of the procedures and recordkeeping
with respect to beneficial ownership interests in the New Bonds, payments
of principal of, and premium, if any, and interest on, the New Bonds to DTC
and its Participants or Beneficial Owners, in each case as defined below,
confirmation and transfer of beneficial ownership interests in the New
Bonds and other related transactions by and among DTC, the DTC Participants
and Beneficial Owners is based solely on information furnished by DTC.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934. DTC holds securities that its
participants (Participants) deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-
entry changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants (Direct
Participants) include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear
-104-
<PAGE>
through or maintain a custodial relationship with a Direct Participant,
either directly or indirectly (Indirect Participants). The rules
applicable to DTC and its Participants are on file with the SEC.
Purchases of New Bonds under the DTC system must be made by or
through Direct Participants, which will receive a credit for the New Bonds
on DTC's records. The ownership interest of each actual purchaser of New
Bonds (Beneficial Owner) is in turn to be recorded on the Direct and
Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase, but Beneficial Owners are expected
to receive written confirmations providing details of the transaction, as
well as periodic statements of their holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the
transaction. Transfers of ownership interests in the New Bonds are to be
accomplished by entries made on the books of Participants acting on behalf
of Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in the New Bonds, except in the
event that use of the book-entry system for the New Bonds is discontinued.
SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE SOLE HOLDER OF THE NEW
BONDS, THE TRUSTEE SHALL TREAT CEDE & CO. AS THE ONLY HOLDER OF THE NEW
BONDS FOR ALL PURPOSES UNDER THE INDENTURE, INCLUDING RECEIPT OF ALL
PRINCIPAL OF, AND PREMIUM, IF ANY, AND INTEREST ON SUCH NEW BONDS, RECEIPT
OF NOTICES, AND VOTING AND REQUESTING OR DIRECTING THE TRUSTEE TO TAKE OR
NOT TO TAKE, OR CONSENTING TO, CERTAIN ACTIONS UNDER THE INDENTURE.
To facilitate subsequent transfers, all New Bonds deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of New Bonds with DTC and their
registration into the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the New
Bonds; DTC's records reflect only the identity of the Direct Participants
to whose accounts such New Bonds are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in any Global
Security.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices, if any, shall be sent to Cede & Co. If less than
all of the New Bonds within an issue are being redeemed, DTC's practice is
to determine by lot the amount of the interest of each Direct Participant
in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the
New Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the
Company as soon as possible after the
-105-
<PAGE>
record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the New Bonds are
credited on the record date (identified in a listing attached to the
Omnibus Proxy).
Principal of, and premium, if any, and interest payments on the New
Bonds will be made to DTC. DTC's practice is to credit Direct Participants'
accounts on the applicable payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it
will not receive payment on such date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Trustee or the
Company, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal, and premium, if any, and
interest to DTC is the responsibility of the Company or the Trustee,
disbursement of such payments to Direct Participants shall be the
responsibility of DTC and disbursement of such payments to the Beneficial
Owners shall be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as securities depositary
with respect to the New Bonds at any time by giving notice to the Company
or the Trustee. Under such circumstances, in the event that a successor
securities depositary is not obtained, individual bond certificates are
required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that
event, individual bond certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company believes to be
reliable (including DTC), but the Company takes no responsibility for the
accuracy thereof.
THE COMPANY AND THE TRUSTEE HAVE NO RESPONSIBILITY OR OBLIGATION TO
THE DTC PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (A) THE
ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT, (B) THE
PAYMENT BY ANY DTC PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN
RESPECT OF THE PRINCIPAL OF, AND PREMIUM, IF ANY, AND INTEREST ON, THE NEW
BONDS, (C) THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC TO ANY DTC
PARTICIPANT OR BY ANY DTC PARTICIPANT TO ANY BENEFICIAL OWNER OF ANY NOTICE
WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE GIVEN
TO HOLDERS OF THE NEW BONDS, OR (D) ANY OTHER ACTION TAKEN BY DTC, OR ITS
NOMINEE, CEDE & CO., AS HOLDER OF THE NEW BONDS.
-106-
<PAGE>
MARKET FOR NEW BONDS
The Company has been advised by the Initial Purchasers that they
presently intend to make a market in the New Bonds as permitted by
applicable laws and regulations. The Initial Purchasers are not obligated,
however, to make a market in the New Bonds and any such market making may
be discontinued at any time without prior notice at the sole discretion of
the Initial Purchasers. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the New Bonds.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion, based on current law, is a general summary
of the anticipated United States federal income tax consequences relevant
to the exchange of Old Bonds for New Bonds and the ownership and
disposition of the New Bonds by holders acquiring New Bonds pursuant to the
Exchange Offer. The summary does not address all aspects of taxation that
may be relevant to particular holders in light of their personal
circumstances (including the effect of any foreign, state or local tax
laws) or to certain types of holders subject to special treatment under
federal income tax laws (including dealers in securities, options or
currencies, insurance companies, financial institutions, persons holding
Bonds as part of a hedging or conversion transaction or straddle, persons
whose functional currency is not the United States dollar and tax-exempt
entities).
The discussion of the federal income tax consequences set forth below
is based upon the Internal Revenue Code of 1986, as amended (the Code), and
judicial decisions and administrative interpretations thereunder, as of the
date hereof, and such authorities may be repealed, revoked or modified so
as to result in federal income tax consequences different from those
discussed below. For purposes of the discussion set forth below, the term
"Holder" includes a beneficial owner of a Bond. The discussion below is
premised upon the assumption that the Bonds are held as capital assets. The
discussion below pertains only to Holders that are citizens or residents of
the United States, corporations, partnerships or other entities created in
or under the laws of the United States or any political subdivision
thereof, estates, or trusts the administration over which a United States
court can exercise primary supervision and for which one or more United
States fiduciaries have the authority to control all substantial decisions,
the income of which is subject to United States federal income taxation
regardless of its source.
EACH PROSPECTIVE HOLDER OF BONDS IS STRONGLY URGED TO CONSULT ITS OWN
TAX ADVISOR WITH RESPECT TO ITS PARTICULAR TAX SITUATION, INCLUDING
THE TAX EFFECTS OF ANY STATE, LOCAL, FOREIGN, OR OTHER TAX LAWS AND
POSSIBLE CHANGES IN THE TAX LAWS.
-107-
<PAGE>
Exchange of Bonds
The exchange of Old Bonds for New Bonds pursuant to the Exchange
Offer should not be treated as an exchange or other taxable event for
federal income tax purposes because, under regulations promulgated by the
United States Treasury Department, the New Bonds should not be considered
to significantly modify the Old Bonds and thus should not differ materially
in kind or extent from the Old Bonds. Rather, the New Bonds received by a
Holder should be treated as a continuation of the Old Bonds in the hands of
such Holder. As a result, there should be no federal income tax
consequences to Holders exchanging Old Bonds for New Bonds pursuant to the
Exchange Offer and a Holder should have the same adjusted basis and holding
period in the New Bonds as it had in the Old Bonds immediately before the
exchange.
Sale or Retirement of Bonds
Upon the sale, exchange or retirement of a Bond, the Holder generally
will recognize gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and the Holder's adjusted tax
basis in the Bond.
Gain or loss realized on the sale, exchange or retirement of a Bond
will be capital, and will be long-term if at the time of sale, exchange or
retirement the Bond has been held for more than one year. The deductibility
of capital losses is subject to limitations.
Information Reporting and Backup Withholding
Under current United States federal income tax law (i) information
reporting requirements apply to "reportable payments," which include
interest and principal payments made to, and the proceeds of sales by,
certain noncorporate Holders of Bonds, and (ii) a Holder of Bonds may be
subject to backup withholding at the rate of 31% with respect to reportable
payments in respect of Bonds. Backup withholding will not apply to payments
to corporations and certain other exempt recipients, such as tax-exempt
organizations, which demonstrate their entitlement to exemption when
required. The payor will be required to deduct and withhold (at the rate of
31%) if (i) the payee fails to furnish a taxpayer identification number
(TIN) to the payor in the manner required by the Code and applicable
Treasury regulations, (ii) the Internal Revenue Service notifies the payor
that the TIN furnished by the payee is incorrect, (iii) there has been a
"notified payee underreporting" described in Section 3406(c) of the Code,
or (iv) there has been a failure of the payee to certify under penalty of
perjury that the payee is not subject to withholding under 3406(c) of the
Code. Amounts withheld under these rules do not constitute an additional
tax and will be credited against the Holder's federal income tax liability,
so long as the required information is provided to the Internal Revenue
Service. The Company will report to the Holders of Bonds and to the
Internal Revenue Service the amount of any "reportable payments" for each
calendar year and the amount of tax withheld, if any, with respect to such
payments.
-108-
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Bonds for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Bonds. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resale of New Bonds received in
exchange for Old Bonds where such Old Bonds were acquired as a result of
market-making activities or other trading activities. The Company has
agreed that, for a period of 180 days after the Expiration Date, it will
make this Prospectus, as amended or supplemented, available to any broker-
dealer for use in connection with any such resale.
The Company will not receive any proceeds from any sale of New Bonds
by broker-dealers. New Bonds received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one
or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Bonds or a
combination of such methods of resale, at market prices prevailing at the
time of resale, at prices related to such prevailing market prices or
negotiated prices. Any such resale may be made directly to purchasers or to
or through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or the
purchasers of any such New Bonds. Any broker-dealer that resells New Bonds
that were received by it for its own account pursuant to the Exchange Offer
and any broker or dealer that participates in a distribution of such New
Bonds may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Bonds any
commission or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of
Transmittal states that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the fees and
disbursements of one counsel for the holders of the New Bonds) other than
commissions or concessions of any brokers or dealers and will indemnify the
holders of the New Bonds (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS AND EXPERTS
Legal matters in connection with the issue of the New Bonds will be
passed upon for the Company by Robert P. Wax, Esq., Senior Vice President,
Secretary and General Counsel of the Company, or Jeffrey C. Miller, Esq.,
Assistant General Counsel of Northeast Utilities Service Company.
Statements of law and legal conclusions herein and in the
Registration Statement pertaining to the description of the New Bonds have
been reviewed by Mr. Miller. Certain statements of law and legal
conclusions set forth with respect to short term borrowing authority and
the earnings coverage requirement of the Indenture and preferred stock
provisions of the Company, its
-109-
<PAGE>
franchises, its participation in joint projects, the laws and regulations
to which it is or may be subject, and litigation and legal proceedings,
have been reviewed by Mr. Miller and said statements are made upon his
authority as an expert.
The Company's audited financial statements included in this
Prospectus and schedules related thereto incorporated by reference in the
Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, which have also been included or incorporated by reference herein
or therein, in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.
GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or
acronyms that are found throughout this Prospectus:
<TABLE>
<CAPTION>
COMPANIES
<S> <C>
NU............................ Northeast Utilities
CL&P or the Company........... The Connecticut Light and Power Company
Charter Oak or COE............ Charter Oak Energy, Inc.
WMECO......................... Western Massachusetts Electric Company
HWP........................... Holyoke Water Power Company
NUSCO or the Service Company.. Northeast Utilities Service Company
NNECO......................... Northeast Nuclear Energy Company
NAEC.......................... North Atlantic Energy Corporation
NAESCO........................ North Atlantic Energy Service Corporation
PSNH.......................... Public Service Company of New Hampshire
RRR........................... The Rocky River Realty Company
Mode 1........................ Mode 1 Communications, Inc.
System........................ The Northeast Utilities System
CYAPC......................... Connecticut Yankee Atomic Power Company
MYAPC......................... Maine Yankee Atomic Power Company
VYNPC......................... Vermont Yankee Nuclear Power Corporation
the Yankee Companies.......... CYAPC, MYAPC, VYNPC, and YAEC
<CAPTION>
GENERATING UNITS
<S> <C>
Millstone 1................... Millstone Unit No. 1, a 660-MW nuclear
generating unit completed in 1970
Millstone 2................... Millstone Unit No. 2, an 870-MW nuclear
electric generating unit completed in 1975.
</TABLE>
-110-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Millstone 3 ............................ Millstone Unit No. 3, a 1,154-MW nuclear
electric generating unit completed in 1986
Seabrook or Seabrook 1 .................. Seabrook Unit No. 1, a 1,148-MW nuclear
electric generating unit completed in 1986.
Seabrook 1 went into service in 1990.
REGULATORS
Commission ............................. Securities and Exchange Commission
DOE .................................... U.S. Department of Energy
DPU .................................... Massachusetts Department of Public Utilities
DPUC ................................... Connecticut Department of Public Utility Control
MDEP ................................... Massachusetts Department of Environmental Protection
CDEP ................................... Connecticut Department of Environmental Protection
EPA .................................... U.S. Environmental Protection Agency
FERC ................................... Federal Energy Regulatory Commission
NHDES .................................. New Hampshire Department of Environmental Services
NHPUC .................................. New Hampshire Public Utilities Commission
NRC .................................... Nuclear Regulatory Commission
OTHER
Holding Company Act .................... Public Utility Holding Company Act of 1935
CAAA ................................... Clean Air Act Amendments of 1990
DSM .................................... Demand-Side Management
Energy Act ............................. Energy Policy Act of 1992
EWG .................................... Exempt wholesale generator
EAC .................................... Energy Adjustment Clause (CL&P)
FAC .................................... Fuel Adjustment Clause (CL&P)
FPPAC .................................. Fuel and purchased power adjustment clause
(PSNH)
GUAC ................................... Generation Utilization Adjustment Clause
(CL&P)
IRM .................................... Integrated resource management
kWh .................................... Kilowatt-hour
Money Pool ............................. A asystem for the pooling of funds established
by certain of the System Companies to provide
</TABLE>
-111-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
a more effective use of their cash resources
and to reduce outside short-term borrowings.
MW ..................................... Megawatt
NBFT ................................... Niantic Bay Fuel Trust, lessor of nuclear fuel
used by CL&P and WMECO
NEPOOL ................................. New England Power Pool
NUGs ................................... Nonutility generators
NUG&T .................................. Northeast Utilities Generation and Transmission
agreement
QF ..................................... Qualifying facility
</TABLE>
-112-
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Public Accountants............................ F-2
Consolidated Balance Sheets
as of December 31, 1996 and 1995
and March 31, 1997 (unaudited).................................... F-3 - F-4
Consolidated Statements of Income
for the years ended December 31, 1996,
1995 and 1994 and the three months
ended March 31, 1997 (unaudited)
and 1996 (unaudited).............................................. F-5
Consolidated Statements of Cash Flows
for the years ended December 31, 1996,
1995 and 1994 and the three months
ended March 31, 1997 (unaudited) and
1996 (unaudited).................................................. F-6
Consolidated Statements of Common
Stockholder's Equity for the
years ended December 31, 1996,
1995 and 1994 and three months
ended March 31, 1997 (unaudited).................................. F-7
</TABLE>
F-1
<PAGE>
Report Of Independent Public Accountants
To the Board of Directors
of The Connecticut Light and Power Company:
We have audited the accompanying consolidated balance sheets of The Connecticut
Light and Power Company (a Connecticut corporation and a wholly owned subsidiary
of Northeast Utilities) and subsidiaries as of December 31, 1996 and 1995, and
the related consolidated statements of income, common stockholder's equity and
cash flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Connecticut Light and Power
Company and subsidiaries as of December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 21, 1997
F-2
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1997 At December 31,
------------- -----------------------------------
(Unaudited) 1996 1995
------------- ---- ----
(Thousands of Dollars)
<S> <C> <C> <C>
ASSETS
- ------
Utility Plant, at original cost:
Electric ............................................. $6,312,883 $6,283,736 $6,147,961
Less: Accumulated provision for
depreciation (Note 1F) ...................... 2,722,637 2,665,519 2,418,557
---------- ---------- ----------
3,590,246 3,618,217 3,729,404
Construction work in progress ........................ 96,735 95,873 103,026
Nuclear fuel, net .................................... 133,892 133,050 138,203
---------- ---------- ----------
Total net utility plant ............................ 3,820,873 3,847,140 3,970,633
---------- ---------- ----------
Other Property and Investments:
Nuclear decommissioning trusts, at market ............ 307,230 296,960 238,023
Investments in regional nuclear generating
companies, at equity (Note 1E) ...................... 58,369 56,925 54,624
Other, at cost ....................................... 18,736 16,565 16,241
---------- ---------- ----------
384,335 370,450 308,888
---------- ---------- ----------
Current Assets:
Cash ................................................. 197 404 337
Notes receivable from affiliated companies ........... 225,300 109,050 --
Receivables, net ..................................... 224,041 226,112 231,574
Accounts receivable from affiliated companies ........ 564 3,481 3,069
Taxes receivable ..................................... 32,414 40,134 --
Accrued utility revenues ............................. 77,461 78,451 91,157
Fuel, materials, and supplies, at average cost ....... 85,110 79,937 68,482
Recoverable energy costs, net--current portion ....... 18,724 25,436 78,108
Prepayments and other ................................ 79,562 63,344 42,894
---------- ---------- ----------
743,373 626,349 515,621
---------- ---------- ----------
Deferred Charges:
Regulatory assets (Note 1H) .......................... 1,297,061 1,370,781 1,225,280
Unamortized debt expense ............................. 17,084 17,033 14,977
Other ................................................ 13,170 12,283 10,232
---------- ---------- ----------
1,327,315 1,400,097 1,250,489
---------- ---------- ----------
---------- ---------- ----------
Total Assets ..................................... $6,275,896 $6,244,036 $6,045,631
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1997 At December 31,
--------------- ---------------------------------
(Unaudited) 1996 1995
--------------- ---- ----
(Thousands of Dollars)
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock--$10 par value. Authorized
24,500,000 shares; outstanding 12,222,930 shares ............ $ 122,229 $ 122,229 $ 122,229
Capital surplus, paid in .................................... 640,077 639,657 637,981
Retained earnings ........................................... 535,184 551,410 785,476
---------- ---------- ----------
Total common stockholder's equity .................. 1,297,490 1,313,296 1,545,686
Preferred stock not subject to mandatory redemption ......... 116,200 116,200 116,200
Preferred stock subject to mandatory redemption ............. 155,000 155,000 155,000
Long-term debt .............................................. 1,816,657 1,834,405 1,812,646
---------- ---------- ----------
Total capitalization ............................... 3,385,347 3,418,901 3,629,532
---------- ---------- ----------
Minority Interest in Consolidated Subsidiary (Note 13) ....... 100,000 100,000 100,000
---------- ---------- ----------
Obligations Under Capital Leases (Note 2) ..................... 144,062 143,347 108,408
---------- ---------- ----------
Current Liabilities:
Notes payable to banks ...................................... 200,000 -- 41,500
Notes payable to affiliated companies ....................... -- -- 10,250
Long-term debt and preferred stock--current portion ......... 224,116 204,116 9,372
Obligations under capital leases--current
portion (Note 2) ........................................... 12,370 12,361 63,856
Accounts payable ............................................ 96,027 160,945 110,798
Accounts payable to affiliated companies .................... 58,008 78,481 44,677
Accrued taxes ............................................... 28,223 28,707 52,268
Accrued interest ............................................ 34,982 31,513 30,854
Nuclear compliance (Note 11B) ............................... 27,855 50,500 --
Other ....................................................... 23,516 34,433 20,027
---------- ---------- ----------
705,097 601,056 383,602
---------- ---------- ----------
Deferred Credits:
Accumulated deferred income taxes (Note 1I) ................. 1,349,880 1,365,641 1,486,873
Accumulated deferred investment tax credits ................. 133,239 135,080 142,447
Deferred contractual obligations (Note 3) ................... 287,773 305,627 65,847
Other ....................................................... 170,498 174,384 128,922
---------- ---------- ----------
1,941,390 1,980,732 1,824,089
---------- ---------- ----------
Commitments and Contingencies (Note 11)
Total Capitalization and Liabilities ............... $6,275,896 $6,244,036 $6,045,631
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For Three Months Ended
March 31, For the Years Ended December 31,
------------------------- -------------------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(Unaudited)
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Operating Revenues ..................................... $ 624,908 $ 659,355 $ 2,397,460 $ 2,387,069 $ 2,328,052
--------- --------- ----------- ----------- -----------
Operating Expenses:
Operation --
Fuel, purchased and net interchange power ......... 265,500 223,375 830,924 608,600 568,394
Other ............................................. 142,145 189,844 778,329 614,382 593,851
Maintenance .......................................... 70,621 49,048 300,005 192,607 207,003
Depreciation ......................................... 59,919 62,716 247,109 242,496 231,155
Amortization of regulatory assets, net ............... 15,869 (2,750) 57,432 54,217 77,384
Federal and state income taxes (Note 8) .............. 836 28,527 (20,174) 178,346 190,249
Taxes other than income taxes ........................ 46,870 48,618 174,062 172,395 173,068
--------- --------- ----------- ----------- -----------
Total operating expenses ....................... 601,760 599,378 2,367,687 2,063,043 2,041,104
--------- --------- ----------- ----------- -----------
Operating Income ....................................... 23,148 59,977 29,773 324,026 286,948
--------- --------- ----------- ----------- -----------
Other Income:
Deferred nuclear plants return--other funds .......... 36 449 1,268 4,683 13,373
Equity in earnings of regional nuclear
generating companies ............................... 1,817 1,836 6,619 6,545 7,453
Other, net ........................................... 4,574 3,639 19,442 9,902 5,136
Minority interest in income of
subsidiary (Note 13) ............................... (2,325) (2,325) (9,300) (8,732) --
Income taxes ......................................... (95) (487) 160 (2,978) 4,248
--------- --------- ----------- ----------- -----------
Other income, net .............................. 4,007 3,112 18,189 9,420 30,210
--------- --------- ----------- ----------- -----------
Income before interest charges ................. 27,155 63,089 47,962 333,446 317,158
--------- --------- ----------- ----------- -----------
Interest Charges:
Interest on long-term debt ........................... 33,277 29,792 127,198 124,350 119,927
Other interest ....................................... 334 492 1,147 5,596 6,378
Deferred nuclear plants return--borrowed funds ....... (25) (46) (146) (1,716) (7,435)
--------- --------- ----------- ----------- -----------
Interest charges, net .......................... 33,586 30,238 128,199 128,230 118,870
--------- --------- ----------- ----------- -----------
========= ========= =========== =========== ===========
Net (Loss) Income ...................................... $ (6,431) $ 32,851 $ (80,237) $ 205,216 $ 198,288
========= ========= =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Three Months Ended
March 31, For the Years Ended December 31,
-------------------------- -----------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(Unaudited)
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Operating Activities:
Net(Loss)Income .............................................. $ (6,431) $ 32,851 $ (80,237) $ 205,216 $ 198,288
Adjustments to reconcile to net cash
from operating activities:
Depreciation ............................................... 59,919 62,716 247,109 242,496 231,155
Deferred income taxes and investment tax credits, net ...... (6,376) (36,122) (60,773) 49,520 37,664
Deferred nuclear plants return, net of amortization ........ -- 3,143 7,746 95,559 82,651
Deferred demand-side-management costs, net of amortization . 13,182 16,870 26,941 (937) (4,691)
Recoverable energy costs, net of amortization .............. 20,071 50,361 (35,567) (16,169) 3,975
Deferred cogeneration costs, net of amortization ........... 8,176 (8,790) 25,957 (55,341) (36,821)
Nuclear compliance, net .................................... (22,645) 30,369 50,500 -- --
Deferred nuclear refueling outage, net of amortization ..... (11,333) 7,503 45,643 (20,712) (4,653)
Other sources of cash ...................................... 20,521 47,493 75,552 86,956 47,791
Other uses of cash ......................................... (1,637) (16,170) (23,862) (53,745) (4,697)
Changes in working capital:
Receivables and accrued utility revenues ................... 13,698 (2,576) (22,378) (33,032) 45,386
Fuel, materials and supplies ............................... (5,173) 332 (11,455) (4,479) (3,756)
Accounts payable ........................................... (85,391) (42,801) 83,951 9,605 (24,167)
Accrued taxes .............................................. (484) 33,318 (23,561) 25,855 (9,726)
Other working capital (excludes cash) ...................... (23,666) (12,104) (5,385) (1,869) (18,403)
--------- --------- --------- --------- ---------
Net cash flows (used for) from operating activities ........... (27,569) 166,393 300,181 528,923 539,996
--------- --------- --------- --------- ---------
Financing Activities:
Issuance of long-term debt ................................... -- -- 222,000 -- 535,000
Issuance of Monthly Income
Preferred Securities ........................................ -- -- -- 100,000 --
Net increase (decrease) in short-term debt ................... 200,000 (51,750) (51,750) (127,000) 82,500
Reacquisitions and retirements of long-term debt ............. (11) (5) (14,329) (10,866) (774,020)
Reacquisitions and retirements of preferred stock ............ -- -- -- (125,000) --
Cash dividends on preferred stock ............................ (3,805) (3,805) (15,221) (21,185) (23,895)
Cash dividends on common stock ............................... (5,990) (60,259) (138,608) (164,154) (159,388)
--------- --------- --------- --------- ---------
Net cash flows from (used for) financing activities ............ 190,194 (115,819) 2,092 (348,205) (339,803)
--------- --------- --------- --------- ---------
Investment Activities:
Investment in plant:
Electric utility plant ..................................... (32,493) (25,945) (140,086) (131,858) (149,889)
Nuclear fuel ............................................... (589) (45) 553 (1,543) (20,905)
--------- --------- --------- --------- ---------
Net cash flows used for investments in plant ................. (33,082) (25,990) (139,533) (133,401) (170,794)
Investment in NU system money pool ........................... (116,250) (12,250) (109,050) -- --
Investment in nuclear decommissioning trusts ................. (9,885) (11,549) (50,998) (47,826) (28,129)
Other investment activities, net ............................. (3,615) (953) (2,625) 581 (1,565)
--------- --------- --------- --------- ---------
Net cash flows used for investments ............................ (162,832) (50,742) (302,206) (180,646) (200,488)
--------- --------- --------- --------- ---------
Net (Decrease) Increase In Cash For The Period ................. (207) (168) 67 72 (295)
Cash - beginning of period ..................................... 404 337 337 265 560
========= ========= ========= ========= =========
Cash - end of period ........................................... $ 197 $ 169 $ 404 $ 337 $ 265
========= ========= ========= ========= =========
Supplemental Cash Flow Information:
Cash paid during the year for:
Interest, net of amounts capitalized ......................... $ 114,458 $ 117,074 $ 115,120
========= ========= =========
Income taxes ................................................. $ 77,790 $ 137,706 $ 161,513
========= ========= =========
Increase in obligations:
Niantic Bay Fuel Trust and other capital leases .............. $ 2,855 $ 33,537 $ 52,353
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Capital Retained
Common Surplus, Earnings
Stock Paid In (a) Total
-------------- --------------- -------------- --------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Balance at January 1, 1994 .............................. $ 122,229 $ 630,271 $ 750,719 $ 1,503,219
Net income for 1994 ................................. 198,288 198,288
Cash dividends on preferred stock ................... (23,895) (23,895)
Cash dividends on common stock ...................... (159,388) (159,388)
Capital stock expenses, net ......................... 1,846 1,846
-------------- --------------- -------------- --------------
Balance at December 31, 1994 ............................ 122,229 632,117 765,724 1,520,070
Net income for 1995 ................................. 205,216 205,216
Cash dividends on preferred stock ................... (21,185) (21,185)
Cash dividends on common stock ...................... (164,154) (164,154)
Loss on the retirement of preferred stock ........... (125) (125)
Capital stock expenses, net ......................... 5,864 5,864
-------------- --------------- -------------- --------------
Balance at December 31, 1995 ............................ 122,229 637,981 785,476 1,545,686
Net loss for 1996 ................................... (80,237) (80,237)
Cash dividends on preferred stock ................... (15,221) (15,221)
Cash dividends on common stock ...................... (138,608) (138,608)
Capital stock expenses, net ......................... 1,676 1,676
-------------- --------------- -------------- --------------
Balance at December 31, 1996 ............................ 122,229 639,657 551,410 1,313,296
Net loss for three months ended
March 31, 1997 .................................... (6,431) (6,431)
Cash dividends on preferred stock ................... (3,805) (3,805)
Cash dividends on common stock ...................... (5,990) (5,990)
Capital stock expenses, net ......................... 420 420
-------------- --------------- -------------- --------------
Balance at March 31, 1997 (unaudited) ................... $ 122,229 $ 640,077 $ 535,184 $ 1,297,490
============== =============== ============== ==============
</TABLE>
(a) The company has dividend restrictions imposed by its long-term debt
agreements. At March 31, 1997 and December 31, 1996, these restrictions
totaled approximately $540 million.
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. About The Connecticut Light and Power Company
The Connecticut Light and Power Company and Subsidiaries (the company or
CL&P), Western Massachusetts Electric Company (WMECO), Holyoke Water
Power Company (HWP), Public Service Company of New Hampshire (PSNH), and
North Atlantic Energy Corporation (NAEC) are the operating subsidiaries
comprising the Northeast Utilities system (the system) and are wholly
owned by Northeast Utilities (NU).
The system furnishes retail electric service in Connecticut, New
Hampshire, and western Massachusetts through CL&P, PSNH, WMECO, and HWP.
A fifth subsidiary, NAEC, sells all of its capacity to PSNH. In addition
to its retail service, the system furnishes firm and other wholesale
electric services to various municipalities and other utilities. The
system serves about 30 percent of New England's electric needs and is
one of the 20 largest electric utility systems in the country as
measured by revenues.
Other wholly owned subsidiaries of NU provide support services for the
system companies and in some cases, for other New England utilities.
Northeast Utilities Service Company (NUSCO) provides centralized
accounting, administrative, information resources, engineering,
financial, legal, operational, planning, purchasing, and other services
to the system companies. Northeast Nuclear Energy Company (NNECO) acts
as agent for the system companies in operating the Millstone nuclear
generating facilities. North Atlantic Energy Service Corporation
(NAESCO) acts as agent for CL&P and NAEC and has operational
responsibilities for the Seabrook nuclear generating facility.
B. Presentation
General: The consolidated financial statements of CL&P include the
accounts of all wholly owned subsidiaries. Significant intercompany
transactions have been eliminated in consolidation.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Certain reclassifications of prior period's data have been made to
conform with the current period's presentation.
All transactions among affiliated companies are on a recovery of cost
basis which may include amounts representing a return
F-8
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
on equity, and are subject to approval by various federal and state
regulatory agencies.
Unaudited Interim Financial Statements: In the opinion of the company,
the accompanying interim financial statements contain all adjustments
necessary to present fairly the financial position as of March 31, 1997,
the results of operations for the three-month periods ended
March 31, 1997 and 1996, and the statements of cash flows for the three-
month periods ended March 31, 1997 and 1996. All adjustments are of a
normal, recurring, nature except those described below in Note 11B. The
results of operations for the three-month periods ended March 31, 1997
and 1996 are not necessarily indicative of the results expected for a
full year.
Certain notes to financial statements have not been updated for the
interim periods because there have been no significant events.
C. Public Utility Regulation
NU is registered with the Securities and Exchange Commission (SEC) as a
holding company under the Public Utility Holding Company Act of 1935
(1935 Act), and it and its subsidiaries, including the company, are
subject to the provisions of the 1935 Act. Arrangements among the system
companies, outside agencies and other utilities covering
interconnections, interchange of electric power and sales of utility
property are subject to regulation by the Federal Energy Regulatory
Commission (FERC) and/or the SEC. The company is subject to further
regulation for rates, accounting and other matters by the FERC and/or
the Connecticut Department of Public Utility Control (DPUC).
D. New Accounting Standards
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," which established accounting standards for evaluating and recording
asset impairment. The company adopted SFAS 121 as of January 1, 1996.
See Note 1H, "Summary of Significant Accounting Policies - Regulatory
Accounting and Assets" for further information on the regulatory impacts
of the company's adoption of SFAS 121.
See Note 10, "Sale of Customer Receivables," and Note 11C, "Commitments
and Contingencies-Environmental Matters," for information on newly
issued accounting and reporting standards related to those specific
areas.
The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 129, "Disclosure of
Information about Capital Structure" in February 1997. SFAS 129 will be
effective for 1997 year-end
F-9
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
reporting. Management believes that the implementation of SFAS 129 will
not have a material impact on CL&P's financial position or its results
of operations.
E. Investments and Jointly Owned Electric Utility Plant
Regional Nuclear Generating Companies: CL&P owns common stock of four
regional nuclear generating companies (Yankee companies). The Yankee
companies, with the company's ownership interests are:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
<S> <C>
Connecticut Yankee Atomic Power Company (a) (CY)................. 34.5%
Yankee Atomic Electric Company (a) (YAEC)........................ 24.5
Maine Yankee Atomic Power Company (MY)........................... 12.0
Vermont Yankee Nuclear Power Corporation (VY).................... 9.5
------------------------------------------------------------------------
</TABLE>
(a) YAEC's and CY's nuclear power plants were shut down permanently on
February 26, 1992 and December 4, 1996, respectively.
CL&P's investments in the Yankee companies are accounted for on the
equity basis due to the company's ability to exercise significant
influence over their operating and financial policies.
CL&P's investments in the Yankee companies at December 31, 1996 are:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C>
Connecticut Yankee Atomic Power Company............... $36,954
Yankee Atomic Electric Company........................ 5,854
Maine Yankee Atomic Power Company..................... 8,956
Vermont Yankee Nuclear Power Corporation.............. 5,161
-------
$56,925
------------------------------------------------------------------------
</TABLE>
The electricity produced by MY and VY is committed substantially on the
basis of ownership interests and is billed pursuant to contractual
agreements. Under ownership agreements with the Yankee companies, CL&P
may be asked to provide direct or indirect financial support for one or
more of the companies. For more information on these agreements, see
Note 11F, "Commitments and Contingencies - Long-Term Contractual
Arrangements." For more information on the Yankee companies, see Note 3,
"Nuclear Decommissioning" and Note 11B, "Commitments and Contingencies-
Nuclear Performance."
Millstone 1: CL&P has an 81.0 percent joint ownership interest in
Millstone 1, a 660-megawatt (MW) nuclear
F-10
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
generating unit. As of December 31, 1996 and 1995, plant-in-service
included approximately $384.5 million and $372.6 million, respectively,
and the accumulated provision for depreciation included approximately
$159.4 million and $148.4 million, respectively, for CL&P's share of
Millstone 1. CL&P's share of Millstone 1 expenses is included in the
corresponding operating expenses on the accompanying Consolidated
Statements of Income.
Millstone 2: CL&P has an 81.0 percent joint ownership interest in
Millstone 2, an 870-MW nuclear generating unit. As of December 31, 1996
and 1995, plant-in-service included approximately $690.4 million and
$684.5 million, respectively, and the accumulated provision for
depreciation included approximately $224.1 million and $198.5 million,
respectively, for CL&P's share of Millstone 2. CL&P's share of
Millstone 2 expenses is included in the corresponding operating expenses
on the accompanying Consolidated Statements of Income.
Millstone 3: CL&P has a 52.93 percent joint ownership interest in
Millstone 3, a 1,154-MW nuclear generating unit. As of December 31, 1996
and 1995, plant-in-service included approximately $1.9 billion, and the
accumulated provision for depreciation included approximately $504.1
million and $455.1 million, respectively, for CL&P's share of
Millstone 3. CL&P's share of Millstone 3 expenses is included in the
corresponding operating expenses on the accompanying Consolidated
Statements of Income.
For more information regarding the Millstone units, see Note 11B,
"Commitments and Contingencies-Nuclear Performance."
Seabrook 1: CL&P has a 4.06 percent joint ownership interest in
Seabrook 1, a 1,148-MW nuclear generating unit. As of December 31, 1996
and 1995, plant-in-service included approximately $173.7 million and
$173.3 million, respectively, and the accumulated provision for
depreciation included approximately $29.7 million and $24.8 million,
respectively, for CL&P's share of Seabrook 1. CL&P's share of Seabrook 1
expenses is included in the corresponding operating expenses on the
accompanying Consolidated Statements of Income.
F. Depreciation
The provision for depreciation is calculated using the straight-line
method based on estimated remaining lives of depreciable utility plant-
in-service, adjusted for salvage value and removal costs, as approved by
the appropriate regulatory agency. Except for major facilities,
depreciation rates are applied to the average plant-in-service during
the period. Major facilities are depreciated from the time they are
placed in service. When plant is retired from service, the original cost
of plant, including costs of removal, less salvage, is charged to the
accumulated provision for
F-11
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
depreciation. The depreciation rates for the several classes of electric
plant-in-service are equivalent to a composite rate of 4.0 percent in
1996 and 1995, and 3.9 percent in 1994. See Note 3, "Nuclear
Decommissioning," for information on nuclear plant decommissioning.
CL&P's nonnuclear generating facilities have limited service lives.
Plant may be retired in place or dismantled based upon expected future
needs, the economics of the closure and environmental concerns. The
costs of closure and removal are incremental costs and, for financial
reporting purposes, are accrued over the life of the asset as part of
depreciation. At December 31, 1996, the accumulated provision for
depreciation included approximately $43 million accrued for the cost of
removal, net of salvage for nonnuclear generation property.
G. Revenues
Other than revenues under fixed-rate agreements negotiated with certain
wholesale, industrial and commercial customers and limited pilot retail
access programs, utility revenues are based on authorized rates applied
to each customer's use of electricity. In general, rates can be changed
only through a formal proceeding before the appropriate regulatory
commission. At the end of each accounting period, CL&P accrues an
estimate for the amount of energy delivered but unbilled.
H. Regulatory Accounting and Assets
The accounting policies of CL&P and the accompanying consolidated
financial statements conform to generally accepted accounting principles
applicable to rate regulated enterprises and reflect the effects of the
ratemaking process in accordance with SFAS 71, "Accounting for the
Effects of Certain Types of Regulation." Assuming a cost-of-service
based regulatory structure, regulators may permit incurred costs,
normally treated as expenses, to be deferred and recovered through
future revenues. Through their actions, regulators may also reduce or
eliminate the value of an asset, or create a liability. If any portion
of the company's operations were no longer subject to the provisions of
SFAS 71, as a result of a change in the cost-of-service based regulatory
structure or the effects of competition, the company would be required
to write off related regulatory assets and liabilities.
Recently, the SEC has questioned the ability of certain utilities to
remain on SFAS 71 in light of state legislation regarding the transition
to retail competition. The industry expects guidance on this issue from
FASB's Emerging Issues Task Force in the near future. While there are
restructuring initiatives pending in the NU system companies' respective
jurisdictions, CL&P is not yet subject to a transition plan.
F-12
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
The company continues to believe that its use of regulatory accounting
remains appropriate.
SFAS 121 requires the evaluation of long-lived assets, including
regulatory assets, for impairment when certain events occur or when
conditions exist that indicate the carrying amounts of assets may not be
recoverable. SFAS 121 requires that any long-lived assets which are no
longer probable of recovery through future revenues be revalued based on
estimated future cash flows. If the revaluation is less than the book
value of the asset, an impairment loss would be charged to earnings. The
implementation of SFAS 121 did not have a material impact on the
company's financial position or results of operations as of
March 31, 1997 and December 31, 1996. Management continues to believe
that it is probable that the company will recover its investments in
long-lived assets through future revenues. This conclusion may change in
the future as competitive factors influence wholesale and retail pricing
in the electric utility industry or if the cost-of-service based
regulatory structure were to change.
The components of CL&P's regulatory assets are as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
March 31, December 31,
1997 1996 1995
------------------------------------------------------------------------
<S> <C> <C> <C>
(Unaudited)
(Thousands of Dollars)
Income taxes, net (Note 1I)....... $ 735,844 $ 753,390 $ 863,521
Recoverable energy costs,
net (Note 1J)................... 84,541 97,900 9,662
Deferred demand side management
costs (Note 1K)................. 76,947 90,129 117,070
Cogeneration costs (Note 1L)...... 58,029 66,205 92,162
Unrecovered contractual
obligations (Note 3)............. 281,527 300,627 65,847
Other............................. 60,173 62,530 77,018
---------- ---------- ----------
$1,297,061 $1,370,781 $1,225,280
========== ========== ==========
</TABLE>
For more information on the company's regulatory environment and the
potential impacts of restructuring, see Note 11A, "Commitments and
Contingencies-Restructuring" and Management's Discussion and Analysis of
Financial Condition and Results of Operations (MD&A).
I. Income Taxes
The tax effect of temporary differences (differences between the periods
in which transactions affect income in the financial statements and the
periods in which they affect the determination of taxable income) is
accounted for in accordance with the ratemaking treatment of the
applicable regulatory commissions. The adoption of SFAS 109, "Accounting
F-13
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
for Income Taxes," in 1993 increased the company's net deferred tax
obligation. As it is probable that the increase in deferred tax
liabilities will be recovered from customers through rates, CL&P
established a regulatory asset. See Note 8, "Income Tax Expense" for the
components of income tax expense.
The tax effect of temporary differences, including timing differences
accrued under previously approved accounting standards, which give rise
to the accumulated deferred tax obligation is as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
March 31, December 31,
1997 1996 1995
------------------------------------------------------------------------
(Unaudited)
(Thousands of Dollars)
<S> <C> <C> <C>
Accelerated depreciation
and other plant-
related differences...... $1,028,507 $1,032,857 $1,074,242
Regulatory assets -
income tax gross up...... 307,999 313,420 347,673
Other...................... 13,373 19,364 64,958
---------- ---------- ----------
$1,349,879 $1,365,641 $1,486,873
========== ========== ==========
</TABLE>
J. Recoverable Energy Costs
Under the Energy Policy Act of 1992 (Energy Act), CL&P is assessed for
its proportionate share of the costs of decontaminating and
decommissioning uranium enrichment plants owned by the United States
Department of Energy (D&D assessment). The Energy Act requires that
regulators treat D&D assessments as a reasonable and necessary current
cost of fuel, to be fully recovered in rates, like any other fuel cost.
CL&P is currently recovering these costs through rates. As of
March 31, 1997 and December 31, 1996, the company's total D&D deferrals
were approximately $49.2 million.
During 1996, retail electric rates included a fuel adjustment clause
(FAC) under which fossil fuel prices above or below base-rate levels are
charged or credited to customers. In addition, CL&P also utilized a
generation utilization adjustment clause (GUAC), which deferred the
effect on fuel costs caused by variations from a specified composite
nuclear generation capacity factor embedded in base rates.
At March 31, 1997 and December 31, 1996, CL&P's net recoverable energy
costs, excluding current net recoverable energy costs, were
approximately $84.5 million and $97.9 million, respectively, which
includes the D&D assessment. For
F-14
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
additional information, see Note 11B, "Commitments and Contingencies -
Nuclear Performance."
On October 8, 1996, the DPUC issued an order establishing an Energy
Adjustment Clause (EAC) which became effective January 1, 1997. The EAC
has replaced CL&P's existing FAC and GUAC. For further information
regarding the EAC, see the MD&A.
K. Demand Side Management (DSM)
CL&P's DSM costs are recovered in base rates through a Conservation
Adjustment Mechanism (CAM). The $90.1 million of costs on CL&P's books
as of December 31, 1996, will be fully recovered by 2000. During
November, 1996, CL&P filed its 1997 DSM program and forecasted CAM for
1997 with the DPUC. The filing proposes expenditures of $36 million in
1997, with recovery over 1.9 years and a zero CAM rate. In April 1997,
the DPUC approved 1997 expenditures of $36 million, a zero CAM rate for
1997 and recovery of the 1997 expenditures over 1.7 years beginning
January 1, 1998.
L. Cogeneration Costs
Beginning on July 1, 1996, the deferred cogeneration balance of
approximately $86 million is being amortized over a five year period. An
additional $9 million of amortization is being applied to the deferred
balance in 1997, as required under a settlement agreement which CL&P
reached with the DPUC. CL&P will continue to apply any savings
associated with the renegotiation of a certain contract with a
cogeneration facility to the deferred balance. Under current
expectations, CL&P expects complete amortization of the deferred balance
by December 31, 1998.
M. Spent Nuclear Fuel Disposal Costs
Under the Nuclear Waste Policy Act of 1982, CL&P must pay the United
States Department of Energy (DOE) for the disposal of spent nuclear fuel
and high-level radioactive waste. Fees for nuclear fuel burned on or
after April 7, 1983 are billed currently to customers and paid to the
DOE on a quarterly basis. For nuclear fuel used to generate electricity
prior to April 7, 1983 (prior-period fuel), payment must be made prior
to the first delivery of spent fuel to the DOE. The DOE was originally
scheduled to begin accepting delivery of spent fuel in 1998. However,
delays in identifying a permanent storage site have continually
postponed plans for the DOE's long-term storage and disposal site. The
DOE's current estimate for an available site is 2010.
Until such payment is made, the outstanding balance will continue to
accrue interest at the three-month Treasury Bill Yield Rate. At December
31, 1996, fees due to the DOE for the disposal of prior-period fuel were
approximately $158.0 million, including interest costs of $91.5 million.
At
F-15
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
March 31, 1997, fees due to the DOE for the disposal of incremental fuel
were approximately $160 million, including interest costs of $93.5
million. As of March 31, 1997, all fees had been collected through
rates.
N. Fuel Price Management
The company utilizes fuel-price management instruments to manage well
defined fuel price risks. Amounts receivable or payable under fuel-price
management instruments are recognized in income when realized. Any
material unrealized gains or losses on fuel-price management instruments
will be deferred until realized. For further information, see Note 12,
"Fuel Price Management."
2. LEASES
CL&P and WMECO finance up to $450 million of nuclear fuel for Millstone 1
and 2 and their respective shares of the nuclear fuel for Millstone 3 under
the Niantic Bay Fuel Trust (NBFT) capital lease agreement. CL&P and WMECO
make quarterly lease payments for the cost of nuclear fuel consumed in the
reactors, based on a units-of-production method at rates which reflect
estimated kilowatt-hours of energy provided, plus financing costs
associated with the fuel in the reactors. Upon permanent discharge from the
reactors, ownership of the nuclear fuel transfers to CL&P and WMECO.
CL&P has also entered into lease agreements, some of which are capital
leases, for the use of data processing and office equipment, vehicles, gas
turbines, nuclear control room simulators and office space. The provisions
of these lease agreements generally provide for renewal options. The
following rental payments have been charged to expense:
<TABLE>
<CAPTION>
Year Capital Leases Operating Leases
---- -------------- ----------------
<S> <C> <C>
1996.................. $17,993,000 $22,032,000
1995.................. 56,307,000 23,793,000
1994.................. 60,975,000 24,192,000
</TABLE>
Interest included in capital lease rental payments was $10,144,000 in 1996,
$10,587,000 in 1995, and $10,228,000 in 1994.
Substantially all of the capital lease rental payments were made pursuant
to the nuclear fuel lease agreement. Future minimum lease payments under
the nuclear fuel capital lease cannot be reasonably estimated on an annual
basis due to variations in the usage of nuclear fuel.
F-16
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
Future minimum rental payments, excluding annual nuclear fuel lease
payments and executory costs, such as property taxes, state use taxes,
insurance and maintenance, under long-term noncancelable leases, as of
December 31, 1996 are:
<TABLE>
<CAPTION>
Year Capital Leases Operating Leases
---- -------------- ----------------
(Thousands of Dollars)
<S> <C> <C>
1997...................... $ 2,800 $ 26,100
1998...................... 2,900 21,500
1999...................... 2,900 19,900
2000...................... 2,900 18,800
2001...................... 3,000 13,700
After 2001................ 66,400 46,400
-------- --------
Future minimum lease
payments................ 80,900 $146,400
========
Less amount representing
interest............... 61,900
--------
Present value of future
minimum lease payments
for other than
nuclear fuel............ 19,000
Present value of future
nuclear fuel lease
payments................ 136,800
--------
Total..................... $155,800
========
</TABLE>
Certain operating lease payments related to NUSCO leases may be
accelerated from future years into 1997. See Note 11G, "The Rocky River
Realty Company - Obligations" for additional information.
On June 21, 1996, CL&P entered into an operating lease with a third party
to acquire the use of four turbine generators having an installed cost of
approximately $70 million. During the first quarter of 1997, CL&P
determined that it would not be in compliance with financial coverage tests
required under the lease agreement, based on projections of its 1997
financial results. CL&P has requested waivers of this covenant from the
lessor and the matter is pending. If CL&P is unable to renegotiate mutually
satisfactory lease revisions, it has sufficient liquidity to purchase the
turbines from the lessor. The purchase price would be slightly less than
the installed cost.
3. NUCLEAR DECOMMISSIONING
CL&P's nuclear power plants have service lives that are expected to end
during the years 2010 through 2026. Upon retirement,
F-17
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
these units must be decommissioned. Decommissioning studies prepared in
1996 concluded that complete and immediate dismantlement at retirement
continues to be the most viable and economic method of decommissioning the
three Millstone units and Seabrook 1. Decommissioning studies are reviewed
and updated periodically to reflect changes in decommissioning
requirements, costs, technology and inflation.
The estimated cost of decommissioning CL&P's ownership share of Millstone 1
and 2, in year-end 1996 dollars, is $316.0 million and $279.0 million,
respectively. CL&P's ownership share of the estimated cost of
decommissioning Millstone 3 and Seabrook 1 in year-end 1996 dollars, is
$244.9 million and $18.3 million, respectively. The Millstone units and
Seabrook 1 decommissioning costs will be increased annually by their
respective escalation rates. Nuclear decommissioning costs are accrued
over the expected service life of the units and are included in
depreciation expense on the Consolidated Statements of Income. Nuclear
decommissioning costs amounted to $37.8 million in 1996, $30.5 million in
1995, and $25.6 million in 1994. Nuclear decommissioning, as a cost of
removal, is included in the accumulated provision for depreciation on the
Consolidated Balance Sheets. At March 31, 1997 and December 31, 1996, the
balance in the accumulated reserve for decommissioning amounted to
$341.9 million and $329.1 million, respectively.
CL&P has established external decommissioning trusts through a trustee for
its portion of the costs of decommissioning Millstone 1, 2, and 3. CL&P's
portion of the cost of decommissioning Seabrook 1 is paid to an independent
decommissioning financing fund managed by the state of New Hampshire.
Funding of the estimated decommissioning costs assume levelized collections
for the Millstone units and escalated collections for Seabrook 1 and after-
tax earnings on the Millstone and Seabrook decommissioning funds of
5.8 percent and 6.5 percent, respectively.
As of March 31, 1997 and December 31, 1996, CL&P has collected, through
rates, $250.1 million and $240.8 million, respectively, towards the future
decommissioning costs of its share of the Millstone units, of which
$215.9 million and $209.1 million, respectively, have been transferred to
external decommissioning trusts. As of March 31, 1997 and December 31,
1996, CL&P has paid approximately $2.5 million and $2.4 million,
respectively, into Seabrook 1's decommissioning financing fund. Earnings on
the decommissioning trusts and financing fund increase the decommissioning
trust balance and the accumulated reserve for decommissioning. Unrealized
gains and losses associated with the decommissioning trusts and financing
fund also impact the balance of the trusts and financing fund and the
accumulated reserve for decommissioning.
Changes in requirements or technology, the timing of funding or
dismantling, or adoption of a decommissioning method other than
F-18
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
immediate dismantlement would change decommissioning cost estimates and the
amounts required to be recovered. CL&P attempts to recover sufficient
amounts through its allowed rates to cover its expected decommissioning
costs. Only the portion of currently estimated total decommissioning costs
that has been accepted by regulatory agencies is reflected in CL&P's rates.
Based on present estimates and assuming its nuclear units operate to the
end of their respective license periods, CL&P expects that the
decommissioning trusts and financing fund will be substantially funded when
the units are retired from service.
MY and VY: Each Yankee company owns a single nuclear generating unit. MY
and VY have service lives that are expected to end in 2008 and 2012,
respectively. The estimated cost, in year-end 1996 dollars, of
decommissioning CL&P's ownership share of units owned and operated by MY
and VY are $44.3 million and $34.8 million, respectively. Under the terms
of the contracts with the Yankee companies, the shareholders-sponsors are
responsible for their proportionate share of the operating costs of each
unit, including decommissioning. The nuclear decommissioning costs of the
Yankee companies are included as part of the cost of power purchased by
CL&P.
On May 27, 1997, MY announced that it was considering permanent closure of
the plant based on economic concerns and uncertainty about the operation of
the plant. MY disclosed that it would reduce spending to a level that
would preserve the option of restarting the plant or closing it.
For further information on MY, see Note 11B, "Commitments and Contingencies
- Nuclear Performance."
CY and YAEC: On December 4, 1996, the board of directors of CY voted
unanimously to cease permanently the production of power at its nuclear
plant. The system companies relied on CY for approximately three percent
of their capacity.
CY has undertaken a number of regulatory filings intended to implement the
decommissioning and the recovery of remaining assets of CY. During late
December, 1996, CY filed an amendment to its power contracts to clarify the
obligations of its purchasing utilities following the decision to cease
power production. At December 31, 1996, the estimated obligation,
including decommissioning, amounted to $762.8 million of which CL&P's share
was approximately $263.2 million.
On February 27, 1997, FERC approved an order for hearing which, among other
things, accepted CY's contract amendments for filing and suspended the new
rates for a nominal period. The new rates became effective March 1, 1997,
subject to refund. At March 31, 1997, CL&P's share of the CY unrecovered
contractual obligation, which also has been recorded as a regulatory asset,
was $248.3 million.
F-19
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
YAEC is in the process of decommissioning its nuclear facility. At
December 31, 1996, the estimated remaining costs, including
decommissioning, amounted to $173.3 million of which CL&P's share was
approximately $42.5 million. At March 31, 1997, CL&P's share of the YAEC
unrecovered contractual obligation was $33.2 million.
Management expects that CL&P will continue to be allowed to recover these
costs from its customers. Accordingly, CL&P has recognized these costs as
regulatory assets, with corresponding obligations, on its Consolidated
Balance Sheets.
Proposed Accounting: The staff of the SEC has questioned certain of the
current accounting practices of the electric utility industry, including
the company, regarding the recognition, measurement and classification of
decommissioning costs for nuclear generating units in the financial
statements. In response to these questions, FASB agreed to review the
accounting for removal costs, including decommissioning, and issued a
proposed statement entitled "Accounting for Liabilities Related to Closure
or Removal of Long-Lived Assets," in February, 1996. If current electric
utility industry accounting practices for decommissioning are changed in
accordance with the proposed statement: (1) annual provisions for
decommissioning could increase, (2) the estimated cost for decommissioning
could be recorded as a liability with an offset to plant rather than as
part of accumulated depreciation, and (3) trust fund income from the
external decommissioning trusts could be reported as investment income
rather than as a reduction to decommissioning expense.
4. SHORT-TERM DEBT
Limits: The amount of short-term borrowings that may be incurred by CL&P is
subject to periodic approval by either the SEC under the 1935 Act or by its
state regulator. In addition, the charter of CL&P contains provisions
restricting the amount of short-term debt borrowings. Under the SEC and/or
charter restrictions, the company was authorized, as of January 1, 1997, to
incur short-term borrowings up to a maximum of $375 million.
Credit Agreements: In November, 1996, NU entered into a three-year
revolving credit agreement (New Credit Agreement) with a group of 12 banks.
Under the terms of the New Credit Agreement, NU, CL&P and WMECO will be
able to borrow up to $150 million, $313.75 million, and $150 million,
respectively. The overall limit for all of the borrowing system companies
under the entire New Credit Agreement is $313.75 million. The system
companies are currently obligated to pay a facility fee of .50 percent per
annum of each bank's total commitment under the new credit facility which
will expire November 21, 1999. At December 31, 1996 there were
$27.5 million in borrowings under this agreement,
F-20
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
all of which were borrowed by other system companies. At March 31, 1997,
there were no borrowings under this agreement.
Access to the New Credit Agreement is contingent upon certain financial
tests being met. NU is currently renegotiating these restrictions so that
the financial impacts of the current nuclear outages do not impact the
ability to access these facilities. Through February 21, 1997, CL&P and
WMECO have satisfied all financial covenants required under their
respective borrowing facilities, but NU needed and obtained a limited
waiver of an interest coverage covenant that had to be satisfied for NU to
borrow under the New Credit Agreement. NU, CL&P, and WMECO are currently
maintaining their access to the New Credit Agreement under an interim
written agreement, under which NU agreed not to borrow more than
$27.5 million against the facility.
On May 30, 1997, the First Amendment and Waiver became effective, replacing
the interim written agreement and amending the New Credit Agreement. This
closing permitted $313.75 million of credit to remain available to CL&P and
WMECO through securing their borrowings with first mortgage bonds.
Interest coverage and common equity ratios were revised to enable the
companies to meet certain financial tests. CL&P will be able to borrow up
to $225 million on the strength of bonds it has provided as collateral for
borrowings under this agreement. WMECO will be able to borrow up to
$90 million on the basis of bonds it has provided as collateral and the NU
parent company, which as a holding company cannot issue first mortgage
bonds, will be able to borrow up to $50 million if CL&P, WMECO, and NU
consolidated financial statements meet certain interest coverage tests for
two consecutive quarters.
In addition to the New Credit Agreement, NU, CL&P, WMECO, HWP, NNECO and
The Rocky River Realty Company (RRR) have various revolving credit lines
through separate bilateral credit agreements. Under the remaining three-
year portion of the facility, four banks maintain commitments to the
respective system companies totaling $56.25 million. NU, CL&P and WMECO
may borrow up to the aggregate $56.25 million, whereas HWP, NNECO and RRR
may borrow up to their short-term debt limit of $5 million, $50 million and
$22 million, respectively. Under the terms of the agreement, the system
companies are obligated to pay a facility fee of .15 percent per annum of
each bank's total commitment under the three-year portion of the facility.
These commitments will expire December 3, 1998. At December 31, 1996 and
1995, there were $11.3 million and $42.5 million in borrowings,
respectively, under the facility, of which CL&P had no borrowings in 1996
and $10 million in borrowings in 1995. At March 31, 1997, there were
$11.3 million in borrowings under the facility, of which CL&P had no
borrowings.
F-21
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
Under both credit facilities above, the company may borrow funds on a
short-term revolving basis under the remaining portion of its agreement,
using either fixed-rate loans or standby loans. Fixed rates are set using
competitive bidding. Standby loans are based upon several alternative
variable rates.
The weighted average annual interest rate on CL&P's notes payable to banks
outstanding at December 31, 1995 was 6.0 percent.
Maturities of CL&P's short-term debt obligations are for periods of three
months or less.
Money Pool: Certain subsidiaries of NU, including CL&P, are members of the
Northeast Utilities System Money Pool (Pool). The Pool provides a more
efficient use of the cash resources of the system, and reduces outside
short-term borrowings. NUSCO administers the Pool as agent for the member
companies. Short-term borrowing needs of the member companies are first
met with available funds of other member companies, including funds
borrowed by NU parent. NU parent may lend to the Pool but may not borrow.
Funds may be withdrawn from or repaid to the Pool at any time without prior
notice. Investing and borrowing subsidiaries receive or pay interest based
on the average daily Federal Funds rate. However, borrowings based on loans
from NU parent bear interest at NU parent's cost and must be repaid based
upon the terms of NU parent's original borrowing. At March 31, 1997 and
December 31, 1996, CL&P had no borrowings outstanding from the Pool. At
December 31, 1995, CL&P had $10.3 million of borrowings outstanding from
the Pool. The interest rate on borrowings from the Pool on
December 31, 1995 was 4.7 percent.
For further information on short-term debt see the MD&A.
F-22
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
5. PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock not subject to mandatory redemption are:
<TABLE>
<CAPTION>
Shares
December 31, Outstanding
1996 at 3/31/97 March 31, December 31,
Redemption and 1997 ----------------------------
Description Price 12/31/96 (Unaudited) 1996 1995 1994
- -------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
$1.90 Series of 1947........ $52.50 163,912 $ 8,196 $ 8,196 $ 8,196 $ 8,196
$2.00 Series of 1947........ 54.00 336,088 16,804 16,804 16,804 16,804
$2.04 Series of 1949........ 52.00 100,000 5,000 5,000 5,000 5,000
$2.06 Series E of 1954...... 51.00 200,000 10,000 10,000 10,000 10,000
$2.09 Series F of 1955...... 51.00 100,000 5,000 5,000 5,000 5,000
$2.20 Series of 1949........ 52.50 200,000 10,000 10,000 10,000 10,000
$3.24 Series G of 1968...... 51.84 300,000 15,000 15,000 15,000 15,000
3.90% Series of 1949........ 50.50 160,000 8,000 8,000 8,000 8,000
4.50% Series of 1956........ 50.75 104,000 5,200 5,200 5,200 5,200
4.50% Series of 1963........ 50.50 160,000 8,000 8,000 8,000 8,000
4.96% Series of 1958........ 50.50 100,000 5,000 5,000 5,000 5,000
5.28% Series of 1967........ 51.43 200,000 10,000 10,000 10,000 10,000
6.56% Series of 1968........ 51.44 200,000 10,000 10,000 10,000 10,000
1989 Adjustable Rate DARTS.. - - - - - 50,000
Total preferred stock
not subject to
mandatory redemption $116,200 $116,200 $116,200 $166,200
======== ======== ======== ========
</TABLE>
All or any part of each outstanding series of such preferred stock may be
redeemed by the company at any time at established redemption prices plus
accrued dividend to the date of redemption.
F-23
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
6. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION
Details of preferred stock subject to mandatory redemption are:
<TABLE>
<CAPTION>
Shares
December 31, Outstanding
1996 at 3/31/97 March 31, December 31,
Redemption and 1997 ---------------------------
Description Price* 12/31/96 (Unaudited) 1996 1995 1994
- ----------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C>
9.00% Series of 1989........ - - $ - $ - $ - $ 75,000
7.23% Series of 1992........ $52.41 1,500,000 75,000 75,000 75,000 75,000
5.30% Series of 1993........ $51.00 1,600,000 80,000 80,000 80,000 80,000
-------- -------- -------- --------
$155,000 $155,000 $155,000 $230,000
======== ======== ======== ========
Less preferred stock
to be redeemed
within one year............ - - - 3,750
Total preferred stock
subject to mandatory
redemption................. $155,000 $155,000 $155,000 $226,250
======== ======== ======== ========
</TABLE>
*Each of these series is subject to certain refunding limitations for the first
five years after they were issued. Redemption prices reduce in future years.
The following table details redemption and sinking fund activity for preferred
stock subject to mandatory redemption:
<TABLE>
<CAPTION>
Minimum
Annual Shares Reacquired
Sinking-Fund ----------------------------
Series Requirement 1996 1995 1994
- ------------------------------------------------------------------------------------
(Thousand of Dollars)
<S> <C> <C> <C> <C> <C>
9.00% Series of 1989 $ - - 3,000,000 -
7.23% Series of 1992 (1) 3,750 - - -
5.30% Series of 1993 (2) 16,000 - - -
</TABLE>
(1) Sinking fund requirements commence September 1, 1998.
(2) Sinking fund requirements commence October 1, 1999.
F-24
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
The minimum sinking-fund provisions of the series subject to mandatory
redemption, for the years 1998 through 2001, aggregate approximately $3.8
million in 1998, and $19.8 million in 1999, 2000 and 2001. There were no
minimum sinking-fund provisions in 1997. In case of default on sinking-
fund payments or the payment of dividends, no payments may be made on any
junior stock by way of dividends or otherwise (other than in shares of
junior stock) so long as the default continues. If the company is in
arrears in the payment of dividends on any outstanding shares of preferred
stock, the company would be prohibited from redemption or purchase of less
than all of the preferred stock outstanding. All or part of each of the
series named above may be redeemed by the company at any time at
established redemption prices plus accrued dividends to the date of
redemption, subject to certain refunding limitations.
7. LONG-TERM DEBT
Details of long-term debt outstanding are:
<TABLE>
<CAPTION>
March 31, December 31,
1997 ----------------------
(Unaudited) 1996 1995
- ------------------------------------------------------------------------
(Thousands of Dollars)
First Mortgage Bonds:
<S> <C> <C> <C>
7 5/8% Series UU due 1997....... $ 193,288 $ 193,288 $ 197,245
6 1/2% Series T due 1998....... 20,000 20,000 20,000
7 1/4% Series VV due 1999....... 99,000 99,000 100,000
5 1/2% Series A due 1999....... 140,000 140,000 140,000
5 3/4% Series XX due 2000....... 200,000 200,000 200,000
7 7/8% Series A due 2001....... 160,000 160,000 -
6 1/8% Series B due 2004....... 140,000 140,000 140,000
7 3/8% Series TT due 2019....... 20,000 20,000 20,000
7 1/2% Series YY due 2023....... 100,000 100,000 100,000
8 1/2% Series C due 2024....... 115,000 115,000 115,000
7 7/8% Series D due 2024....... 140,000 140,000 140,000
7 3/8% Series ZZ due 2025....... 125,000 125,000 125,000
---------- ---------- ----------
Total First Mortgage
Bonds 1,452,288 1,452,288 1,297,245
Pollution Control Notes:
Variable rate, due 2016-2022.... 46,400 46,400 46,400
Tax exempt, due 2028-2031....... 377,500 377,500 315,500
Fees and interest due for
spent fuel disposal
costs (Note 1M)................. 160,000 157,968 149,978
Other............................. 10,904 10,915 20,286
Less amounts due within
one year........................ 224,116 204,116 9,372
Unamortized premium and
discount, net................... (6,319) (6,550) (7,391)
---------- ---------- ----------
Long-term debt, net $1,816,657 $1,834,405 $1,812,646
========== ========== ==========
</TABLE>
F-25
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
Long-term debt and cash sinking-fund requirements on debt outstanding at
December 31, 1996 for the years 1997 through 2001 are approximately
$204.1 million, $20.0 million, $239.0 million, $200.0 million, and
$160.0 million, respectively. In addition, there are annual one-percent
sinking-and improvement-fund requirements, currently amounting to
$14.5 million for 1997, $12.6 million for 1998, $12.4 million for 1999,
$10.0 million for 2000, and $8.0 million for 2001. Such sinking- and
improvement-fund requirements may be satisfied by the deposit of cash or
bonds or by certification of property additions.
All or any part of each outstanding series of first mortgage bonds may be
redeemed by the company at any time at established redemption prices plus
accrued interest to the date of redemption, except certain series which are
subject to certain refunding limitations during their respective initial
five-year redemption periods.
Essentially all of the company's utility plant is subject to the lien of
its first mortgage bond indenture. As of December 31, 1996 and 1995, the
company has secured $315.5 million of pollution control notes with second
mortgage liens on Millstone 1, junior to the lien of its first mortgage
bond indenture. The average effective interest rate on the variable-rate
pollution control notes ranged from 3.4 percent to 3.6 percent for 1996 and
from 3.8 percent to 4.0 percent for 1995.
On January 23, 1997, the letter of credit associated with CL&P's $62
million tax-exempt PCRBs, issued on May 21, 1996, was replaced with a bond
insurance and liquidity facility secured by First Mortgage Bonds. The bonds
were originally backed by a five-year letter of credit and secured by a
second mortgage on CL&P's interest in Millstone 1.
Downgrade Events: On April 28, 1997, Moody's Investors Service (Moody's)
announced that it was downgrading both CL&P's and WMECO's first mortgage
bonds from their "Baa3" rating to a "Ba1" rating. This rating change has
placed CL&P's and WMECO's first mortgage bonds in Moody's below investment
grade category.
On May 22, 1997, Standard and Poor's Corporation (S&P) announced that it
was downgrading both CL&P's and WMECO's corporate credit and its senior
secured debt from their rating of "BBB-" to "BB+." This rating change has
placed CL&P's and WMECO's first mortgage bonds in S&P'S below investment
grade category.
F-26
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
8. INCOME TAX EXPENSE
The components of the federal and state income tax provisions charged to
operations are:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended For the Years Ended
March 31, December 31,
1997 1996 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Current income taxes:
Federal ........................................... $ 7,268 $ 48,625 $ 30,650 $ 93,906 $ 108,371
State ............................................. 39 16,510 9,789 37,898 39,966
------- -------- -------- --------- ---------
Total current.................................... 7,307 65,135 40,439 131,804 148,337
------- -------- -------- --------- ---------
Deferred income taxes, net:
Federal ........................................... (3,206) (25,611) (38,680) 52,075 44,180
State.............................................. (1,328) (8,668) (14,726) 5,085 842
------- -------- -------- --------- ---------
Total deferred................................... (4,534) (34,279) (53,406) 57,160 45,022
Investment tax credits, net ........................... (1,842) (1,842) (7,367) (7,640) (7,358)
------- -------- -------- --------- ---------
Total income tax expense ........................ $ 931 $ 29,014 $(20,334) $ 181,324 $ 186,001
======= ======== ======== ========= =========
The components of total income tax expense are classified as follows:
Income taxes charged to
operating expenses .................................. $ 836 $ 28,527 $(20,174) $ 178,346 $ 190,249
Other income taxes .................................... 95 487 (160) 2,978 (4,248)
------- -------- -------- --------- ---------
Total income tax expense .............................. $ 931 $ 29,014 $(20,334) $ 181,324 $ 186,001
======= ======== ======== ========= =========
</TABLE>
Deferred income taxes are comprised of the tax effects of temporary
differences as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended For the Years Ended
March 31, December 31,
1997 1996 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Depreciation, leased nuclear fuel,
settlement credits and
disposal costs ............................. $ 2,257 $ (250) $ 3,981 $ 44,278 $ 38,874
Energy adjustment clauses .................... (12,892) (21,489) (1,654) 23,302 14,465
Demand-side management ....................... (7,589) (9,406) (17,099) 1,310 203
Nuclear plant deferrals ...................... 5,204 (3,379) (18,861) (8,055) (20,452)
Bond redemptions ............................. (401) (469) (1,789) (2,255) 6,826
Contractual settlements ...................... 438 665 2,513 (9,496) 109
Nuclear compliance reserves .................. 9,440 -- (21,131) -- --
Other ........................................ (991) 49 634 8,076 4,997
-------- -------- -------- -------- --------
Deferred income taxes, net ................... $ (4,534) $(34,279) $(53,406) $ 57,160 $ 45,022
======== ======== ======== ======== ========
</TABLE>
F-27
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
A reconciliation between income tax expense and the expected tax expense
at the applicable statutory rate is as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended For the Years Ended
March 31, December 31,
1997 1996 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
(Unaudited) (Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Expected federal income tax at
35 percent of pretax income .............. $(2,047) $ 21,653 $(35,931) $ 135,289 $ 134,501
Tax effect of differences:
State income taxes, net of
federal benefit ........................ (838) 5,097 (3,209) 27,939 26,526
Depreciation ............................. 4,869 4,942 21,313 23,517 18,602
Deferred nuclear plants return ........... (13) (157) (444) (1,639) (4,681)
Amortization of
regulatory assets ...................... 1,219 698 8,601 20,218 19,755
Property tax ............................. -- -- -- (159) 5,286
Investment tax credit
amortization ........................... (1,842) (1,842) (7,367) (7,640) (7,358)
Adjustment for prior years'
taxes .................................. -- -- -- (10,442) (2,706)
Other, net ............................... (417) (1,377) (3,297) (5,759) (3,924)
------- -------- -------- --------- ---------
Total income tax expense ................... $ 931 $ 29,014 $(20,334) $ 181,324 $ 186,001
======= ======== ======== ========= =========
</TABLE>
9. EMPLOYEE BENEFITS
A. Pension Benefits
The company participates in a uniform noncontributory defined benefit
retirement plan covering all regular system employees. Benefits are
based on years of service and the employees' highest eligible
compensation during 60 consecutive months of employment. The company's
direct portion of the system's pension income, part of which was
credited to utility plant, approximated $8.8 million in 1996, $10.4
million in 1995 and $2.3 million in 1994. The company's pension costs
for 1996, 1995, and 1994 included approximately $2.8 million, $0.1
million, and $4.8 million, respectively, related to workforce reduction
programs.
Currently, the company funds annually an amount at least equal to that
which will satisfy the requirements of the Employee Retirement Income
Security Act and the Internal Revenue Code. Pension costs are
determined using market-related values of pension assets. Pension
assets are invested primarily in domestic and international equity
securities and bonds.
F-28
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
The components of net pension cost for CL&P are:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
-------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Service cost ........................... $ 11,896 $ 7,543 $ 13,072
Interest cost .......................... 37,226 37,110 36,103
Return on plan assets .................. (103,248) (138,582) 1,020
Net amortization ....................... 45,300 83,516 (52,536)
--------- --------- --------
Net pension income ..................... (8,826) $ (10,413) $ (2,341)
========= ========= ========
</TABLE>
For calculating pension cost, the following assumptions
were used:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate .......................... 7.50% 8.25% 7.75%
Expected long-term
rate of return ....................... 8.75 8.50 8.50
Compensation/progression
rate ................................. 4.75 5.00 4.75
</TABLE>
The following table represents the plan's funded status reconciled to
the Consolidated Balance Sheets:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
At December 31, 1996 1995
------------------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
Accumulated benefit obligation, including vested
benefits at December 31, 1996 and 1995 of
$405,340,000 and $404,540,000, respectively ............. $ 434,473 $ 432,987
========= =========
Projected benefit obligation .............................. $ 514,989 $ 515,121
Market value of plan assets ............................... 736,448 668,929
--------- ---------
Market value in excess of projected benefit obligation .... 221,459 153,808
Unrecognized transition amount ............................ (7,365) (8,285)
Unrecognized prior service costs .......................... 3,818 1,293
Unrecognized net gain ..................................... (198,088) (135,817)
--------- ---------
Prepaid pension asset ..................................... $ 19,824 $ 10,999
========= =========
</TABLE>
F-29
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
The following actuarial assumptions were used in calculating the plan's
year-end funded status:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
At December 31, 1996 1995
--------------------------------------------------------------------------
<S> <C> <C>
Discount rate ............................ 7.75% 7.50%
Compensation/progression rate ............ 4.75 4.75
</TABLE>
B. Postretirement Benefits Other Than Pensions
The company provides certain health care benefits, primarily medical
and dental, and life insurance benefits through a benefit plan to
retired employees (referred to as SFAS 106 benefits). These benefits
are available for employees retiring from the company who have met
specified service requirements. For current employees and certain
retirees, the total SFAS 106 benefit is limited to two times the 1993
per-retiree health care costs. The SFAS 106 obligation has been
calculated based on this assumption. CL&P's direct portion of SFAS 106
benefits, part of which were deferred or charged to utility plant,
approximated $17.9 million in 1996, $20.7 million in 1995 and $22.3
million in 1994.
During 1996 and 1995, the company funded SFAS 106 postretirement costs
through external trusts. The company is funding, on an annual basis,
amounts that have been rate-recovered and which also are tax
deductible under the Internal Revenue Code. The trust assets are
invested primarily in equity securities and bonds.
The components of health care and life insurance cost are:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
--------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Service cost ........................ $ 2,270 $ 2,248 $ 2,371
Interest cost ....................... 10,211 11,510 12,157
Return on plan assets ............... (2,904) (1,015) 2
Amortization of unrecognized
transition obligation ............. 7,344 7,344 7,344
Other amortization, net ............. 956 602 430
-------- -------- -------
Net health care and life
insurance costs ................... $ 17,877 $ 20,689 $22,304
======== ======== =======
</TABLE>
F-30
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
For calculating SFAS 106 benefit costs, the following assumptions were
used:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
For the Years Ended December 31, 1996 1995 1994
--------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate ...................... 7.50% 8.00% 7.75%
Long-term rate of return -
Health assets, net of tax ........ 5.25 5.00 5.00
Life assets ...................... 8.75 8.50 8.50
</TABLE>
The following table represents the plan's funded status reconciled to the
Consolidated Balance Sheets:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
At December 31, 1996 1995
--------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
Accumulated postretirement
benefit obligation of:
Retirees ................................ $ 109,299 $ 126,624
Fully eligible active employees ......... 165 198
Active employees not eligible
to retire ............................. 27,913 29,798
--------- ---------
Total accumulated postretirement
benefit obligation ..................... 137,377 156,620
Market value of plan assets .............. 38,783 11,378
--------- ---------
Accumulated postretirement benefit
obligation in excess of
plan assets ............................ (98,594) (145,242)
Unrecognized transition amount ........... 117,506 124,850
Unrecognized net (gain)/loss ............. (18,912) 1,260
--------- ---------
Accrued postretirement benefit
liability .............................. $ 0 $ (19,132)
========= =========
--------------------------------------------------------------------------
</TABLE>
The following actuarial assumptions were used in calculating the plan's
year-end funded status:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
At December 31, 1996 1995
--------------------------------------------------------------------------
<S> <C> <C>
Discount rate.......................... 7.75% 7.50%
Health care cost trend rate (a)........ 7.23 8.40
</TABLE>
(a) The annual growth in per capita cost of covered health care benefits
was assumed to decrease to 4.91 percent by 2001.
F-31
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
The effect of increasing the assumed health care cost trend rate by one
percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1996, by $7.6
million and the aggregate of the service and interest cost components
of net periodic postretirement benefit cost for the year then ended by
$600,000. The trust holding the health plan assets is subject to
federal income taxes at a 39.6 percent tax rate. CL&P is currently
recovering SFAS 106 costs.
10. SALE OF CUSTOMER RECEIVABLES
CL&P has entered into an agreement to sell up to $200 million of eligible
customer billed and unbilled accounts receivable. The eligible receivables
are sold with limited recourse. The agreement was entered into during July,
1996 and will expire in five years. The company has retained collection
responsibilities for receivables which have been sold under the agreement.
The agreement provides for a loss reserve determined by a formula which
reflects credit exposure. There were no accounts receivable sold under the
agreement as of December 31, 1996. As of March 31, 1997, CL&P had sold
approximately $200 million of its accounts receivable under the agreement.
The FASB issued SFAS 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities," in June, 1996. SFAS
125 became effective on January 1, 1997, and establishes, in part, criteria
for concluding whether a transfer of financial assets in exchange for
consideration should be accounted for as a sale or as a secured borrowing.
At present, CL&P is required to record the sales of its customer accounts
receivable as secured short-term borrowings. CL&P is currently in the
process of restructuring its accounts receivable sales agreement so that
CL&P may treat this transaction as a sale as permitted under SFAS 125.
Management believes that the adoption of SFAS 125 will not have a material
impact on the company's financial position or results of operations.
11. COMMITMENTS AND CONTINGENCIES
A. Restructuring
Although CL&P continues to operate under cost-of-service based
regulation, various restructuring initiatives in its jurisdiction have
created uncertainty with respect to future rates and the recovery of
strandable investments and certain future costs such as purchase power
obligations. Strandable investments are regulatory assets or other
assets that would not be economical in a competitive environment.
Management is unable to predict the ultimate outcome of restructuring
initiatives; however, it believes that it is entitled to full recovery
of its prudently incurred costs, including regulatory assets and
strandable investments based on the
F-32
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
general nature of public utility cost of service regulation. For
further information on restructuring, see the MD&A.
B. Nuclear Performance
Millstone: The three Millstone units are managed by NNECO. Millstone 1,
2, and 3 have been out of service since November 4, 1995, February 21,
1996 and March 30, 1996, respectively, and are on the Nuclear
Regulatory Commission's (NRC) watch list. The company has restructured
its nuclear organization and is currently implementing comprehensive
plans to restart the units.
Millstone 3 has been designated as the lead unit for restart. Millstone
2 remains on a schedule to be ready for restart shortly after Millstone
3. To provide the resources and focus for Millstone 3, the work on the
restart of Millstone 1 will be reduced until late in 1997 when the full
work effort will be resumed.
Management believes that Millstone 3 will be ready for restart around
the end of the third quarter of 1997, Millstone 2 in the fourth quarter
of 1997 and Millstone 1 in the first quarter of 1998. Because of the
need for completion of independent inspections and reviews and for the
Nuclear Regulatory Commission (NRC) to complete its processes before
the NRC Commissioners can vote on permitting a unit to restart, the
actual beginning of operations is expected to take several months
beyond the time when a unit is declared ready for restart. The NRC's
internal schedules at present indicate that a meeting of the
Commissioners to act upon a Millstone 3 restart request could occur by
mid-December if NU, the independent review teams and NRC staff concur
that the unit is ready for restart by that time. Management hopes that
Millstone 3 can begin operating by the end of 1997.
The company is currently incurring substantial costs, including
replacement power costs, while the three Millstone units are not
operating. Management does not expect to recover a substantial portion
of these costs. CL&P expensed approximately $143 million of incremental
nonfuel nuclear operation and maintenance costs (O&M) in 1996,
including a reserve of $50 million against 1997 expenditures. At year-
end management estimated that CL&P will expense approximately $309
million of nonfuel O&M costs in 1997.
Based on a recent review of the work efforts and budgets, management
believes that the overall 1997 nuclear spending levels - both nuclear
operations and maintenance (O&M) expenditures and associated support
services and capital expenditures - will be approximately the same as
previously estimated. However, 1997 nuclear O&M expenditures and
related support services are expected to increase slightly, while 1997
capital expenditures are expected to decrease. Management
F-33
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
also believes that it is possible that 1997 nuclear spending will
increase somewhat as the detailed work needed to restore the units to
service progresses.
CL&P expensed approximately $69 million of non-fuel nuclear operation
and maintenance costs in the first quarter of 1997. An additional $22.6
million was expended in the first quarter of 1997 and charged against
the reserve established in 1996. The balance of the reserve at March
31, 1997 was $31 million.
Management will continue to evaluate the costs to be incurred for the
remainder of 1997 and in 1998 to determine whether adjustments to the
existing reserves are required. A portion of the increased nuclear O&M
expenditures in 1997 will be reserved in the second quarter of 1997.
As discussed above, management cannot predict when the NRC will allow
any of the Millstone units to return to service and thus cannot
estimate the total replacement power costs the companies will
ultimately incur. Replacement power costs incurred by CL&P attributable
to the Millstone outages averaged approximately $28 million per month
during the first quarter of 1997, and are projected to average
approximately $24 million per month for the remainder of 1997.
Management believes the system has sufficient resources to fund the
restoration of the Millstone units to service under its present
timetable.
Prudence Investigation: In response to motions filed by various
intervenors, the Connecticut Department of Public Utility Control
(DPUC) on June 27, 1997 orally granted summary judgment in CL&P's
prudence docket, disallowing recovery of costs associated with the
ongoing outages at Millstone. CL&P has projected that its share of the
total costs for the Millstone outages, including replacement power,
operation and maintenance and capacity reliability projects, will be
about $990 million.
CL&P had not requested cost recovery and had said that it did not
expect to seek recovery for a substantial portion of these costs and
did not intend to request any cost recovery until the units had
returned to operation. Any requests for recovery would include only
costs for projects CL&P would have undertaken under normal operating
conditions or that provide long-term value for CL&P customers. CL&P
currently expects to appeal the decision to the Connecticut Superior
Court. CL&P does not expect this decision to have a material financial
impact on projected 1997 results.
MY: The system companies rely on MY for approximately two percent of
their capacity. The MY nuclear generating plant has been limited to
operating at 90 percent of capacity since early 1996, pending the
resolution of issues related to investigations initiated by the NRC,
and on December 6, 1996, was taken off line to resolve cable-separation
and associated issues. The NRC has notified MY that the NRC staff has
placed the MY plant on its watch list. Returning the plant to service
would require NRC approval. Management cannot predict if or when MY's
plant will be allowed to return to service. The owners of MY are
evaluating a range of options, including closure of the plant, with
respect to MY's future operations, and have curtailed expenditures
pending resolution of this evaluation. CL&P's monthly replacement power
costs attributable to MY being out of service are projected to average
approximately $1.5 million.
Potential Litigation: The non-NU owners of Millstone 3 have been paying
their share of the monthly costs for Millstone 3 since the unit went
out of service in March, 1996, but have reserved their rights to
contest whether the NU system companies have any responsibility for the
additional costs the non-NU owners have borne as a result of the
current
F-34
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
outage. No formal claims have been made, but management believes that
it is possible that some or all of the non-NU owners will assert
liability on the part of the NU system. CL&P and WMECO, through NNECO
as agent, operate Millstone 3 at cost, and without profit, under a
Sharing Agreement that obligates them to utilize good utility operating
practice and requires the joint owners to share the risk of employee
negligence and other risks pro rata in accordance with their ownership
shares. The Sharing Agreement provides that CL&P and WMECO would only
be liable for damages to the non-NU owners for a deliberate breach of
the Sharing Agreement. At December 31, 1996, the costs related to this
potential litigation were estimated to be $10.5 million for incremental
O&M costs and between $32 million and $40 million for replacement power
costs. At March 31, 1997, the costs related to this potential
litigation were estimated to be $13 million for incremental O&M costs
and between $49 million and $57 million for replacement power costs.
These costs are likely to increase as long as Millstone 3 remains out
of service. NU would vigorously contest such suits if they are brought.
C. Environmental Matters
CL&P is subject to regulation by federal, state and local authorities
with respect to air and water quality, the handling and disposal of
toxic substances and hazardous and solid wastes, and the handling and
use of chemical products. CL&P has an active environmental auditing and
training program and believes that it is in substantial compliance with
current environmental laws and regulations.
Environmental requirements could hinder the construction of new
generating units, transmission and distribution lines, substations, and
other facilities. Changing environmental requirements could also
require extensive and costly modifications to CL&P's existing
generating units and transmission and distribution systems, and could
raise operating costs significantly. As a result, CL&P may incur
significant additional environmental costs, greater than amounts
included in cost of removal and other reserves, in connection with the
generation and transmission of electricity and the storage,
transportation and disposal of by-products and wastes. CL&P may also
encounter significantly increased costs to remedy the environmental
effects of prior waste handling activities. The cumulative long-term
cost impact of increasingly stringent environmental requirements cannot
accurately be estimated.
CL&P has recorded a liability based upon currently available
information for what it believes are its estimated environmental
remediation costs for waste disposal sites. In most cases, additional
future environmental cleanup costs are not reasonably estimable due to
a number of factors, including the unknown magnitude of possible
contamination,
F-35
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
the appropriate remediation methods, the possible effects of future
legislation or regulation and the possible effects of technological
changes. At December 31, 1996, the net liability recorded by CL&P for
its estimated environmental remediation costs, excluding any possible
insurance recoveries or recoveries from third parties, amounted to
approximately $7.5 million, which management has determined to be the
most probable amount within the range of $7.5 million to $14.0 million.
On October 10, 1996, the American Institute of Certified Public
Accountants issued Statement of Position 96-1, "Environmental
Remediation Liabilities" (SOP). The principal objective of the SOP is
to improve the manner in which existing authoritative accounting
literature is applied by entities to specific situations of
recognizing, measuring and disclosing environmental remediation
liabilities. The SOP became effective January 1, 1997. The adoption of
the SOP resulted in a $400 thousand increase to CL&P's environmental
reserve.
At March 31, 1997, CL&P's net liability recorded for its estimated
environmental remediation costs, excluding any possible insurance
recoveries or recoveries from third parties, amounted to approximately
$7.6 million, which management has determined to be the most probable
amount within the range of $7.6 million to $13.4 million.
CL&P cannot estimate the potential liability for future claims,
including environmental remediation costs, that may be brought against
it. However, considering known facts, existing laws and regulatory
practices, management does not believe the matters disclosed above will
have a material effect on CL&P's financial position or future results
of operations.
D. Nuclear Insurance Contingencies
Under certain circumstances, in the event of a nuclear incident at one
of the nuclear facilities covered by the federal government's third-
party liability indemnification program, the company could be assessed
in proportion to its ownership interest in each nuclear unit up to
$75.5 million, not to exceed $10.0 million per nuclear unit in any one
year. Based on its ownership interest in Millstone 1, 2, and 3 and in
Seabrook 1, CL&P's maximum liability, including any additional
potential assessments, would be $173.6 million per incident. In
addition, through power purchase contracts with MY, VY and CY, CL&P
would be responsible for up to an additional $44.4 million per
incident. Payments for CL&P's ownership interest in nuclear generating
facilities would be limited to a maximum of $27.5 million per incident
per year.
F-36
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
Insurance has been purchased to cover the primary cost of repair,
replacement or decontamination of utility property resulting from
insured occurrences. CL&P is subject to retroactive assessments if
losses exceed the accumulated funds available to the insurer. The
maximum potential assessment against CL&P with respect to losses
arising during the current policy year was approximately $10.4 million
under the primary property insurance program at December 31, 1996.
Based on the most recent renewal, the maximum potential assessment
against CL&P with respect to losses arising during the current policy
year is approximately $11.2 million under the primary property
insurance program at March 31, 1997.
Insurance has been purchased to cover certain extra costs incurred in
obtaining replacement power during prolonged accidental outages and the
excess cost of repair, replacement, or decontamination or premature
decommissioning of utility property resulting from insured occurrences.
CL&P is subject to retroactive assessments if losses exceed the
accumulated funds available to the insurer. The maximum potential
assessments against the company with respect to losses arising during
current policy years are approximately $9 million under the replacement
power policies and $20.4 million under the excess property damage,
decontamination and decommissioning policies. The cost of a nuclear
incident could exceed available insurance proceeds.
Insurance has been purchased aggregating $200 million on a industry
basis for coverage of worker claims. All participating reactor
operators insured under this coverage are subject to retrospective
assessments of $3 million per reactor. The maximum potential assessment
against CL&P with respect to losses arising during the current policy
period is approximately $8.9 million.
E. Construction Program
The construction program is subject to periodic review and revision by
management. CL&P currently forecasts construction expenditures of
approximately $842 million for the years 1997-2001, including $165
million for 1997. In addition, the company estimates that nuclear fuel
requirements, including nuclear fuel financed through the NBFT, will be
approximately $238.4 million for the years 1997-2001, including $12.2
million for 1997. See Note 2, "Leases," for additional information
about the financing of nuclear fuel.
As a result of the most recent capital program review, management has
decreased the construction program forecast for 1997 expenditures from
$165 million to $148 million.
F-37
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
F. Long-Term Contractual Arrangements
Yankee Companies: CL&P, along with PSNH and WMECO, relies on MY and VY
for approximately three percent of their capacity under long-term
contracts. Under the terms of their agreements, the system companies
pay their ownership (or entitlement) shares of costs, which include
depreciation, O&M expenses, taxes, the estimated cost of
decommissioning and a return on invested capital. These costs are
recorded as purchased power expense and recovered through the company's
rates. CL&P's total cost of purchases under contracts with the Yankee
companies, excluding YAEC, amounted to $96.4 million in 1996, $105.8
million in 1995, and $102.1 million in 1994. See Note 1E, "Summary of
Significant Accounting Policies-Investments and Jointly Owned Electric
Utility Plant," and Note 3, "Nuclear Decommissioning," for more
information on the Yankee companies.
Nonutility Generators: CL&P has entered into various arrangements for
the purchase of capacity and energy from nonutility generators. These
arrangements have terms from 10 to 30 years, currently expiring in the
years 2001 through 2027, and requires the company to purchase energy at
specified prices or formula rates. For the 12 months ended December 31,
1996, approximately 13 percent of system electricity requirements was
met by nonutility generators. CL&P's total cost of purchases under
these arrangements amounted to $279.5 million in 1996, $282.2 million
in 1995, and $277.4 million in 1994. These costs are eventually
recovered through the company's rates.
Hydro-Quebec: Along with other New England utilities, CL&P, PSNH,
WMECO, and HWP have entered into agreements to support transmission and
terminal facilities to import electricity from the Hydro-Quebec system
in Canada. CL&P is obligated to pay, over a 30-year period ending in
2020, its proportionate share of the annual O&M and capital costs of
these facilities.
The estimated annual costs of CL&P's significant long-term contractual
arrangements are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
1997 1998 1999 2000 2001
- -----------------------------------------------------------------
(Millions of Dollars)
<S> <C> <C> <C> <C> <C>
MY and VY............... $ 39.0 $ 33.1 $ 39.1 $ 38.9 $ 36.4
Nonutility
generators............ 274.0 281.0 291.0 291.0 294.0
Hydro-Quebec............ 19.4 18.8 18.2 17.9 17.3
- -----------------------------------------------------------------
</TABLE>
F-38
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
G. The Rocky River Realty Company - Obligations
RRR provides real estate support services which includes the leasing of
property and facilities used by system companies. RRR is the obligor
under financing arrangements for certain system facilities. Under those
financing arrangements, the holders of notes for approximately $38
million are entitled to request that RRR repurchase the notes if
any major subsidiary of NU (as defined by the notes) has debt ratings
below investment grade as of any year-end during the term of the
financing. The notes are secured by real estate leases between RRR as
lessor and NUSCO as lessee. The leases provide for the acceleration of
rent equal to RRR's note obligations. The operating companies,
primarily CL&P, WMECO and PSNH may be billed by NUSCO for their
proportionate share of the accelerated lease obligations when RRR
repurchases the notes. NU has guaranteed the notes.
In April 1997, the holders of approximately $38 million of RRR's notes
elected to have RRR repurchase the notes at par. On July 1, 1997, RRR
received a commitment from an alternative purchaser to purchase
approximately $12 million of the notes that RRR had been required to
repurchase. RRR intends to repurchase the remaining $26 million of
notes on July 14, 1997. Management does not expect the resolution of
this matter to have a material adverse impact on CL&P's financial
condition or liquidity.
12. FUEL PRICE MANAGEMENT
The company utilizes various financial instruments to manage well-
defined fuel price risks. The company does not use these instruments
for trading purposes.
CL&P uses fuel-price management instruments with financial institutions
to hedge against some of the fuel-price risk created by long-term
negotiated energy contracts. These agreements minimize exposure
associated with rising fuel prices and effectively fix a portion of
CL&P's cost of fuel for these negotiated energy contracts. Under the
agreements, CL&P exchanges monthly payments based on the differential
between a fixed and variable price for the associated fuel. As of
December 31, 1996, CL&P had outstanding agreements with a total
notional value of approximately $228.8 million, and a positive mark-to-
market position of approximately $1.1 million.
As of March 31, 1997, CL&P had outstanding fuel price management
agreements with a total notional value of approximately $215.5
F-39
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
million with a negative mark-to-market position of approximately $2.5
million. Since March 31, 1997, CL&P has entered into additional fuel
price management agreements with a total notional value of
approximately $74.8 million.
Under the terms of CL&P's fuel price management agreements, CL&P can be
required to post cash collateral with its counterparties approximately
equivalent to the amount of a negative mark-to-market position. In
general, the amount of collateral is to be returned to CL&P when the
mark-to-market position becomes positive, when CL&P meets specified
credit ratings, or when an agreement ends.
These agreements have been made with various financial institutions,
each of which is rated "A" or better by Standard & Poor's rating group.
CL&P is exposed to credit risk on fuel-price management instruments if
the counterparties fail to perform their obligations. However,
management anticipates that the counterparties will be able to fully
satisfy their obligations under the agreements.
13. MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY
In January 1995, CL&P Capital LP (CL&P LP is a subsidiary of CL&P)
issued $100 million of cumulative 9.3 percent Monthly Income Preferred
Securities (MIPS), Series A. CL&P has the sole ownership interest in
CL&P LP, as a general partner, and is the guarantor of the MIPS
securities. Subsequent to the MIPS issuance, CL&P LP loaned the
proceeds of the MIPS issuance, along with CL&P's $3.1 million capital
contribution, back to CL&P in the form of an unsecured debenture. CL&P
consolidates CL&P LP for financial reporting purposes. Upon
consolidation, the unsecured debenture is eliminated, and the MIPS
securities are accounted for as minority interests.
14. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each of the following financial instruments:
Cash and nuclear decommissioning trusts: The carrying amounts
approximate fair value.
SFAS 115, "Accounting for Certain Investments in Debt and Equity
Securities," requires investments in debt and equity securities to be
presented at fair value. As a result of this requirement, the
investments held in the company's nuclear decommissioning trusts were
adjusted to market by approximately $22.3 million as of December 31,
1996 and by approximately $14.4 million as of December 31, 1995, with
corresponding offsets to the accumulated provision for depreciation.
The amounts adjusted in 1996 and 1995, represent cumulative gross
unrealized holding gains. The
F-40
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
cumulative gross unrealized holding losses were immaterial for both
1996 and 1995.
Preferred stock and long-term debt: The fair value of CL&P's fixed
rate securities is based upon the quoted market price for those issues
or similar issues. Adjustable rate securities are assumed to have a
fair value equal to their carrying value.
The carrying amounts of CL&P's financial instruments and the estimated
fair values are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Carrying Fair
At December 31, 1996 Amount Value
- --------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
Preferred stock not subject
to mandatory redemption....................... $ 116,200 $ 111,845
Preferred stock subject to
mandatory redemption.......................... 155,000 120,900
Long-term debt -
First Mortgage Bonds.......................... 1,452,288 1,410,665
Other long-term debt.......................... 592,783 592,783
MIPS........................................... 100,000 108,520
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Carrying Fair
At December 31, 1995 Amount Value
- --------------------------------------------------------------------------------
(Thousands of Dollars)
Preferred stock not subject
to mandatory redemption....................... $ 116,200 $ 82,448
Preferred stock subject to
mandatory redemption.......................... 155,000 157,575
Long-term debt -
First Mortgage Bonds.......................... 1,297,245 1,329,549
Other long-term debt.......................... 532,164 532,164
MIPS........................................... 100,000 108,520
- --------------------------------------------------------------------------------
</TABLE>
F-41
<PAGE>
The Connecticut Light and Power Company and Subsidiaries
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(Information Subsequent to December 31, 1996 is Unaudited)
The fair values shown above have been reported to meet disclosure
requirements and do not purport to represent the amounts at which those
obligations would be settled.
F-42
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
STATEMENTS OF QUARTERLY FINANCIAL DATA (Unaudited)
- --------------------------------------------------------------------------------
Quarter Ended/(a)/
-------------------------------------------------
1996 March 31 June 30 September 30 December 31
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating Revenues........... $659,355 $542,999 $599,505 $595,601
======== ======== ======== ========
Operating Income (Loss)...... $ 59,977 $ 15,197 $ 593 $(45,994)
======== ======== ======== ========
Net Income (Loss)............ $ 32,851 $(10,700) $(26,938) $(75,450)
======== ======== ======== ========
1995
- --------------------------------------------------------------------------------
Operating Revenues........... $601,194 $525,147 $638,392 $622,336
======== ======== ======== ========
Operating Income............. $ 96,191 $ 65,867 $ 88,012 $ 73,956
======== ======== ======== ========
Net Income................... $ 65,877 $ 38,089 $ 60,462 $ 40,788
======== ======== ======== ========
</TABLE>
/(a)/ Reclassifications of prior data have been made to conform with the
current presentation.
F-44
<PAGE>
================================================================================
No dealer, salesperson, or any other person has been authorized to
give any information or to make any representations other than those contained
in this Prospectus, and, if given or made, such information and representations
must not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof. This Prospectus does not
constitute an offer to sell or a solicitation by anyone in any jurisdiction in
which such offer or solicitation is not authorized, or in which the person
making such offer or solicitation is not qualified to do so or to any person
whom it is unlawful to make such offer or solicitation.
________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Available Information....................................................... 4
Forward-looking Statements.................................................. 4
Prospectus Summary.......................................................... 6
Risk Factors................................................................ 13
The Company................................................................. 18
The Original Offering....................................................... 18
The Exchange Offer.......................................................... 18
Selected Financial Data..................................................... 29
Management's Discussion and Analysis of
Financial Condition and Results of Operations.............................. 30
Business.................................................................... 43
Employees................................................................... 81
Properties.................................................................. 81
Legal Proceedings........................................................... 83
Management And Compensation................................................. 88
Description of the New Bonds................................................ 98
Book-entry; Delivery and Form............................................... 104
Market For New Bonds........................................................ 107
Certain Federal Income Tax Considerations................................... 107
Plan of Distribution........................................................ 109
Legal Matters and Experts................................................... 110
Glossary of Terms........................................................... 109
Index to Consolidated Financial Statements.................................. F1
</TABLE>
Until _____ __, 1997, all dealers effecting transactions in the New
Bonds, whether or not participating in this distribution, may be required to
deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters or with respect to their unsold
allotments or subscriptions.
Offer For All Outstanding
First and Refunding Mortgage Bonds
1997 Series B Due
June 1, 2002
In Exchange For
First and Refunding Mortgage 7 3/4%
Bonds 1997 Series C Due
June 1, 2002
Each Issued By
THE CONNECTICUT LIGHT
AND
POWER COMPANY
----------
PROSPECTUS
----------
July __, 1997
================================================================================
<PAGE>
Part II
Information Not Required In Prospectus
Item 13. Other Expenses of Issuance and Distribution
<TABLE>
<CAPTION>
<S> <C>
Filing fee-Securities and Exchange Commission-
(1933 Act).....................................................$60,607
Fees of Transfer Agent*.................................................. 5,000
Legal fees*.............................................................. 40,000
Accounting fees*......................................................... 30,000
Printing expenses*....................................................... 15,000
Northeast Utilities Service Company expenses*............................ 20,000
Miscellaneous*........................................................... 9,000
$179,607
========
</TABLE>
__________________________
*Estimated.
Item 14. Indemnification of Directors and Officers.
The Connecticut Light and Power Company (the Company) is a Connecticut
corporation. Sections 33-770 through 33-778 of the Connecticut General Statutes
(C.G.S.) provides that a Connecticut corporation may, under certain
circumstances, and shall, in other circumstances, indemnify its directors,
officers, employees, agents and certain other persons.
Section 33-771 of C.G.S. provides that (a) except as provided in
subsection (d) of Sections 33-771, a Connecticut corporation may indemnify an
individual made a party to a proceeding because he is or was a director against
liability incurred in the proceeding if: (1) He conducted himself in good faith;
and (2) he reasonably believed (A) in the case of conduct in his official
capacity with the corporation, that his conduct was in its best interests, and
(B) in all other cases, that his conduct was at least not opposed to its best
interests; and (3) in the case of any criminal proceeding he had no reason to
believe his conduct was unlawful. (b) A director's conduct with respect to an
employee benefit plan for a purpose he reasonably believed to be in the best
interest of the participants in and beneficiaries of the plan is conduct that
satisfies the requirement of subparagraph (b) of subdivision (2) of subsection
(a) of C.G.S. Section 33-771. (c) The termination of a proceeding by judgment,
order, settlement or conviction or upon a plea of nolo contendere or its
equivalent is not, or itself, determinative that the director did not meet the
standard of conduct described in C.G.S. Section 33-771. (d) A corporation may
not indemnify a director under C.G.S. Section 33-771; (1) in connection with a
proceeding by or in the right of the corporation in which the director was
adjudged liable to the corporation; or (2) in connection with any other
proceeding charging improper personal benefit to him, whether or not involving
action in his official capacity, in which he was adjudged liable on the basis
that personal benefit was improperly received by him. (e) Indemnification
permitted under C.G.S. Section 33-771 in connection with a proceeding by or in
the right of the corporation is limited to reasonable expenses incurred in
connection with the proceeding. (f) Notwithstanding any provision of C.G.S.
Section 33-771 to the contrary, a corporation which was incorporated under the
laws of this state, whether under chapter 599 of the general statutes, revised
to January 1, 1995, or any other general law or special act, prior to January 1,
1996, shall, except to the extent that the articles of incorporation expressly
provide otherwise, provide its directors with the full amount of indemnification
that the corporation is permitted to provide to such directors pursuant to
C.G.S. Section 33-771 as limited by the provisions of C.G.S. Section 33-775.
C.G.S. Section 33-772 provides that, unless limited by its articles of
incorporation, a corporation shall indemnify a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which he was a party because he is or was a director of the corporation against
reasonable expenses incurred by him in connection with the proceeding.
II-1
<PAGE>
C.G.S. Section 33-773 provides that (a) a corporation may pay for or
reimburse the reasonable expenses incurred by a director who is a party to a
proceeding in advance of final disposition of the proceeding if: (1) The
director furnishes the corporation a written affirmation of his good faith
belief that he has met the standard of conduct described in C.G.S. Section 33-
771; (2) the director furnishes the corporation a written undertaking, executed
personally or on his behalf, to repay the advance if it is ultimately determined
that he did not meet the standard of conduct; and (3) a determination is made
that the facts then known to those making the determination would not preclude
indemnification under C.G.S. Sections 33-770 through 33-778, inclusive. (b) The
undertaking required by subdivision (2) of subsection (a) of such section must
be an unlimited obligation of the director but need not be secured and may be
accepted without reference to financial ability to make repayment. (c)
Determinations and authorizations of payments under C.G.S. Section 33-773 shall
be made in the manner specified in C.G.S. Section 33-775.
C.G.S. Section 33-774 provides that, unless a corporation's articles of
incorporation provide otherwise, a director of the corporation who is a party to
a proceeding may apply for indemnification if it determines: (1) The director is
entitled to mandatory indemnification under C.G.S. Section 33-772, in which case
the director is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not he met the standard of conduct set
forth in C.G.S. Sections 33-771 or was adjudged liable as described in
subsection (d) of C.G.S. Section 33-771, but if he was adjudged so liable his
indemnification is limited to reasonable expenses incurred.
C.G.S. Section 33-775 provides (a) a corporation may not indemnify a
director under C.G.S. Section 33-771 unless authorized in the specific case
after a determination has been made that indemnification of the director is
permissible in the circumstances because he has met the standard of conduct set
forth in C.G.S. Section 33-771. (b) The determination shall be made: (1) by the
board of directors by majority vote of a quorum consisting of directors not at
the time parties to the proceeding; (2) if a quorum cannot be obtained under
subdivision (1) of this subsection, by majority vote of a committee duly
designated by the board of directors, in which designation directors who are
parties may participate, consisting solely of two or more directors not at the
time parties to the proceeding; (3) by special legal counsel (A) selected by the
board of directors or its committee in that manner prescribed in subdivision (1)
or (2) of this subsection, or (B) if a quorum of the board of directors cannot
be obtained under subdivision (1) of this subsection and a committee cannot be
designated under subdivision (2) of this subsection, selected by majority vote
of the full board of directors, in which selection directors who are parties may
participate; or (4) by the shareholders, but shares owned by or voted under the
control of directors who are at the time parties to the proceeding may not be
voted on the determination. (c) Authorization of indemnification and evaluation
as to reasonableness of expenses shall be made in the same manner as the
determination that indemnification is permissible except that the determination
is made by special legal counsel, authorization of indemnification and
evaluation as to reasonableness of expenses shall be made by those entitled
under subdivision (3) of subsection (b) of this section to select counsel.
C.G.S. Section 33-776, provides that, unless a corporation's articles of
incorporation provide otherwise (1) an officer of the corporation who is not a
director is entitled to mandatory indemnification under C.G.S. Section 33-772,
and is entitled to apply for court-ordered indemnification under C.G.S. Section
33-774, in each case to the same extent as a director; (2) the corporation may
indemnify and advance expenses under C.G.S. Sections 33-770 to 33-778,
inclusive, to an officer, employee or agent of the corporation who is not a
director to the same extent as to a director; (3) a corporation may also
indemnify and advance expenses to an officer, employee or agent who is not a
director to the extent, consistent with public policy, that may be provided by
its articles of incorporation, bylaws, general or specific action of its board
of directors or contract; and (4) a corporation which was incorporated under the
laws of this state, whether under chapter 599 of the general statues, revised to
January 1, 1995, or any other general law or special act, prior to January 1,
1996, shall, except to the extent that the articles of incorporation expressly
provide otherwise indemnify and advance expenses under C.G.S. Sections 33-770 to
33-778, inclusive, to each officer, employee or agent of the corporation who is
not a director to the same extent as the corporation is permitted to provide the
same to a director pursuant to C.G.S. Section 33-771, as limited by C.G.S.
Section 33-775.
C.G.S. Section 33-777 provides that a corporation may purchase and
maintain insurance on behalf of an individual who is or was a director, officer,
employee or agent of the corporation, or who, while a director, officer,
employee or agent of the corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, against liability asserted against or
incurred by him in that capacity or arising from his status as
II-2
<PAGE>
a director, officer, employee or agent, whether or not the corporation would
have the power to indemnify him against the same liability under C.G.S. Section
33-771 or 33-772.
C.G.S. Section 33-778 provides that (a) A provision treating a
corporation's indemnification of or advance for expenses to directors that is
contained in its articles of incorporation, bylaws, a resolution of its
shareholders or board of directors, or in a contract or otherwise, is valid only
if and to the extent the provision is consistent with C.G.S. Sections 33-770 to
33-778, inclusive. If articles of incorporation limit indemnification or advance
of expenses, indemnification and advance for expenses are valid only to the
extent consistent with the articles. (b) C.G.S. Sections 33-770 to 33-778,
inclusive, do not limit a corporation's power to pay or reimburse expenses
incurred by a director in connection with his appearance as a witness in a
proceeding at a time when he has not been made a named defendant or respondent
to the proceeding.
Consistent with the statute, the Company has obtained insurance for its
directors and officers which supplements the indemnification rights provided to
those individuals by C.G.S. Section 33-771 to 33-778, inclusive. Unlike the
statute, such policy does not require the standard of conduct required by C.G.S.
Section 33-771, nor does the policy require the undertakings required by C.G.S.
Section 33-773 relating to the advances for expenses in connection with the
defense of an officer or director in a proceeding.
Section IX of Part Two of Article IV of the Restated Certificate of
Incorporation of the Company provides:
No director, officer or agent of the Company shall be held
personally responsible for any action taken in good faith though
subsequently adjudged to be in violation of these Sections.
Effective January 1, 1997, the Company shall indemnify and
advance expenses to an individual made a party to a proceeding because
he/she is or was a Director of the Company under Section 33-771 of the
Connecticut General Statutes, Revision of 1958, as amended. The Company
shall also indemnify and advance expenses under Sections 33-770 to 33-
778, inclusive, of the Connecticut General Statutes, to any officer,
employee or agent of the Company who is not a director to the same
extent as provided to a director.
Item 15. Sales of Unregistered Securities.
On May 21, 1996, the Connecticut Development Authority issued $62
million of tax-exempt pollution control revenue bonds. Concurrent with that
issuance, the proceeds of the bonds were loaned to the Company for the
reimbursement of a portion of Company's share of the previously incurred costs
of financing, acquiring, constructing, and installing pollution control, sewage,
and solid waste disposal facilities at Millstone 3. The bonds will mature on May
1, 2031 and may bear, at the Company's discretion, a variable or fixed interest
rate, which may not exceed 12 percent. The bonds are exempt from registration
under Section 3(a)(2) of the Securities Act. The bonds were originally backed by
a five-year letter of credit, which was secured by a second mortgage on
Company's interest in Millstone 1. On January 23, 1997, the letter of credit was
replaced with an insurance facility and a standby bond purchase agreement. The
second mortgage was replaced with the issuance of $62 million of First and
Refunding Mortgage Bonds, 1996 Series B, bearing the same interest rate as the
underlying bonds. Goldman, Sachs & Co. was the Remarketing Agent for the bonds,
which were sold at the price of 100%.
On May 30, 1997, the Company issued $225 million First and Refunding
Mortgage Bonds, 1997 Series A as collateral to secure its obligations under a
three year revolving credit agreement. The collateral bonds were exempt from
registration under Section 4(2) of the Securities Act.
On June 26, 1997, the Company issued and sold to Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc (the Initial Purchasers) $200,000,000 in
aggregate principal amount of the Company's First and Refunding Mortgage Bonds,
1997 Series B Due June 1, 2002 (the Series B Bonds). The Series Bonds were sold
pursuant to exemptions from or in transactions not subject to the registration
requirements of the Securities Act and applicable state securities laws. The
Initial Purchasers subsequently placed the Series B Bonds with "qualified
institutional buyers," as defined in Rule 144A. The Company received
approximately $197 million of net proceeds from the sale of the Series B Bonds.
The aggregate underwriting discount and commission was approximately $3 million.
The bonds that are the subject of this
II-3
<PAGE>
Registration Statement, the Company's First and Refunding Mortgage 7 3/4% Bonds,
1997 Series C Due June 1, 2002 will be exchanged for the unregistered Series B
Bonds.
II-4
<PAGE>
Item 16 Exhibits and Financial Statement Schedules
1. Schedule - Valuation and Qualifying Accounts and Reserves
The information required by the schedule, Valuation and Qualifying
Accounts and Reserves, and the Report of Independent Public
Accountants thereon, for the three years ended December 31, 1996 is
incorporated herein by reference to the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission for the
fiscal year ended December 31, 1996.
2. Exhibits
Each document referred to below is incorporated by reference to the
files of the Securities and Exchange Commission, unless the reference to the
document is indicated by an asterisk.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
3.1 - Certificate of Incorporation of the Company, restated to
March 22, 1994. (Exhibit 3.2.1, 1993 NU Form 10-K, File
No. 1-5324)
3.2 - Certificate of Amendment to Certificate of Incorporation of the
Company, dated December 26, 1996. (Exhibit 3.2.2, 1996 NU Form
10-K, File No. 1-5324)
3.3 - By-laws of the Company, as amended to January 1, 1997.
(Exhibit 3.2.3, 1996 NU Form 10-K, File No. 1-5324)
*4.1 - Registration Rights Agreement.
4.2 - Indenture of Mortgage and Deed of Trust between the Company and
Bankers Trust Company, Trustee, dated as of May 1, 1921.
(Composite including all twenty-four amendments to May 1, 1967.)
(Exhibit 4.1.1, 1989 NU Form 10-K, File No. 1-5324)
Supplemental Indentures to Exhibit 4.2, dated as of:
4.3 - April 1, 1967. (Exhibit 4.16, File No. 2-60806)
4.4 - January 1, 1968. (Exhibit 4.18, File No. 2-60806)
4.5 - December 1, 1969. (Exhibit 4.20, File No. 2-60806)
4.6 - June 30, 1982. (Exhibit 4.33, File No. 2-79235)
4.7 - December 1, 1989. (Exhibit 4.1.26, 1989 NU Form 10-K, File
No. 1-5324)
4.8 - April 1, 1992. (Exhibit 4.30, File No. 33-59430)
4.9 - July 1, 1992. (Exhibit 4.31, File No. 33-59430)
4.10 - July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.11 - July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.12 - December 1, 1993. (Exhibit 4.2.14, 1993 NU Form 10-K, File
No. 1-5324)
4.13 - February 1, 1994. (Exhibit 4.2.15, 1993 NU Form 10-K, File
No. 1-5324)
4.14 - February 1, 1994. (Exhibit 4.2.16, 1993 NU Form 10-K, File
No. 1-5324)
</TABLE>
II-5
<PAGE>
<TABLE>
<C> <S>
4.15 - June 1, 1994. (Exhibit 4.2.15, 1994 NU Form 10-K, File No.
1-5324)
4.16 - October 1, 1994. (Exhibit 4.2.16, 1994 NU Form 10-K, File
No. 1-5324)
4.17 - June 1, 1996. (Exhibit 4.2.16, 1996 NU Form 10-K, File No.
1-5324)
4.18 - January 1, 1997. (Exhibit 4.2.17, 1996 NU Form 10-K, File
No. 1-5324)
*4.19 - May 1, 1997.
*4.20 - June 1, 1997.
*4.21 - Form of Proposed New Supplemental Indenture to be used for the
New Bonds.
4.22 - Cross-reference sheet showing location in Indenture of provisions
inserted pursuant to Sections 310 through 318 (a) of the Trust
Indenture Act of 1939. (Exhibit 2.32, File No. 2-68807)
4.23 - Financing Agreement between Industrial Development Authority of
the State of New Hampshire and the Company (Pollution Control
Bonds, 1986 Series) dated as of December 1, 1986. (Exhibit
C.1.47, 1986 NU Form U5S, File No. 30-246)
4.23.1 - Letter of Credit and Reimbursement Agreement (Pollution Control
Bonds, 1986 Series) dated as of August 1, 1994. (Exhibit 1
(Execution Copy), File No. 70-7320)
4.24 - Financing Agreement between Industrial Development Authority of
the State of New Hampshire and the Company (Pollution Control
Bonds, 1988 Series) dated as of October 1, 1988. (Exhibit C.1.55,
1988 NU Form U5S, File No. 30-246)
4.24.1 - Letter of Credit (Pollution Control Bonds, 1988 Series) dated
October 27, 1988. (Exhibit 4.2.17.1, 1995 NU Form 10-K, File
No. 1-5324)
4.24.2 - Reimbursement and Security Agreement (Pollution Control Bonds,
1988 Series) dated as of October 1, 1988. (Exhibit 4.2.17.2,
1995 NU Form 10-K, File No. 1-5324)
4.25 - Financing Agreement between Industrial Development Authority of
the State of New Hampshire and the Company (Pollution Control
Bonds) dated as of December 1, 1989. (Exhibit C.1.39, 1989 NU
Form U5S, File No. 30-246)
4.26 - Loan and Trust Agreement among Business Finance Authority of the
State of New Hampshire, the Company and the Trustee
</TABLE>
II-6
<PAGE>
<TABLE>
<C> <S>
(Pollution Control Bonds, 1992 Series A) dated as of December 1,
1992. (Exhibit C.2.33, 1992 NU Form U5S, File No. 30-246)
4.26.1 - Letter of Credit and Reimbursement Agreement (Pollution Control
Bonds, 1992 Series A) dated as of December 1, 1992. (Exhibit
4.2.19.1, 1995 NU Form 10-K, File No. 1-5324)
4.27 - Loan Agreement between Connecticut Development Authority and the
Company (Pollution Control Bonds - Series A, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit 4.2.21, 1993
NU Form 10-K, File No. 1-5324)
4.27.1 - Letter of Credit and Reimbursement Agreement (Pollution Control
Bonds - Series A, Tax Exempt Refunding) dated as of September 1,
1993. (Exhibit 4.2.23, 1993 NU Form 10-K, File No. 1-5324)
4.28 - Loan Agreement between Connecticut Development Authority and the
Company (Pollution Control Bonds - Series B, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit 4.2.22, 1993
NU Form 10-K, File No. 1-5324)
4.28.1 - Letter of Credit and Reimbursement Agreement (Pollution Control
Bonds - Series B, Tax Exempt Refunding) dated as of September 1,
1993. (Exhibit 4.2.24, 1993 NU Form 10-K, File No. 1-5324)
4.29 - Amended and Restated Loan Agreement between Connecticut
Development Authority and the Company (Pollution Control Revenue
Bond - 1996A Series) dated as of May 1, 1996 and Amended and
Restated as of January 1, 1997. (Exhibit 4.2.24, 1996 NU Form
10-K, File No. 1-5324)
4.29.1 - Amended and Restated Indenture of Trust between Connecticut
Development Authority and the Trustee (Pollution Control Revenue
Bond - 1996A Series), dated as of May 1, 1996 and Amended and
Restated as of January 1, 1997. (Exhibit 4.2.24.1, 1996 NU Form
10-K, File No. 1-5324)
4.29.2 - Standby Bond Purchase Agreement among the Company, Societe
Generale, New York Branch and the Trustee, dated January 23,
1997. (Exhibit 4.2.24.2, 1996 NU Form 10-K, File No. 1-5324)
4.29.3 - AMBAC Municipal Bond Insurance Policy issued by the Connecticut
Development Authority (Pollution Control Revenue Bond - 1996A
Series), effective January 23, 1997. (Exhibit No. 4.2.24.3, 1996
NU Form 10-K, File No. 1-5324)
4.30 - Amended and Restated Limited Partnership Agreement (CL&P Capital,
L.P.) among the Company, Northeast Utilities Service Company
(NUSCO), and the persons who became limited partners of CL&P
Capital, L.P. in accordance with the provisions thereof dated as
of January 23, 1995 (MIPS). (Exhibit A.1 (Execution Copy), File
No. 70-8451)
</TABLE>
II-7
<PAGE>
<TABLE>
<C> <S>
4.31 - Indenture between the Company and Bankers Trust Company, Trustee
(Series A Subordinated Debentures), dated as of January 1, 1995
(MIPS). (Exhibit B.1 (Execution Copy), File No. 70-8451)
4.32 - Payment and Guaranty Agreement of the Company dated as of
January 23, 1995 (MIPS). (Exhibit B.3 (Execution Copy), File
No. 70-8451)
*5.1 - Opinion of Jeffrey C. Miller, Assistant General Counsel of NUSCO,
as to the legality of the New Bonds, including consent of such
counsel.
10.1 - Stockholder Agreement dated as of July 1, 1964 among the
stockholders of Connecticut Yankee Atomic Power Company (CYAPC).
(Exhibit 10.1, 1994 NU Form 10-K, File No. 1-5324)
10.2 - Form of Power Contract dated as of July 1, 1964 between CYAPC and
each of the Company, The Hartford Electric Light Company (HELCO),
Public Service Company of New Hampshire (PSNH) and Western
Massachusetts Electric Company (WMECO). (Exhibit 10.2, 1994 NU
Form 10-K, File No. 1-5324)
10.2.1 - Form of Additional Power Contract dated as of April 30, 1984,
between CYAPC and each of the Company, PSNH and WMECO. (Exhibit
10.2.1, 1994 NU Form 10-K, File No. 1-5324)
10.2.2 - Form of 1987 Supplementary Power Contract dated as of April 1,
1987, between CYAPC and each of the Company, PSNH and WMECO.
(Exhibit 10.2.6, 1987 NU Form 10-K, File No. 1-5324)
10.3 - Capital Funds Agreement dated as of September 1, 1964 between
CYAPC and the Company, HELCO, PSNH and WMECO. (Exhibit 10.3, 1994
NU Form 10-K, File No. 1-5324)
10.4 - Stockholder Agreement dated December 10, 1958 between Yankee
Atomic Electric Company (YAEC) and the Company, HELCO, PSNH and
WMECO. (Exhibit 10.4, 1993 NU Form 10-K, File No. 1-5324)
10.5 - Form of Amendment No. 3, dated as of April 1, 1985, to Power
Contract between YAEC and each of the Company, PSNH and WMECO,
including a composite restatement of original Power Contract
dated June 30, 1959 and Amendment No. 1 dated April 1, 1975 and
Amendment No. 2 dated October 1, 1980. (Exhibit 10.5, 1988 NU
Form 10-K, File No. 1-5324.)
10.5.1 - Form of Amendment No. 4 to Power Contract, dated May 6, 1988,
between YAEC and each of the Company, PSNH and WMECO. (Exhibit
10.5.1, 1989 NU Form 10-K, File No. 1-5324)
10.5.2 - Form of Amendment No. 5 to Power Contract, dated June 26, 1989,
between YAEC and each of the Company, PSNH and WMECO. (Exhibit
10.5.2, 1989 NU Form 10-K, File No. 1-5324)
</TABLE>
II-8
<PAGE>
<TABLE>
<C> <S>
10.5.3 - Form of Amendment No. 6 to Power Contract, dated July 1, 1989,
between YAEC and each of the Company, PSNH and WMECO. (Exhibit
10.5.3, 1989 NU Form 10-K, File No. 1-5324)
10.5.4 - Form of Amendment No. 7 to Power Contract, dated February 1,
1992, between YAEC and each of the Company, PSNH and WMECO.
(Exhibit 10.5.4, 1993 NU Form 10-K, File No. 1-5324)
10.6 - Stockholder Agreement dated as of May 20, 1968 among stockholders
of Maine Yankee Atomic Power Company (MYAPC). (Exhibit 4.15, File
No. 2-30018)
10.7 - Form of Power Contract dated as of May 20, 1968 between MYAPC and
each of the Company, HELCO, PSNH and WMECO. (Exhibit 4.14, File
No. 2-30018)
10.7.1 - Form of Amendment No. 1 to Power Contract dated as of March 1,
1983 between MYAPC and each of the Company, PSNH and WMECO.
(Exhibit 10.7.1, 1993 NU Form 10-K, File No. 1-5324)
10.7.2 - Form of Amendment No. 2 to Power Contract dated as of January 1,
1984 between MYAPC and each of the Company, PSNH and WMECO.
(Exhibit 10.7.2, 1993 NU Form 10-K, File No. 1-5324)
10.7.3 - Form of Amendment No. 3 to Power Contract dated as of October 1,
1984 between MYAPC and each of the Company, PSNH and WMECO.
(Exhibit No. 10.7.3, 1994 NU Form 10-K, File No. 1-5324)
10.7.4 - Form of Additional Power Contract dated as of February 1, 1984
between MYAPC and each of the Company, PSNH and WMECO. (Exhibit
10.7.4, 1993 NU Form 10-K, File No. 1-5324)
10.8 - Capital Funds Agreement dated as of May 20, 1968 between MYAPC
and the Company, PSNH, HELCO and WMECO. (Exhibit 4.13, File No.
2-30018)
10.8.1 - Amendment No. 1 to Capital Funds Agreement, dated as of August 1,
1985, between MYAPC, the Company, PSNH and WMECO. (Exhibit No.
10.8.1, 1994 NU Form 10-K, File No. 1-5324)
10.9 - Sponsor Agreement dated as of August 1, 1968 among the sponsors
of Vermont Yankee Nuclear Power Corporation (VYNPC). (Exhibit
4.16, File No. 2-30285)
10.10 - Form of Power Contract dated as of February 1, 1968 between VYNPC
and each of the Company, HELCO, PSNH and WMECO. (Exhibit 4.18,
File No. 2-30018)
10.10.1 - Form of Amendment to Power Contract dated as of June 1, 1972
between VYNPC and each of the Company, HELCO, PSNH and WMECO.
(Exhibit 5.22, File No. 2-47038)
</TABLE>
II-9
<PAGE>
<TABLE>
<C> <S>
10.10.2 - Form of Second Amendment to Power Contract dated as of April 15,
1983 between VYNPC and each of the Company, PSNH and WMECO.
(Exhibit 10.10.2, 1993 NU Form 10-K, File No. 1-5324)
10.10.3 - Form of Third Amendment to Power Contract dated as of April 24,
1985 between VYNPC and each of the Company, PSNH and WMECO.
(Exhibit No. 10.10.3, 1994 NU Form 10-K, File No. 1-5324)
10.10.4 - Form of Fourth Amendment to Power Contract dated as of June 1,
1985 between VYNPC and each of the Company, PSNH and WMECO.
(Exhibit 10.10.4, 1996 NU Form 10-K, File No. 1-5324)
10.10.5 - Form of Fifth Amendment to Power Contract dated as of May 6, 1988
between VYNPC and each of the Company, PSNH and WMECO. (Exhibit
10.10.5, 1990 NU Form 10-K, File No. 1-5324)
10.10.6 - Form of Sixth Amendment to Power Contract dated as of May 6, 1988
between VYNPC and each of the Company, PSNH and WMECO. (Exhibit
10.10.6, 1990 NU Form 10-K, File No. 1-5324)
10.10.7 - Form of Seventh Amendment to Power Contract dated as of June 15,
1989 between VYNPC and each of the Company, PSNH and WMECO.
(Exhibit 10.10.7, 1990 NU Form 10-K, File No. 1-5324)
10.10.8 - Form of Eighth Amendment to Power Contract dated as of December
1, 1989 between VYNPC and each of the Company, PSNH and WMECO.
(Exhibit 10.10.8, 1990 NU Form 10-K, File No. 1-5324)
10.10.9 - Form of Additional Power Contract dated as of February 1, 1984
between VYNPC and each of the Company, PSNH and WMECO. (Exhibit
10.10.9, 1993 NU Form 10-K, File No. 1-5324)
10.11 - Capital Funds Agreement dated as of February 1, 1968 between
VYNPC and the Company, HELCO, PSNH and WMECO. (Exhibit 4.16, File
No. 2-30018)
10.11.1 - Form of First Amendment to Capital Funds Agreement dated as of
March 12, 1968 between VYNPC and the Company, HELCO, PSNH and
WMECO. (Exhibit 4.17, File No. 2-30018)
10.11.2 - Form of Second Amendment to Capital Funds Agreement dated as of
September 1, 1993 between VYNPC and the Company, HELCO, PSNH and
WMECO. (Exhibit 10.11.2, 1993 NU Form 10-K, File No. 1-5324)
10.12 - Amended and Restated Millstone Plant Agreement dated as of
December 1, 1984 by and among the Company, WMECO and Northeast
Nuclear Energy Company (NNECO). (Exhibit 10.12, 1994 NU Form
10-K, File No. 1-5324)
10.13 - Sharing Agreement dated as of September 1, 1973 with respect to
1979 Connecticut nuclear generating unit (Millstone 3). (Exhibit
6.43, File No. 2-50142)
</TABLE>
II-10
<PAGE>
<TABLE>
<C> <S>
10.13.1 - Amendment dated August 1, 1974 to Sharing Agreement - 1979
Connecticut Nuclear Unit. (Exhibit 5.45, File No. 2-52392)
10.13.2 - Amendment dated December 15, 1975 to Sharing Agreement - 1979
Connecticut Nuclear Unit. (Exhibit 7.47, File No. 2-60806)
10.13.3 - Amendment dated April 1, 1986 to Sharing Agreement - 1979
Connecticut Nuclear Unit. (Exhibit 10.17.3, 1990 NU Form 10-K,
File No. 1-5324)
10.14 - Agreement dated July 19, 1990, among North Atlantic Energy
Service Corporation (NAESCO) and Seabrook Nuclear Power Station
(Seabrook) joint owners with respect to operation of Seabrook.
(Exhibit 10.53, 1990 NU Form 10-K, File No. 1-5324)
10.15 - Sharing Agreement between the Company, WMECO, Holyoke Power &
Electric Company (HP&E), Holyoke Water Power Company (HWP) and
PSNH dated as of June 1, 1992. (Exhibit 10.17, 1992 NU Form 10-K,
File No. 1-5324)
10.16 - Agreement (composite) for joint ownership, construction and
operation of Seabrook, as amended through the November 1, 1990
twenty-third amendment. (Exhibit No. 10.17, 1994 NU Form 10-K,
File No. 1-5324)
10.16.1 - Memorandum of Understanding dated November 7, 1988 between PSNH
and Massachusetts Municipal Wholesale Electric Company (Exhibit
10.17, PSNH 1989 Form 10-K, File No. 1-6392)
10.16.2 - Agreement of Settlement among joint owners dated as of January
13, 1989. (Exhibit 10.13.21, 1988 NU Form 10-K, File No. 1-5324)
10.16.2.1- Supplement to Settlement Agreement, dated as of February 7, 1989,
between PSNH and Central Maine Power Company. (Exhibit 10.18.1,
PSNH 1989 Form 10-K, File No. 1-6392)
10.17 - Amended and Restated Agreement for Seabrook Project Disbursing
Agent dated as of November 1, 1990. (Exhibit 10.4.7, File No.
33-35312)
10.17.1 - Form of First Amendment to Exhibit 10.17. (Exhibit 10.4.8, File
No. 33-35312)
10.17.2 - Form (Composite) of Second Amendment to Exhibit 10.17. (Exhibit
10.18.2, 1993 NU Form 10-K, File No. 1-5324)
10.18 - Form of Service Contract dated as of July 1, 1966 between each of
NU, the Company, WMECO and NUSCO. (Exhibit 10.20, 1993 NU Form
10-K, File No. 1-5324)
10.18.1 - Form of Annual Renewal of Service Contract. (Exhibit 10.20.3,
1993 NU Form 10-K, File No. 1-5324)
</TABLE>
II-11
<PAGE>
<TABLE>
<C> <S>
10.19 - Memorandum of Understanding between the Company, HELCO, HP&E, HWP
and WMECO dated as of June 1, 1970 with respect to pooling of
generation and transmission. (Exhibit 13.32, File No. 2-38177)
10.19.1 - Amendment to Memorandum of Understanding between the Company,
HELCO, HP&E, HWP and WMECO dated as of February 2, 1982 with
respect to pooling of generation and transmission. (Exhibit
10.21.1, 1993 NU Form 10-K, File No. 1-5324)
10.19.2 - Amendment to Memorandum of Understanding between the Company,
HELCO, HP&E, HWP and WMECO dated as of January 1, 1984 with
respect to pooling of generation and transmission. (Exhibit
10.21.2, 1994 NU Form 10-K, File No. 1-5324)
10.20 - New England Power Pool Agreement effective as of November 1,
1971, as amended to December 1, 1996. (Exhibit 10.15, 1988 NU
Form 10-K, File No. 1-5324.)
10.20.1 - Twenty-sixth Amendment to Exhibit 10.20 dated as of March 15,
1989. (Exhibit 10.15.1, 1990 NU Form 10-K, File No. 1-5324)
10.20.2 - Twenty-seventh Amendment to Exhibit 10.20 dated as of October 1,
1990. (Exhibit 10.15.2, 1991 NU Form 10-K, File No. 1-5324)
10.20.3 - Twenty-eighth Amendment to Exhibit 10.20 dated as of
September 15, 1992. (Exhibit 10.18.3, 1992 NU Form 10-K, File
No. 1-5324)
10.20.4 - Twenty-ninth Amendment to Exhibit 10.20 dated as of May 1, 1993.
(Exhibit 10.22.4, 1993 NU Form 10-K, File No. 1-5324)
10.20.5 - Thirty-second Amendment (Amendments 30 and 31 were withdrawn) to
Exhibit 10.20 dated as of September 1, 1995. (Exhibit 10.23.5,
1995 NU Form 10-K, File No. 1-5324)
10.20.6 - Thirty-third Amendment to Exhibit 10.20 dated as of December 31,
1996 and Form of Interim Independent System Operator (ISO)
Agreement. (Exhibit 10.236, 1996 NU Form 10-K, File No. 1-5324)
10.21 - Agreements among New England Utilities with respect to the Hydro-
Quebec interconnection projects. (See Exhibits 10(u) and 10(v);
10(w), 10(x), and 10(y), 1990 and 1988, respectively, Form 10-K
of New England Electric System, File No. 1-3446.)
10.22 - Trust Agreement dated February 11, 1992, between State Street
Bank and Trust Company of Connecticut, as Trustor, and Bankers
Trust Company, as Trustee, and the Company and WMECO, with
respect to Niantic Bay Fuel Trust. (Exhibit 10.23, 1991 NU Form
10-K, File No. 1-5324)
10.22.1 - Nuclear Fuel Lease Agreement dated as of February 11, 1992,
between Bankers Trust Company, Trustee, as Lessor, and the
</TABLE>
II-12
<PAGE>
<TABLE>
<C> <S>
Company and WMECO, as Lessees. (Exhibit 10.23.1, 1991 NU Form
10-K, File No. 1-5324)
10.23 - Simulator Financing Lease Agreement, dated as of February 1,
1985, by and between ComPlan and NNECO. (Exhibit 10.25, 1994 NU
Form 10-K, File No. 1-5324)
10.24 - Simulator Financing Lease Agreement, dated as of May 2, 1985, by
and between The Prudential Insurance Company of America and
NNECO. (Exhibit No. 10.26, 1994 NU Form 10-K, File No. 1-5324)
10.25 - Lease dated as of April 14, 1992 between The Rocky River Realty
Company (RRR) and NUSCO with respect to the Berlin, Connecticut
headquarters (office lease). (Exhibit 10.29, 1992 NU Form 10-K,
File No. 1-5324)
10.25.1 - Lease dated as of April 14, 1992 between RRR and NUSCO with
respect to the Berlin, Connecticut headquarters (project lease).
(Exhibit 10.29.1, 1992 NU Form 10-K, File No. 1-5324)
10.26 - Millstone Technical Building Note Agreement dated as of December
21, 1993 between, by and between The Prudential Insurance Company
of America and NNECO. (Exhibit 10.28, 1993 NU Form 10-K, File No.
1-5324)
10.27 - Note Agreement dated April 14, 1992, by and between RRR and
Purchasers named therein (Connecticut General Life Insurance
Company, Life Insurance Company of North America, INA Life
Insurance Company of New York, Life Insurance Company of
Georgia), with respect to RRR's sale of $15 million of guaranteed
senior secured notes due 2007 and $28 million of guaranteed
senior secured notes due 2017. (Exhibit 10.52, 1992 NU Form 10-K,
File No. 1-5324)
10.27.1 - Note Guaranty dated April 14, 1992 by Northeast Utilities
pursuant to Note Agreement dated April 14, 1992 between RRR and
Note Purchasers, for the benefit of The Connecticut National Bank
as Trustee, the Purchasers and the owners of the notes. (Exhibit
10.52.1, 1992 NU Form 10-K, File No. 1-5324)
10.27.2 - Assignment of Leases, Rents and Profits, Security Agreement and
Negative Pledge, dated as of April 14, 1992 among RRR, NUSCO and
The Connecticut National Bank as Trustee, securing notes sold by
RRR pursuant to April 14, 1992 Note Agreement. (Exhibit 10.52.2,
1992 NU Form 10-K, File No. 1-5324)
10.28 - Master Trust Agreement dated as of September 2, 1986 between the
Company and WMECO and Colonial Bank as Trustee, with respect to
reserve funds for Millstone 1 decommissioning costs. (Exhibit
10.32, 1996 NU Form 10-K, File No. 1-5324)
10.28.1 - Notice of Appointment of Mellon Bank, N.A. as Successor Trustee,
dated November 20, 1990, and Acceptance of
</TABLE>
II-13
<PAGE>
<TABLE>
<C> <S>
Appointment. (Exhibit 10.41.1, 1992 NU Form 10-K, File No. 1-
5324)
10.29 - Master Trust Agreement dated as of September 2, 1986 between the
Company and WMECO and Colonial Bank as Trustee, with respect to
reserve funds for Millstone 2 decommissioning costs. (Exhibit
10.33, 1996 NU Form 10-K, File No. 1-5324)
10.29.1 - Notice of Appointment of Mellon Bank, N.A. as Successor Trustee,
dated November 20, 1990, and Acceptance of Appointment. (Exhibit
10.42.1, 1992 NU Form 10-K, File No. 1-5324)
10.30 - Master Trust Agreement dated as of April 23, 1986 between the
Company and WMECO and Colonial Bank as Trustee, with respect to
reserve funds for Millstone 3 decommissioning costs. (Exhibit
10.34, 1996 NU Form 10-K, File No. 1-5324)
10.30.1 - Notice of Appointment of Mellon Bank, N.A. as Successor Trustee,
dated November 20, 1990, and Acceptance of Appointment. (Exhibit
10.43.1, 1992 NU Form 10-K, File No. 1-5324)
10.31 - NU Executive Incentive Plan, effective as of January 1, 1991.
(Exhibit 10.44, NU 1991 Form 10-K, File No. 1-5324)
10.32 - Supplemental Executive Retirement Plan for Officers of NU System
Companies, amended and restated, effective as of January 1, 1992.
(Exhibit 10.45.1, NU Form 10-Q for the Quarter Ended June 30,
1992, File No. 1-5324)
10.32.1 - Amendment 1 to Exhibit 10.32, effective as of August 1, 1993.
(Exhibit 10.35.1, 1993 NU Form 10-K, File No. 1-5324)
10.32.2 - Amendment 2 to Exhibit 10.32, effective as of January 1, 1994.
(Exhibit 10.35.2, 1993 NU Form 10-K, File No. 1-5324)
10.32.3 - Amendment 3 to Exhibit 10.32, effective as of January 1, 1996.
(Exhibit 10.36.3, 1995 NU Form 10-K, File No. 1-5324)
*10.33 - Special Severance Program for Officers of NU System Companies,
as adopted on June 9, 1997.
10.34 - Loan Agreement dated as of December 2, 1991, by and between NU
and Mellon Bank, N.A., as Trustee, with respect to NU's loan of
$175 million to an ESOP Trust. (Exhibit 10.46, NU 1991 Form 10-K,
File No. 1-5324)
10.34.1 - First Amendment to Exhibit 10.34 dated February 7, 1992. (Exhibit
10.36.1, 1993 NU Form 10-K, File No. 1-5324)
10.34.2 - Loan Agreement dated as of March 19, 1992 by and between NU and
Mellon Bank, N.A., as Trustee, with respect to NU's loan of $75
</TABLE>
II-14
<PAGE>
<TABLE>
<C> <S>
million to the ESOP Trust. (Exhibit 10.49.1, 1992 NU Form 10-K,
File No. 1-5324)
10.34.3 - Second Amendment to Exhibit 10.34 dated April 9, 1992. (Exhibit
10.36.3, 1993 NU Form 10-K, File No. 1-5324)
10.35 - Credit Agreements among the Company, NU, WMECO, NUSCO (as Agent)
and 3 Commercial Banks dated December 3, 1992 (Three-Year
Facility). (Exhibit C.2.38, 1992 NU Form U5S, File No. 30-246)
10.36 - Credit Agreements among the Company, WMECO, NU, HWP, RRR, NNECO
and NUSCO (as Agent) and 1 commercial bank dated December 3, 1992
(Three-Year Facility). (Exhibit C.2.39, 1992 NU Form U5S, File
No. 30-246)
10.37 - First Amendment and Waiver dated as of May 30, 1997 to Credit
Agreement dated as of November 21, 1996 among the Company, NU,
WMECO and the Co-Agents and Banks named therein. (Exhibit No.
B.4(a) (Execution Copy), File No. 70-8875)
10.38 - Employment Agreement with Bernard M. Fox. (Exhibit 10.48, NU Form
10-Q for the Quarter Ended June 30, 1992, File No. 1-5324)
10.39 - Transition and Retirement Agreement with Bernard M. Fox. (Exhibit
10.39, 1996 NU Form 10-K, File No. 1-5324)
10.40 - Employment Agreement with Bruce M. Kenyon. (Exhibit 10.40, 1996
NU Form 10-K, File No. 1-5324)
10.41 - Employment Agreement with John H. Forsgren. (Exhibit 10.41, 1996
NU Form 10-K, File No. 1-5324)
10.42 - Employment Agreement with Hugh C. MacKenzie. (Exhibit 10.42, 1996
NU Form 10-K, File No. 1-5324)
10.43 - Employment Agreement with Ted C. Feigenbaum. (Exhibit 10.43, 1996
NU Form 10-K, File No. 1-5324)
10.44 - Employment Agreement with Robert E. Busch. (Exhibit 10, NU Form
10-Q for the Quarter Ended September 30, 1996, File No. 1-5324)
10.45 - Northeast Utilities Deferred Compensation Plan for Trustees,
amended and restated December 13, 1994. (Exhibit 10.39, 1995 NU
Form 10-K, File No. 1-5324)
10.46 - Deferred Compensation Plan for Officers of Northeast Utilities
System Companies, as adopted September 23, 1986. (Exhibit 10.40,
1995 NU Form 10-K, File No. 1-5324)
10.47 - Reciprocal Support Agreement Among NNECO, NAESCO, CYAPC, YAEC and
NUSCO dated January 1, 1996. (Exhibit 10.41, 1995 NU Form 10K,
File No. 1-5324)
</TABLE>
II-15
<PAGE>
<TABLE>
<C> <S>
10.48 - Receivables Purchase and Sale Agreement, dated as of July 11,
1996. (Exhibit 10.48, 1996 NU Form 10-K, File No. 1-5324)
10.49 - Master Lease Agreement between General Electric Capital
Corporation and the Company, dated as of June 21, 1996. (Exhibit
10.50, 1996 NU Form 10-K, File No. 1-5324)
*12 - Statement re computation of Ratio of Earnings to Fixed Charges.
21 - Subsidiaries of the Registrant. (Exhibit 21, 1996 NU Form 10-K,
File No. 1-5324)
*23 - Consent of Arthur Andersen LLP. (See also Exhibit 5.1)
*24 - Power of Attorney. (See page II-18)
*25 - Form T-1 of Bankers Trust Company, Trustee.
*99 - Letter of Transmittal for the Exchange Offer.
</TABLE>
II-16
<PAGE>
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or controlling persons of the
registrant pursuant to the provisions described under Item 14, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director or officers of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director or officer in connection with the securities being
registered hereby and the Securities and Exchange Commission is still of the
same opinion, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the Town of
Berlin, and State of Connecticut, on this 8th day of July, 1997.
THE CONNECTICUT LIGHT AND POWER COMPANY
By /s/Hugh C. MacKenzie
----------------------------------
Hugh C. MacKenzie
Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the following persons in
the capacities and on the dates indicated. The Company and each person whose
signature appears below hereby constitute John H. Forsgren, John B. Keane,
Jeffrey C. Miller and Jane P. Seidl, and each of them singly, their true and
lawful attorneys, with full power to them and each of them to sign for them and
in their names, in the capacities indicated above or below, as the case may be,
any and all amendments to this registration statement, hereby ratifying and
confirming its or their signatures as it may be signed by said attorneys to any
and all amendments to said registration statement.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Hugh C. MacKenzie President and Director July 8, 1997
- ----------------------------
Hugh C. MacKenzie
Principal Executive Officer
/s/ John H. Forsgren Executive Vice President, July 8, 1997
- ---------------------------- Chief Financial Officer and
John H. Forsgren Director
Principal Financial Officer
/s/ John J. Roman Vice President and July 8, 1997
- ---------------------------- Controller
John J. Roman
Principal Accounting Officer
/s/ Bernard M. Fox Chairman and Director July 8, 1997
- ----------------------------
Bernard M. Fox
/s/ Robert G. Abair Director July 8, 1997
- ----------------------------
Robert G. Abair
/s/ William T. Frain, Jr. Director July 8, 1997
- ----------------------------
William T. Frain, Jr.
/s/ Cheryl W. Grise Director July 8, 1997
- ----------------------------
Cheryl W. Grise
/s/ John B. Keane Director July 8, 1997
- ----------------------------
John B. Keane
- ----------------------------
Bruce D. Kenyon Director
</TABLE>
II-18
<PAGE>
Registration No. 333-
--------
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
-------------
EXHIBITS
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------
THE CONNECTICUT LIGHT AND POWER COMPANY
<PAGE>
EXHIBIT INDEX
-------------
Each document referred to below is incorporated by reference to the
files of the Securities and Exchange Commission, unless the reference to the
document is indicated by an asterisk.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
3.1 - Certificate of Incorporation of the Company, restated to
March 22, 1994. (Exhibit 3.2.1, 1993 NU Form 10-K, File
No. 1-5324)
3.2 - Certificate of Amendment to Certificate of Incorporation of the
Company, dated December 26, 1996. (Exhibit 3.2.2, 1996 NU Form
10-K, File No. 1-5324)
3.3 - By-laws of the Company, as amended to January 1, 1997.
(Exhibit 3.2.3, 1996 NU Form 10-K, File No. 1-5324)
*4.1 - Registration Rights Agreement.
4.2 - Indenture of Mortgage and Deed of Trust between the Company and
Bankers Trust Company, Trustee, dated as of May 1, 1921.
(Composite including all twenty-four amendments to May 1, 1967.)
(Exhibit 4.1.1, 1989 NU Form 10-K, File No. 1-5324)
Supplemental Indentures to Exhibit 4.2, dated as of:
4.3 - April 1, 1967. (Exhibit 4.16, File No. 2-60806)
4.4 - January 1, 1968. (Exhibit 4.18, File No. 2-60806)
4.5 - December 1, 1969. (Exhibit 4.20, File No. 2-60806)
4.6 - June 30, 1982. (Exhibit 4.33, File No. 2-79235)
4.7 - December 1, 1989. (Exhibit 4.1.26, 1989 NU Form 10-K, File
No. 1-5324)
4.8 - April 1, 1992. (Exhibit 4.30, File No. 33-59430)
4.9 - July 1, 1992. (Exhibit 4.31, File No. 33-59430)
4.10 - July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.11 - July 1, 1993. (Exhibit A.10(b), File No. 70-8249)
4.12 - December 1, 1993. (Exhibit 4.2.14, 1993 NU Form 10-K, File
No. 1-5324)
4.13 - February 1, 1994. (Exhibit 4.2.15, 1993 NU Form 10-K, File
No. 1-5324)
4.14 - February 1, 1994. (Exhibit 4.2.16, 1993 NU Form 10-K, File
No. 1-5324)
</TABLE>
E-1
<PAGE>
<TABLE>
<C> <S>
4.15 - June 1, 1994. (Exhibit 4.2.15, 1994 NU Form 10-K, File No.
1-5324)
4.16 - October 1, 1994. (Exhibit 4.2.16, 1994 NU Form 10-K, File
No. 1-5324)
4.17 - June 1, 1996. (Exhibit 4.2.16, 1996 NU Form 10-K, File No.
1-5324)
4.18 - January 1, 1997. (Exhibit 4.2.17, 1996 NU Form 10-K, File
No. 1-5324)
*4.19 - May 1, 1997.
*4.20 - June 1, 1997.
*4.21 - Form of Proposed New Supplemental Indenture to be used for the
New Bonds.
4.22 - Cross-reference sheet showing location in Indenture of provisions
inserted pursuant to Sections 310 through 318 (a) of the Trust
Indenture Act of 1939. (Exhibit 2.32, File No. 2-68807)
4.23 - Financing Agreement between Industrial Development Authority of
the State of New Hampshire and the Company (Pollution Control
Bonds, 1986 Series) dated as of December 1, 1986. (Exhibit
C.1.47, 1986 NU Form U5S, File No. 30-246)
4.23.1 - Letter of Credit and Reimbursement Agreement (Pollution Control
Bonds, 1986 Series) dated as of August 1, 1994. (Exhibit 1
(Execution Copy), File No. 70-7320)
4.24 - Financing Agreement between Industrial Development Authority of
the State of New Hampshire and the Company (Pollution Control
Bonds, 1988 Series) dated as of October 1, 1988. (Exhibit C.1.55,
1988 NU Form U5S, File No. 30-246)
4.24.1 - Letter of Credit (Pollution Control Bonds, 1988 Series) dated
October 27, 1988. (Exhibit 4.2.17.1, 1995 NU Form 10-K, File
No. 1-5324)
4.24.2 - Reimbursement and Security Agreement (Pollution Control Bonds,
1988 Series) dated as of October 1, 1988. (Exhibit 4.2.17.2,
1995 NU Form 10-K, File No. 1-5324)
4.25 - Financing Agreement between Industrial Development Authority of
the State of New Hampshire and the Company (Pollution Control
Bonds) dated as of December 1, 1989. (Exhibit C.1.39, 1989 NU
Form U5S, File No. 30-246)
4.26 - Loan and Trust Agreement among Business Finance Authority of the
State of New Hampshire, the Company and the Trustee
</TABLE>
E-2
<PAGE>
<TABLE>
<C> <S>
(Pollution Control Bonds, 1992 Series A) dated as of December 1,
1992. (Exhibit C.2.33, 1992 NU Form U5S, File No. 30-246)
4.26.1 - Letter of Credit and Reimbursement Agreement (Pollution Control
Bonds, 1992 Series A) dated as of December 1, 1992. (Exhibit
4.2.19.1, 1995 NU Form 10-K, File No. 1-5324)
4.27 - Loan Agreement between Connecticut Development Authority and the
Company (Pollution Control Bonds - Series A, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit 4.2.21, 1993
NU Form 10-K, File No. 1-5324)
4.27.1 - Letter of Credit and Reimbursement Agreement (Pollution Control
Bonds - Series A, Tax Exempt Refunding) dated as of September 1,
1993. (Exhibit 4.2.23, 1993 NU Form 10-K, File No. 1-5324)
4.28 - Loan Agreement between Connecticut Development Authority and the
Company (Pollution Control Bonds - Series B, Tax Exempt
Refunding) dated as of September 1, 1993. (Exhibit 4.2.22, 1993
NU Form 10-K, File No. 1-5324)
4.28.1 - Letter of Credit and Reimbursement Agreement (Pollution Control
Bonds - Series B, Tax Exempt Refunding) dated as of September 1,
1993. (Exhibit 4.2.24, 1993 NU Form 10-K, File No. 1-5324)
4.29 - Amended and Restated Loan Agreement between Connecticut
Development Authority and the Company (Pollution Control Revenue
Bond - 1996A Series) dated as of May 1, 1996 and Amended and
Restated as of January 1, 1997. (Exhibit 4.2.24, 1996 NU Form
10-K, File No. 1-5324)
4.29.1 - Amended and Restated Indenture of Trust between Connecticut
Development Authority and the Trustee (Pollution Control Revenue
Bond - 1996A Series), dated as of May 1, 1996 and Amended and
Restated as of January 1, 1997. (Exhibit 4.2.24.1, 1996 NU Form
10-K, File No. 1-5324)
4.29.2 - Standby Bond Purchase Agreement among the Company, Societe
Generale, New York Branch and the Trustee, dated January 23,
1997. (Exhibit 4.2.24.2, 1996 NU Form 10-K, File No. 1-5324)
4.29.3 - AMBAC Municipal Bond Insurance Policy issued by the Connecticut
Development Authority (Pollution Control Revenue Bond - 1996A
Series), effective January 23, 1997. (Exhibit No. 4.2.24.3, 1996
NU Form 10-K, File No. 1-5324)
4.30 - Amended and Restated Limited Partnership Agreement (CL&P Capital,
L.P.) among the Company, Northeast Utilities Service Company
(NUSCO), and the persons who became limited partners of CL&P
Capital, L.P. in accordance with the provisions thereof dated as
of January 23, 1995 (MIPS). (Exhibit A.1 (Execution Copy), File
No. 70-8451)
</TABLE>
E-3
<PAGE>
<TABLE>
<C> <S>
4.31 - Indenture between the Company and Bankers Trust Company, Trustee
(Series A Subordinated Debentures), dated as of January 1, 1995
(MIPS). (Exhibit B.1 (Execution Copy), File No. 70-8451)
4.32 - Payment and Guaranty Agreement of the Company dated as of
January 23, 1995 (MIPS). (Exhibit B.3 (Execution Copy), File
No. 70-8451)
*5.1 - Opinion of Jeffrey C. Miller, Assistant General Counsel of NUSCO,
as to the legality of the New Bonds, including consent of such
counsel.
10.1 - Stockholder Agreement dated as of July 1, 1964 among the
stockholders of Connecticut Yankee Atomic Power Company (CYAPC).
(Exhibit 10.1, 1994 NU Form 10-K, File No. 1-5324)
10.2 - Form of Power Contract dated as of July 1, 1964 between CYAPC and
each of the Company, The Hartford Electric Light Company (HELCO),
Public Service Company of New Hampshire (PSNH) and Western
Massachusetts Electric Company (WMECO). (Exhibit 10.2, 1994 NU
Form 10-K, File No. 1-5324)
10.2.1 - Form of Additional Power Contract dated as of April 30, 1984,
between CYAPC and each of the Company, PSNH and WMECO. (Exhibit
10.2.1, 1994 NU Form 10-K, File No. 1-5324)
10.2.2 - Form of 1987 Supplementary Power Contract dated as of April 1,
1987, between CYAPC and each of the Company, PSNH and WMECO.
(Exhibit 10.2.6, 1987 NU Form 10-K, File No. 1-5324)
10.3 - Capital Funds Agreement dated as of September 1, 1964 between
CYAPC and the Company, HELCO, PSNH and WMECO. (Exhibit 10.3, 1994
NU Form 10-K, File No. 1-5324)
10.4 - Stockholder Agreement dated December 10, 1958 between Yankee
Atomic Electric Company (YAEC) and the Company, HELCO, PSNH and
WMECO. (Exhibit 10.4, 1993 NU Form 10-K, File No. 1-5324)
10.5 - Form of Amendment No. 3, dated as of April 1, 1985, to Power
Contract between YAEC and each of the Company, PSNH and WMECO,
including a composite restatement of original Power Contract
dated June 30, 1959 and Amendment No. 1 dated April 1, 1975 and
Amendment No. 2 dated October 1, 1980. (Exhibit 10.5, 1988 NU
Form 10-K, File No. 1-5324.)
10.5.1 - Form of Amendment No. 4 to Power Contract, dated May 6, 1988,
between YAEC and each of the Company, PSNH and WMECO. (Exhibit
10.5.1, 1989 NU Form 10-K, File No. 1-5324)
10.5.2 - Form of Amendment No. 5 to Power Contract, dated June 26, 1989,
between YAEC and each of the Company, PSNH and WMECO. (Exhibit
10.5.2, 1989 NU Form 10-K, File No. 1-5324)
</TABLE>
E-4
<PAGE>
<TABLE>
<C> <S>
10.5.3 - Form of Amendment No. 6 to Power Contract, dated July 1, 1989,
between YAEC and each of the Company, PSNH and WMECO. (Exhibit
10.5.3, 1989 NU Form 10-K, File No. 1-5324)
10.5.4 - Form of Amendment No. 7 to Power Contract, dated February 1,
1992, between YAEC and each of the Company, PSNH and WMECO.
(Exhibit 10.5.4, 1993 NU Form 10-K, File No. 1-5324)
10.6 - Stockholder Agreement dated as of May 20, 1968 among stockholders
of Maine Yankee Atomic Power Company (MYAPC). (Exhibit 4.15, File
No. 2-30018)
10.7 - Form of Power Contract dated as of May 20, 1968 between MYAPC and
each of the Company, HELCO, PSNH and WMECO. (Exhibit 4.14, File
No. 2-30018)
10.7.1 - Form of Amendment No. 1 to Power Contract dated as of March 1,
1983 between MYAPC and each of the Company, PSNH and WMECO.
(Exhibit 10.7.1, 1993 NU Form 10-K, File No. 1-5324)
10.7.2 - Form of Amendment No. 2 to Power Contract dated as of January 1,
1984 between MYAPC and each of the Company, PSNH and WMECO.
(Exhibit 10.7.2, 1993 NU Form 10-K, File No. 1-5324)
10.7.3 - Form of Amendment No. 3 to Power Contract dated as of October 1,
1984 between MYAPC and each of the Company, PSNH and WMECO.
(Exhibit No. 10.7.3, 1994 NU Form 10-K, File No. 1-5324)
10.7.4 - Form of Additional Power Contract dated as of February 1, 1984
between MYAPC and each of the Company, PSNH and WMECO. (Exhibit
10.7.4, 1993 NU Form 10-K, File No. 1-5324)
10.8 - Capital Funds Agreement dated as of May 20, 1968 between MYAPC
and the Company, PSNH, HELCO and WMECO. (Exhibit 4.13, File No.
2-30018)
10.8.1 - Amendment No. 1 to Capital Funds Agreement, dated as of August 1,
1985, between MYAPC, the Company, PSNH and WMECO. (Exhibit No.
10.8.1, 1994 NU Form 10-K, File No. 1-5324)
10.9 - Sponsor Agreement dated as of August 1, 1968 among the sponsors
of Vermont Yankee Nuclear Power Corporation (VYNPC). (Exhibit
4.16, File No. 2-30285)
10.10 - Form of Power Contract dated as of February 1, 1968 between VYNPC
and each of the Company, HELCO, PSNH and WMECO. (Exhibit 4.18,
File No. 2-30018)
10.10.1 - Form of Amendment to Power Contract dated as of June 1, 1972
between VYNPC and each of the Company, HELCO, PSNH and WMECO.
(Exhibit 5.22, File No. 2-47038)
</TABLE>
E-5
<PAGE>
<TABLE>
<C> <S>
10.10.2 - Form of Second Amendment to Power Contract dated as of April 15,
1983 between VYNPC and each of the Company, PSNH and WMECO.
(Exhibit 10.10.2, 1993 NU Form 10-K, File No. 1-5324)
10.10.3 - Form of Third Amendment to Power Contract dated as of April 24,
1985 between VYNPC and each of the Company, PSNH and WMECO.
(Exhibit No. 10.10.3, 1994 NU Form 10-K, File No. 1-5324)
10.10.4 - Form of Fourth Amendment to Power Contract dated as of June 1,
1985 between VYNPC and each of the Company, PSNH and WMECO.
(Exhibit 10.10.4, 1996 NU Form 10-K, File No. 1-5324)
10.10.5 - Form of Fifth Amendment to Power Contract dated as of May 6, 1988
between VYNPC and each of the Company, PSNH and WMECO. (Exhibit
10.10.5, 1990 NU Form 10-K, File No. 1-5324)
10.10.6 - Form of Sixth Amendment to Power Contract dated as of May 6, 1988
between VYNPC and each of the Company, PSNH and WMECO. (Exhibit
10.10.6, 1990 NU Form 10-K, File No. 1-5324)
10.10.7 - Form of Seventh Amendment to Power Contract dated as of June 15,
1989 between VYNPC and each of the Company, PSNH and WMECO.
(Exhibit 10.10.7, 1990 NU Form 10-K, File No. 1-5324)
10.10.8 - Form of Eighth Amendment to Power Contract dated as of December
1, 1989 between VYNPC and each of the Company, PSNH and WMECO.
(Exhibit 10.10.8, 1990 NU Form 10-K, File No. 1-5324)
10.10.9 - Form of Additional Power Contract dated as of February 1, 1984
between VYNPC and each of the Company, PSNH and WMECO. (Exhibit
10.10.9, 1993 NU Form 10-K, File No. 1-5324)
10.11 - Capital Funds Agreement dated as of February 1, 1968 between
VYNPC and the Company, HELCO, PSNH and WMECO. (Exhibit 4.16, File
No. 2-30018)
10.11.1 - Form of First Amendment to Capital Funds Agreement dated as of
March 12, 1968 between VYNPC and the Company, HELCO, PSNH and
WMECO. (Exhibit 4.17, File No. 2-30018)
10.11.2 - Form of Second Amendment to Capital Funds Agreement dated as of
September 1, 1993 between VYNPC and the Company, HELCO, PSNH and
WMECO. (Exhibit 10.11.2, 1993 NU Form 10-K, File No. 1-5324)
10.12 - Amended and Restated Millstone Plant Agreement dated as of
December 1, 1984 by and among the Company, WMECO and Northeast
Nuclear Energy Company (NNECO). (Exhibit 10.12, 1994 NU Form
10-K, File No. 1-5324)
10.13 - Sharing Agreement dated as of September 1, 1973 with respect to
1979 Connecticut nuclear generating unit (Millstone 3). (Exhibit
6.43, File No. 2-50142)
</TABLE>
E-6
<PAGE>
<TABLE>
<C> <S>
10.13.1 - Amendment dated August 1, 1974 to Sharing Agreement - 1979
Connecticut Nuclear Unit. (Exhibit 5.45, File No. 2-52392)
10.13.2 - Amendment dated December 15, 1975 to Sharing Agreement - 1979
Connecticut Nuclear Unit. (Exhibit 7.47, File No. 2-60806)
10.13.3 - Amendment dated April 1, 1986 to Sharing Agreement - 1979
Connecticut Nuclear Unit. (Exhibit 10.17.3, 1990 NU Form 10-K,
File No. 1-5324)
10.14 - Agreement dated July 19, 1990, among North Atlantic Energy
Service Corporation (NAESCO) and Seabrook Nuclear Power Station
(Seabrook) joint owners with respect to operation of Seabrook.
(Exhibit 10.53, 1990 NU Form 10-K, File No. 1-5324)
10.15 - Sharing Agreement between the Company, WMECO, Holyoke Power &
Electric Company (HP&E), Holyoke Water Power Company (HWP) and
PSNH dated as of June 1, 1992. (Exhibit 10.17, 1992 NU Form 10-K,
File No. 1-5324)
10.16 - Agreement (composite) for joint ownership, construction and
operation of Seabrook, as amended through the November 1, 1990
twenty-third amendment. (Exhibit No. 10.17, 1994 NU Form 10-K,
File No. 1-5324)
10.16.1 - Memorandum of Understanding dated November 7, 1988 between PSNH
and Massachusetts Municipal Wholesale Electric Company (Exhibit
10.17, PSNH 1989 Form 10-K, File No. 1-6392)
10.16.2 - Agreement of Settlement among joint owners dated as of January
13, 1989. (Exhibit 10.13.21, 1988 NU Form 10-K, File No. 1-5324)
10.16.2.1- Supplement to Settlement Agreement, dated as of February 7, 1989,
between PSNH and Central Maine Power Company. (Exhibit 10.18.1,
PSNH 1989 Form 10-K, File No. 1-6392)
10.17 - Amended and Restated Agreement for Seabrook Project Disbursing
Agent dated as of November 1, 1990. (Exhibit 10.4.7, File No.
33-35312)
10.17.1 - Form of First Amendment to Exhibit 10.17. (Exhibit 10.4.8, File
No. 33-35312)
10.17.2 - Form (Composite) of Second Amendment to Exhibit 10.17. (Exhibit
10.18.2, 1993 NU Form 10-K, File No. 1-5324)
10.18 - Form of Service Contract dated as of July 1, 1966 between each of
NU, the Company, WMECO and NUSCO. (Exhibit 10.20, 1993 NU Form
10-K, File No. 1-5324)
10.18.1 - Form of Annual Renewal of Service Contract. (Exhibit 10.20.3,
1993 NU Form 10-K, File No. 1-5324)
</TABLE>
E-7
<PAGE>
<TABLE>
<C> <S>
10.19 - Memorandum of Understanding between the Company, HELCO, HP&E, HWP
and WMECO dated as of June 1, 1970 with respect to pooling of
generation and transmission. (Exhibit 13.32, File No. 2-38177)
10.19.1 - Amendment to Memorandum of Understanding between the Company,
HELCO, HP&E, HWP and WMECO dated as of February 2, 1982 with
respect to pooling of generation and transmission. (Exhibit
10.21.1, 1993 NU Form 10-K, File No. 1-5324)
10.19.2 - Amendment to Memorandum of Understanding between the Company,
HELCO, HP&E, HWP and WMECO dated as of January 1, 1984 with
respect to pooling of generation and transmission. (Exhibit
10.21.2, 1994 NU Form 10-K, File No. 1-5324)
10.20 - New England Power Pool Agreement effective as of November 1,
1971, as amended to December 1, 1996. (Exhibit 10.15, 1988 NU
Form 10-K, File No. 1-5324.)
10.20.1 - Twenty-sixth Amendment to Exhibit 10.20 dated as of March 15,
1989. (Exhibit 10.15.1, 1990 NU Form 10-K, File No. 1-5324)
10.20.2 - Twenty-seventh Amendment to Exhibit 10.20 dated as of October 1,
1990. (Exhibit 10.15.2, 1991 NU Form 10-K, File No. 1-5324)
10.20.3 - Twenty-eighth Amendment to Exhibit 10.20 dated as of
September 15, 1992. (Exhibit 10.18.3, 1992 NU Form 10-K, File
No. 1-5324)
10.20.4 - Twenty-ninth Amendment to Exhibit 10.20 dated as of May 1, 1993.
(Exhibit 10.22.4, 1993 NU Form 10-K, File No. 1-5324)
10.20.5 - Thirty-second Amendment (Amendments 30 and 31 were withdrawn) to
Exhibit 10.20 dated as of September 1, 1995. (Exhibit 10.23.5,
1995 NU Form 10-K, File No. 1-5324)
10.20.6 - Thirty-third Amendment to Exhibit 10.20 dated as of December 31,
1996 and Form of Interim Independent System Operator (ISO)
Agreement. (Exhibit 10.236, 1996 NU Form 10-K, File No. 1-5324)
10.21 - Agreements among New England Utilities with respect to the Hydro-
Quebec interconnection projects. (See Exhibits 10(u) and 10(v);
10(w), 10(x), and 10(y), 1990 and 1988, respectively, Form 10-K
of New England Electric System, File No. 1-3446.)
10.22 - Trust Agreement dated February 11, 1992, between State Street
Bank and Trust Company of Connecticut, as Trustor, and Bankers
Trust Company, as Trustee, and the Company and WMECO, with
respect to Niantic Bay Fuel Trust. (Exhibit 10.23, 1991 NU Form
10-K, File No. 1-5324)
10.22.1 - Nuclear Fuel Lease Agreement dated as of February 11, 1992,
between Bankers Trust Company, Trustee, as Lessor, and the
</TABLE>
E-8
<PAGE>
<TABLE>
<C> <S>
Company and WMECO, as Lessees. (Exhibit 10.23.1, 1991 NU Form
10-K, File No. 1-5324)
10.23 - Simulator Financing Lease Agreement, dated as of February 1,
1985, by and between ComPlan and NNECO. (Exhibit 10.25, 1994 NU
Form 10-K, File No. 1-5324)
10.24 - Simulator Financing Lease Agreement, dated as of May 2, 1985, by
and between The Prudential Insurance Company of America and
NNECO. (Exhibit No. 10.26, 1994 NU Form 10-K, File No. 1-5324)
10.25 - Lease dated as of April 14, 1992 between The Rocky River Realty
Company (RRR) and NUSCO with respect to the Berlin, Connecticut
headquarters (office lease). (Exhibit 10.29, 1992 NU Form 10-K,
File No. 1-5324)
10.25.1 - Lease dated as of April 14, 1992 between RRR and NUSCO with
respect to the Berlin, Connecticut headquarters (project lease).
(Exhibit 10.29.1, 1992 NU Form 10-K, File No. 1-5324)
10.26 - Millstone Technical Building Note Agreement dated as of December
21, 1993 between, by and between The Prudential Insurance Company
of America and NNECO. (Exhibit 10.28, 1993 NU Form 10-K, File No.
1-5324)
10.27 - Note Agreement dated April 14, 1992, by and between RRR and
Purchasers named therein (Connecticut General Life Insurance
Company, Life Insurance Company of North America, INA Life
Insurance Company of New York, Life Insurance Company of
Georgia), with respect to RRR's sale of $15 million of guaranteed
senior secured notes due 2007 and $28 million of guaranteed
senior secured notes due 2017. (Exhibit 10.52, 1992 NU Form 10-K,
File No. 1-5324)
10.27.1 - Note Guaranty dated April 14, 1992 by Northeast Utilities
pursuant to Note Agreement dated April 14, 1992 between RRR and
Note Purchasers, for the benefit of The Connecticut National Bank
as Trustee, the Purchasers and the owners of the notes. (Exhibit
10.52.1, 1992 NU Form 10-K, File No. 1-5324)
10.27.2 - Assignment of Leases, Rents and Profits, Security Agreement and
Negative Pledge, dated as of April 14, 1992 among RRR, NUSCO and
The Connecticut National Bank as Trustee, securing notes sold by
RRR pursuant to April 14, 1992 Note Agreement. (Exhibit 10.52.2,
1992 NU Form 10-K, File No. 1-5324)
10.28 - Master Trust Agreement dated as of September 2, 1986 between the
Company and WMECO and Colonial Bank as Trustee, with respect to
reserve funds for Millstone 1 decommissioning costs. (Exhibit
10.32, 1996 NU Form 10-K, File No. 1-5324)
10.28.1 - Notice of Appointment of Mellon Bank, N.A. as Successor Trustee,
dated November 20, 1990, and Acceptance of
</TABLE>
E-9
<PAGE>
<TABLE>
<C> <S>
Appointment. (Exhibit 10.41.1, 1992 NU Form 10-K, File No. 1-
5324)
10.29 - Master Trust Agreement dated as of September 2, 1986 between the
Company and WMECO and Colonial Bank as Trustee, with respect to
reserve funds for Millstone 2 decommissioning costs. (Exhibit
10.33, 1996 NU Form 10-K, File No. 1-5324)
10.29.1 - Notice of Appointment of Mellon Bank, N.A. as Successor Trustee,
dated November 20, 1990, and Acceptance of Appointment. (Exhibit
10.42.1, 1992 NU Form 10-K, File No. 1-5324)
10.30 - Master Trust Agreement dated as of April 23, 1986 between the
Company and WMECO and Colonial Bank as Trustee, with respect to
reserve funds for Millstone 3 decommissioning costs. (Exhibit
10.34, 1996 NU Form 10-K, File No. 1-5324)
10.30.1 - Notice of Appointment of Mellon Bank, N.A. as Successor Trustee,
dated November 20, 1990, and Acceptance of Appointment. (Exhibit
10.43.1, 1992 NU Form 10-K, File No. 1-5324)
10.31 - NU Executive Incentive Plan, effective as of January 1, 1991.
(Exhibit 10.44, NU 1991 Form 10-K, File No. 1-5324)
10.32 - Supplemental Executive Retirement Plan for Officers of NU System
Companies, amended and restated, effective as of January 1, 1992.
(Exhibit 10.45.1, NU Form 10-Q for the Quarter Ended June 30,
1992, File No. 1-5324)
10.32.1 - Amendment 1 to Exhibit 10.32, effective as of August 1, 1993.
(Exhibit 10.35.1, 1993 NU Form 10-K, File No. 1-5324)
10.32.2 - Amendment 2 to Exhibit 10.32, effective as of January 1, 1994.
(Exhibit 10.35.2, 1993 NU Form 10-K, File No. 1-5324)
10.32.3 - Amendment 3 to Exhibit 10.32, effective as of January 1, 1996.
(Exhibit 10.36.3, 1995 NU Form 10-K, File No. 1-5324)
*10.33 - Special Severance Program for Officers of NU System Companies,
as adopted on June 9, 1997.
10.34 - Loan Agreement dated as of December 2, 1991, by and between NU
and Mellon Bank, N.A., as Trustee, with respect to NU's loan of
$175 million to an ESOP Trust. (Exhibit 10.46, NU 1991 Form 10-K,
File No. 1-5324)
10.34.1 - First Amendment to Exhibit 10.34 dated February 7, 1992. (Exhibit
10.36.1, 1993 NU Form 10-K, File No. 1-5324)
10.34.2 - Loan Agreement dated as of March 19, 1992 by and between NU and
Mellon Bank, N.A., as Trustee, with respect to NU's loan of $75
</TABLE>
E-10
<PAGE>
<TABLE>
<C> <S>
million to the ESOP Trust. (Exhibit 10.49.1, 1992 NU Form 10-K,
File No. 1-5324)
10.34.3 - Second Amendment to Exhibit 10.34 dated April 9, 1992. (Exhibit
10.36.3, 1993 NU Form 10-K, File No. 1-5324)
10.35 - Credit Agreements among the Company, NU, WMECO, NUSCO (as Agent)
and 3 Commercial Banks dated December 3, 1992 (Three-Year
Facility). (Exhibit C.2.38, 1992 NU Form U5S, File No. 30-246)
10.36 - Credit Agreements among the Company, WMECO, NU, HWP, RRR, NNECO
and NUSCO (as Agent) and 1 commercial bank dated December 3, 1992
(Three-Year Facility). (Exhibit C.2.39, 1992 NU Form U5S, File
No. 30-246)
10.37 - First Amendment and Waiver dated as of May 30, 1997 to Credit
Agreement dated as of November 21, 1996 among the Company, NU,
WMECO and the Co-Agents and Banks named therein. (Exhibit No.
B.4(a) (Execution Copy), File No. 70-8875)
10.38 - Employment Agreement with Bernard M. Fox. (Exhibit 10.48, NU Form
10-Q for the Quarter Ended June 30, 1992, File No. 1-5324)
10.39 - Transition and Retirement Agreement with Bernard M. Fox. (Exhibit
10.39, 1996 NU Form 10-K, File No. 1-5324)
10.40 - Employment Agreement with Bruce M. Kenyon. (Exhibit 10.40, 1996
NU Form 10-K, File No. 1-5324)
10.41 - Employment Agreement with John H. Forsgren. (Exhibit 10.41, 1996
NU Form 10-K, File No. 1-5324)
10.42 - Employment Agreement with Hugh C. MacKenzie. (Exhibit 10.42, 1996
NU Form 10-K, File No. 1-5324)
10.43 - Employment Agreement with Ted C. Feigenbaum. (Exhibit 10.43, 1996
NU Form 10-K, File No. 1-5324)
10.44 - Employment Agreement with Robert E. Busch. (Exhibit 10, NU Form
10-Q for the Quarter Ended September 30, 1996, File No. 1-5324)
10.45 - Northeast Utilities Deferred Compensation Plan for Trustees,
amended and restated December 13, 1994. (Exhibit 10.39, 1995 NU
Form 10-K, File No. 1-5324)
10.46 - Deferred Compensation Plan for Officers of Northeast Utilities
System Companies, as adopted September 23, 1986. (Exhibit 10.40,
1995 NU Form 10-K, File No. 1-5324)
10.47 - Reciprocal Support Agreement Among NNECO, NAESCO, CYAPC, YAEC and
NUSCO dated January 1, 1996. (Exhibit 10.41, 1995 NU Form 10K,
File No. 1-5324)
</TABLE>
E-11
<PAGE>
<TABLE>
<C> <S>
10.48 - Receivables Purchase and Sale Agreement, dated as of July 11,
1996. (Exhibit 10.48, 1996 NU Form 10-K, File No. 1-5324)
10.49 - Master Lease Agreement between General Electric Capital
Corporation and the Company, dated as of June 21, 1996. (Exhibit
10.50, 1996 NU Form 10-K, File No. 1-5324)
*12 - Statement re computation of Ratio of Earnings to Fixed Charges.
21 - Subsidiaries of the Registrant. (Exhibit 21, 1996 NU Form 10-K,
File No. 1-5324)
*23 - Consent of Arthur Andersen LLP. (See also Exhibit 5.1)
*24 - Power of Attorney. (See page II-18)
*25 - Form T-1 of Bankers Trust Company, Trustee.
*99 - Letter of Transmittal for the Exchange Offer.
</TABLE>
E-12
<PAGE>
Exhibit 4.1
THE CONNECTICUT LIGHT AND POWER COMPANY
$200,000,000 First and Refunding Mortgage Bonds,
1997 Series B due June 1, 2002
REGISTRATION RIGHTS AGREEMENT
New York, New York
June 19, 1997
Morgan Stanley & Co. Incorporated
Salomon Brothers Inc
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
The Connecticut Light and Power Company, a Connecticut corporation
(the "Company"), proposes to issue and sell (the "Initial Placement") to Morgan
Stanley & Co. Incorporated ("Morgan Stanley") and Salomon Brothers Inc
("Salomon" and, together with Morgan Stanley, the "Purchasers"), upon the terms
set forth in a placement agreement of even date herewith (the "Placement
Agreement"), $200,000,000 of the Company's First and Refunding Mortgage Bonds,
1997 Series B due June 1, 2002 (the "Bonds"). The Bonds will be issued under the
Indenture of Mortgage and Deed of Trust dated as of May 1, 1921 between the
Company and Bankers Trust Company, as amended and supplemented and to be further
supplemented by the 67th Supplemental Indenture relating to the Bonds to be
dated as of June 1, 1997 (such indenture, as so amended and supplemented, the
"Indenture"), between the Company and Bankers Trust Company, as trustee (the
"Trustee"). As an inducement to the Purchasers to enter into the Placement
Agreement and in satisfaction of a condition to your obligations thereunder, the
Company agrees with you, (i) for your benefit and (ii) for the benefit of the
holders from time to time, as follows:
1. Definitions. Capitalized terms used herein without definition
-----------
shall have their respective meanings set forth in the Placement Agreement. As
used in this Agreement, the following capitalized defined terms shall have the
following meanings:
"Act" means the Securities Act of 1933, as amended, and the rules and
---
regulations of the Commission promulgated thereunder.
"Affiliate" has the meaning given to that term in Rule 405 of the Act
---------
or any successor rule thereunder.
<PAGE>
"Closing Date" has the meaning set forth in the Placement Agreement.
------------
"Commission" means the Securities and Exchange Commission.
----------
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations of the Commission promulgated thereunder.
"Exchange Bonds" means, in respect of the Bonds, a like principal
--------------
amount of debt securities of the Company identical in all material respects to,
and entitled to substantially the same benefits as, the Bonds.
"Exchange Offer Registration Period" means the 180-day period
----------------------------------
following the issuance of the Exchange Bonds, exclusive of any period during
which any stop order shall be in effect suspending the effectiveness of the
Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration statement
-------------------------------------
of the Company on an appropriate form under the Act with respect to the
Registered Exchange Offer, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchanging Dealer" means any Holder (which may include any Purchaser)
-----------------
which is a broker-dealer electing to exchange Bonds acquired for its own account
as a result of market-making activities or other trading activities for Exchange
Bonds.
"Final Memorandum" has the meaning set forth in the Placement
----------------
Agreement.
"Holder" means each of the Purchasers, for so long as any such
------
Purchaser shall hold Registrable Bonds, and each of their successors, assigns
and direct and indirect transferees who become holders of Registrable Bonds.
"Indenture" has the meaning set forth in the preamble hereto.
---------
"Initial Placement" has the meaning set forth in the preamble hereto.
-----------------
"Liquidated Damages" has the meaning set forth in Section 7(a) hereof.
------------------
"Majority Holders" means the Holders of a majority of the aggregate
----------------
principal amount of securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment
---------------------
bankers and manager or managers that shall administer an underwritten offering.
"Bonds" has the meaning set forth in the preamble hereto.
-----
"Prospectus" means the prospectus included in any Registration
----------
Statement (including a prospectus that discloses information previously omitted
from a prospectus filed as part of an effective registration statement in
reliance upon Rule 430A under the Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Bonds or the Exchange Bonds, covered by such Registration
-2-
<PAGE>
Statement, and all amendments and supplements to the Prospectus, including post-
effective amendments.
"Registrable Bonds" shall mean the Bonds; provided, however, that
----------------- -------- -------
Bonds shall cease to be Registrable Bonds when (i) a Shelf Registration
Statement with respect to such Bonds shall have been declared effective under
the Act and such Bonds shall have been disposed of pursuant to such Registration
Statement, (ii) such Bonds shall have been sold pursuant to Rule 144(k) (or any
similar rule then in effect, but not Rule 144A) under the Act, (iii) such Bonds
shall have ceased to be outstanding or (iv) the Bonds shall have been exchanged
for Exchange Bonds which may be transferred without restriction under the Act.
"Registered Exchange Offer" means the proposed offer to the Holders to
-------------------------
issue and deliver to such Holders a like principal amount of the Exchange Bonds,
in exchange for the Bonds.
"Registration Statement" means any Exchange Offer Registration
----------------------
Statement or Shelf Registration Statement that covers any of the Registrable
Bonds or the Exchange Bonds pursuant to the provisions of this Agreement, and
amendments and supplements to such registration statement, including post-
effective amendments, in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by reference therein.
"Shelf Registration" means a registration effected pursuant to
------------------
Section 3 hereof.
"Shelf Registration Event" has the meaning set forth in Section 3
------------------------
hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
-------------------------
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
----------------------------
of the Company pursuant to the provisions of Section 3 hereof which covers some
or all of the Registrable Bonds on an appropriate form under Rule 415 under the
Act, or any similar rule that may be adopted by the Commission, and amendments
and supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Special Counsel" means Winthrop, Stimson, Putnam & Roberts or any one
---------------
such other counsel as shall be specified by the Majority Holders of securities
included in the relevant Registration Statement, the reasonable fees and
expenses of which will be paid by the Company pursuant to Section 5 hereof.
"Trustee" has the meaning set forth in the preamble hereto.
-------
"Underwriter" means any underwriter of Registrable Bonds in connection
-----------
with an offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer; Resales of Exchange Bonds by
-------------------------- ------------------- --------
Exchanging Dealers. Unless prohibited by law or Commission policy: (a) The
- ------------------
Company shall prepare and file with the Commission the Exchange Offer
Registration Statement. The Company shall use its best efforts to cause the
Exchange Offer Registration Statement to become effective under the Act on or
prior to 150 days after the Closing Date.
-3-
<PAGE>
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Registrable Bonds for Exchange Bonds (assuming that such
Holder is not an affiliate of the Company within the meaning of the Act,
acquires the Exchange Bonds in the ordinary course of such Holder's business and
has no arrangements with any person to participate in the distribution (within
the meaning of the Act) of the Exchange Bonds) to transfer such Exchange Bonds
from and after their receipt without any limitations or restrictions under the
Act and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States. The Company will be
entitled to close the Registered Exchange Offer 20 business days after the
commencement thereof provided that the Company has accepted all Bonds validly
tendered and not withdrawn pursuant to the Registered Exchange Offer.
(c) In connection with the Registered Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
and
(iii) comply in all material respects with all applicable laws.
(d) On or prior to 180 days after the Closing Date, the Company
shall use its best efforts to:
(i) accept for exchange all Registrable Bonds validly tendered and
not withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all Registrable Bonds so
accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver to each
Holder of tendered Registrable Bonds, Exchange Bonds of the appropriate
series equal in principal amount to the Registrable Bonds of such Holder so
accepted for exchange therefor.
(e) The Purchasers and the Company acknowledge that, pursuant to
interpretations by the Commission's staff of Section 5 of the Act, and in the
absence of an applicable exemption therefrom, each Exchanging Dealer is required
to deliver a Prospectus in connection with a sale of any Exchange Bonds received
by such Exchanging Dealer pursuant to the Registered Exchange Offer in exchange
for Registrable Bonds acquired for its own account as a result of market-making
activities or other trading activities. Accordingly, the Company shall:
(i) include the information set forth in Annex A hereto on the
cover of the Exchange Offer Registration Statement, in Annex B hereto in
the forepart of the Exchange Offer Registration Statement in a section
setting forth details of the Registered Exchange Offer, and in Annex C
hereto in the underwriting or plan of distribution section of the
Prospectus forming a part of the Exchange Offer Registration Statement, and
include the information set forth in Annex D hereto in the Letter of
Transmittal
-4-
<PAGE>
delivered pursuant to the Registered Exchange Offer; and
(ii) keep the Exchange Offer Registration Statement continuously
effective under the Act during the Exchange Offer Registration Period for
delivery of the Prospectus forming a part thereof by Exchanging Dealers in
connection with sales of Exchange Bonds received pursuant to the Registered
Exchange Offer, as contemplated by Section 4(h) below.
(f) In the event that the Purchasers determine that they are not
eligible to participate in the Registered Exchange Offer with respect to the
exchange of Bonds constituting any portion of their initial unsold allotment, at
the request of the Purchasers, the Company shall issue and deliver to the
Purchasers, in exchange for such Bonds, a like principal amount of Exchange
Bonds (provided that such Exchange Bonds shall include legends with respect to
restrictions on transfer and shall be deemed Registrable Bonds), and the Company
shall, for a period of 180 days after consummation of the Registered Exchange
Offer, make available as many copies of the Exchange Offer Registration
Statement Prospectus, as amended or supplemented, as reasonably requested by the
Purchasers. The Company shall seek to cause the CUSIP Service Bureau to issue
the same CUSIP number(s) for such securities as for the corresponding series of
Exchange Bonds issued pursuant to the Registered Exchange Offer. The Purchasers
agree to promptly notify the Company in writing following the resale of their
initial allotment of Bonds.
3. Shelf Registration. If, (i) because of any change in law or
------------------
currently prevailing interpretations of law by the Commission's staff, the
Company determines upon advice of its outside counsel that it is not permitted
to file the Exchange Offer Registration Statement or effect the Registered
Exchange Offer as contemplated by Section 2 hereof, or (ii) for any other reason
the Registered Exchange Offer is not, despite the Company's best efforts,
consummated within 180 days of the Closing Date and the Holders of a majority in
principal amount of Bonds so request, or (iii) any Holder notifies the Company
that (a) due to a change in law or policy it is not entitled to participate in
the Exchange Offer; (b) due to a change in law or policy it may not resell the
Exchange Bonds acquired by it in the Exchange Offer to the public without
delivering a prospectus and the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder or (c) it is a broker-dealer and owns Bonds acquired directly from the
Company or any affiliate of the Company (the events described in clauses (i),
(ii) and (iii) of this paragraph are each referred to herein as a "Shelf
Registration Event"), the following provisions shall apply:
(a) The Company shall promptly deliver to the Holders written notice
of a Shelf Registration Event, and file with the Commission, prior to 30 days
after such filing obligation arises, and thereafter use its best efforts to
cause to be declared effective under the Act on or prior to 150 days after such
obligation arises, a Shelf Registration Statement relating to the offer and sale
of the Registrable Bonds by the Holders from time to time in accordance with the
methods of distribution elected by such Holders and set forth in such Shelf
Registration Statement; provided, however, that with respect to Exchange Bonds
-------- -------
received by the Purchasers in exchange for Bonds constituting any portion of an
unsold allotment, the Company may, if permitted by current interpretations by
the Commission's staff, file a post-effective amendment to the Exchange Offer
Registration Statement containing the information required by Regulation S-K
Items 507 and/or 508, as applicable, in satisfaction of their obligations under
this paragraph (a) with respect thereto, and any such Exchange Offer
Registration Statement, as so amended, shall be referred to herein as, and
governed by the provisions herein applicable to, a Shelf Registration Statement.
-5-
<PAGE>
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended in order
to permit the Prospectus forming part thereof to be usable by Holders for a
period of two years from the Closing Date or such shorter period that will
terminate when all the Registrable Bonds covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement or
otherwise cease being Registrable Bonds (in any such case, such period being
called the "Shelf Registration Period").
4. Registration Procedures. In connection with any Shelf
-----------------------
Registration Statement and, to the extent specified, any Exchange Offer
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to each Purchaser, prior to the filing
thereof with the Commission, a copy of any Shelf Registration Statement and
any Exchange Offer Registration Statement, and each amendment thereof and
each amendment or supplement, if any, to the Prospectus included therein
and the Company shall, upon request, promptly incorporate in such
Registration Statement, such information and comments as the Purchasers
reasonably agree with the Company and its counsel should be included
therein provided that the Company shall not be required to take any action
under this Section 4(a) that is not in the reasonable opinion of counsel
for the Company in compliance with applicable law.
(b) The Company shall ensure that (i) any Registration Statement and
any amendment thereto and any Prospectus forming a part thereof and any
amendment or supplement thereto complies in all material respects with the
Act, (ii) any Registration Statement and any amendment thereto does not,
when it becomes effective, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (iii) any Prospectus
forming part of any Registration Statement, and any amendment or supplement
to such Prospectus, does not, during the period when delivery thereof is
required, include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) (1) The Company shall advise the Purchasers and, in the case of
a Shelf Registration Statement, the Holders of securities covered thereby
and, if requested by you or any such Holder, confirm such advice in
writing:
(i) when a Registration Statement and any amendment thereto
has been filed with the Commission and when a Registration Statement
or any post-effective amendment thereto has become effective; and
(ii) of any request by the Commission for amendments or
supplements to a Registration Statement or the Prospectus included
therein or for additional information.
(2) The Company shall advise the Purchasers and, in the case
of a Shelf Registration Statement, the Holders of securities covered
thereby, and, in the case of an Exchange Offer Registration Statement, any
Exchanging Dealer which has provided in writing to the Company a telephone
or facsimile number and address for notices, and,
-6-
<PAGE>
if requested by you or any such Holder or Exchanging Dealer, confirm such
advice in writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose;
(ii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(iii) of the suspension of the use of a Prospectus.
(d) The Company shall use its best efforts to prevent the issuance
or obtain the withdrawal of any order suspending the effectiveness or use
of any Registration Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of securities
included within the coverage of any Shelf Registration Statement, without
charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits
(including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period, as
promptly as is reasonably practicable deliver to each Holder of securities
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the Prospectus (including each preliminary
Prospectus) included in such Shelf Registration Statement and any amendment
or supplement thereto as such Holder may reasonably request; and subject to
Section 4(k), the Company consents to the use of the Prospectus or any
amendment or supplement thereto as to which no notice has been given
pursuant to paragraph 4(c)(2) by each of the selling Holders of securities
in connection with the offering and sale of the securities covered by the
Prospectus or any amendment or supplement thereto.
(g) The Company shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, any documents incorporated by reference
therein, and, if the Exchanging Dealer so requests in writing, all exhibits
(including those incorporated by reference).
(h) The Company shall, during the Exchange Offer Registration
Period, promptly deliver to each Exchanging Dealer, without charge, as many
copies of the Prospectus included in such Exchange Offer Registration
Statement and any amendment or supplement thereto as such Exchanging Dealer
may reasonably request for delivery by such Exchanging Dealer in connection
with a sale of Exchange Bonds received by it pursuant to the Registered
Exchange Offer; and subject to Section 4(k), the Company consents to the
use of the Prospectus or any amendment or supplement thereto as to which no
notice has been given pursuant to paragraph 4(c)(2) by any such Exchanging
Dealer, as aforesaid.
-7-
<PAGE>
(i) Prior to the Registered Exchange Offer or the effectiveness of
a Registration Statement, the Company shall, if required by applicable law,
register or qualify or cooperate with the Holders of securities included
therein and their respective counsel in connection with the registration or
qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holders reasonably request
in writing and do any and all other acts or things necessary or advisable
to enable the offer and sale in such United States jurisdictions of the
securities covered by such Registration Statement; provided, however, that
the Company will not be required to (i) qualify generally to do business or
as a foreign corporation or as a dealer in securities in any jurisdiction
where it would not otherwise be required to so qualify but for this Section
4(i), (ii) file any general consent to service of process in any
jurisdiction where it is not as of the date hereof so subject or (iii)
subject itself to taxation in any jurisdiction where it is not otherwise
subject.
(j) Unless the applicable securities shall be in book-entry only
form, the Company shall cooperate with the Holders of Bonds to facilitate
the timely preparation and delivery of certificates representing
Registrable Bonds to be sold pursuant to any Registration Statement free of
any restrictive legends and in such denominations and registered in such
names as Holders may request prior to sales of Registrable Bonds pursuant
to such Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraphs
(c)(1)(ii) or (c)(2) above, the Company agrees to notify the Purchasers,
and in the case of a Shelf Registration Statement, the Holders of
securities covered thereby, to suspend use of the Prospectus and the
Company shall prepare, using its best efforts to do so as soon as possible,
a post-effective amendment to any Registration Statement or an amendment or
supplement to the related Prospectus or file any other required document so
that, as thereafter delivered to purchasers of the securities included
therein, the Prospectus will not include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading and the Purchasers, and in the case of a Shelf Registration
Statement, the Holders of securities covered thereby, shall suspend use of
such Prospectus until the Company has amended or supplemented such
Prospectus so that such Prospectus does not contain any such untrue
statement or omission.
(1) The Company shall use its best efforts to cause The Depository
Trust Company ("DTC"), on the first business day following the effective
date of any Shelf Registration Statement hereunder or as soon as possible
thereafter, to remove (i) from any existing CUSIP number assigned to any
series of Registrable Bonds, any designation indicating that such
Registrable Bonds are "restricted securities," which efforts shall include
delivery to DTC of a letter executed by the Company to such effect and (ii)
any other stop or restriction on DTC's system with respect to such
Registrable Bonds. In the event the Company is unable to cause DTC to take
the actions described in the immediately preceding sentence, the Company
shall take such actions as Morgan Stanley may reasonably request to
provide, as soon as practicable, a CUSIP number for each series of
Registrable Bonds registered under such Registration Statement and to cause
such CUSIP numbers to be assigned to such Registrable Bonds (or to the
maximum aggregate principal amount of such Registrable Bonds to which such
number(s) may be assigned). Upon compliance with the foregoing
requirements of this Section 4(1), the Company shall provide the Trustee
with printed certificates for each series of Registrable Bonds, in a form
eligible for deposit with DTC.
-8-
<PAGE>
(m) The Company shall use its best efforts to comply with all
applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the
effective date of the applicable Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Act.
(n) The Company shall cause the Indenture to be qualified under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), in
a timely manner.
(o) The Company may require each Holder of securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding such Holder and the distribution of such securities
by such Holder as the Company may from time to time reasonably require for
inclusion in such Registration Statement, and securities of a Holder which
does not provide information necessary for inclusion in such Registration
Statement may be omitted from any Shelf Registration Statement.
(p) The Company shall, upon request, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Managing Underwriters and Majority
Holders reasonably agree with the Company and its counsel should be
included therein and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as notified of the matters
to be incorporated in such Prospectus supplement or post-effective
amendment provided that the Company shall not be required to take any
action under this Section 4(p) that is not in the reasonable opinion of
counsel for the Company in compliance with applicable law.
(q) In the case of any Shelf Registration Statement, the Company
shall enter into such customary agreements (including underwriting
agreements) and take all other appropriate and reasonably required actions
in connection therewith in order to expedite or facilitate the registration
or the disposition of the Registrable Bonds and in connection therewith, if
an underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures no less favorable than those set
forth in Section 6 (or such other provisions and procedures acceptable to
the Holders of a majority in aggregate principal amount of Registrable
Bonds and the Managing Underwriters, if any) with respect to all parties to
be indemnified pursuant to Section 6.
(r) In the case of any Shelf Registration Statement, the Company
shall (i) make reasonably available for inspection by the Holders of
securities to be registered thereunder, subject to their acceptance of the
provisions of this Section 4(r), any underwriter participating in any
distribution pursuant to such Registration Statement, and any Special
Counsel, accountant or other agent retained by the Holders or any such
underwriter, all relevant financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries as shall
reasonably be required in connection with the discharge of their due
diligence obligations; (ii) cause the Company's officers, directors and
employees and any relevant trustee to supply all relevant information
reasonably requested by the Holders or any such underwriter, Special
Counsel, accountant or agent in connection with any such Registration
Statement as is customary for similar due diligence examinations; provided,
--------
however, that the foregoing inspection and information gathering shall be
-------
coordinated on behalf of the Holders and the other parties entitled thereto
by the Special Counsel and other parties; (iii) make such representations
and warranties to the Holders of securities registered thereunder and the
-9-
<PAGE>
underwriters, if any, in form, substance and scope as are customarily made
by issuers to underwriters in secondary offerings and covering such matters
as are customarily covered in representations and warranties requested in
secondary offerings; (iv) obtain opinions of counsel to the Company and
updates thereof addressed to each selling Holder and the underwriters, if
any, covering such matters and with such exceptions as are customarily
covered or taken in opinions requested in secondary offerings, (v) obtain
"cold comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any
business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each selling Holder of securities registered
thereunder and the underwriters, if any, in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with secondary offerings; and (vi) deliver such documents and
certificates as may be reasonably requested by the Majority Holders and the
Managing Underwriters, if any, or their counsel including those to evidence
compliance with Section 4(k) and with conditions customarily contained in
the underwriting agreement or other agreement entered into by the Company.
The foregoing actions set forth in clauses (iii) and (v) of this Section
4(r) shall be performed at the effectiveness of such Registration Statement
and those set forth in clauses (iii), (iv), (v) and (vi) of this Section
4(r) shall be performed at each closing under any underwriting or similar
agreement as and to the extent required thereunder.
(s) In the case of any Exchange Offer Registration Statement, if
requested by the Purchasers, the Company shall (i) make reasonably
available for inspection by the Purchasers, subject to their acceptance of
the provisions of this Section 4(s), and any Special Counsel, accountant or
other agent retained by the Purchasers, all relevant financial and other
records, pertinent corporate documents and properties of the Company and
its subsidiaries as shall reasonably be required in connection with the
discharge of their due diligence obligations; (ii) cause the Company's
officers, directors and employees and any relevant trustee to supply all
relevant information reasonably requested by the Purchasers or any such
Special Counsel, accountant or agent in connection with any such
Registration Statement as is customary for similar due diligence
examinations; provided, however, that the foregoing inspection and
-------- -------
information gathering shall be coordinated on behalf of the Purchasers and
other parties entitled thereto by the Special Counsel and other parties;
(iii) make such representations and warranties to the Purchasers, in form,
substance and scope as are customarily made by issuers to underwriters in
secondary offerings and covering such matters as are customarily covered in
representations and warranties requested in secondary offerings; and (iv)
deliver such documents and certificates as may be reasonably requested by
the Special Counsel, including those to evidence compliance with Section
4(k) and with conditions customarily contained in underwriting agreements.
The foregoing actions set forth in clauses (iii) and (iv) of this Section
4(s) shall be performed, if requested by the Special Counsel, at the
closing of the Registered Exchange Offer and the effective date of any
post-effective amendment to the Exchange Offer Registration Statement.
5. Registration Expenses. The Company shall bear all expenses
---------------------
incurred in connection with the performance of their obligations under Sections
2, 3 and 4 hereof, including for the reasonable fees and disbursements of the
Special Counsel; provided, however, that each Holder shall pay all underwriting
-------- -------
discounts and commissions and transfer taxes, if any, relating to the sale or
disposition of such Holder's Bonds pursuant to a Shelf Registration Statement.
-10-
<PAGE>
6. Indemnification; Contribution.
-----------------------------
(a) The Company agrees to indemnify and hold harmless each Holder
and each person, if any, who controls any Holder within the meaning of either
Section 15 of the Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by (i) any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or any amendment thereof, including all documents incorporated therein
by reference, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or (ii) any untrue statement or alleged untrue statement of a
material fact contained in any preliminary Prospectus or any Prospectus (or
amendment or supplement thereto) or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Holder furnished to the Company in writing by such
Holder expressly for use therein. The Company shall also indemnify each
Exchanging Dealer participating in the offering and sale of the Bonds and each
person who controls any such Exchanging Dealer (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) to the same extent and with the
same limitations as provided above with respect to the indemnification of the
Holders of the Bonds.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Company's directors, the Company's officers who
sign a Registration Statement, and each person, if any, who controls the Company
within the meaning of either Section 15 of the Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by (i) any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or any amendment thereof, or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary Prospectus or any Prospectus (or amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, but in the case of clauses (i) and (ii), only
with reference to information relating to such Holder furnished to the Company
in writing by such Holder expressly for use in such Registration Statement,
preliminary Prospectus, Prospectus or any amendments or supplements thereto. In
no event shall the liability of any Holder of the Bonds hereunder be greater in
amount than the net dollar amount of the proceeds received by such Holder from
the sale of the Bonds giving rise to such indemnification obligation.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either of the two preceding paragraphs, such
person (the "indemnified party") shall promptly notify the person against whom
----------- -----
such indemnity may be sought (the "indemnifying party") in writing and the
------------------
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the reasonable fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any
-11-
<PAGE>
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for (a) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all Holders and all persons, if any, who control any Holders within the meaning
of either Section 15 of the Act or Section 20 of the Exchange Act, and (b) the
fees and expenses of more than one separate firm (in addition to any local
counsel) for the Company, its officers and directors and each person, if any,
who controls the Company within the meaning of either such Section, and that all
such fees and expenses shall be reimbursed as they are incurred. In the case of
any such separate firm for the Company, its officers and directors and any such
control persons of the Company, such firm shall be designated in writing by the
Company. In the case of any such separate firm for the Holders or any such
control persons of any Holders, such firm shall be designated in writing on
behalf of the Majority Holders. The indemnifying party shall not be liable for
any settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 6 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities referred to herein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and the indemnified
party in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or by such indemnified party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this paragraph are several in
proportion to the respective principal amounts of the Bonds they have sold
pursuant to a Registration Statement, and not joint.
(e) The Company and the Holders agree that it would not be just or
equitable if contribution pursuant to Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) of this Section 6. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in paragraph (d) of this Section 6
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses
-12-
<PAGE>
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 6, a Holder of Registrable Bonds shall not be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Bonds sold by such indemnifying party and distributed to the public were offered
to the public pursuant to any Registration Statement exceeds the amount of any
damages which such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies provided
for in this Section 6 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Holder or any person controlling any Holder, or the Company or any person
controlling the Company and (iii) the sale of any Registrable Bonds pursuant to
an effective Registration Statement by any Holder.
7. Liquidated Damages Under Certain Circumstances. (a) Liquidated
----------------------------------------------
damages ("Liquidated Damages") shall become payable in respect of Registrable
Bonds as follows if either of the following events occur (each such event, a
"Registration Default")
(i) if the Registered Exchange Offer is not consummated on or prior
to the 180th day following the Closing Date; or
(ii) if after the Exchange Offer Registration Statement or Shelf
Registration Statement is declared effective, (A) such Exchange Offer
Registration Statement or Shelf Registration Statement ceases to be
effective prior to the end of the Exchange Offer Registration Period or
Shelf Registration Period (except as permitted in paragraph (b) of this
Section 7) or (B) such Exchange Offer Registration Statement or Shelf
Registration Statement or the related Prospectus ceases to be usable in
connection with resales of Registrable Bonds covered by such Exchange Offer
Registration Statement or Shelf Registration Statement prior to the end of
the Exchange Offer Registration Period or Shelf Registration Period (except
as permitted in paragraph (b) of this Section 7) because (1) the Company
determines that any event occurs as a result of which the related
Prospectus forming part of such Exchange Offer Registration Statement or
Shelf Registration Statement would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, (2) the Company determines that it shall be necessary
to amend such Exchange Offer Registration Statement or Shelf Registration
Statement, or supplement the related Prospectus, to comply with the Act or
the Exchange Act or the rules thereunder, or (3) the Company determines
that it is advisable to suspend use of the Prospectus for a discrete period
of time due to pending material corporate developments or similar material
events that have not yet been publicly disclosed and as to which the
Company believes public disclosure will be prejudicial to the Company.
Liquidated Damages shall accrue on the Registrable Bonds over and
above the original interest rate set forth in the Registrable Bonds following
the occurrence of a Registration Default set forth in clauses (i) and (ii) above
from and including the next day following each such Registration Default, with
respect to the first 90-day period immediately following the
-13-
<PAGE>
occurrence of such Registration Default by 0.50% per annum and will increase by
an additional 0.50% per annum with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of 1.50%
per annum; provided that in no event shall the interest rate payable on the
--------
Registrable Bonds be increased more than 0.50% per annum in any single 90-day
period above the interest rate applicable immediately prior to commencement of
such 90-day period. The Liquidated Damages attributable to each Registration
Default shall cease to accrue from the date such Registration Default is cured;
the effectiveness of the Shelf Registration Statement filed pursuant to Section
3 hereof shall be deemed to cure the Registration Default referred to in clause
(i) above.
(b) A Registration Default referred to in clause (ii) above shall be
deemed not to have occurred and be continuing in relation to the Exchange Offer
Registration Statement or Shelf Registration Statement or the related Prospectus
if (i) such Registration Default has occurred solely as a result of (x) the
filing of a post-effective amendment to such Exchange Offer Registration
Statement or Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related Prospectus or (y) the occurrence of other material
events or developments with respect to the Company that would need to be
described in such Exchange Offer Registration Statement or Shelf Registration
Statement or the related Prospectus and (ii) in the case of clause (y), the
Company is proceeding promptly and in good faith to amend or supplement such
Exchange Offer Registration Statement or Shelf Registration Statement and
related Prospectus to describe such events.
(c) As set forth in the Bonds (and without duplication), any amounts
of Liquidated Damages due pursuant to the foregoing paragraphs will be payable
in cash on June 1 and December 1 of each year to the holders of record on the
preceding May 15 and November 15, respectively (or if such record date is a day
on which banks are authorized to close in New York City, on the preceding
banking day).
8. Miscellaneous.
-------------
(a) No Inconsistent Agreements. The Company has not, as of the date
--------------------------
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to the Bonds that is inconsistent with the rights granted
to the Holders herein or otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the written
consent of the Holders of at least a majority of the then outstanding aggregate
principal amount of the Registrable Bonds; provided, however, that, with respect
-------- -------
to any matter that affects the rights of any Purchaser hereunder, the Company
shall obtain the written consent of such Purchaser. Notwithstanding the
foregoing (except the foregoing proviso), a waiver or consent to departure from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose Registrable Bonds are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by the Holders of a majority of the
Registrable Bonds, determined on the basis of Registrable Bonds being sold
rather than registered under such Registration Statement.
(c) Notices. All notices and other communications provided for or
-------
permitted
-14-
<PAGE>
hereunder shall be made in writing by hand-delivery, first-class mail, telex,
telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 8(c),
which address initially is, with respect to each Holder, the address of
such Holder maintained by the Registrar under the Indenture, with a copy in
like manner to Morgan Stanley;
(2) if to the Purchasers, initially at the address set forth in the
Placement Agreement; and
(3) if to the Company, initially at the address set forth in the
Placement Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
The Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
(d) Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Registrable Bonds. The Company hereby
agrees to extend the benefits of this Agreement to any Holder of Registrable
Bonds and any such Holder may enforce the provisions of this Agreement as if an
original party hereto.
(e) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
(h) Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Bonds Held by the Company, etc. Whenever the consent or
-------------------------------
approval of Holders of a specified percentage of principal amount of Registrable
Bonds is required hereunder, Bonds or Exchange Bonds, as applicable, held by the
Company or its Affiliates (other than subsequent Holders of Registrable Bonds if
such subsequent Holders are deemed to be
-15-
<PAGE>
Affiliates solely by reason of their holdings of such Bonds or Exchange Bonds)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.
-16-
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart thereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the several Purchasers and the Company in accordance with its terms.
Very truly yours,
THE CONNECTICUT LIGHT AND
POWER COMPANY
By: /s/John B. Keane
----------------------------------
Name: John B. Keane
Title: Vice President and Treasurer
The foregoing is
hereby confirmed
and accepted as of
the date first above
written.
MORGAN STANLEY & CO. INCORPORATED
SALOMON BROTHERS INC
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/Harold J. Hendershot, III
Title: Vice President
-17-
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Bonds for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Bonds. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Bonds received in exchange for Registrable Bonds where
such Registrable Bonds were acquired by such broker-dealer as a result of market
making activities or other trading activities. The Company has agreed that, for
a period of 180 days after the Expiration Date (as defined herein), it will make
this Prospectus available to any broker-dealer for use in connection with any
such resale. See "Plan of Distribution."
-A1-
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Bonds for its own account in
exchange for Bonds where such Bonds were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such Exchange
Bonds. See "Plan of Distribution."
-B1-
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Bonds for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Bonds. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Bonds received in
exchange for Existing Bonds where such Existing Bonds were acquired as a result
of market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale.
The Company will not receive any proceeds from any sale of Exchange Bonds
by broker-dealers. Exchange Bonds received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Bonds or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Bonds. Any broker-
dealer that resells Exchange Bonds that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Bonds may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such resale of Exchange
Bonds and any commission or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that, by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the fees and disbursements of one
counsel for the holders of the Registrable Bonds) other than commissions or
concessions of any brokers or dealers and will indemnify the holders of the
Registrable Bonds (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
-C1-
<PAGE>
ANNEX D
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
-------------------------------
Address:
----------------------------
----------------------------
If the undersigned is not a broker-dealer, the undersigned represents that
it is not engaged in, and does not intend to engage in, a distribution of
Exchange Bonds. If the undersigned is a broker-dealer that will receive Exchange
Bonds for its own account in exchange for Bonds that were acquired as a result
of market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such Exchange Bonds;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
-D1-
<PAGE>
Exhibit 4.19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SUPPLEMENTAL INDENTURE
Dated as of May 1, 1997
To
Indenture of Mortgage and Deed of Trust
Dated as of May 1, 1921
---------------------
THE CONNECTICUT LIGHT AND POWER COMPANY
TO
BANKERS TRUST COMPANY, Trustee
---------------------
1997 Series A Bonds, Due November 21, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY
Supplemental Indenture, Dated as of May 1, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Parties.........................................................................................................................2
Recitals........................................................................................................................2
Granting Clause.................................................................................................................4
Habendum........................................................................................................................5
Grant in Trust..................................................................................................................5
ARTICLE 1.
FORM AND PROVISIONS OF BONDS OF 1997 SERIES A
SECTION 1.01. Designation; Amount.............................................................................................5
SECTION 1.02. Form of Bonds of 1997 Series A..................................................................................6
SECTION 1.03. Provisions of Bonds of 1997 Series A; Interest Accrual; Effect of Payment on Credit Borrowings..................6
SECTION 1.04. Transfer and Exchange of Bonds of 1997 Series A; Agent as Registered Holder: Restriction on Transfer of Bonds of
1997 Series A...................................................................................................7
SECTION 1.05. Conditions under which 1997 Series A Bond Not Entitled to Benefits of Mortgage..................................8
SECTION 1.06. Sinking and Improvement Fund....................................................................................8
ARTICLE 2.
REPAYMENT OF BONDS OF 1997 SERIES A
SECTION 2.01. Repayment Upon Repayment of Credit Borrowings...................................................................8
ARTICLE 3.
MISCELLANEOUS
SECTION 3.01. Benefits of Supplemental Indenture and Bonds of 1997 Series A...................................................9
SECTION 3.02. Effect of Table of Contents and Headings........................................................................9
SECTION 3.03. Counterparts....................................................................................................9
SECTION 3.04. Payment Due on Holidays.........................................................................................9
TESTIMONIUM....................................................................................................................10
SIGNATURES.....................................................................................................................10
ACKNOWLEDGMENTS................................................................................................................11
</TABLE>
SCHEDULE A - Form of Bond of 1997 Series A Form of Trustee's Certificate
<PAGE>
-2-
SUPPLEMENTAL INDENTURE, dated as of the first day of May, 1997,
between THE CONNECTICUT LIGHT AND POWER COMPANY, a corporation organized and
existing under the laws of the State of Connecticut (hereinafter called the
"Company"), and BANKERS TRUST COMPANY, a corporation organized and existing
under the laws of the State of New York (hereinafter called the "Trustee").
WHEREAS, the Company heretofore duly executed, acknowledged and
delivered to the Trustee a certain Indenture of Mortgage and Deed of Trust dated
as of May 1, 1921, and sixty-five Supplemental Indentures thereto dated
respectively as of May 1, 1921, February 1, 1924, July 1, 1926, June 20, 1928,
June 1, 1932, July 1, 1932, July 1, 1935, September 1, 1936, October 20, 1936,
December 1, 1936, December 1, 1938, August 31, 1944, September 1, 1944, May 1,
1945, October 1, 1945, November 1, 1949, December 1, 1952, December 1, 1955,
January 1, 1958, February 1, 1960, April 1, 1961, September 1, 1963, April 1,
1967, May 1, 1967, January 1, 1968, October 1, 1968, December 1, 1969, January
1, 1970, October 1, 1970, December 1, 1971, August 1, 1972, April 1, 1973, March
1, 1974, February 1, 1975, September 1, 1975, May 1, 1977, March 1, 1978,
September 1, 1980, October 1, 1981, June 30, 1982, October 1, 1982, July 1,
1983, January 1, 1984, October 1, 1985, September 1, 1986, April 1, 1987,
October 1, 1987, November 1, 1987, April 1, 1988, November 1, 1988, June 1,
1989, September 1, 1989 , December 1, 1989, April 1, 1992, July 1, 1992, October
1, 1992, July 1, 1993, July 1, 1993, December 1, 1993, February 1, 1994,
February 1, 1994, June 1, 1994, October 1, 1994, June 1, 1996 and January 1,
1997 (said Indenture of Mortgage and Deed of Trust (i) as heretofore amended,
being hereinafter generally called the "Mortgage Indenture," and (ii) together
with said Supplemental Indentures thereto, being hereinafter generally called
the "Mortgage"), all of which have been duly recorded as required by law, for
the purpose of securing its First and Refunding Mortgage Bonds (of which
$1,484,000,000 aggregate principal amount are outstanding at the date of this
Supplemental Indenture) in an unlimited amount, issued and to be issued for the
purposes and in the manner therein provided, of which Mortgage this Supplemental
Indenture is intended to be made a part, as fully as if therein recited at
length;
WHEREAS, pursuant to the Credit Agreement dated as of November 21,
1996 (the "Original Agreement") among Northeast Utilities ("NU"), the Company
and Western Massachusetts Electric Company ("WMECO"), the Lenders and Co-Agents
named therein (collectively, the "Lenders") and Citibank, N.A. as administrative
agent as amended and restated by a First Amendment and Waiver dated as of
May 30, 1997 (the Original Agreement, as so amended and restated, herein called
the "Credit Agreement"), the Company has the right, upon meeting the conditions
thereof, to obtain up to $313,750,000 of Advances (as that term and all other
capitalized terms used but not otherwise defined in this Supplemental Indenture
are defined in the Credit Agreement) under the Credit Agreement; and
<PAGE>
-3-
WHEREAS, in consideration of the line of credit being provided by the
Banks under the Credit Agreement and pursuant to the provisions thereof, the
Company has agreed to issue $225,000,000 principal amount of its First and
Refunding Mortgage Bonds, 1997 Series A (hereinafter generally referred to as
the "1997 Series A Bonds" or the "bonds of 1997 Series A") to evidence and
secure the Company's obligation under the Credit Agreement to repay Advances as
provided in the Credit Agreement, to provide security for the borrowings by the
Company under the Credit Agreement and to secure the Company's obligation to pay
the Facility Fee under Section 2.02(b) of the Credit Agreement; provided however
-------- -------
that such obligation shall not exceed $410,000 (the "Facility Fee Obligation");
and
WHEREAS, pursuant to the terms of the Credit Agreement the entire
$225,000,000 principal amount of the 1997 Series A Bonds shall be made available
to the Agent as potential collateral for the aggregate unpaid principal amount
of Advances to the Company outstanding from time to time under the Credit
Agreement, plus the Facility Fee Obligation, together with accrued and unpaid
interest thereon then payable by the Company thereunder (collectively, as of any
time for determining same, the "Credit Borrowings"), it being understood that
the actual indebtedness evidenced by the 1997 Series A Bonds as of any time
shall be limited to the Credit Borrowings as determined at such time, that at no
time shall any claim be made for principal and interest on the 1997 Series A
Bonds in excess of the Credit Borrowings as determined at such time, and that,
to the extent that the outstanding principal amount of the 1997 Series A Bonds
exceeds such amount, neither the Lenders nor the Agent shall have any right
under, or right to exercise any right granted to the holders of such excess 1997
Series A Bonds under, the Mortgage; and
WHEREAS, in consideration of the Advances to be provided by the
Lenders under the Credit Agreement, and pursuant to the provisions of the Credit
Agreement, the Company has agreed to issue, and by appropriate and sufficient
corporate action in conformity with the provisions of the Mortgage has duly
determined to create, to evidence and secure the Company's obligation under the
Credit Agreement to make loan payments as aforesaid and to provide security for
the Credit Borrowings, a further series of bonds under the Mortgage, the 1997
Series A Bonds, to consist of fully registered bonds containing terms and
provisions duly fixed and determined by the Board of Directors of the Company
and expressed in this Supplemental Indenture, including terms and provisions
with respect to maturity, interest payment, interest rate and repayment as
provided herein Bonds, such fully registered bonds and the Trustee's certificate
of its authentication thereof to be substantially in the forms thereof
respectively set forth in Schedule A appended hereto and made a part hereof;
WHEREAS, the execution and delivery of this Supplemental Indenture
and the issue of not exceeding Two Hundred Twenty-Five Million Dollars
($225,000,000) in aggregate principal
<PAGE>
-4-
amount of bonds of 1997 Series A and other necessary actions have been duly
authorized by the Board of Directors of the Company;
WHEREAS, the Company proposes to execute and deliver this
Supplemental Indenture to provide for the issue of the bonds of 1997 Series A
and to confirm the lien of the Mortgage on the property referred to below, all
as permitted by Section 14.01 of the Mortgage Indenture; and
WHEREAS, all acts and things necessary to constitute this
Supplemental Indenture a valid, binding and legal instrument and to make the
bonds of 1997 Series A when executed by the Company and authenticated by the
Trustee valid, binding and legal obligations of the Company have been authorized
and performed;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE OF MORTGAGE AND DEED OF
TRUST WITNESSETH:
That in order to secure the payment of the principal of and interest
on all bonds issued and to be issued under the Mortgage, according to their
tenor and effect, and according to the terms of the Mortgage and this
Supplemental Indenture, and to secure the performance of the covenants and
obligations in said bonds and in the Mortgage and this Supplemental Indenture
respectively contained, and for the better assuring and confirming unto the
Trustee, its successor or successors and its or their assigns, upon the trusts
and for the purposes expressed in the Mortgage and this Supplemental Indenture,
all and singular the hereditaments, premises, estates and property of the
Company thereby conveyed or assigned or intended so to be, or which the Company
may thereafter have become bound to convey or assign to the Trustee, as security
for said bonds (except such hereditaments, premises, estates and property as
shall have been disposed of or released or withdrawn from the lien of the
Mortgage and this Supplemental Indenture, in accordance with the provisions
thereof and subject to alterations, modifications and changes in said
hereditaments, premises, estates and property as permitted under the provisions
thereof), the Company, for and in consideration of the premises and the sum of
One Dollar ($1.00) to it in hand paid by the Trustee, the receipt whereof is
hereby acknowledged, and of other valuable considerations, has granted,
bargained, sold, assigned, mortgaged, pledged, transferred, set over, aliened,
enfeoffed, released, conveyed and confirmed, and by these presents does grant,
bargain, sell, assign, mortgage, pledge, transfer, set over, alien, enfeoff,
release, convey and confirm unto said Bankers Trust Company, as Trustee, and its
successor or successors in the trust created by the Mortgage and this
Supplemental Indenture, and its and their assigns, all of said hereditaments,
premises, estates and property (except and subject as aforesaid), as fully as
though described at length herein. Together with all plants, buildings,
structures, improvements and machinery located upon said real estate or any
portion thereof, and all rights, privileges and easements of every kind and
nature appurtenant thereto, and all and singular the tenements, hereditaments
and appurtenances belonging to the real estate or any part
<PAGE>
-5-
thereof described or referred to therein or intended so to be, or in any wise
appertaining thereto, and the reversions, remainders, rents, issues and profits
thereof, and also all the estate, right, title, interest, property, possession,
claim and demand whatsoever, as well in law as in equity, of the Company, of, in
and to the same and any and every part thereof, with the appurtenances; except
and subject as aforesaid.
TO HAVE AND TO HOLD all and singular the property, rights and
privileges hereby granted or mentioned or intended so to be, together with all
and singular the reversions, remainders, rents, revenues, income, issues and
profits, privileges and appurtenances, now or hereafter belonging or in any way
appertaining thereto, unto the Trustee and its successor or successors in the
trust created by the Mortgage and this Supplemental Indenture, and its and their
assigns, forever, and with like effect as if the above described property,
rights and privileges had been specifically described at length in the Mortgage
and this Supplemental Indenture.
Subject, however, to permitted liens, as defined in the Mortgage
Indenture.
IN TRUST, NEVERTHELESS, upon the terms and trusts of the Mortgage and
this Supplemental Indenture for those who shall hold the bonds and coupons
issued and to be issued thereunder, or any of them, without preference, priority
or distinction as to lien of any of said bonds and coupons over any others
thereof by reason of priority in the time of the issue or negotiation thereof,
or otherwise howsoever, subject, however, to the provisions in reference to
extended, transferred or pledged coupons and claims for interest set forth in
the Mortgage and this Supplemental Indenture (and subject to any sinking fund
that may heretofore have been or hereafter be created for the benefit of any
particular series).
And it is hereby covenanted that all such bonds of 1997 Series A are
to be issued, authenticated and delivered, and that the mortgaged premises are
to be held by the Trustee, upon and subject to the trusts, covenants, provisions
and conditions and for the uses and purposes set forth in the Mortgage and this
Supplemental Indenture and upon and subject to the further covenants, provisions
and conditions and for the uses and purposes hereinafter set forth, as follows,
to wit:
ARTICLE 1.
FORM AND PROVISIONS OF BONDS OF 1997 SERIES A
SECTION 1.01. Designation; Amount. The bonds of 1997 Series A shall
be designated "First and Refunding Mortgage Bonds, 1997 Series A" and, subject
to Section 2.08 of the Mortgage Indenture, shall not exceed Two Hundred
Twenty-Five Million Dollars ($225,000,000) in aggregate principal amount at any
one time outstanding. The initial issue of
<PAGE>
-6-
the bonds of 1997 Series A may be effected upon compliance with the applicable
provisions of the Mortgage Indenture.
SECTION 1.02. Form of Bonds of 1997 Series A. The bonds of 1997
Series A shall be issued only in fully registered form without coupons in
denominations of One Thousand Dollars ($1,000) and multiples thereof.
The bonds of 1997 Series A and the certificate of the Trustee upon
said bonds shall be substantially in the forms thereof respectively set forth in
Schedule A appended hereto.
SECTION 1.03. Provisions of Bonds of 1997 Series A; Interest Accrual;
Effect of Payment on Credit Borrowings. The bonds of 1997 Series A shall mature
on November 21, 1999 and, subject to the provisions of the Credit Agreement,
shall bear interest, payable on the dates on which interest payments are payable
by the Company to the Lenders from time to time under the Credit Agreement (each
such date on which interest is so payable by the Company to the Lenders under
the Credit Agreement being an interest payment date applicable to the bonds of
1997 Series A), until the Company's obligation in respect of the principal
thereof shall be discharged, in amounts equal to the interest payments payable
by the Company to the Lenders pursuant to the Credit Agreement on such interest
payment dates applicable to the bonds of 1997 Series A; provided, however, that
-------- -------
in no event shall the interest rate payable on the 1997 Series A Bonds exceed
11%; and shall be payable both as to principal and interest at the office or
agency of the Company in the Borough of Manhattan, New York, New York, in any
coin or currency of the United States of America which at the time of payment is
legal tender for the payment of public and private debts. The interest on the
bonds of 1997 Series A, whether in temporary or definitive form, shall be
payable without presentation of such bonds; and only to or upon the written
order of the registered holders thereof of record at the applicable record date.
If, pursuant to the Credit Agreement, the Company's right to obtain Advances
thereunder shall be terminated and all or any portion of the principal of the
Credit Borrowings shall become or be declared immediately due and payable by the
Company, a like principal amount of the bonds of 1997 Series A, together with
all accrued interest thereon, shall without notice or demand of any kind, become
immediately due and payable. In addition, the bonds of 1997 Series A shall be
repayable in whole or in part according to the terms and provisions provided
herein in Article 2.
Subject to the provisions of the Credit Agreement and subject to the
Company's right to repay Advances and thereafter obtain new Advances, in each
case collateralized by 1997 Series A Bonds, thereunder, anything in the
Mortgage, this Supplemental Indenture or any bond of 1997 Series A to the
contrary notwithstanding, the bonds of 1997 Series A shall be deemed paid, and
all obligations of the Company to pay at the times provided herein the principal
of, premium, if any, and interest on the bonds of 1997 Series A shall be
satisfied and discharged, when and to the extent, that the Credit Borrowings
shall have been indefeasibly paid in full in
<PAGE>
-7-
accordance with the terms thereof and the obligations of the several Lenders to
make Advances to the Company under the Credit Agreement shall have been
terminated, it being understood that the actual indebtedness evidenced by the
1997 Series A Bonds as of any time shall be limited to the Credit Borrowings as
determined at such time, that at no time shall any claim be made for principal
and interest on the 1997 Series A Bonds in excess of the Credit Borrowings as
determined at such time, and that, to the extent that the outstanding principal
amount of the 1997 Series A Bonds exceeds such amount, neither the Lenders nor
the Agent shall have any right under, or right to exercise any right granted to
the holders of such excess 1997 Series A Bonds under, the Mortgage. Unless the
Trustee shall have received written notice to the contrary from the Company or
the Collateral Agent, the Trustee shall be entitled to assume that the Company
has made all payments required under the Credit Agreement.
Each bond of 1997 Series A shall be dated as of May 30, 1997 and
shall bear interest on the principal amount thereof as provided herein and in
the Credit Agreement.
Subject to the provisions of the Credit Agreement, the person in
whose name any bond of 1997 Series A is registered at the close of business on
any record date (as hereinafter defined) with respect to any interest payment
date shall be entitled to receive the interest payable on such interest payment
date notwithstanding the cancellation of such bond upon any registration of
transfer or exchange thereof subsequent to the record date and prior to such
interest payment date, except that if and to the extent the Company shall
default in the payment of the interest due on such interest payment date, then
such defaulted interest shall be paid to the person in whose name such bond is
registered on a subsequent record date for the payment of defaulted interest if
one shall have been established as hereinafter provided and otherwise on the
date of payment of such defaulted interest. A subsequent record date may be
established by the Company by notice mailed to the owners of the bonds of 1997
Series A not less than ten (10) days preceding such record date, which record
date shall not be more than thirty (30) days prior to the subsequent interest
payment date. The term "record date" as used in this Section with respect to any
regular interest payment date shall mean the day next preceding such interest
payment date, or if such day shall not be a Business Day, the next preceding day
which shall be a Business Day.
SECTION 1.04. Transfer and Exchange of Bonds of 1997 Series A; Agent
as Registered Holder: Restriction on Transfer of Bonds of 1997 Series A. The
bonds of 1997 Series A may be surrendered for registration of transfer as
provided in Section 2.06 of the Mortgage Indenture at the office or agency of
the Company in the Borough of Manhattan, New York, New York, and may be
surrendered at said office for exchange for a like aggregate principal amount of
bonds of 1997 Series A of other authorized denominations. Notwithstanding the
provisions of Section 2.06 of the Mortgage Indenture, no charge, except for
taxes or other governmental charges, shall be made by the Company for any
registration of
<PAGE>
-8-
transfer of bonds of 1997 Series A or for the exchange of any bonds of 1997
Series A for such bonds of other authorized denominations.
The bonds of 1997 Series A shall be issued to and registered in the
name of CITIBANK, N.A., as Collateral Agent for the benefit of the several
Lenders and, anything in the Mortgage, this Supplemental Indenture or any bond
of 1997 Series A to the contrary notwithstanding, the bonds of 1997 Series A
shall not be sold, assigned, pledged or transferred, except to effect the
transfer to any successor Collateral Agent under the Credit Agreement.
SECTION 1.05. Conditions under which 1997 Series A Bond Not Entitled
to Benefits of Mortgage. As provided in the Credit Agreement, anything in the
Mortgage, this Supplemental Indenture or any bond of 1997 Series A to the
contrary notwithstanding, (i) the actual indebtedness evidenced by the 1997
Series A Bonds as of any time shall be limited to the Credit Borrowings as
determined at such time; (ii) at no time shall any claim be made for principal
and interest on the 1997 Series A Bonds in excess of the Credit Borrowings as
determined at such time; and (iii) to the extent that the outstanding principal
amount of the 1997 Series A Bonds exceeds such amount, neither the Lenders nor
the Agent shall have any right under, or right to exercise any right granted to
the holders of such excess 1997 Series A Bonds under, the Mortgage.
SECTION 1.06. Sinking and Improvement Fund. Each holder of a bond of
1997 Series A, solely by virtue of its acquisition thereof, shall have and be
deemed to have consented, without the need for any further action or consent by
such holder, to any and all amendments to the Mortgage Indenture which are
intended to eliminate or modify in any manner the requirements of the sinking
and improvement fund as provided for in Section 6.14 thereof.
ARTICLE 2.
REPAYMENT OF BONDS OF 1997 SERIES A
SECTION 2.01. Repayment Upon Repayment of Credit Borrowings. In the
event that the Credit Agreement is (i) terminated in its entirety with respect
to the Company and the Credit Borrowings shall have been paid in full, all of
the then outstanding 1997 Series A Bonds shall be deemed paid and all
obligations of the Company thereunder and hereunder shall be deemed satisfied
and discharged, or (ii) amended to reduce the aggregate principal amount of
Advances which the Company may obtain thereunder (the Company's "Borrower
Sublimit"), bonds of the 1997 Series A, in a principal amount equal to the
amount by which the then outstanding 1997 Series A Bonds exceed the sum of the
Company's Borrower Sublimit plus the Facility Fee Obligation, shall be deemed
paid and all obligations of the Company hereunder and thereunder with respect to
such principal amount of 1997 Series A Bonds shall be deemed
<PAGE>
-9-
satisfied and discharged. Except as provided herein, the 1997 Series A Bonds
shall not be redeemable.
ARTICLE 3.
MISCELLANEOUS
SECTION 3.01. Benefits of Supplemental Indenture and Bonds of 1997
Series A. Nothing in this Supplemental Indenture, or in the bonds of 1997 Series
A, expressed or implied, is intended or shall be construed to give to any person
or corporation other than the Company, the Trustee and the holders of the bonds
and interest obligations secured by the Mortgage and this Supplemental
Indenture, any legal or equitable right, remedy or claim under or in respect of
this Supplemental Indenture or of any covenant, condition or provision herein
contained. All the covenants, conditions and provisions hereof are and shall be
for the sole and exclusive benefit of the Company, the Trustee and the holders
of the bonds and interest obligations secured by the Mortgage and this
Supplemental Indenture.
SECTION 3.02. Effect of Table of Contents and Headings. The table of
contents and the descriptive headings of the several Articles and Sections of
this Supplemental Indenture are inserted for convenience of reference only and
are not to be taken to be any part of this Supplemental Indenture or to control
or affect the meaning, construction or effect of the same.
SECTION 3.03. Counterparts. For the purpose of facilitating the
recording hereof, this Supplemental Indenture may be executed in any number of
counterparts, each of which shall be and shall be taken to be an original and
all collectively but one instrument.
SECTION 3.04. Payment Due on Holidays. If the date for making any
payment or the last date for performance of any act or the exercise of any
right, as provided in this Supplemental Indenture, is not a Business Day, such
payment may be made or act performed or right exercised on the next succeeding
Business Day unless otherwise provided herein, with the same force and effect as
if done on the nominal date provided in this Supplemental Indenture.
IN WITNESS WHEREOF, The Connecticut Light and Power Company has
caused these presents to be executed by a Vice President and its corporate seal
to be hereunto affixed, duly attested by an Assistant Secretary, and Bankers
Trust Company has caused these presents to be executed by an Assistant Vice
President and its corporate seal to be hereunto affixed, duly attested by an
Assistant Treasurer, as of the day and year first above written.
<PAGE>
THE CONNECTICUT LIGHT AND
POWER COMPANY
Attest:
/s/ Theresa H. Allsop By: /s/ John B. Keane
- ------------------------------ -------------------------
Theresa H. Allsop John B. Keane
Assistant Secretary Vice President and Treasurer
(SEAL) Signed, sealed and delivered
in the presence of:
/s/ Shelley Peters
-------------------------------
/s/ Tracy A. DeCredico
-------------------------------
STATE OF CONNECTICUT )
) ss: BERLIN
COUNTY OF HARTFORD )
On this 23rd day of May, 1997, before me, Deborah A. Tawrel, the
undersigned officer, personally appeared John B. Keane and Theresa H. Allsop,
who acknowledged themselves to be Vice President and Treasurer and Assistant
Secretary, respectively, of THE CONNECTICUT LIGHT AND POWER COMPANY, a
corporation, and that they, as such Vice President and Treasurer and Assistant
Secretary, being authorized so to do, executed the foregoing instrument for the
purpose therein contained, by signing the name of the corporation by themselves
as Vice President and Treasurer and Assistant Secretary, and as their free act
and deed.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Deborah A. Tawrel
-----------------------------------
Deborah A. Tawrel
Notary Public
My commission expires: December 31, 2000
(NOTARIAL SEAL)
<PAGE>
BANKERS TRUST COMPANY
Attest:
/s/ Scott Thiel /s/ James McDonough
- ------------------------------ ------------------------------------
Name: Scott Thiel Name: James McDonough
Title: Assistant Vice President Title: Vice President
(SEAL) Signed, sealed and delivered in the
presence of:
/s/ Gina Evangelista
------------------------------------
/s/ Dale Murarsh
------------------------------------
STATE OF NEW YORK )
) ss: NEW YORK
COUNTY OF NEW YORK )
On this 27th day of May, 1997, before me, Sharon V. Alston, the
undersigned officer, personally appeared James McDonough and Scott Thiel, who
acknowledged themselves to be a Vice President and an Assistant Vice President,
respectively, of BANKERS TRUST COMPANY, a corporation, and that they, as such
Vice President and such Assistant Vice President, being authorized so to do,
executed the foregoing instrument for the purposes therein contained, by signing
the name of the corporation by themselves as Vice President and Assistant Vice
President, and as their free act and deed.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Sharon V. Alston
------------------------------------
Name: Sharon V. Alston
Notary Public, State of New York
No. 31-4966275
Qualified in New York County
Commission Expires: May 7, 1998
(NOTARIAL SEAL)
<PAGE>
SCHEDULE A
(FORM OF BONDS OF 1997 Series A)
THIS BOND IS TRANSFERABLE ONLY AS PROVIDED HEREIN
No. $
THE CONNECTICUT LIGHT AND POWER COMPANY
Incorporated under the Laws of the State of Connecticut
FIRST AND REFUNDING MORTGAGE BOND, 1997 Series A
PRINCIPAL DUE NOVEMBER 21, 1999
FOR VALUE RECEIVED, THE CONNECTICUT LIGHT AND POWER COMPANY, a
corporation organized and existing under the laws of the State of Connecticut
(hereinafter called the Company) hereby promises to pay to CITIBANK, N.A., or
registered assigns, in each case as Collateral Agent for the benefit of the
several Lenders (as such terms and all other capitalized terms used but not
otherwise defined herein are defined in the Credit Agreement referred to on the
reverse hereof), the principal sum of _______________ or, if less, the aggregate
Credit Borrowings (as herein defined) outstanding on November 21, 1999 or any
earlier date on or as of which the obligations of the several Lenders to make
Advances to the Company under the Credit Agreement shall be terminated and all
or any portion of the unpaid principal of Advances shall become or be declared
immediately due and payable. Credit Borrowings means the aggregate unpaid
principal amount of Advances to the Company outstanding under the Credit
Agreement plus the Facility Fee Obligation (as said term is defined in the
Supplemental Indenture establishing the terms and conditions of bonds of this
Series) together with accrued and unpaid interest thereon then payable by the
Company thereunder. The Company further agrees to pay interest on said sum on
the dates on which interest payments are payable by the Company to the Lenders
from time to time under the Credit Agreement (each such date on which interest
is so payable by the Company to the Lenders under the Credit Agreement being an
interest payment date applicable to the bonds of 1997 Series A), until the
Company's obligation in respect of the principal hereof shall be discharged, in
amounts equal to the interest payments payable by the Company to the Lenders
pursuant to the Credit Agreement on such interest payment dates applicable to
the bonds of 1997 Series A; provided, however, that in no event shall the
-------- -------
interest rate payable on the 1997 Series A Bonds exceed 11%. The bonds of 1997
Series A shall be payable both as to principal and interest at the office or
agency of the Company in the Borough of Manhattan, New York, New York, in any
coin or currency of the United States of America which at the time of payment is
legal tender for the payment of public
<PAGE>
-2-
and private debts. The interest on the bonds of 1997 Series A, whether in
temporary or definitive form, shall be payable without presentation of such
bonds; and only to or upon the written order of the registered holders thereof
of record at the applicable record date. If, pursuant to the Credit Agreement,
the Company's right to obtain Advances thereunder shall be terminated and all or
any portion of the principal of the Credit Borrowings shall become or be
declared immediately due and payable by the Company, a like principal amount of
the bonds of 1997 Series A, together with all accrued interest thereon, shall
without notice or demand of any kind, become immediately due and payable. In
addition, the bonds of 1997 Series A shall be repayable in whole or in part
according to the terms and provisions provided in Article 2 of the Supplemental
Indenture establishing the terms and conditions of bonds of this Series.
Subject to the provisions of the Credit Agreement anything in the
Mortgage, this Supplemental Indenture or any bond of 1997 Series A to the
contrary notwithstanding, the bonds of 1997 Series A shall be deemed paid, and
all obligations of the Company to pay at the times provided herein the principal
of, premium, if any, and interest on the bonds of 1997 Series A shall be
satisfied and discharged, when and to the extent that the Credit Borrowings
shall have been indefeasibly paid in full in accordance with the terms thereof
and the obligations of the several Lenders to make Advances to the Company under
the Credit Agreement shall have been terminated, it being understood that the
actual indebtedness evidenced by the 1997 Series A Bonds as of any time shall be
limited to the Credit Borrowings as determined at such time, that at no time
shall any claim be made for principal and interest on the 1997 Series A Bonds in
excess of the Credit Borrowings as determined at such time, and that, to the
extent that the outstanding principal amount of the 1997 Series A Bonds exceeds
such amount, neither the Lenders nor the Agent shall have any right under, or
right to exercise any right granted to the holders of such excess 1997 Series A
Bonds under, the Mortgage. Unless the Trustee shall have received written notice
to the contrary from the Company or the Collateral Agent, the Trustee shall be
entitled to assume that the Company has made all payments required under the
Credit Agreement.
Each installment of interest hereon (other than overdue interest)
shall be payable to the person who shall be the registered owner of this bond at
the close of business on the record date, which shall be the day next preceding
such interest payment date, or if such day shall not be a Business Day (as
defined on the reverse hereof), the next preceding day which is a Business Day.
Reference is hereby made to the further provisions of this Bond set
forth on the reverse hereof, including without limitation provisions in regard
to the call and redemption and the registration of transfer and exchangeability
of this bond, and such further provisions shall for all purposes have the same
effect as though fully set forth in this place.
<PAGE>
-3-
This bond shall not become or be valid or obligatory until the
certificate of authentication hereon shall have been signed by Bankers Trust
Company (hereinafter with its successors as defined in the Mortgage (as defined
on the reverse hereof), generally called the Trustee), or by such a successor.
IN WITNESS WHEREOF, The Connecticut Light and Power Company has
caused this bond to be executed in its corporate name and on its behalf by its
Vice President by his signature or a facsimile thereof, and its corporate seal
to be affixed or imprinted hereon and attested by the manual or facsimile
signature of its Assistant Secretary.
Dated as of ____________ __, 1997.
THE CONNECTICUT LIGHT AND POWER COMPANY
By
-------------------------------------
Name:
Title: Vice President
Attest:
---------------------------------------
Name:
Title: Assistant Secretary
<PAGE>
-4-
[FORM OF TRUSTEE'S CERTIFICATE]
Bankers Trust Company hereby certifies that this bond is one of the
bonds described in the within mentioned Mortgage.
BANKERS TRUST COMPANY, TRUSTEE
By
----------------------------------
Name:
Title: Authorized Officer
<PAGE>
-5-
[FORM OF BOND]
[REVERSE]
THE CONNECTICUT LIGHT AND POWER COMPANY
FIRST AND REFUNDING MORTGAGE BOND, 1997 Series A
This bond is one of an issue of bonds of the Company, of an unlimited
authorized amount of coupon bonds or registered bonds without coupons, or both,
known as its First and Refunding Mortgage Bonds, all issued or to be issued in
one or more series, and is one of a series of said bonds limited in principal
amount to Two Hundred Twenty-Five Million Dollars ($225,000,000), consisting
only of registered bonds without coupons and designated "First and Refunding
Mortgage Bonds, 1997 Series A," all of which bonds are issued or are to be
issued under, and equally and ratably secured by, a certain Indenture of
Mortgage and Deed of Trust dated as of May 1, 1921, and by sixty-six
Supplemental Indentures dated respectively as of May 1, 1921, February 1, 1924,
July 1, 1926, June 20, 1928, June 1, 1932, July 1, 1932, July 1, 1935, September
1, 1936, October 20, 1936, December 1, 1936, December 1, 1938, August 31, 1944,
September 1, 1944, May 1, 1945, October 1, 1945, November 1, 1949, December 1,
1952, December 1, 1955, January 1, 1958, February 1, 1960, April 1, 1961,
September 1, 1963, April 1, 1967, May 1, 1967, January 1, 1968, October 1, 1968,
December 1, 1969, January 1, 1970, October 1, 1970, December 1, 1971, August 1,
1972, April 1, 1973, March 1, 1974, February 1, 1975, September 1, 1975, May 1,
1977, March 1, 1978, September 1, 1980, October 1, 1981, June 30, 1982, October
1, 1982, July 1, 1983, January 1, 1984, October 1, 1985, September 1, 1986,
April 1, 1987, October 1, 1987, November 1, 1987, April 1, 1988, November 1,
1988, June 1, 1989, September 1, 1989, December 1, 1989, April 1, 1992, July 1,
1992, October 1, 1992, July 1, 1993, July 1, 1993, December 1, 1993, February 1,
1994, February 1, 1994, June 1, 1994, October 1, 1994, June 1, 1996, January 1,
1997 and May 1, 1997 (said Indenture of Mortgage and Deed of Trust and
Supplemental Indentures being collectively referred to herein as the
"Mortgage"), all executed by the Company to Bankers Trust Company, as Trustee,
all as provided in the Mortgage to which reference is made for a statement of
the property mortgaged and pledged, the nature and extent of the security, the
rights of the holders of the bonds in respect thereof and the terms and
conditions upon which the bonds may be issued and are secured; but neither the
foregoing reference to the Mortgage nor any provision of this bond or of the
Mortgage (other than the last sentence of the next paragraph and Section 1.03 of
the Supplemental Indenture establishing the terms and conditions of the bonds of
this Series) shall affect or impair the obligation of the Company, which is
absolute, unconditional and unalterable, to pay at the maturities herein
provided the principal of and interest on this bond as herein provided. The
principal of this bond may be declared or may become due on the conditions, in
<PAGE>
-6-
the manner and at the time set forth in the Mortgage, upon the happening of an
event of default as in the Mortgage provided.
This bond, together with all other bonds of this series, if any, is
issued to evidence and secure the Company's obligations pursuant to a Credit
Agreement dated as of November 21, 1996 (the "Original Agreement") among
Northeast Utilities ("NU"), the Company and Western Massachusetts Electric
Company ("WMECO"), the Lenders and Co-Agents named therein (collectively, the
"Lenders") and Citibank, N.A. as administrative agent, as amended and restated
by a First Amendment and Waiver dated as of May 30, 1997 (the Original
Agreement, as so amended, herein called the "Credit Agreement"), it being
understood that the actual indebtedness evidenced by the 1997 Series A Bonds as
of any time shall be limited to the Credit Borrowings as determined at such
time, that at no time shall any claim be made for principal and interest on the
1997 Series A Bonds in excess of the Credit Borrowings as determined at such
time, and that, to the extent that the outstanding principal amount of the 1997
Series A Bonds exceeds such amount, neither the Lenders nor the Agent shall have
any right under, or right to exercise any right granted to the holders of such
excess 1997 Series A Bonds under, the Mortgage.
The bonds of 1997 Series A shall be issued to and registered in the
name of CITIBANK, N.A., as Collateral Agent for the benefit of the several
Lenders and, anything in the Mortgage, this Supplemental Indenture or any bond
of 1997 Series A to the contrary notwithstanding, the bonds of 1997 Series A
shall not be sold, assigned, pledged or transferred, except to effect the
transfer to any successor Collateral Agent under the Credit Agreement. Prior to
due presentment for registration of transfer of this bond the Company and the
Trustee may deem and treat the registered owner hereof as the absolute owner
hereof, whether or not this bond be overdue, for the purpose of receiving
payment and for all other purposes, and neither the Company nor the Trustee
shall be affected by any notice to the contrary.
This bond is exchangeable at the option of the registered holder
hereof upon surrender hereof, at the office or agency of the Company in the
Borough of Manhattan, New York, New York, for an equal principal amount of bonds
of this series of other authorized denominations, in the manner and on the terms
provided in the Mortgage.
In the event that the Credit Agreement is terminated and all Credit
Borrowings shall have been paid in full, all of the then outstanding 1997 Series
A Bonds shall be deemed paid and all obligations of the Company thereunder and
hereunder shall be deemed satisfied and discharged. Except as provided in the
Supplemental Indenture establishing the terms and conditions of bonds of this
Series, the 1997 Series A Bonds shall not be redeemable.
The Mortgage provides that the Company and the Trustee, with consent
of the holders of not less than 66 2/3% in aggregate principal amount of the
bonds at the time outstanding which
<PAGE>
would be affected by the action proposed to be taken, may by supplemental
indenture add any provisions to or change or eliminate any of the provisions of
the Mortgage or modify the rights of the holders of the bonds and coupons issued
thereunder; provided, however, that without the consent of the holder hereof no
such supplemental indenture shall affect the terms of payment of the principal
of or interest or premium on this bond, or reduce the aforesaid percentage of
the bonds the holders of which are required to consent to such a supplemental
indenture, or permit the creation by the Company of any mortgage or pledge or
lien in the nature thereof ranking prior to or equal with the lien of the
Mortgage or deprive the holder hereof of the lien of the Mortgage on any of the
property which is subject to the lien thereof.
As set forth in the Supplemental Indenture establishing the terms and
conditions of the bonds of this Series, each holder of this bond, solely by
virtue of its acquisition thereof, shall have and be deemed to have consented,
without the need for any further action or consent by such holder, to any and
all amendments to the Mortgage which are intended to eliminate or modify in any
manner the requirements of the sinking and improvement fund as set forth in
Section 6.14 of the Mortgage.
If the date for making any payment or the last date for performance
of any act or the exercise of any right, as provided in the Supplemental
Indenture establishing the terms and series of the bonds of this series, is not
a Business Day, such payment may be made or act performed or right exercised on
the next succeeding Business Day unless otherwise provided herein, with the same
force and effect as if done on the nominal date provided in the Supplemental
Indenture establishing the terms and series of the bonds of this series.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or any part thereof, or for any claim based thereon or
otherwise in respect thereof, to any incorporator or any past, present or future
stockholder, officer or director of the Company, either directly or indirectly,
by virtue of any statute or by enforcement of any assessment or otherwise, and
any and all liability of the said incorporators, stockholders, officers or
directors of the Company in respect to this bond is hereby expressly waived and
released by every holder hereof.
<PAGE>
Exhibit 4.20
SIXTY-SEVENTH
SUPPLEMENTAL INDENTURE
Dated as of June 1, 1997
TO
Indenture of Mortgage and Deed of Trust
Dated as of May 1, 1921
-----------
THE CONNECTICUT LIGHT AND POWER COMPANY
TO
BANKERS TRUST COMPANY, Trustee
-----------
1997 Series B Bonds, Due June 1, 2002
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY
Supplemental Indenture, Dated as of June 1, 1997
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties................................................................................1
Recitals...............................................................................1
Granting Clauses.......................................................................2
Habendum...............................................................................3
Grant in Trust.........................................................................3
<CAPTION>
ARTICLE 1.
FORM AND PROVISIONS OF BONDS OF 1997 SERIES B
<S> <C> <C>
SECTION 1.01. Designation; Amount.....................................................4
SECTION 1.02. Form of Bonds of 1997 Series B..........................................4
SECTION 1.03. Provisions of Bonds of 1997 Series B; Interest Accrual..................4
SECTION 1.04. Transfer and Exchange of Bonds of 1997 Series B.........................5
SECTION 1.05. Sinking and Improvement Fund............................................5
<CAPTION>
ARTICLE 2.
<S> <C>
REDEMPTION OF BONDS OF 1997 Series B ...............................5
ARTICLE 3.
AMENDMENT OF MORTGAGE INDENTURE ...................................7
ARTICLE 4.
MISCELLANEOUS
<CAPTION>
<S> <C> <C>
SECTION 4.01. Benefits of Supplemental Indenture and Bonds of 1997 Series B...........7
SECTION 4.02. Effect of Table of Contents and Headings................................7
SECTION 4.03. Counterparts............................................................7
TESTIMONIUM............................................................................8
SIGNATURES.............................................................................8
ACKNOWLEDGMENTS........................................................................8
SCHEDULE A - Form of Bond of 1997 Series B, Form of Trustee's Certificate
SCHEDULE B - Property Subject to the Lien of the Mortgage
</TABLE>
<PAGE>
SUPPLEMENTAL INDENTURE, dated as of the first day of June, 1997,
between THE CONNECTICUT LIGHT AND POWER COMPANY, a corporation organized and
existing under the laws of the State of Connecticut (hereinafter called
"Company"), and BANKERS TRUST COMPANY, a corporation organized and existing
under the laws of the State of New York (hereinafter called "Trustee"), with its
principal corporate trust office at Four Albany Street, New York, NY 10006.
WHEREAS, the Company heretofore duly executed, acknowledged and
delivered to the Trustee a certain Indenture of Mortgage and Deed of Trust dated
as of May 1, 1921, and sixty-six Supplemental Indentures thereto dated
respectively as of May 1, 1921, February 1, 1924, July 1, 1926, June 20, 1928,
June 1, 1932, July 1, 1932, July 1, 1935, September 1, 1936, October 20, 1936,
December 1, 1936, December 1, 1938, August 31, 1944, September 1, 1944, May 1,
1945, October 1, 1945, November 1, 1949, December 1, 1952, December 1, 1955,
January 1, 1958, February 1, 1960, April 1, 1961, September 1, 1963, April 1,
1967, May 1, 1967, January 1, 1968, October 1, 1968, December 1, 1969, January
1, 1970, October 1, 1970, December 1, 1971, August 1, 1972, April 1, 1973, March
1, 1974, February 1, 1975, September 1, 1975, May 1, 1977, March 1, 1978,
September 1, 1980, October 1, 1981, June 30, 1982, October 1, 1982, July 1,
1983, January 1, 1984, October 1, 1985, September 1, 1986, April 1, 1987,
October 1, 1987, November 1, 1987, April 1, 1988, November 1, 1988, June 1,
1989, September 1, 1989, December 1, 1989, April 1, 1992, July 1, 1992, October
1, 1992, July 1, 1993, July 1, 1993, December 1, 1993, February 1, 1994,
February 1, 1994, June 1, 1994, October 1, 1994, June 1, 1996, January 1, 1997
and May 1, 1997 (said Indenture of Mortgage and Deed of Trust (i) as heretofore
amended, being hereinafter generally called the "Mortgage Indenture," and (ii)
together with said Supplemental Indentures thereto, being hereinafter generally
called the "Mortgage"), all of which have been duly recorded as required by law,
for the purpose of securing its First and Refunding Mortgage Bonds (of which
$1,546,000,000 aggregate principal amount are outstanding at the date of this
Supplemental Indenture) in an unlimited amount, issued and to be issued for the
purposes and in the manner therein provided, of which Mortgage this Supplemental
Indenture is intended to be made a part, as fully as if therein recited at
length;
WHEREAS, the Company by appropriate and sufficient corporate action
in conformity with the provisions of the Mortgage has duly determined to create
a further series of bonds under the Mortgage to be designated "First and
Refunding Mortgage Bonds, 1997 Series B" (hereinafter generally referred to as
the "bonds of 1997 Series B"), to consist of fully registered bonds containing
terms and provisions duly fixed and determined by the Board of Directors of the
Company and expressed in this Supplemental Indenture, such fully registered
bonds and the Trustee's certificate of its authentication thereof to be
substantially in the forms thereof respectively set forth in Schedule A appended
hereto and made a part hereof; and
WHEREAS, the execution and delivery of this Supplemental Indenture
and the issue of not in excess of Two Hundred Million Dollars ($200,000,000) in
aggregate principal amount of bonds of 1997 Series B and other necessary actions
have been duly authorized by the Board of Directors of the Company; and
<PAGE>
2
WHEREAS, the Company proposes to effect, contemporaneously with the
issuance of the bonds of 1997 Series B, the amendments to the Mortgage Indenture
hereinafter specified to eliminate Section 6.14 of the Mortgage Indenture; and
WHEREAS, all applicable requirements of the Indenture with respect to
the effecting of such amendments have been complied with, and such amendments
are all ones which, contemporaneously with the issuance of the bonds of 1997
Series B, will have been consented to by the holders of more than two-thirds in
principal amount of the bonds outstanding; and
WHEREAS, the Company has purchased, constructed or otherwise acquired
certain additional property not specifically described in the Mortgage but which
is and is intended to be subject to the lien thereof, and proposes specifically
to subject such additional property to the lien of the Mortgage at this time;
and
WHEREAS, the Company proposes to execute and deliver this
Supplemental Indenture to provide for the issue of the bonds of 1997 Series B,
to effect such amendments, and to conform the lien of the Mortgage on the
property referred to below, all as permitted by Sections 14.01 and 14.03 of the
Mortgage Indenture; and
WHEREAS, all acts and things necessary to constitute this
Supplemental Indenture a valid, binding and legal instrument and to make the
bonds of 1997 Series B, when executed by the Company and authenticated by the
Trustee valid, binding and legal obligations of the Company have been authorized
and performed;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE OF MORTGAGE AND DEED OF
TRUST WITNESSETH:
That in order to secure the payment of the principal of and interest
on all bonds issued and to be issued under the Mortgage, according to their
tenor and effect, and according to the terms of the Mortgage and this
Supplemental Indenture, and to secure the performance of the covenants and
obligations in said bonds and in the Mortgage and this Supplemental Indenture
respectively contained, and for the better assuring and confirming unto the
Trustee, its successor or successors and its or their assigns, upon the trusts
and for the purposes expressed in the Mortgage and this Supplemental Indenture,
all and singular the hereditaments, premises, estates and property of the
Company thereby conveyed or assigned or intended so to be, or which the Company
may thereafter have become bound to convey or assign to the Trustee, as security
for said bonds (except such hereditaments, premises, estates and property as
shall have been disposed of or released or withdrawn from the lien of the
Mortgage and this Supplemental Indenture, in accordance with the provisions
thereof and subject to alterations, modifications and changes in said
hereditaments, premises, estates and property as permitted under the provisions
thereof), the Company, for and in consideration of the premises and the sum of
One Dollar ($1.00) to it in hand paid by the Trustee, the receipt whereof is
hereby acknowledged, and of other valuable considerations, has granted,
bargained, sold, assigned, mortgaged, pledged, transferred, set over, aliened,
enfeoffed, released, conveyed and confirmed, and by these presents does grant,
bargain, sell, assign, mortgage, pledge, transfer, set over, alien, enfeoff,
release, convey and confirm unto said Bankers Trust Company, as Trustee, and its
successor or successors in the trusts created by the Mortgage
<PAGE>
3
and this Supplemental Indenture, and its and their assigns, all of said
hereditaments, premises, estates and property (except and subject as aforesaid),
as fully as though described at length herein, including, without limitation of
the foregoing, the property, rights and privileges of the Company described or
referred to in Schedule B hereto.
Together with all plants, buildings, structures, improvements and
machinery located upon said real estate or any portion thereof, and all rights,
privileges and easements of every kind and nature appurtenant thereto, and all
and singular the tenements, hereditaments and appurtenances belonging to the
real estate or any part thereof described or referred to in Schedule B or
intended so to be, or in any wise appertaining thereto, and the reversions,
remainders, rents, issues and profits thereof, and also all the estate, right,
title, interest, property, possession, claim and demand whatsoever, as well in
law as in equity, of the Company, of, in and to the same and any and every part
thereof, with the appurtenances; except and subject as aforesaid.
TO HAVE AND TO HOLD all and singular the property, rights and
privileges hereby granted or mentioned or intended so to be, together with all
and singular the reversions, remainders, rents, revenues, income, issues and
profits, privileges and appurtenances, now or hereafter belonging or in any way
appertaining thereto, unto the Trustee and its successor or successors in the
trust created by the Mortgage and this Supplemental Indenture, and its and their
assigns, forever, and with like effect as if the above described property,
rights and privileges had been specifically described at length in the Mortgage
and this Supplemental Indenture.
Subject, however, to permitted liens, as defined in the Mortgage
Indenture.
IN TRUST, NEVERTHELESS, upon the terms and trusts of the Mortgage and
this Supplemental Indenture for those who shall hold the bonds and coupons
issued and to be issued thereunder, or any of them, without preference, priority
or distinction as to lien of any of said bonds and coupons over any others
thereof by reason of priority in the time of the issue or negotiation thereof,
or otherwise howsoever, subject, however, to the provisions in reference to
extended, transferred or pledged coupons and claims for interest set forth in
the Mortgage and this Supplemental Indenture (and subject to any sinking fund
that may heretofore have been or hereafter be created for the benefit of any
particular series).
And it is hereby covenanted that all such bonds of 1997 Series B are
to be issued, authenticated and delivered, and that the mortgaged premises are
to be held by the Trustee, upon and subject to the trusts, covenants, provisions
and conditions and for the uses and purposes set forth in the Mortgage and this
Supplemental Indenture and upon and subject to the further covenants, provisions
and conditions and for the uses and purposes hereinafter set forth, as follows,
to wit:
<PAGE>
4
ARTICLE 1.
FORM AND PROVISIONS OF BONDS OF 1997 SERIES B
SECTION 1.01. Designation; Amount. The bonds of 1997 Series B shall
be designated "First and Refunding Mortgage Bonds, 1997 Series B" and, subject
to Section 2.08 of the Mortgage Indenture, shall not exceed Two Hundred Million
Dollars ($200,000,000) in aggregate principal amount at any one time
outstanding. The initial issue of the bonds of 1997 Series B may be effected
upon compliance with the applicable provisions of the Mortgage Indenture.
SECTION 1.02. Form of Bonds of 1997 Series B. The bonds of 1997
Series B shall be issued only in fully registered form without coupons in
denominations of One Hundred Thousand Dollars ($100,000) or integral multiples
of $1,000 in excess thereof; provided, however, that, if any registered holder
holds less than $100,000 in aggregate principal amount of the bonds of 1997
Series B as result of a partial redemption by the Company in accordance with
Article 2 hereof, a bond of 1997 Series B in the amount of such holder's
aggregate holdings shall be issued.
The bonds of 1997 Series B and the certificate of the Trustee upon
said bonds shall be substantially in the forms thereof respectively set forth in
Schedule A appended hereto.
SECTION 1.03. Provisions of Bonds of 1997 Series B; Interest Accrual.
The bonds of 1997 Series B shall mature on June 1, 2002 and shall bear interest,
payable semiannually on the first days of June and December of each year,
commencing December 1, 1997, at the rate of 7-3/4% per annum, provided that if a
Registration Default (as defined in the Registration Rights Agreement dated June
19, 1997 between the Company and the Purchasers named therein (the "Registration
Agreement")) occurs at a time when any bond of 1997 Series B is a Registrable
Bond (as defined in the Registration Agreement), then the interest rate thereon
will increase by 0.50% per annum with respect to the first 90-day period
immediately following the occurrence of such Registration Default and by an
additional 0.50% per annum with respect to each subsequent 90-day period until
all Registration Defaults have been cured, up to a maximum amount of 1.50% per
annum (provided that in no event shall the interest rate payable on the
Registrable Bonds be increased by more than 0.50% per annum in any single 90-day
period above the interest rate applicable immediately prior to commencement of
such 90-day period), until the Company's obligation in respect of the principal
thereof shall be discharged; and shall be payable both as to principal and
interest at the office or agency of the Company in the Borough of Manhattan, New
York, New York, in any coin or currency of the United States of America which at
the time of payment is legal tender for the payment of public and private debts.
The interest on the bonds of 1997 Series B, whether in temporary or definitive
form, shall be payable without presentation of such bonds; and only to or upon
the written order of the registered holders thereof of record at the applicable
record date. The bonds of 1997 Series B shall be callable for redemption in
whole or in part according to the terms and provisions herein in Article 2.
Each bond of 1997 Series B shall be dated as of June 1, 1997 and
shall bear interest on the principal amount thereof from the interest payment
date next preceding the date of authentication thereof by the Trustee to which
interest has been paid on the bonds of 1997 Series B, or if the date of
authentication thereof is prior to November 16, 1997, then from June 1, 1997, or
if the date of
<PAGE>
5
authentication thereof be an interest payment date to which interest is being
paid or a date between the record date for any such interest payment date and
such interest payment date, then from such interest payment date.
The person in whose name any bond of 1997 Series B is registered at
the close of business on any record date (as hereinafter defined) with respect
to any interest payment date shall be entitled to receive the interest payable
on such interest payment date notwithstanding the cancellation of such bond upon
any registration of transfer or exchange thereof subsequent to the record date
and prior to such interest payment date, except that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, then such defaulted interest shall be paid to the person in whose
name such bond is registered on a subsequent record date for the payment of
defaulted interest if one shall have been established as hereinafter provided
and otherwise on the date of payment of such defaulted interest. A subsequent
record date may be established by the Company by notice mailed to the owners of
bonds of 1997 Series B not less than ten (10) days preceding such record date,
which record date shall not be more than thirty (30) days prior to the
subsequent interest payment date. The term "record date" as used in this Section
with respect to any regular interest payment (i.e., June 1 or December 1) shall
mean the May 15 or November 15, as the case may be, next preceding such interest
payment date, or if such May 15 or November 15 shall be a legal holiday or a day
on which banking institutions in the Borough of Manhattan, New York, New York
are authorized by law to close, the next preceding day which shall not be a
legal holiday or a day on which such institutions are so authorized to close.
SECTION 1.04. Transfer and Exchange of Bonds of 1997 Series B. The
bonds of 1997 Series B may be surrendered for registration of transfer as
provided in Section 2.06 of the Mortgage Indenture at the office or agency of
the Company in the Borough of Manhattan, New York, New York, and may be
surrendered at said office for exchange for a like aggregate principal amount of
bonds of 1997 Series B of other authorized denominations. Notwithstanding the
provisions of Section 2.06 of the Mortgage Indenture, no charge, except for
taxes or other governmental charges, shall be made by the Company for any
registration of transfer of bonds of 1997 Series B or for the exchange of any
bonds of 1997 Series B for such bonds of other authorized denominations.
SECTION 1.05. Sinking and Improvement Fund. Each holder of a bond of
1997 Series B, solely by virtue of its acquisition thereof, shall have and be
deemed to have consented, without the need for any further action or consent by
such holder, to the amendments to the Mortgage Indenture specified in Article 3
hereof, which will, contemporaneously with the issue of the bonds of 1997 Series
B, eliminate all requirements of the sinking and improvement fund as heretofore
provided in Section 6.14 thereof.
ARTICLE 2.
REDEMPTION OF BONDS OF 1997 SERIES B.
The bonds of 1997 Series B shall be redeemable, as a whole at any
time or in part from time to time, in accordance with the provisions of the
Mortgage and upon not less than thirty (30) days and not
<PAGE>
6
more than 60 days prior notice given by mail as provided in the Mortgage (which
notice may state that it is subject to the receipt of the redemption moneys by
the Trustee on or before the date fixed for redemption and which notice shall be
of no effect unless such moneys are so received on or before such date), at the
option of the Company, at a redemption price equal to the greater of (i) 100% of
the principal amount of the bonds being redeemed and (ii) the sum of the present
values of the remaining scheduled payments of principal and interest thereon,
discounted to the date of redemption on a semiannual basis (assuming a 360-day
year consisting of twelve 30-day months) at the Treasury Yield, plus in each
case accrued interest to the date of redemption (the "Redemption Date").
"Treasury Yield" means, with respect to any Redemption Date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker having a maturity comparable to the
remaining term of the bonds of 1997 Series B that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the bonds of 1997 Series B. "Independent Investment Banker" means Morgan
Stanley & Co. Incorporated or, if such firm is unwilling or unable to select the
Comparable Treasury Issue, an independent investment banking institution of
national standing to be selected by the Company and appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any Redemption
Date (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third business day preceding such Redemption Date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Trustee obtains fewer than four Reference Treasury Dealer Quotations,
the average of all such Quotations. "Reference Treasury Dealer Quotations"
means, with respect to each Reference Treasury Dealer and any Redemption Date,
the average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m. on the third business day preceding such Redemption Date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co.
Incorporated, Salomon Brothers Inc and another Primary Treasury Dealer (as
defined herein) at the option of the Company, provided, however, that if any of
the foregoing shall cease to be a primary U.S. Government securities dealer in
New York City (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer.
<PAGE>
7
ARTICLE 3.
AMENDMENT OF MORTGAGE INDENTURE
Effective contemporaneously with the issuance of the bonds of 1997
Series B, the Mortgage Indenture is hereby amended to (i) delete Section 6.14 in
its entirety (Section 6.14 of the Mortgage Indenture shall hereinafter be
designated Section 6.14 [Deleted] and there shall be no re-numbering of any
other provisions of the Mortgage Indenture as a result of this amendment) with
the same force and effect as if Section 6.14 had never been included in the
Mortgage Indenture; and (ii) all references to Section 6.14 in all other
provisions of the Mortgage Indenture (including without limitation Section
1.01(qq), Section 3.52 (three references), Section 3.57 (three references),
Section 9.08 and Section 9.09) are hereby deleted, in each case with the same
force and effect as if Section 6.14 had never been referred to in said Sections
of the Mortgage Indenture.
ARTICLE 4.
MISCELLANEOUS.
SECTION 4.01. Benefits of Supplemental Indenture and Bonds of 1997
Series B. Nothing in this Supplemental Indenture, or in the bonds of 1997 Series
B, expressed or implied, is intended to or shall be construed to give to any
person or corporation other than the Company, the Trustee and the holders of the
bonds and interest obligations secured by the Mortgage and this Supplemental
Indenture, any legal or equitable right, remedy or claim under or in respect of
this Supplemental Indenture or of any covenant, condition or provision herein
contained. All the covenants, conditions and provisions hereof are and shall be
for the sole and exclusive benefit of the Company, the Trustee and the holders
of the bonds and interest obligations secured by the Mortgage and this
Supplemental Indenture.
SECTION 4.02. Effect of Table of Contents and Headings. The table of
contents and the description headings of the several Articles and Sections of
this Supplemental Indenture are inserted for convenience of reference only and
are not to be taken to be any part of this Supplemental Indenture or to control
or affect the meaning, construction or effect of the same.
SECTION 4.03. Counterparts. For the purpose of facilitating the
recording hereof, this Supplemental Indenture may be executed in any number of
counterparts, each of which shall be and shall be taken to be an original and
all collectively but one instrument.
<PAGE>
8
IN WITNESS WHEREOF, The Connecticut Light and Power Company has
caused these presents to be executed by a Vice President and its corporate seal
to be hereunto affixed, duly attested by an Assistant Secretary, and Bankers
Trust Company has caused these presents to be executed by a Vice President and
its corporate seal to be hereunto affixed, duly attested by an Assistant Vice
President, as of the day and year first above written.
THE CONNECTICUT LIGHT AND POWER
COMPANY
Attest:
/s/ Theresa H. Allsop By: /s/ John B.Keane
- --------------------------- ------------------------------------
Name: Theresa H. Allsop Name: John B. Keane
Title: Assistant Secretary Title: Vice President and Treasurer
(SEAL) Signed, sealed and delivered
in the presence of:
/s/ Marion C. Bloomquist
---------------------------------------
/s/ Tracy A. DeCredico
---------------------------------------
STATE OF CONNECTICUT )
) ss.: Berlin
COUNTY OF HARTFORD )
On this 20th day of June 1997, before me, Judith D. Boucher, the
undersigned officer, personally appeared John B. Keane and Theresa H. Allsop,
who acknowledged themselves to be Vice President and Treasurer and Assistant
Secretary, respectively, of THE CONNECTICUT LIGHT AND POWER COMPANY, a
corporation, and that they, as such Vice President and Treasurer and such
Assistant Secretary, being authorized so to do, executed the foregoing
instrument for the purpose therein contained, by signing the name of the
corporation by themselves as Vice President and Treasurer and Assistant
Secretary, and as their free act and deed.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Judith D. Boucher
-------------------------------------
Judith D. Boucher
Notary Public
My commission expires on September 30, 1999
(SEAL)
<PAGE>
BANKERS TRUST COMPANY
Attest:
/s/ Scott Thiel /s/ Robert Caporale
- --------------------------------- -----------------------------------
Name: Scott Thiel Name: Robert Caporale
Title: Assistant Vice President Title: Vice President
(SEAL) Signed, sealed and delivered
in the presence of:
/s/ Barbara Nastor
-----------------------------------
/s/ J. Theriault
-----------------------------------
STATE OF NEW YORK )
) ss.: New York
COUNTY OF NEW YORK )
On this 19th day of June, 1997, before me, Sharon V. Alston, the
undersigned officer, personally appeared Robert Caporale and Scott Thiel who
acknowledged themselves to be a Vice President and an Assistant Vice President,
respectively, of BANKERS TRUST COMPANY, a corporation, and that they, as such
Vice President and such Assistant Vice President, being authorized so to do,
executed the foregoing instrument for the purposes therein contained, by signing
the name of the corporation by themselves as Vice President and Assistant Vice
President, and as their free act and deed.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Sharon V. Alston
-------------------------------------
Name: Sharon V. Alston
Notary Public, State of New York
No. 31-4966275
Qualified in New York County
Commission Expires May 7, 1998
(NOTARIAL SEAL)
<PAGE>
A-1
SCHEDULE A
[FORM OF BOND OF 1997 SERIES B]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501 (a) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR")) OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT
WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITIY RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY
THEREOF), (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN
COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE
UNITED STATES TO PERSONS OTHER THAN U.S. PERSONS IN OFFSHORE TRANSACTIONS
MEETING THE REQUIREMENTS OF RULE 904 UNDER REGULATION S UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED (OTHER THAN IN THE CASE OF A
TRANSFER PURSUANT TO CLAUSE (2) (B) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" "UNITED STATES"
AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY REGULATION S
UNDER THE SECURITIES ACT.
No. $
THE CONNECTICUT LIGHT AND POWER COMPANY
Incorporated under the Laws of the State of Connecticut
FIRST AND REFUNDING MORTGAGE BOND, 1997 SERIES B
PRINCIPAL DUE JUNE 1, 2002
FOR VALUE RECEIVED, THE CONNECTICUT LIGHT AND POWER COMPANY, a
corporation organized and existing under the laws of the State of Connecticut
(hereinafter called the Company), hereby promises to pay to
_______________________, or registered assigns, the principal sum of
_____________________ dollars, on the first day of June, 2002 and to pay
interest on said sum, semiannually on the first days of June and December in
each year, commencing December 1, 1997, until the Company's obligation with
respect to said principal sum shall be discharged, at the rate of 7-3/4%
<PAGE>
A-2
per annum from the interest payment date next preceding the date of
authentication hereof to which interest has been paid on the bonds of this
series, or if the date of authentication hereof is prior to November 16, 1997,
then from June 1, 1997, or if the date of authentication hereof is an interest
payment date to which interest is being paid or a date between the record date
for any such interest payment date and such interest payment date, then from
such interest payment date. Both principal and interest shall be payable at the
office or agency of the Company in the Borough of Manhattan, New York, New York,
in such coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
If a Registration Default (as defined in the Registration Rights
Agreement dated June 19, 1997 between the Company and the Purchasers named
therein (the "Registration Agreement")) occurs at a time when this security is a
Registrable Bond (as defined in the Registration Agreement), then the interest
rate hereon will increase by 0.50% per annum with respect to the first 90-day
period immediately following the occurrence of such Registration Default and by
an additional 0.50% per annum with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of 1.50%
per annum (provided that in no event shall the interest rate payable on the
Registrable Bonds be increased by more than 0.50% per annum in any single 90-day
period above the interest rate applicable immediately prior to commencement of
such 90-day period). The Registration Agreement will be provided without charge,
upon request of the holder hereof, to the office or agency of the Company in the
Borough of Manhattan, New York, New York.
Each installment of interest hereon (other than overdue interest)
shall be payable to the person who shall be the registered owner of this bond at
the close of business on the record date, which shall be the May 15 or November
15, as the case may be, next preceding the interest payment date, or, if such
May 15 or November 15 shall be a legal holiday or a day on which banking
institutions in the Borough of Manhattan, New York, New York, are authorized by
law to close, the next preceding day which shall not be a legal holiday or a day
on which such institutions are so authorized to close.
Reference is hereby made to the further provisions of this bond set
forth on the reverse hereof, including without limitation provisions in regard
to the call and redemption and the registration of transfer and exchangeability
of this bond, and such further provisions shall for all purposes have the same
effect as though fully set forth in this place.
This bond shall not become or be valid or obligatory until the
certificate of authentication hereon shall have been signed by Bankers Trust
Company (hereinafter with its successors as defined in the Mortgage hereinafter
referred to, generally called the Trustee), or by such a successor.
<PAGE>
A-3
IN WITNESS WHEREOF, The Connecticut Light and Power Company has
caused this bond to be executed in its corporate name and on its behalf by its
President by his signature or a facsimile thereof, and its corporate seal to be
affixed or imprinted hereon and attested by the manual or facsimile signature of
its Secretary.
Dated as of _______, 1997.
THE CONNECTICUT LIGHT AND POWER
COMPANY
By:
-----------------------------------
Name:
Title: President
Attest:
--------------------------------------
Name:
Title: Secretary
[FORM OF TRUSTEE'S CERTIFICATE]
Bankers Trust Company hereby certifies that this bond is one of the
bonds described in the within mentioned Mortgage.
BANKERS TRUST COMPANY, TRUSTEE
By:
-----------------------------------
Name:
Title: Authorized Officer
<PAGE>
A-4
[FORM OF BOND]
[REVERSE]
THE CONNECTICUT LIGHT AND POWER COMPANY
FIRST AND REFUNDING MORTGAGE BOND, 1997 SERIES B
This bond is one of an issue of bonds of the Company, of an unlimited
authorized amount of coupon bonds or registered bonds without coupons, or both,
known as its First and Refunding Mortgage Bonds, all issued or to be issued in
one or more series, and is one of a series of said bonds limited in principal
amount to Two Hundred Million Dollars ($200,000,000), consisting only of
registered bonds without coupons and designated "First and Refunding Mortgage
Bonds, 1997 Series B," all of which bonds are issued or are to be issued under,
and equally and ratably secured by, a certain Indenture of Mortgage and Deed and
Trust dated as of May 1, 1921, and by sixty-seven Supplemental Indentures dated
respectively as of May 1, 1921, February 1, 1924, July 1, 1926, June 20, 1928,
June 1, 1932, July 1, 1932, July 1, 1935, September 1, 1936, October 20, 1936,
December 1, 1936, December 1, 1938, August 31, 1944, September 1, 1944, May 1,
1945, October 1, 1945, November 1, 1949, December 1, 1952, December 1, 1955,
January 1, 1958, February 1, 1960, April 1, 1961, September 1, 1963, April 1,
1967, May 1, 1967, January 1, 1968, October 1, 1968, December 1, 1969, January
1, 1970, October 1, 1970, December 1, 1971, August 1, 1972, April 1, 1973, March
1, 1974, February 1, 1975, September 1, 1975, May 1, 1977, March 1, 1978,
September 1, 1980, October 1, 1981, June 30, 1982, October 1, 1982, July 1,
1983, January 1, 1984, October 1, 1985, September 1, 1986, April 1, 1987,
October 1, 1987, November 1, 1987, April 1, 1988, November 1, 1988, June 1,
1989, September 1, 1989, December 1, 1989, April 1, 1992, July 1, 1992, October
1, 1992, July 1, 1993, July 1, 1993, December 1, 1993, February 1, 1994,
February 1, 1994, June 1, 1994, October 1, 1994, June 1, 1996, January 1, 1997,
May 1, 1997, and June 1, 1997 (said Indenture of Mortgage and Deed of Trust and
Supplemental Indentures being collectively referred to herein as the
"Mortgage"), all executed by the Company to Bankers Trust Company, as Trustee,
all as provided in the Mortgage to which reference is made for a statement of
the property mortgaged and pledged, the nature and extent of the security, the
rights of the holders of the bonds in respect thereof and the terms and
conditions upon which the bonds may be issued and are secured; but neither the
foregoing reference to the Mortgage nor any provision of this bond or of the
Mortgage shall affect or impair the obligation of the Company, which is
absolute, unconditional and unalterable, to pay at the maturities herein
provided the principal of and interest on this bond as herein provided. The
principal of this bond may be declared or may become due on the conditions, in
the manner and at the time set forth in the Mortgage, upon the happening of an
event of default as in the Mortgage provided.
This bond is transferable by the registered holder hereof in person
or by attorney upon surrender hereof at the office or agency of the Company in
the Borough of Manhattan, New York, New York, together with a written instrument
of transfer in approved form, signed by the holder, and a new bond or bonds of
this series for a like principal amount in authorized denominations will be
issued in exchange, all as provided in the Mortgage. Prior to due presentment
for registration of transfer of this bond, the Company and the Trustee may deem
and treat the registered owner hereof as the absolute owner hereof,
<PAGE>
A-5
whether or not this bond be overdue, for the purpose of receiving payment and
for all other purposes, and neither the Company nor the Trustee shall be
affected by any notice to the contrary.
This bond is exchangeable at the option of the registered holder
hereof upon surrender hereof, at the office or agency of the Company in the
Borough of Manhattan, New York, New York, for an equal principal amount of bonds
of this series of other authorized denominations, in the manner and on the terms
provided in the Mortgage.
Bonds of this series owned by "qualified institutional buyers" as
defined in Rule 144A under the Securities Act of 1933, as amended ("Securities
Act") are to be issued initially under a book-entry only system and, except as
hereinafter provided, will be evidenced by a single Global Security registered
in the name of The Depository Trust Company, New York, New York ("DTC") or its
nominee, which shall be considered to be the holder of all such bonds for all
purposes of the Mortgage, including, without limitation, payment by the Company
of principal of and interest on such bonds and receipt of notices and exercise
of rights of holders of such bonds. The Global Security shall be immobilized in
the custody of DTC with the owners of book-entry interests in the Global
Security ("Book-Entry Interests") having no right to receive bonds of this
series in the form of physical securities or certificates. Ownership of
Book-Entry Interests shall be shown by book-entry on the system maintained and
operated by DTC, its participants (the "Participants") and certain persons
acting through the Participants. Transfers of ownership of Book-Entry Interests
are to be made only by DTC and the Participants by that book-entry system, the
Company and the Trustee having no responsibility therefor so long as the Global
Security is registered in the name of DTC or its nominee. DTC is to maintain
records of positions of Participants in bonds of this series registered by the
Global Security, and the Participants and persons acting through Participants
are to maintain records of the purchasers and owners of Book-Entry Interests. If
DTC or its nominee determines not to continue to act as a depository for the
bonds of this series in connection with a book-entry only system, another
depository, if available, may act instead and the Global Security will be
transferred into the name of such other depository or its nominee, in which case
the above provisions will continue to apply to the new depository. If the
book-entry system for bonds of this series is discontinued for any reason, upon
surrender and cancellation of the Global Security registered in the name of the
then depository or its nominee, new registered bonds of this series will be
issued in authorized denominations to the holders of Book-Entry Interests in
principal amounts coinciding with the amounts of Book-Entry Interests shown on
the book-entry system immediately prior to the discontinuance thereof. Neither
the Trustee nor the Company shall be responsible for the accuracy of the
interests shown on that system.
Bonds of this series originally purchased by or transferred to
institutional Accredited Investors as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) who are not qualified institutional buyers are to be
issued in certificated form. Upon the transfers of a bond from an institutional
Accredited Investor to a qualified institutional buyer, such bond may (unless
the Global Security has previously been exchanged in whole for certificated
bonds of this series) be exchanged for an interest in the Global Security.
The bonds of this series are subject to redemption prior to maturity,
as a whole at any time or in part from time to time, in accordance with the
provisions of the Mortgage, upon not less than thirty (30) days and not more
than 60 days prior notice (which notice may be made subject to the deposit of
<PAGE>
A-6
redemption moneys with the Trustee before the date fixed for redemption) given
by mail as provided in the Mortgage, at the option of the Company, at a
redemption price equal to the greater of (i) 100% of their principal amount and
(ii) the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Yield, plus in each case accrued interest to the date of redemption
(the "Redemption Date").
"Treasury Yield" means, with respect to any Redemption Date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker having a maturity comparable to the
remaining term of the bonds of this series that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the bonds of this series. "Independent Investment Banker" means Morgan
Stanley & Co. Incorporated or, if such firm is unwilling or unable to select the
Comparable Treasury Issue, an independent investment banking institution of
national standing to be selected by the Company and appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any Redemption
Date, (i) the average of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) on the
third business day preceding such Redemption Date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day (A) the average
of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Trustee obtains fewer than four Reference Treasury Dealer Quotations,
the average of all such Quotations. "Reference Treasury Dealer Quotations"
means, with respect to each Reference Treasury Dealer and any Redemption Date,
the average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m. on the third business day preceding such Redemption Date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co.
Incorporated and Salomon Brothers Inc. and another Primary Treasury Dealer (as
defined herein) at the option of the Company, provided, however, that if any of
the foregoing shall cease to be a primary U.S. Government securities dealer in
New York City (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer.
The Mortgage provides that the Company and the Trustee, with consent
of the holders of not less than 66-2/3% in aggregate principal amount of the
bonds at the time outstanding which would be affected by the action proposed to
be taken, may by supplemental indenture add any provisions to or change or
eliminate any of the provisions of the Mortgage or modify the rights of the
holders of the
<PAGE>
A-7
bonds and coupons issued thereunder; provided, however, that without the consent
of the holder hereof no such supplemental indenture shall affect the terms of
payment of the principal of or interest or premium on this bond, or reduce the
aforesaid percentage of the bonds the holders of which are required to consent
to such a supplemental indenture, or permit the creation by the Company of any
mortgage or pledge or lien in the nature thereof ranking prior to or equal with
the lien of the Mortgage or deprive the holder hereof of the lien of the
Mortgage on any of the property which is subject to the lien thereof.
As set forth in the Supplemental Indenture establishing the terms and
conditions of the bonds of this series, each holder of this bond, solely by
virtue of its acquisition thereof, shall have and be deemed to have consented,
without the need for any further action or consent by such holder, to certain
amendments to the Mortgage, effective contemporaneously with the issuance of the
bonds of this series, which have the effect of eliminating in their entirety the
requirements of the sinking and improvement fund previously set forth in Section
6.14 of the Mortgage.
No recourse shall be had for the payment of the principal of or the
interest on this bond, or any part thereof, or for any claim based thereon or
otherwise in respect thereof, to any incorporator, or any past, present or
future stockholder, officer or director of the Company, either directly or
indirectly, by virtue of any statute or by enforcement of any assessment or
otherwise, and any and all liability of the said incorporators, stockholders,
officers or directors of the Company in respect to this bond is hereby expressly
waived and released by every holder hereof.
<PAGE>
B-1
SCHEDULE B
TOWN OF AVON
------------
All of the following described rights, privileges and easements
situated in the Town of Avon, County of Hartford and State of Connecticut, more
particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(1) Orchard Farms Development, Inc. March 12, 1997 330 723
(2) Orchard Farms Development, Inc. December 9, 1996 328 53
(3) Land Subdividers, Inc. December 10, 1996 328 55
(4) Home Builders Association of
Hartford County, Inc. December 9, 1996 328 57
(5) Saverio Stancati et al October 10, 1995 319 486
(6) Mansour Enterprises, Inc. March 7, 1995 306 22*
</TABLE>
*Inter Alia: Farmington
TOWN OF BOLTON
--------------
All of the following described rights, privileges and easements
situated in the Town of Bolton, County of Tolland and State of Connecticut, more
particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(7) Richard H. Barry et al January 31, 1997 89 700
</TABLE>
TOWN OF BRANFORD
----------------
All of the following described rights, privileges and easements
situated in the Town of Branford, County of New Haven and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(8) M & E Construction, Inc. November 5, 1996 617 496
(9) Stanley Kaczynski November 18, 1993 560 423
(10) Edward L. Pantani, Trustee February 6, 1997 621 469
</TABLE>
<PAGE>
B-2
TOWN OF CANTON
--------------
All of the following described rights, privileges and easements
situated in the Town of Canton, County of Hartford and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(11) Howard Olson et al November 6, 1996 216 698
(12) Village Developers January 13, 1997 218 113
</TABLE>
TOWN OF CHESHIRE
----------------
All of the following described rights, privileges and easements
situated in the Town of Cheshire, County of New Haven and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(13) MDA Cheshire L.L.C. December 9, 1996 1199 260
</TABLE>
TOWN OF CLINTON
---------------
All of the following described rights, privileges and easements
situated in the Town of Clinton, County of Middlesex and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(14) Susan G. Lione December 19, 1996 250 132
(15) C & G Realty, Inc. March 18, 1997 251 1059
</TABLE>
<PAGE>
B-3
TOWN OF COVENTRY
----------------
All of the following described rights, privileges and easements
situated in the Town of Coventry, County of Tolland and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(16) Rolling Woods LLC December 30, 1996 577 281
</TABLE>
TOWN OF CROMWELL
----------------
All of the following described rights, privileges and easements
situated in the Town of Cromwell, County of Middlesex and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(17) Daylar River Properties
Limited Partnership March 8, 1995 579 27
(18) Tournament Players Club of
Connecticut, Inc. April 16, 1997 631 151
</TABLE>
TOWN OF DANBURY
---------------
All of the following described rights, privileges and easements
situated in the Town of Danbury, County of Fairfield and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(19) The Enclave, LLC June 20, 1996 1153 1149
</TABLE>
<PAGE>
B-4
TOWN OF DEEP RIVER
------------------
All of the following described rights, privileges and easements
situated in the Town of Deep River, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(20) Harold A. Tomlinson et al April 10, 1997 145 557
</TABLE>
TOWN OF DURHAM
--------------
All of the following described rights, privileges and easements
situated in the Town of Durham, County of Middlesex and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(21) Noel K. Higgins January 13, 1997 152 201
(22) Cuomo Construction, Inc. April 4, 1997 152 1112
</TABLE>
TOWN OF EAST HADDAM
-------------------
All of the following described rights, privileges and easements
situated in the Town of East Haddam, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(23) Elizabeth Nemergut November 8, 1996 400 325
(24) R.D.M. Construction, Inc. December 13, 1996 402 118
(25) Howard F. Camolli, Jr. et al September 12, 1996 399 22
</TABLE>
<PAGE>
B-5
TOWN OF ENFIELD
---------------
All of the following described rights, privileges and easements
situated in the Town of Enfield, County of Hartford and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(26) Hampden and Beech, Inc. January 16, 1997 1030 25
</TABLE>
TOWN OF FARMINGTON
------------------
All of the following described rights, privileges and easements
situated in the Town of Farmington, County of Hartford and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(27) Farmington Land Trust, Inc. December 13, 1996 536 866
(28) Lee T. Ferguson et al November 18, 1996 536 868
(29) Mansour Enterprises, Inc. March 7, 1995 497 1110*
</TABLE>
Inter Alia: Avon
TOWN OF GLASTONBURY
-------------------
All of the following described rights, privileges and easements
situated in the Town of Glastonbury, County of Hartford and State of
Connecticut, more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(30) Edward J. Kamis June 14, 1985 303 61
(31) Cove Landing Associates LLC November 13, 1996 1050 217
</TABLE>
<PAGE>
B-6
TOWN OF GRANBY
--------------
All of the following described rights, privileges and easements
situated in the Town of Granby, County of Hartford and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(32) Granby Farms Partners August 21, 1996 212 791
(33) Connecticut Valley Land
Developers, Inc. December 18, 1996 212 794
(34) Thomas Development Corporation November 1, 1996 212 923
(35) George J. Reynolds et al January 31, 1997 214 46
</TABLE>
TOWN OF GRISWOLD
----------------
All of the following described rights, privileges and easements
situated in the Town of Griswold, County of New London and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(36) Pine Trace, Inc. March 11, 1997 178 507
</TABLE>
TOWN OF GUILFORD
----------------
All of the following described rights, privileges and easements
situated in the Town of Guilford, County of New Haven and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(37) Peter Whitney Marlowe November 22, 1996 469 653
(38) Martin A. White et al December 9, 1996 469 426
(39) Archie Bailey January 20, 1997 470 806
(40) Joseph S. Milano April 9, 1997 473 718
</TABLE>
<PAGE>
B-7
TOWN OF HAMPTON
---------------
All of the following described rights, privileges and easements
situated in the Town of Hampton, County of Windham and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(41) Jereslawa Asselin December 4, 1996 44 680
</TABLE>
TOWN OF LEDYARD
---------------
All of the following described rights, privileges and easements
situated in the Town of Ledyard, County of New London and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(42) Hidden Acres December 20, 1996 265 865
(43) Crossen Builders, Inc. March 11, 1997 267 451
</TABLE>
TOWN OF LISBON
--------------
All of the following described rights, privileges and easements
situated in the Town of Lisbon, County of New London and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(44) Carolyn J. Read et al January 14, 1997 80 709
(45) John F. Shork et al March 13, 1992 67 380
& March 17, 1992
</TABLE>
<PAGE>
B-8
TOWN OF LITCHFIELD
------------------
All of the following described rights, privileges and easements
situated in the Town of Litchfield, County of Litchfield and State of
Connecticut, more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(46) Nancy D. Goldring May 9. 1996 232 109
(47) Douglas C. Wisch et al November 12, 1996 234 613
</TABLE>
TOWN OF MADISON
---------------
All of the following described rights, privileges and easements
situated in the Town of Madison, County of New Haven and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(48) Kenneth L. Evarts November 26, 1996 728 92
</TABLE>
TOWN OF MANSFIELD
-----------------
All of the following described rights, privileges and easements
situated in the Town of Mansfield, County of Tolland and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(49) Pasquale A. Ferrigno et al March 20, 1997 384 404
</TABLE>
<PAGE>
B-9
TOWN OF MERIDEN
---------------
All of the following described rights, privileges and easements
situated in the Town of Meriden, County of New Haven and State of Connecticut,
more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(50) City of Meriden October 11, 1996 2215 154
(51) The Southern New England
Telephone Company December 16, 1996 2228 75
(52) Gennaro Martorelli, Trustee March 27, 1997 2255 32
</TABLE>
TOWN OF MIDDLEBURY
------------------
All of the following described rights, privileges and easements
situated in the Town of Middlebury, County of New Haven and State of
Connecticut, more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(53) Steeplechase of Middlebury
L.L.C. August 7, 1996 146 102
</TABLE>
TOWN OF MIDDLETOWN
------------------
All of the following described rights, privileges and easements
situated in the Town of Middletown, County of Middlesex and State of
Connecticut, more particularly described in the following deeds, viz:
<TABLE>
<CAPTION>
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
<S> <C> <C> <C>
(54) Joseph F. Sarcia November 18, 1996 1112 629
</TABLE>
<PAGE>
B-10
TOWN OF MONROE
--------------
All of the following described rights, privileges and easements situated in
the Town of Monroe, County of Fairfield and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(55) Summit Residential, L.L.C. April 12, 1996 697 213
TOWN OF MONTVILLE
-----------------
All of the following described rights, privileges and easements
situated in the Town of Montville, County of New London and State of
Connecticut, more particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(56) Frank Charles Dvorak et al April 9, 1992 269 68
TOWN OF NEWINGTON
-----------------
All of the following described rights, privileges and easements situated in
the Town of Newington, County of Hartford and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(57) Town of Newington October 30, 1996 1115 95
<PAGE>
B-11
TOWN OF NORWALK
---------------
All of the following described rights, privileges and easements situated in
the Town of Norwalk, County of Fairfield and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(58) Ludovico A. Iacono et al January 17, 1996 3169 306
TOWN OF OLD LYME
----------------
All of the following described rights, privileges and easements situated in
the Town of Old Lyme, County of New London and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(59) EPW-1, LLC May 5, 1997 238 307
TOWN OF OLD SAYBROOK
--------------------
All of the following described rights, privileges and easements situated in
the Town of Old Saybrook, County of Middlesex and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(60) Greg S. Gibson November 4, 1996 339 575
(61) Captain Dolbeare, Inc. et al August 28, 1996 339 226
(62) Scott T. Efinger November 19, 1996 340 232
(63) Robert L. Day Co., Inc. November 19, 1996 340 122
(64) Blue Point, Inc. et al March 8, 1997 342 647
<PAGE>
B-12
TOWN OF OXFORD
--------------
All of the following described rights, privileges and easements situated in
the Town of Oxford, County of New Haven and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(65) Gray Eagle, Inc. January 6, 1997 192 408
(66) Elizabeth Troia Blatchley December 13, 1996 191 967
et al
TOWN OF PLAINFIELD
------------------
All of the following described rights, privileges and easements situated in
the Town of Plainfield, County of Windham and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(67) Lauri P. Pulkkinen et al January 6, 1997 240 1077
TOWN OF PLYMOUTH
----------------
All of the following described rights, privileges and easements situated in
the Town of Plymouth, County of Litchfield and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(68) Olga S. Wrettick January 23, 1997 35 24
<PAGE>
B-13
TOWN OF PRESTON
---------------
All of the following described rights, privileges and easements situated in
the Town of Preston, County of New London and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(69) Gail L. Whitney et al February 5, 1997 112 144
TOWN OF PROSPECT
----------------
All of the following described rights, privileges and easements situated in
the Town of Prospect, County of New Haven and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(70) Robinmark Development Group,
LLC December 19, 1996 283 192
TOWN OF SALEM
-------------
All of the following described rights, privileges and easements situated in
the Town of Salem, County of New London and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(71) Marian Keszycki October 28, 1996 102 17
<PAGE>
B-14
TOWN OF SHARON
--------------
All of the following described rights, privileges and easements situated in
the Town of Sharon, County of Litchfield and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(72) Patricia R. Purdy August 6, 1996 127 948
TOWN OF SIMSBURY
----------------
All of the following described rights, privileges and easements situated in
the Town of Simsbury, County of Hartford and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(73) Brewer & Horan Construction February 28, 1997 467 59
Co., Inc.
TOWN OF SOMERS
--------------
All of the following described rights, privileges and easements situated in
the Town of Somers, County of Tolland and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(74) Hardor, Inc. January 13, 1997 173 453
<PAGE>
B-15
TOWN OF SOUTH WINDSOR
---------------------
All of the following described rights, privileges and easements situated in
the Town of South Windsor, County of Hartford and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(75) RSK-KELLCO INC. December 11, 1996 924 158
(76) B&M Enterprises, Inc. November 21, 1996 923 21
TOWN OF SOUTHBURY
-----------------
All of the following described rights, privileges and easements situated in
the Town of Southbury, County of New Haven and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(77) Edward H. Williams July 11, 1996 311 560
(78) Thomas W. Hill et al November 18, 1996 314 126
(79) Pond Ridge Corp. October 31, 1996 314 220
TOWN OF SOUTHINGTON
-------------------
All of the following described rights, privileges and easements situated in
the Town of Southington, County of Hartford and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(80) Alison Wight November 13, 1996 659 532
(81) D & J Corporation February 21, 1997 664 545
(82) James L. Hermann May 13, 1996 646 99
(83) Ralph Crispino et al December 3, 1996 667 53
& December 4, 1996
<PAGE>
B-16
TOWN OF STAFFORD
----------------
All of the following described rights, privileges and easements situated in
the Town of Stafford, County of Tolland and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(84) Robert W. Pinatti November 25, 1996 343 523
TOWN OF STAMFORD
----------------
All of the following described rights, privileges and easements situated in
the Town of Stamford, County of Fairfield and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(85) Vanech Bros., Inc. April 1, 1996 4563 21
(86) Vanech Bros., Inc. August 8, 1996 4625 52
TOWN OF STONINGTON
------------------
All of the following described rights, privileges and easements situated in
the Town of Stonington, County of New London and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(87) Bishop Venture Realty December 9, 1996 398 571
Corporation
(88) Stephen J. Schlachter et al February 6, 1997 402 953
(89) Stephen B. Palmer, III et al March 13, 1997 403 433
<PAGE>
B-17
TOWN OF SUFFIELD
----------------
All of the following described rights, privileges and easements situated in
the Town of Suffield, County of Hartford and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(90) Finlay Properties, Inc. November 4, 1996 272 618
TOWN OF THOMPSON
----------------
All of the following described rights, privileges and easements situated in
the Town of Thompson, County of Windham and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(91) Raymond G. Audette et al November 21, 1996 352 13
TOWN OF TOLLAND
---------------
All of the following described rights, privileges and easements situated in
the Town of Tolland, County of Tolland and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(92) Capstone Builders, Inc. February 4, 1997 551 148
<PAGE>
B-18
TOWN OF VOLUNTOWN
-----------------
All of the following described rights, privileges and easements situated in
the Town of Voluntown, County of New London and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(93) Henry P. Maynard December 26, 1996 65 707
TOWN OF WATERFORD
-----------------
All of the following described rights, privileges and easements situated in
the Town of Waterford, County of New London and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(94) River Road Manor, Inc. October 11, 1996 463 634
(95) Castle Hill Development, Inc. February 4, 1997 464 31
(96) Olyn Contracting Company February 24, 1997 464 630
(97) W. C. Peregrine Housing March 7, 1997 465 758
Associates Limited Partnership
(98) Jordan Commons Associates April 15, 1997 466 786
TOWN OF WATERTOWN
-----------------
All of the following described rights, privileges and easements situated in
the Town of Watertown, County of Litchfield and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(99) Watertown Landmark, Inc. October 29, 1996 838 123
<PAGE>
B-19
TOWN OF WESTBROOK
-----------------
All of the following described rights, privileges and easements situated in
the Town of Westbrook, County of Middlesex and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(100) Raymond Papandrea February 10, 1997 180 474
(101) Michael I. Reznik et al January 25, 1997 181 293
(102) Mary J. Linde April 30, 1997 181 791
TOWN OF WILTON
--------------
All of the following described rights, privileges and easements situated in
the Town of Wilton, County of Fairfield and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(103) Avalon Properties, Inc. June 14, 1996 996 114
TOWN OF WINDHAM
---------------
All of the following described rights, privileges and easements situated in
the Town of Windham, County of Windham and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(104) Windham Mills Development February 3, 1997 507 279
Corporation
<PAGE>
B-20
TOWN OF WOLCOTT
---------------
All of the following described rights, privileges and easements situated in
the Town of Wolcott, County of New Haven and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(105) Lakeview, LLC May 30, 1996 233 101
(106) Wolcott Associates October 16, 1996 236 537
(107) Graziano Brothers et al May 23, 1996 233 521
TOWN OF WOODSTOCK
-----------------
All of the following described rights, privileges and easements situated in
the Town of Woodstock, County of Windham and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(108) Gary A. Potter December 16, 1996 271 218
(109) James R. Pestey July 11, 1996 269 29
(110) Stephen J. Kaplowitt et al February 18, 1997 274 31
TOWN OF WOODBURY
----------------
All of the following described rights, privileges and easements situated in
the Town of Woodbury, County of Litchfield and State of Connecticut, more
particularly described in the following deeds, viz:
RECORDED
GRANTOR DATE OF INSTRUMENT VOLUME/PAGE
------- ------------------ -----------
(111) Loan Oak Development, Inc. April 2, 1996 213 489
(112) Raymond Hardisty et al May 22, 1996 214 671
<PAGE>
Exhibit 4.21
SIXTY-EIGHTH
SUPPLEMENTAL INDENTURE
Dated as of June 1, 1997
TO
Indenture of Mortgage and Deed of Trust
Dated as of May 1, 1921
___________
THE CONNECTICUT LIGHT AND POWER COMPANY
TO
BANKERS TRUST COMPANY, Trustee
___________
7-3/4% 1997 Series C Bonds, Due June 1, 2002
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY
Sixty-Eighth Supplemental Indenture, Dated as of June 1, 1997
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Parties......................................................................1
Recitals.....................................................................1
Granting Clauses.............................................................2
Habendum.....................................................................3
Grant in Trust...............................................................3
ARTICLE 1.
FORM AND PROVISIONS OF BONDS OF 1997 SERIES C
SECTION 1.01. Designation; Amount...........................................4
SECTION 1.02. Form of Bonds of 1997 Series C................................4
SECTION 1.03. Provisions of Bonds of 1997 Series C; Interest Accrual........4
SECTION 1.04. Transfer and Exchange of Bonds of 1997 Series C...............5
ARTICLE 2.
REDEMPTION OF BONDS OF 1997 Series C....................5
ARTICLE 3.
MISCELLANEOUS
SECTION 3.01. Benefits of Supplemental Indenture and Bonds of 1997 Series C.6
SECTION 3.02. Effect of Table of Contents and Headings......................6
SECTION 3.03. Counterparts..................................................6
TESTIMONIUM..................................................................7
SIGNATURES...................................................................7
ACKNOWLEDGMENTS..............................................................7
</TABLE>
SCHEDULE A - Form of Bond of 1997 Series C, Form of Trustee's Certificate
[SCHEDULE B - Property Subject to the Lien of the Mortgage]
<PAGE>
SIXTY-EIGHTH SUPPLEMENTAL INDENTURE, dated as of the first day of June,
1997, between THE CONNECTICUT LIGHT AND POWER COMPANY, a corporation organized
and existing under the laws of the State of Connecticut (hereinafter called
"Company"), and BANKERS TRUST COMPANY, a corporation organized and existing
under the laws of the State of New York (hereinafter called "Trustee"), with its
principal corporate trust office at Four Albany Street, New York, NY 10006.
WHEREAS, the Company heretofore duly executed, acknowledged and delivered
to the Trustee a certain Indenture of Mortgage and Deed of Trust dated as of May
1, 1921, and sixty-seven Supplemental Indentures thereto dated respectively as
of May 1, 1921, February 1, 1924, July 1, 1926, June 20, 1928, June 1, 1932,
July 1, 1932, July 1, 1935, September 1, 1936, October 20, 1936, December 1,
1936, December 1, 1938, August 31, 1944, September 1, 1944, May 1, 1945, October
1, 1945, November 1, 1949, December 1, 1952, December 1, 1955, January 1, 1958,
February 1, 1960, April 1, 1961, September 1, 1963, April 1, 1967, May 1, 1967,
January 1, 1968, October 1, 1968, December 1, 1969, January 1, 1970, October 1,
1970, December 1, 1971, August 1, 1972, April 1, 1973, March 1, 1974, February
1, 1975, September 1, 1975, May 1, 1977, March 1, 1978, September 1, 1980,
October 1, 1981, June 30, 1982, October 1, 1982, July 1, 1983, January 1, 1984,
October 1, 1985, September 1, 1986, April 1, 1987, October 1, 1987, November 1,
1987, April 1, 1988, November 1, 1988, June 1, 1989, September 1, 1989, December
1, 1989, April 1, 1992, July 1, 1992, October 1, 1992, July 1, 1993, July 1,
1993, December 1, 1993, February 1, 1994, February 1, 1994, June 1, 1994,
October 1, 1994, June 1, 1996, January 1, 1997, May 1, 1997 and June 1, 1997
(said Indenture of Mortgage and Deed of Trust (i) as heretofore amended, being
hereinafter generally called the "Mortgage Indenture," and (ii) together with
said Supplemental Indentures thereto, being hereinafter generally called the
"Mortgage"), all of which have been duly recorded as required by law, for the
purpose of securing its First and Refunding Mortgage Bonds (of which
$1,746,000,000 aggregate principal amount are outstanding at the date of this
Supplemental Indenture) in an unlimited amount, issued and to be issued for the
purposes and in the manner therein provided, of which Mortgage this Supplemental
Indenture is intended to be made a part, as fully as if therein recited at
length;
WHEREAS, the Company by appropriate and sufficient corporate action in
conformity with the provisions of the Mortgage has duly determined to create a
further series of bonds under the Mortgage to be designated "First and Refunding
Mortgage 7-3/4% Bonds, 1997 Series C" (hereinafter generally referred to as the
"bonds of 1997 Series C"), to consist of fully registered bonds containing terms
and provisions duly fixed and determined by the Board of Directors of the
Company and expressed in this Supplemental Indenture, such fully registered
bonds and the Trustee's certificate of its authentication thereof to be
substantially in the forms thereof respectively set forth in Schedule A appended
hereto and made a part hereof; and
WHEREAS, the execution and delivery of this Supplemental Indenture and the
issue of not in excess of [Two Hundred Million Dollars ($200,000,000) in
aggregate principal amount of bonds of 1997 Series C and other necessary actions
have been duly authorized by the Board of Directors of the Company; and
<PAGE>
2
WHEREAS, the Company has purchased, constructed or otherwise acquired
certain additional property not specifically described in the Mortgage but which
is and is intended to be subject to the lien thereof, and proposes specifically
to subject such additional property to the lien of the Mortgage at this time;
and
WHEREAS, the Company proposes to execute and deliver this Supplemental
Indenture to provide for the issue of the bonds of 1997 Series C and to confirm
the lien of the Mortgage on the property referred to below, all as permitted by
Section 14.01 of the Mortgage Indenture; and
WHEREAS, all acts and things necessary to constitute this Supplemental
Indenture a valid, binding and legal instrument and to make the bonds of 1997
Series C, when executed by the Company and authenticated by the Trustee valid,
binding and legal obligations of the Company have been authorized and performed;
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE OF MORTGAGE AND DEED OF TRUST
WITNESSETH:
That in order to secure the payment of the principal of and interest on all
bonds issued and to be issued under the Mortgage, according to their tenor and
effect, and according to the terms of the Mortgage and this Supplemental
Indenture, and to secure the performance of the covenants and obligations in
said bonds and in the Mortgage and this Supplemental Indenture respectively
contained, and for the better assuring and confirming unto the Trustee, its
successor or successors and its or their assigns, upon the trusts and for the
purposes expressed in the Mortgage and this Supplemental Indenture, all and
singular the hereditaments, premises, estates and property of the Company
thereby conveyed or assigned or intended so to be, or which the Company may
thereafter have become bound to convey or assign to the Trustee, as security for
said bonds (except such hereditaments, premises, estates and property as shall
have been disposed of or released or withdrawn from the lien of the Mortgage and
this Supplemental Indenture, in accordance with the provisions thereof and
subject to alterations, modifications and changes in said hereditaments,
premises, estates and property as permitted under the provisions thereof), the
Company, for and in consideration of the premises and the sum of One Dollar
($1.00) to it in hand paid by the Trustee, the receipt whereof is hereby
acknowledged, and of other valuable considerations, has granted, bargained,
sold, assigned, mortgaged, pledged, transferred, set over, aliened, enfeoffed,
released, conveyed and confirmed, and by these presents does grant, bargain,
sell, assign, mortgage, pledge, transfer, set over, alien, enfeoff, release,
convey and confirm unto said Bankers Trust Company, as Trustee, and its
successor or successors in the trusts created by the Mortgage and this
Supplemental Indenture, and its and their assigns, all of said hereditaments,
premises, estates and property (except and subject as aforesaid), as fully as
though described at length herein, including, without limitation of the
foregoing, the property, rights and privileges of the Company described or
referred to in Schedule B hereto.
Together with all plants, buildings, structures, improvements and machinery
located upon said real estate or any portion thereof, and all rights, privileges
and easements of every kind and nature appurtenant thereto, and all and singular
the tenements, hereditaments and appurtenances belonging to the real estate or
any part thereof described or referred to in Schedule B or intended so to be, or
in any wise appertaining thereto, and the reversions, remainders, rents, issues
and profits thereof, and also all
<PAGE>
3
the estate, right, title, interest, property,possession, claim and demand
whatsoever, as well in law as in equity, of the Company, of, in and to the same
and any and every part thereof, with the appurtenances; except and subject as
aforesaid.
TO HAVE AND TO HOLD all and singular the property, rights and privileges
hereby granted or mentioned or intended so to be, together with all and singular
the reversions, remainders, rents, revenues, income, issues and profits,
privileges and appurtenances, now or hereafter belonging or in any way
appertaining thereto, unto the Trustee and its successor or successors in the
trust created by the Mortgage and this Supplemental Indenture, and its and their
assigns, forever, and with like effect as if the above described property,
rights and privileges had been specifically described at length in the Mortgage
and this Supplemental Indenture.
Subject, however, to permitted liens, as defined in the Mortgage Indenture.
IN TRUST, NEVERTHELESS, upon the terms and trusts of the Mortgage and this
Supplemental Indenture for those who shall hold the bonds and coupons issued and
to be issued thereunder, or any of them, without preference, priority or
distinction as to lien of any of said bonds and coupons over any others thereof
by reason of priority in the time of the issue or negotiation thereof, or
otherwise howsoever, subject, however, to the provisions in reference to
extended, transferred or pledged coupons and claims for interest set forth in
the Mortgage and this Supplemental Indenture (and subject to any sinking fund
that may heretofore have been or hereafter be created for the benefit of any
particular series).
And it is hereby covenanted that all such bonds of 1997 Series C are to be
issued, authenticated and delivered, and that the mortgaged premises are to be
held by the Trustee, upon and subject to the trusts, covenants, provisions and
conditions and for the uses and purposes set forth in the Mortgage and this
Supplemental Indenture and upon and subject to the further covenants, provisions
and conditions and for the uses and purposes hereinafter set forth, as follows,
to wit:
ARTICLE 1.
FORM AND PROVISIONS OF BONDS OF 1997 SERIES C
SECTION 1.01. Designation; Amount. The bonds of 1997 Series C shall be
designated "First and Refunding Mortgage 7-3/4% Bonds, 1997 Series C" and,
subject to Section 2.08 of the Mortgage Indenture, shall not exceed [Two Hundred
Million Dollars ($200,000,000)] in aggregate principal amount at any one time
outstanding. The initial issue of the bonds of 1997 Series C may be effected
upon compliance with the applicable provisions of the Mortgage Indenture.
SECTION 1.02. Form of Bonds of 1997 Series C. The bonds of 1997 Series C
shall be issued only in fully registered form without coupons in denominations
of One Hundred Thousand Dollars ($100,000) or integral multiples of $1,000 in
excess thereof; provided, however, that, if any registered holder holds less
than $100,000 in aggregate principal amount of the bonds of 1997 Series C as
result of
<PAGE>
4
a partial redemption by the Company in accordance with Article 2 hereof, a bond
of 1997 Series C in the amount of such holder's aggregate holdings shall be
issued.
The bonds of 1997 Series C and the certificate of the Trustee upon said
bonds shall be substantially in the forms thereof respectively set forth in
Schedule A appended hereto.
SECTION 1.03. Provisions of Bonds of 1997 Series C; Interest Accrual. The
bonds of 1997 Series C shall mature on June 1, 2002 and shall bear interest,
payable semiannually on the first days of June and December of each year,
commencing December 1, 1997, at the rate of 7-3/4% per annum, until the
Company's obligation in respect of the principal thereof shall be discharged;
and shall be payable both as to principal and interest at the office or agency
of the Company in the Borough of Manhattan, New York, New York, in any coin or
currency of the United States of America which at the time of payment is legal
tender for the payment of public and private debts. The interest on the bonds
of 1997 Series C, whether in temporary or definitive form, shall be payable
without presentation of such bonds; and only to or upon the written order of the
registered holders thereof of record at the applicable record date. The bonds
of 1997 Series C shall be callable for redemption in whole or in part according
to the terms and provisions herein in Article 2.
Each bond of 1997 Series C shall be dated as of June 1, 1997 and shall bear
interest on the principal amount thereof from the interest payment date next
preceding the date of authentication thereof by the Trustee to which interest
has been paid on the bonds of 1997 Series C, or if the date of authentication
thereof is prior to November 16, 1997, then from June 1, 1997, or if the date of
authentication thereof be an interest payment date to which interest is being
paid or a date between the record date for any such interest payment date and
such interest payment date, then from such interest payment date.
The person in whose name any bond of 1997 Series C is registered at the
close of business on any record date (as hereinafter defined) with respect to
any interest payment date shall be entitled to receive the interest payable on
such interest payment date notwithstanding the cancellation of such bond upon
any registration of transfer or exchange thereof subsequent to the record date
and prior to such interest payment date, except that if and to the extent the
Company shall default in the payment of the interest due on such interest
payment date, then such defaulted interest shall be paid to the person in whose
name such bond is registered on a subsequent record date for the payment of
defaulted interest if one shall have been established as hereinafter provided
and otherwise on the date of payment of such defaulted interest. A subsequent
record date may be established by the Company by notice mailed to the owners of
bonds of 1997 Series C not less than ten (10) days preceding such record date,
which record date shall not be more than thirty (30) days prior to the
subsequent interest payment date. The term "record date" as used in this
Section with respect to any regular interest payment (i.e., June 1 or December
1) shall mean the May 15 or November 15, as the case may be, next preceding such
interest payment date, or if such May 15 or November 15 shall be a legal holiday
or a day on which banking institutions in the Borough of Manhattan, New York,
New York are authorized by law to close, the next preceding day which shall not
be a legal holiday or a day on which such institutions are so authorized to
close.
<PAGE>
5
SECTION 1.04. Transfer and Exchange of Bonds of 1997 Series C. The bonds
of 1997 Series C may be surrendered for registration of transfer as provided in
Section 2.06 of the Mortgage Indenture at the office or agency of the Company in
the Borough of Manhattan, New York, New York, and may be surrendered at said
office for exchange for a like aggregate principal amount of bonds of 1997
Series C of other authorized denominations. Notwithstanding the provisions of
Section 2.06 of the Mortgage Indenture, no charge, except for taxes or other
governmental charges, shall be made by the Company for any registration of
transfer of bonds of 1997 Series C or for the exchange of any bonds of 1997
Series C for such bonds of other authorized denominations.
ARTICLE 2.
REDEMPTION OF BONDS OF 1997 SERIES C.
The bonds of 1997 Series C shall be redeemable, as a whole at any time or
in part from time to time, in accordance with the provisions of the Mortgage and
upon not less than thirty (30) days and not more than 60 days prior notice given
by mail as provided in the Mortgage (which notice may state that it is subject
to the receipt of the redemption moneys by the Trustee on or before the date
fixed for redemption and which notice shall be of no effect unless such moneys
are so received on or before such date), at the option of the Company, at a
redemption price equal to the greater of (i) 100% of the principal amount of the
bonds being redeemed and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon, discounted to the date of
redemption on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Yield, plus in each case accrued interest to the
date of redemption (the "Redemption Date").
"Treasury Yield" means, with respect to any Redemption Date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker having a maturity comparable to the
remaining term of the bonds of 1997 Series C that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the bonds of 1997 Series C. "Independent Investment Banker" means Morgan
Stanley & Co. Incorporated or, if such firm is unwilling or unable to select the
Comparable Treasury Issue, an independent investment banking institution of
national standing to be selected by the Company and appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any Redemption Date (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such Redemption Date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the
<PAGE>
6
average of the Reference Treasury Dealer Quotations for such Redemption Date,
after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four Reference Treasury
Dealer Quotations, the average of all such Quotations. "Reference Treasury
Dealer Quotations" means, with respect to each Reference Treasury Dealer and any
Redemption Date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. on the third business day preceding such Redemption
Date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co.
Incorporated, Salomon Brothers Inc and another Primary Treasury Dealer (as
defined herein) at the option of the Company, provided, however, that if any of
the foregoing shall cease to be a primary U.S. Government securities dealer in
New York City (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer.
ARTICLE 3.
MISCELLANEOUS.
SECTION 3.01. Benefits of Supplemental Indenture and Bonds of 1997 Series
C. Nothing in this Supplemental Indenture, or in the bonds of 1997 Series C,
expressed or implied, is intended to or shall be construed to give to any person
or corporation other than the Company, the Trustee and the holders of the bonds
and interest obligations secured by the Mortgage and this Supplemental
Indenture, any legal or equitable right, remedy or claim under or in respect of
this Supplemental Indenture or of any covenant, condition or provision herein
contained. All the covenants, conditions and provisions hereof are and shall be
for the sole and exclusive benefit of the Company, the Trustee and the holders
of the bonds and interest obligations secured by the Mortgage and this
Supplemental Indenture.
SECTION 3.02. Effect of Table of Contents and Headings. The table of
contents and the description headings of the several Articles and Sections of
this Supplemental Indenture are inserted for convenience of reference only and
are not to be taken to be any part of this Supplemental Indenture or to control
or affect the meaning, construction or effect of the same.
SECTION 3.03. Counterparts. For the purpose of facilitating the recording
hereof, this Supplemental Indenture may be executed in any number of
counterparts, each of which shall be and shall be taken to be an original and
all collectively but one instrument.
<PAGE>
7
IN WITNESS WHEREOF, The Connecticut Light and Power Company has caused
these presents to be executed by a Vice President and its corporate seal to be
hereunto affixed, duly attested by an Assistant Secretary, and Bankers Trust
Company has caused these presents to be executed by a Vice President and its
corporate seal to be hereunto affixed, duly attested by an Assistant Vice
President, as of the day and year first above written.
THE CONNECTICUT LIGHT AND POWER
COMPANY
Attest:
By:
- ------------------------------ -----------------------------------
Name: Name:
Title: Title:
(SEAL) Signed, sealed and delivered
in the presence of:
--------------------------------------
--------------------------------------
STATE OF CONNECTICUT )
) ss.: Berlin
COUNTY OF HARTFORD )
On this ___ day of ____ 1997, before me, _______________, the undersigned
officer, personally appeared ________________ and ____________, who
acknowledged themselves to be _____________ and ______________ and
______________________, respectively, of THE CONNECTICUT LIGHT AND POWER
COMPANY, a corporation, and that they, as such _______________ and such
_________________, being authorized so to do, executed the foregoing instrument
for the purpose therein contained, by signing the name of the corporation by
themselves as __________________ and _____________, and as their free act and
deed.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------------------
Notary Public
My commission expires on
-------------
(SEAL)
<PAGE>
8
BANKERS TRUST COMPANY
Attest:
By:
- ------------------------- -----------------------------------
Name: Name:
Title: Title:
(SEAL) Signed, sealed and delivered
in the presence of:
--------------------------------------
--------------------------------------
STATE OF NEW YORK )
) ss.: New York
COUNTY OF NEW YORK )
On this ____ day of ____, 1997, before me, ______________, the undersigned
officer, personally appeared _____________ and _________________ who
acknowledged themselves to be a ________________ and an __________________,
respectively, of BANKERS TRUST COMPANY, a corporation, and that they, as such
___________________ and such ______________, being authorized so to do, executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation by themselves as ______________ and _______________, and as
their free act and deed.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------------------
Name:
Notary Public, State of New York
No.
------------
Qualified in New York County
Commission Expires
---------------
(SEAL)
<PAGE>
A-1
SCHEDULE A
[FORM OF BOND OF 1997 SERIES C]
No. $
THE CONNECTICUT LIGHT AND POWER COMPANY
Incorporated under the Laws of the State of Connecticut
FIRST AND REFUNDING MORTGAGE 7-3/4% BOND, 1997 SERIES C
PRINCIPAL DUE JUNE 1, 2002
FOR VALUE RECEIVED, THE CONNECTICUT LIGHT AND POWER COMPANY, a corporation
organized and existing under the laws of the State of Connecticut (hereinafter
called the Company), hereby promises to pay to _______________________, or
registered assigns, the principal sum of _____________________ dollars, on the
first day of June, 2002 and to pay interest on said sum, semiannually on the
first days of June and December in each year, commencing December 1, 1997, until
the Company's obligation with respect to said principal sum shall be discharged,
at the rate of 7-3/4% per annum from the interest payment date next preceding
the date of authentication hereof to which interest has been paid on the bonds
of this series, or if the date of authentication hereof is prior to November 16,
1997, then from June 1, 1997, or if the date of authentication hereof is an
interest payment date to which interest is being paid or a date between the
record date for any such interest payment date and such interest payment date,
then from such interest payment date. Both principal and interest shall be
payable at the office or agency of the Company in the Borough of Manhattan, New
York, New York, in such coin or currency of the United States of America as at
the time of payment is legal tender for the payment of public and private debts.
Each installment of interest hereon (other than overdue interest) shall be
payable to the person who shall be the registered owner of this bond at the
close of business on the record date, which shall be the May 15 or November 15,
as the case may be, next preceding the interest payment date, or, if such May 15
or November 15 shall be a legal holiday or a day on which banking institutions
in the Borough of Manhattan, New York, New York, are authorized by law to close,
the next preceding day which shall not be a legal holiday or a day on which such
institutions are so authorized to close.
Reference is hereby made to the further provisions of this bond set forth
on the reverse hereof, including without limitation provisions in regard to the
call and redemption and the registration of transfer and exchangeability of this
bond, and such further provisions shall for all purposes have the same effect as
though fully set forth in this place.
This bond shall not become or be valid or obligatory until the certificate
of authentication hereon shall have been signed by Bankers Trust Company
(hereinafter with its successors as defined in the Mortgage hereinafter referred
to, generally called the Trustee), or by such a successor.
<PAGE>
A-2
IN WITNESS WHEREOF, The Connecticut Light and Power Company has caused this
bond to be executed in its corporate name and on its behalf by its President by
his signature or a facsimile thereof, and its corporate seal to be affixed or
imprinted hereon and attested by the manual or facsimile signature of its
Secretary.
Dated as of _______, 1997.
THE CONNECTICUT LIGHT AND POWER
COMPANY
By:___________________________________
Name:
Title: President
Attest:
______________________________________
Name:
Title: Secretary
[FORM OF TRUSTEE'S CERTIFICATE]
Bankers Trust Company hereby certifies that this bond is one of the bonds
described in the within mentioned Mortgage.
BANKERS TRUST COMPANY, TRUSTEE
By:__________________________________
Name:
Title: Authorized Officer
<PAGE>
A-3
[FORM OF BOND]
[REVERSE]
THE CONNECTICUT LIGHT AND POWER COMPANY
FIRST AND REFUNDING MORTGAGE 7-3/4% BOND, 1997 SERIES C
This bond is one of an issue of bonds of the Company, of an unlimited
authorized amount of coupon bonds or registered bonds without coupons, or both,
known as its First and Refunding Mortgage Bonds, all issued or to be issued in
one or more series, and is one of a series of said bonds limited in principal
amount to [Two Hundred Million Dollars ($200,000,000)], consisting only of
registered bonds without coupons and designated "First and Refunding Mortgage 7-
3/4% Bonds, 1997 Series C," all of which bonds are issued or are to be issued
under, and equally and ratably secured by, a certain Indenture of Mortgage and
Deed and Trust dated as of May 1, 1921, and by sixty-eight Supplemental
Indentures dated respectively as of May 1, 1921, February 1, 1924, July 1, 1926,
June 20, 1928, June 1, 1932, July 1, 1932, July 1, 1935, September 1, 1936,
October 20, 1936, December 1, 1936, December 1, 1938, August 31, 1944, September
1, 1944, May 1, 1945, October 1, 1945, November 1, 1949, December 1, 1952,
December 1, 1955, January 1, 1958, February 1, 1960, April 1, 1961, September 1,
1963, April 1, 1967, May 1, 1967, January 1, 1968, October 1, 1968, December 1,
1969, January 1, 1970, October 1, 1970, December 1, 1971, August 1, 1972, April
1, 1973, March 1, 1974, February 1, 1975, September 1, 1975, May 1, 1977, March
1, 1978, September 1, 1980, October 1, 1981, June 30, 1982, October 1, 1982,
July 1, 1983, January 1, 1984, October 1, 1985, September 1, 1986, April 1,
1987, October 1, 1987, November 1, 1987, April 1, 1988, November 1, 1988, June
1, 1989, September 1, 1989, December 1, 1989, April 1, 1992, July 1, 1992,
October 1, 1992, July 1, 1993, July 1, 1993, December 1, 1993, February 1, 1994,
February 1, 1994, June 1, 1994, October 1, 1994, June 1, 1996, January 1, 1997,
May 1, 1997, June 1, 1997 and June 1, 1997 (said Indenture of Mortgage and Deed
of Trust and Supplemental Indentures being collectively referred to herein as
the "Mortgage"), all executed by the Company to Bankers Trust Company, as
Trustee, all as provided in the Mortgage to which reference is made for a
statement of the property mortgaged and pledged, the nature and extent of the
security, the rights of the holders of the bonds in respect thereof and the
terms and conditions upon which the bonds may be issued and are secured; but
neither the foregoing reference to the Mortgage nor any provision of this bond
or of the Mortgage shall affect or impair the obligation of the Company, which
is absolute, unconditional and unalterable, to pay at the maturities herein
provided the principal of and interest on this bond as herein provided. The
principal of this bond may be declared or may become due on the conditions, in
the manner and at the time set forth in the Mortgage, upon the happening of an
event of default as in the Mortgage provided.
This bond is transferable by the registered holder hereof in person or by
attorney upon surrender hereof at the office or agency of the Company in the
Borough of Manhattan, New York, New York, together with a written instrument of
transfer in approved form, signed by the holder, and a new bond or bonds of this
series for a like principal amount in authorized denominations will be issued in
exchange, all as provided in the Mortgage. Prior to due presentment for
registration of transfer of this bond, the Company and the Trustee may deem and
treat the registered owner hereof as the absolute owner hereof,
<PAGE>
A-4
whether or not this bond be overdue, for the purpose of receiving payment and
for all other purposes, and neither the Company nor the Trustee shall be
affected by any notice to the contrary.
This bond is exchangeable at the option of the registered holder hereof
upon surrender hereof, at the office or agency of the Company in the Borough of
Manhattan, New York, New York, for an equal principal amount of bonds of this
series of other authorized denominations, in the manner and on the terms
provided in the Mortgage.
Bonds of this series are to be issued initially under a book-entry only
system and, except as hereinafter provided, will be evidenced by a single Global
Security registered in the name of The Depository Trust Company, New York, New
York ("DTC") or its nominee, which shall be considered to be the holder of all
such bonds for all purposes of the Mortgage, including, without limitation,
payment by the Company of principal of and interest on such bonds and receipt of
notices and exercise of rights of holders of such bonds. The Global Security
shall be immobilized in the custody of DTC with the owners of book-entry
interests in the Global Security ("Book-Entry Interests") having no right to
receive bonds of this series in the form of physical securities or certificates.
Ownership of Book-Entry Interests shall be shown by book-entry on the system
maintained and operated by DTC, its participants (the "Participants") and
certain persons acting through the Participants. Transfers of ownership of
Book-Entry Interests are to be made only by DTC and the Participants by that
book-entry system, the Company and the Trustee having no responsibility therefor
so long as the Global Security is registered in the name of DTC or its nominee.
DTC is to maintain records of positions of Participants in bonds of this series
registered by the Global Security, and the Participants and persons acting
through Participants are to maintain records of the purchasers and owners of
Book-Entry Interests. If DTC or its nominee determines not to continue to act
as a depository for the bonds of this series in connection with a book-entry
only system, another depository, if available, may act instead and the Global
Security will be transferred into the name of such other depository or its
nominee, in which case the above provisions will continue to apply to the new
depository. If the book-entry system for bonds of this series is discontinued
for any reason, upon surrender and cancellation of the Global Security
registered in the name of the then depository or its nominee, new registered
bonds of this series will be issued in authorized denominations to the holders
of Book-Entry Interests in principal amounts coinciding with the amounts of
Book-Entry Interests shown on the book-entry system immediately prior to the
discontinuance thereof. Neither the Trustee nor the Company shall be
responsible for the accuracy of the interests shown on that system.
The bonds of this series are subject to redemption prior to maturity, as a
whole at any time or in part from time to time, in accordance with the
provisions of the Mortgage, upon not less than thirty (30) days and not more
than 60 days prior notice (which notice may be made subject to the deposit of
redemption moneys with the Trustee before the date fixed for redemption) given
by mail as provided in the Mortgage, at the option of the Company, at a
redemption price equal to the greater of (i) 100% of their principal amount and
(ii) the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the date of redemption on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Treasury Yield, plus in each case accrued interest to the date of redemption
(the "Redemption Date").
<PAGE>
A-5
"Treasury Yield" means, with respect to any Redemption Date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker having a maturity comparable to the
remaining term of the bonds of this series that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of the bonds of this series. "Independent Investment Banker" means Morgan
Stanley & Co. Incorporated or, if such firm is unwilling or unable to select the
Comparable Treasury Issue, an independent investment banking institution of
national standing to be selected by the Company and appointed by the Trustee.
"Comparable Treasury Price" means, with respect to any Redemption Date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such Redemption Date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day (A) the average
of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Trustee obtains fewer than four Reference Treasury Dealer Quotations,
the average of all such Quotations. "Reference Treasury Dealer Quotations"
means, with respect to each Reference Treasury Dealer and any Redemption Date,
the average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m. on the third business day preceding such Redemption Date.
"Reference Treasury Dealer" means each of Morgan Stanley & Co. Incorporated
and Salomon Brothers Inc. and another Primary Treasury Dealer (as defined
herein) at the option of the Company, provided, however, that if any of the
foregoing shall cease to be a primary U.S. Government securities dealer in New
York City (a "Primary Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.
The Mortgage provides that the Company and the Trustee, with consent of the
holders of not less than 66-2/3% in aggregate principal amount of the bonds at
the time outstanding which would be affected by the action proposed to be taken,
may by supplemental indenture add any provisions to or change or eliminate any
of the provisions of the Mortgage or modify the rights of the holders of the
bonds and coupons issued thereunder; provided, however, that without the consent
of the holder hereof no such supplemental indenture shall affect the terms of
payment of the principal of or interest or premium on this bond, or reduce the
aforesaid percentage of the bonds the holders of which are required to consent
to such a supplemental indenture, or permit the creation by the Company of any
mortgage or pledge or lien in the nature thereof ranking prior to or equal with
the lien of the Mortgage or deprive the holder hereof of the lien of the
Mortgage on any of the property which is subject to the lien thereof.
<PAGE>
A-6
No recourse shall be had for the payment of the principal of or the
interest on this bond, or any part thereof, or for any claim based thereon or
otherwise in respect thereof, to any incorporator, or any past, present or
future stockholder, officer or director of the Company, either directly or
indirectly, by virtue of any statute or by enforcement of any assessment or
otherwise, and any and all liability of the said incorporators, stockholders,
officers or directors of the Company in respect to this bond is hereby expressly
waived and released by every holder hereof.
<PAGE>
B-1
SCHEDULE B
<PAGE>
Exhibit 5.1
July 3, 1997
The Connecticut Light and Power Company
107 Selden Street
Berlin, Connecticut 06037-1616
Re: The Connecticut Light and Power Company
Registration Statement on Form S-1
Ladies and Gentlemen:
I am Assistant General Counsel of Northeast Utilities Service Company, an
affiliate of The Connecticut Light and Power Company, a Connecticut corporation
(the "Company"). I have acted as counsel for the Company in connection with the
proposed registration, issuance and exchange of up to $200,000,000 aggregate
principal amount of First and Refunding Mortgage 7 3/4% Bonds, 1997 Series C
(the "New Bonds") for any and all previously issued and outstanding First and
Refunding Mortgage Bonds, 1997 Series B (the "Old Bonds") (the "Exchange
Offer"). This opinion is being delivered in accordance with the requirements of
the Securities and Exchange Commission in connection with the filing of the
Registration Statement on Form S-1 pertaining to the New Bonds (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). I have reviewed the Registration Statement, and the exhibits
thereto, relating to the New Bonds and the Exchange Offer, and the Company's
Charter, as amended to the date of this opinion, and have examined or caused to
be examined such other papers, documents and records, have made such examination
of law and have satisfied myself as to such other matters as I deemed relevant
and necessary for purposes of this opinion.
Based on the foregoing, I am of the opinion that at such time as (i)
there are in effect such appropriate orders of the Securities and Exchange
Commission and the Connecticut Department of Public Utility Control, as may be
necessary, (ii) a Supplemental Indenture with respect to the New Bonds, has been
duly executed, delivered and recorded and (iii) the New Bonds have been duly
executed, authenticated and exchanged in accordance with the Exchange Offer, the
New Bonds will be legally issued and binding obligations of the Company entitled
to the security provided in the Indenture.
<PAGE>
I hereby consent to the use of this opinion in connection with the
registration of the New Bonds under the Securities Act and to the references to
me under "Legal Matters and Experts" in the prospectus included in the
Registration Statement.
Very truly yours,
/s/ Jeffrey C. Miller
Assistant General Counsel
Northeast Utilities Service Company
<PAGE>
Exhibit 10.33
As approved and adopted by subsidiaries of Northeast Utilities on June 9, 1997
SPECIAL SEVERANCE PROGRAM
-------------------------
FOR OFFICERS OF NORTHEAST UTILITIES SYSTEM COMPANIES
----------------------------------------------------
I. Purpose
-------
The purpose of this Special Severance Program for Officers of
Northeast Utilities System Companies (the "Program") is to provide certain
executives with severance payments and benefits in the event of "Termination
upon a Change of Control", as hereinafter defined. The Program is not intended
to meet the qualification requirements of Section 401 of the Code or to be an
"employee pension benefit plan" as defined in ERISA. The Program is not intended
to affect eligibility for or payment of any other compensation or benefits in
accordance with the terms of any applicable plans or programs of the Company.
II. Definitions
-----------
When used herein with initial capital letters, each of the following
terms shall have the corresponding meaning set forth below unless a different
meaning is plainly required by the context in which the term is used:
"Administrator" shall mean the Senior Vice President and Chief
Administrative Officer of NUSCO.
"Affiliate" shall mean an "affiliate" as defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act.
"Base Compensation" for any Participant shall mean the Participant's
annualized base rate of salary plus all short-term incentive compensation at the
target level for the Participant specified under compensation programs
established by the Company for its officers generally, received by the
Participant in all capacities with the Company, as would be reported for federal
income tax purposes on Form W-2, together with any and all salary reduction
authorized amounts under any of the Company's benefit plans or programs, for the
most recent full calendar year immediately preceding the calendar year in which
occurs Participant's Termination Date or preceding the Change of Control, if
higher. "Base Compensation" shall not include the value of any stock options,
stock appreciation rights, restricted stock, or restricted stock units granted
to Participant by the Company.
"Board" shall mean the Board of Trustees of Northeast Utilities.
"Cause" with respect to the Termination of Employment of a
Participant shall mean (i) the Participant's conviction of a felony, (ii) in the
reasonable determination of the Board, the Participant's (x) commission of an
act of fraud, embezzlement, or theft in connection with Participant's duties in
the course of Participant's employment with the Company, (y) acts or omissions
causing intentional, wrongful damage to the property of the Company or
intentional and wrongful disclosure of Confidential Information, or (z) engaging
in gross misconduct or gross negligence in the course of the Participant's
employment with the Company, or (iii) the Participant's material breach of his
or her obligations under any written agreement with the Company if such breach
shall not have been remedied within 30 days after receiving written notice from
the Administrator specifying the details thereof. For purposes of this Program,
an act or omission on the part of a Participant shall be deemed "intentional"
only if it was not due primarily to an error in judgment or negligence and was
done by Participant not in good faith and without reasonable belief that the act
or omission was in the best interest of the Company.
<PAGE>
- 2 -
"Change of Control" shall mean the happening of any of the following:
(i) Any "person," as such term is used in Sections
13(d) and 14(d) of the Exchange Act, other than Northeast Utilities, its
Affiliates, or any Company employee benefit plan (including any trustee of such
plan acting as trustee), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
Northeast Utilities representing more than 20% of the combined voting power of
either (i) the Outstanding Common Shares or (ii) the Voting Securities; or
(ii) Individuals who, as of the beginning of any
twenty-four month period, constitute the trustees of NU (the "Incumbent Board")
cease for any reason to constitute at least a majority of the Board or cease to
be able to exercise the powers of the majority of the Board, provided that any
individual becoming a trustee subsequent to the beginning of such period whose
election or nomination for election by the common shareholders of Northeast
Utilities was approved by a vote of at least a majority of the trustees then
comprising the Incumbent Board shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the trustees of
Northeast Utilities (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act); or
(iii) Consummation by Northeast Utilities of a
reorganization, merger or consolidation (a "Business Combination"), in each
case, with respect to which all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding Common
Shares and Voting Securities immediately prior to such Business Combination do
not, following such Business Combination, beneficially own, directly or
indirectly, more than 75% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation, business trust or other entity resulting from or
being the surviving entity in such Business Combination in substantially the
same proportion as their ownership immediately prior to such Business
Combination of the Outstanding Common Shares and Voting Securities, as the case
may be; or
(iv) Consummation of a complete liquidation or
dissolution of Northeast Utilities or sale or other disposition of all or
substantially all of the assets of Northeast Utilities other than to a
corporation, business trust or other entity with respect to which, following
such sale or disposition, more than 75% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, is then owned beneficially, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Common Shares and Voting Securities
immediately prior to such sale or disposition in substantially the same
proportion as their ownership of the Outstanding Common Shares and Voting
Securities, as the case may be, immediately prior to such sale or disposition.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Committee" shall mean the Committee on Organization, Compensation
and Board Affairs that has been established by the Board, or any subsequent
committee of the Board that has primary responsibility for compensation
policies. In the absence of such a committee, "Committee" shall mean
<PAGE>
- 3 -
the Board or any committee of the Board designated by the Board to perform the
functions of the Committee under the Program.
"Company" includes, individually and/or collectively as the context
requires, Northeast Utilities, NUSCO, and all other entities that have approved
and adopted this Program pursuant to Article VII, whether or not an individual
such entity directly compensates the Participant or the Participant appears on
the payroll of such entity.
"Disability" shall mean the inability of a Participant substantially
to perform his or her duties and responsibilities to the full extent required by
the Board, by reason of illness, injury or incapacity for six consecutive
months, or for more than six months in the aggregate during any period of twelve
calendar months.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Notice of Termination" means a written notice given in accordance
with Section 3(d) which (i) indicates the specific termination provision in this
Program relied upon, (ii) briefly summarizes the facts and circumstances deemed
to provide a basis for a Termination of Employment and the applicable provision
hereof, and (iii) if the Termination Date is other than the date of receipt of
such notice, specifies the Termination Date (which date shall not be more than
15 days after the giving of such notice).
"NUSCO" shall mean Northeast Utilities Service Company, its
successors and assigns.
"Outstanding Common Shares" at any time shall mean the then
outstanding common shares of Northeast Utilities.
"Participant" at any time shall mean each person then holding the
office of vice president or higher level of the Company, not including assistant
officers, who (a) has signed a non-competition agreement with the Company in the
form of Annex 1 hereto or in such form as has been approved by the Administrator
for this purpose from time to time, and (b) is not a party to a then effective
separate written agreement with the Company which has been adopted by the Board
and expressly provides benefits following a change of control of Northeast
Utilities (unless such agreement expressly provides for participation in this
Program).
"Termination Date" with respect to any Participant shall mean the
date of any action by the Company constituting a Termination upon a Change of
Control of such Participant.
"Termination of Employment" of a Participant shall mean the
termination of the Participant's actual employment relationship with the Company
occasioned by the Company's action.
"Termination upon a Change of Control" of a Participant shall mean a
Termination of Employment upon or within two years after a Change of Control
either (i) initiated by the Company for any reason other than (w) Disability,
(x) death, (y) retirement on or after attaining age 65, or (z) Cause, or (ii)
initiated by the Participant (A) upon any significant reduction by the Company
of the authority, duties or responsibilities of Participant, any reduction of
the Participant's compensation or benefits other than a reduction applicable to
all employees generally, or the assignment to Participant of duties which
<PAGE>
- 4 -
are materially inconsistent with the duties of Participant's position with the
Company, or (B) if Participant is transferred, without Participant's written
consent, to a location that is more than 50 miles from Participant's principal
place of business immediately preceding the Change of Control.
"Voting Securities" at any time shall mean the then outstanding
voting securities of Northeast Utilities entitled to vote generally in the
election of trustees of Northeast Utilities.
III. Benefits
--------
(a) Benefits Following Termination Upon a Change of Control. So long
-------------------------------------------------------
as a Participant executes a written release substantially in the form of Annex 2
hereto, upon such Participant's Termination upon a Change of Control, (i) the
Company will pay to Participant, in a single cash payment within 30 days after
the later of the Termination Date and the date the Participant executes such
release, an amount equal to two times the Participant's Base Compensation, (ii)
each of the Participant, his or her eligible spouse and dependents shall be
eligible for a continuation of all employee health plan benefits as then in
effect for such persons, as if the Participant had remained actively employed by
the Company, such benefits to continue until the earlier of two years following
the Termination Date or the date such person has coverage through another group
health plan or plans and to count as "continuation coverage" pursuant to the
requirements of Section 4980B of the Code, and (iii) on such Participant's
Termination Date, all performance share units, stock options or restricted
shares previously granted to the Participant, to the extent not already vested
prior to the Termination Date, shall be fully vested and exercisable or paid as
if the Participant had remained actively employed by the Company, including the
right of exercise, where appropriate, within 36 months after the Termination
Date; provided, however, that the performance share units shall be paid as if
the Company had met all performance targets during the applicable performance
period.
(b) Certain Reduction of Payments.
-----------------------------
(i) Anything in this Program to the contrary
notwithstanding, in the event that it shall be determined that
any payment or distribution by the Company to or for the benefit of a
Participant, whether paid or payable or distributed or distributable pursuant to
the terms of this Program or otherwise (the "Payment"), would constitute an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), and that such Participant would
receive a greater net amount if the Payment to Participant were reduced to avoid
the taxation of excess parachute payments under Section 4999 of the Code, the
aggregate present value of amounts payable or distributable to or for the
benefit of Participant pursuant to this Program (such payments or distributions
pursuant to this Program are hereinafter referred to as "Program Payments")
shall be reduced (but not below zero) to the Reduced Amount. The "Reduced
Amount" shall be an amount expressed in present value which maximizes the
aggregate present value of Program Payments without causing any Payment to be
subject to the taxation under Section 4999 of the Code. For purposes of this
Section 3(b), present value shall be determined in accordance with Section
280G(d)(4) of the Code.
(ii) All determinations to be made under this Section
3(b) shall be made by the Company's independent public
accountant immediately prior to the Change of Control (the "Accounting Firm"),
which firm shall provide its determinations and any supporting calculations both
to the Company and the affected Participant within 10 days of the Termination
Date of such Participant. Any such determination by the Accounting Firm shall be
binding upon the Company and the Participant; provided, however, that
Participant shall, in his or her sole discretion, determine whether,
<PAGE>
- 5 -
which and how much of the Program Payments shall be eliminated or reduced
consistent with the requirements of this Section 3(b). Within five days after
the Participant's determination, the Company shall pay (or cause to be paid) or
distribute (or cause to be distributed) to or for the benefit of the Participant
such amounts as are then due to the Participant under this Program.
(iii) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Program Payments will have been
made by the Company which should not have been made ("Overpayment") or that
additional Program Payments which have not been made by the Company could have
been made ("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. Within two years after the Termination of
Employment of any Participant, the Accounting Firm shall review the
determination made by it pursuant to Section 3(b)(ii). In the event that the
Accounting Firm determines that an Overpayment has been made, any such
Overpayment shall be treated for all purposes as a loan to the Participant which
the Participant shall repay to the Company together with interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code (the
"Federal Rate"); provided, however, that no amount shall be payable by the
Participant to the Company if and to the extent such payment would not increase
the net amount which is payable to the Participant after taking into account the
provisions of Section 4999 of the Code. In the event that the Accounting Firm
determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Participant together
with interest at the Federal Rate.
(iv) All of the fees and expenses of the Accounting Firm in
performing the determinations referred to in subsections 3(b)(ii) and 3(b)(iii)
above shall be borne solely by the Company. The Company agrees to indemnify and
hold harmless the Accounting Firm of and from any and all claims, damages and
expenses resulting from or relating to its determinations pursuant to
subsections 3(b)(ii) and 3(b)(iii) above, except for claims, damages or expenses
resulting from the gross negligence or wilful misconduct of the Accounting Firm.
(b) Vesting. A Participant shall be vested and shall have a
-------
nonforfeitable right with respect to the benefits to be provided hereunder from
and after the Termination Date. The respective rights and obligations of the
Company and the Participant under this Program shall survive any termination of
Participant's employment to the extent necessary to the intended preservation of
such rights and obligations.
(c) Non-Exclusivity of Rights. Nothing in this Program shall prevent
-------------------------
or limit any Participant's continuing or future participation in or rights under
any benefit, bonus, incentive or other plan or program provided by the Company
and for which such Participant may qualify; provided, however, that if such
Participant becomes entitled to and receives all of the payments provided for in
this Program, the Participant hereby waives his or her right to receive payments
under any severance plan or similar program applicable to employees of the
Company generally.
(d) Notice of Termination. No Termination upon a Change of
---------------------
Control shall be effective unless accompanied or preceded
by a Notice of Termination.
IV. Funding
-------
Benefits payable under this Program shall be unfunded, as that term is used in
Sections 201(2), 301(a)(3), 401(a)(1) and 4021(a)(6) of ERISA, with respect to
unfunded plans maintained primarily for the purpose of providing deferred
compensation to a select group of management or highly
<PAGE>
- 6 -
compensated employees, and the Administrator shall administer this Program in a
manner that will ensure that benefits are unfunded and that Participants will
not be considered to have received a taxable economic benefit prior to the time
at which benefits are actually payable hereunder. Accordingly, the Company shall
not be required to segregate or earmark any of its assets for the benefit of
Participants or their spouses or other beneficiaries, and each such person shall
have only a contractual right against the Company for benefits hereunder. The
Company may from time to time establish a trust and deposit with the trustee
thereof funds to be held in trust for the payment of benefits hereunder;
provided, that the use of such funds for such purpose shall be subject to the
claims of the Company's general creditors as set forth in the agreement
establishing any such trust. The rights and interests of a Participant under
this Program shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge or encumbrance by a Participant or any person
claiming under or through a Participant, nor shall they be subject to the debts,
contracts, liabilities or torts of a Participant or anyone else prior to
payment. The Treasurer of NUSCO may from time to time appoint an investment
manager or managers for the funds held in any such trust.
V. Administration
--------------
The Program shall be operated under the direction of the Committee and
administered by the Administrator. The calculation of all benefits payable under
the Program shall be performed by the Administrator, subject to the review of
the Committee.
VI. Claims Procedure
----------------
All claims for benefits under this Program shall be determined under the claims
procedure in effect under the Northeast Utilities Service Company Retirement
Plan on the date that such claims are submitted, except that the Administrator
shall make initial determinations with respect to claims hereunder and the
Committee shall decide appeals of such determinations. In the event that any
dispute under the provisions of this Program is not resolved to the satisfaction
of the affected Participant, other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in the
City of Hartford, Connecticut in accordance with National Rules for the
Resolution of Employment Disputes then in effect of the American Arbitration
Association, before a panel of three arbitrators, two of whom shall be selected
by the Company and the affected Participant, respectively, and the third of whom
shall be selected by the other two arbitrators. Any award entered by the
arbitrators shall be final, binding and nonappealable (except as provided in
Section 52-418 of the Connecticut General Statutes) and judgment may be entered
thereon by either party in accordance with applicable law in any court of
competent jurisdiction. This arbitration provision shall be specifically
enforceable. The arbitrators shall have no authority to modify any provision of
this Program or to award a remedy for a dispute involving this Program other
than a benefit specifically provided under or by virtue of the Program. If a
Participant prevails on any material issue which is the subject of any such
arbitration or lawsuit, the Company shall be responsible for all of the fees of
the American Arbitration Association and the arbitrators and any expenses
relating to the conduct of the arbitration (including the Company's and the
Participant's reasonable attorneys' fees and expenses). Otherwise, each party
shall be responsible for its own expenses relating to the conduct of the
arbitration (including reasonable attorneys' fees and expenses) and shall share
the fees of the American Arbitration Association.
VII. Adoption by Company: Obligations of Company.
-------------------------------------------
<PAGE>
- 7 -
(a) At the earliest feasible time or times, Northeast Utilities shall
cause each entity in which it now or hereafter holds, directly or indirectly,
more than a 50 percent voting interest to approve and adopt this Program and, by
such approval and adoption, to be bound by the terms hereof.
(b) Benefits under this Program shall, in the first instance, be paid
and satisfied by NUSCO. If NUSCO shall be dissolved or for any other reason
shall fail to pay and satisfy such benefits, each individual entity referred to
in (a) above shall pay and satisfy its share of such benefits, such share to be
the ratio of the Participant's Base Compensation charged to such entity during
the three calendar years immediately preceding the Participant's Termination
Upon a Change of Control to the total of the Participant's Base Compensation
charged to all such entities during the same period.
(c) The Declaration of Trust of Northeast Utilities provides that no
shareholder of Northeast Utilities shall be held to any liability whatever for
the payment of any sum of money, or for damages or otherwise under any contract,
obligation or undertaking made, entered into or issued by the trustees of
Northeast Utilities or by any officer, agent or representative elected or
appointed by the trustees and no such contract, obligation or undertaking shall
be enforceable against the trustees or any of them in their or his individual
capacities or capacity and all such contracts, obligations and undertakings
shall be enforceable only against the trustees as such and every person, firm,
association, trust and corporation having any claim or demand arising out of any
such contract, obligation or undertaking shall look only to the trust estate for
the payment or satisfaction thereof. Any liability for benefits under this
Program incurred by Northeast Utilities shall be subject to the foregoing
provisions of this Section 7 (c).
VIII. Miscellaneous
-------------
(a) Amendment or Termination. Prior to the occurrence of a Change of
------------------------
Control, the Board may amend or discontinue this Program at any time, on at
least two (2) years prior written notice to each Participant of the Board's
intention to do so and specifying the changes to be made. Upon and following a
Change of Control, this Program may not be amended or terminated in any way that
would eliminate or reduce the payments and benefits owing to Participants under
the Program.
(b) Headings. Headings are included in the Program for convenience
--------
only and are not substantive provisions of the Program.
(c) Applicable Law. The interpretation of the provisions and the
--------------
administration of the Program shall be governed by the laws of the State of
Connecticut without giving effect to any conflict of laws provisions, and to the
extent applicable, the United States of America.
(d) Mitigation. No Participant shall be required to mitigate the
----------
amount of any payment or benefit provided for in this Program by seeking other
employment or otherwise and there shall be no offset against amounts due any
Participant under this Program on account of any remuneration attributable to
any subsequent employment that may be obtained.
(e) Notices. All notices and other communications required or
-------
permitted under this Program or necessary or convenient in connection herewith
shall be in writing and shall be deemed to have been given when hand delivered
or mailed by registered or certified mail to the last known
<PAGE>
- 8 -
address of the Company or the Participant, as the case may be, reflected upon
Company records. Notices to the Company shall be addressed to:
Northeast Utilities Service Company
P.O. Box 270
Hartford, CT 06141-0270
Attention: Senior Vice President and Chief Administrative
Officer
(f) Binding Effect; Successors and Assigns. All of the terms and
--------------------------------------
provisions of this Program shall be binding upon and inure to the benefit of and
be enforceable by the respective heirs, executors, administrators, legal
representatives, successors and assigns of the parties hereto, except that the
duties and responsibilities of the Participants under this Program are of a
personal nature and shall not be assignable or delegatable in whole or in part
by the Participants. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by agreement
in form and substance satisfactory to the Participants, expressly to assume and
agree to perform this Plan in the same manner and to the extent the Company
would be required to perform if no such succession had taken place.
(g) Severability. If any provision of this Program or application
------------
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Program which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or render unenforceable such provision or application in any
other jurisdiction. If any provision is held void, invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full force
and effect in all other circumstances.
(h) Remedies Cumulative; No Waiver. No remedy conferred upon a party
------------------------------
by this Program is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Program or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or power
under this Program or existing at law or in equity shall be construed as a
waiver thereof, and any such right, remedy or power may be exercised by such
party from time to time and as often as may be deemed expedient or necessary by
such party in its sole discretion.
(i) Beneficiaries/References. Each Participant shall be entitled, to
------------------------
the extent permitted under any applicable law, to select and change a
beneficiary or beneficiaries to receive any compensation or benefit payable
under this Program following his or her death by giving the Company written
notice thereof. In the event of a Participant's death or a judicial
determination of a Participant's incompetence, reference in this Program to
"Participant" shall be deemed, where appropriate, to refer to such Participant's
beneficiary, estate or other legal representative.
(j) Withholding. The Company may withhold from any payments under
-----------
this Program all federal, state and local taxes as the Company is required to
withhold pursuant to any law or governmental rule or regulation. Each
Participant shall bear all expense of, and be solely responsible for, all
federal, state and local taxes due with respect to any payment received under
this Program.
(k) Establishment of Trust. The Company may establish an irrevocable
----------------------
trust fund pursuant to a trust agreement to hold assets to satisfy any of its
obligations under this Program. Funding of such
<PAGE>
- 9 -
trust fund shall be subject to the Board's discretion, as set forth in the
agreement pursuant to which the fund will be established.
<PAGE>
Exhibit 12
<TABLE>
<CAPTION>
THE CONNECTICUT LIGHT & POWER COMPANY & SUBSIDIARIES Exhibit 12
RATIO OF EARNINGS TO FIXED CHARGES
(THOUSANDS OF DOLLARS)
Twelve
Months
Ended
Year Ended December 31, 3/31/97
1992 1993 1994 1995 1996 (unaudited)
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Net Income(Loss) 206,714 143,702 (a) 198,288 205,216 (80,237) (119,520)
Current Income Taxes 88,926 159,876 148,337 131,804 40,439 (17,389)
Deferred Income Taxes 66,391 (20,188) 37,664 49,520 (60,773) (31,028)
------- ------- ------- ------- ------- -------
Earnings before Income Taxes 362,031 283,390 384,289 386,540 (100,571) (167,937)
Less: Undistributed Income from less
than Fifty Percent Owned Companies 95 234 1,042 (328) 2,301 3,526
Add: Fixed Charges 184,407 165,213 144,212 146,330 147,356 150,644
------- ------- ------- ------- ------- -------
Earnings Available for Fixed Charges 546,343 448,369 527,459 533,198 44,484 (20,819)
Fixed Charges:
Interest on Long Term Debt 145,066 126,850 111,094 117,060 120,819 124,363
Amortization of Debt Discount and
Expense, Less Premium 6,248 7,412 8,834 7,290 6,379 6,320
Interest on Short Term Debt 3,679 6,111 6,543 2,009 545 623
Other Interest 5,659 5,423 (551) 1,453 2,125 2,049
Portion of Rents Representative of
the Interest Factor 23,755 19,417 18,292 18,518 17,488 17,289
------- ------- ------- ------- ------- -------
Total Fixed Charges 184,407 165,213 144,212 146,330 147,356 150,644
Ratio of Earnings to Fixed Charges 2.96 2.71 3.65 3.64 0.30 -0.13
</TABLE>
(a) Excludes the cummulative effect of an accounting change of $47.747 million.
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included (or incorporated by reference) in
this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Hartford, Connecticut
July 3, 1997
<PAGE>
Exhibit 25
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT
OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)____________
-------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
THE CONNECTICUT LIGHT AND POWER COMPANY
(Exact name of obligor as specified in its charter)
CONNECTICUT 06-030850
(State or other jurisdiction of (I.R.S. Employer Identification no.)
Incorporation or organization)
SELDEN STREET
BERLIN, CONNECTICUT 06037
(Address of principal executive offices) (Zip Code)
-------------------------------
FIRST MORTGAGE BONDS
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
</TABLE>
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe
each such affiliation.
None.
Item 3. -15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers
Trust Company dated August 7, 1990, Certificate
of Amendment of the Organization Certificate of
Bankers Trust Company dated June 21, 1995 -
Incorporated herein by reference to Exhibit 1
filed with Form T-1 Statement, Registration No.
33-65171, and Certificate of Amendment of the
Organization Certificate of Bankers Trust
Company dated March 20, 1996, copy attached.
Exhibit 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2
filed with Form T-1 Statement, Registration No.
33-21047.
Exhibit 3 - Authorization of the Trustee to exercise
corporate trust powers -Incorporated herein by
reference to Exhibit 2 filed with Form T-1
Statement, Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust Company, as
amended on February 18, 1997, Incorporated
herein by reference to Exhibit 4 filed with
Form T-1 Statement, Registration No. 333-24509-
01.
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company required by
Section 321(b) of the Act. - Incorporated
herein by reference to Exhibit 4 filed with
Form T-1 Statement, Registration No. 22-18864.
Exhibit 7 - A copy of the latest report of condition of
Bankers Trust Company dated as of March 31,
1997.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 16th day
of June, 1997.
BANKERS TRUST COMPANY
By: [SIGNATURE APPEARS HERE]
------------------------
Scott F. Thiel
Assistant Vice President
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 16th day
of June, 1997.
BANKERS TRUST COMPANY
By: /s/ Scott F. Thiel
------------------------
Scott F. Thiel
Assistant Vice President
-5-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 3/31/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
</TABLE>
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks March 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
---------------
C400
-------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS / / / / / / / / / /
1. Cash and balances due from depository institutions (from Schedule RC-A): / / / / / / / / / /
a. Noninterest-bearing balances and currency and coin(1) ............................... 0081 1,589,000 1.a.
b. Interest-bearing balances(2) ........................................................ 0071 2,734,000 1.b.
2. Securities: / / / / / / / / / /
a. Held-to-maturity securities (from Schedule RC-B, column A) ....................... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)...................... 1773 4,433,000 2.b.
3 Federal funds sold and securities purchased under agreements to resell 1350 26,490,000 3
4. Loans and lease financing receivables: / / / / / / / / /
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 15,941,000 / / / / / / / / / 4.a.
b. LESS: Allowance for loan and lease losses.................... RCFD 3123 708,000 / / / / / / / / / 4.b.
c. LESS: Allocated transfer risk reserve ..................... RCFD 3128 0 4.c
4.c. / / / / / / / / /
d. Loans and leases, net of unearned income, / / / / / / / / /
allowance, and reserve (item 4 a minus 4.b and 4.c) ..................................... 2125 15,233,000 4.d.
5. Assets held in trading accounts ............................................................... 3545 38,115,000 5.
6. Premises and fixed assets (including capitalized leases) ...................................... 2145 924,000 6.
7. Other real estate owned (from Schedule RC-M) .................................................. 2150 188,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) 2130 175,000 8.
9. Customers' liability to this bank on acceptances outstanding .................................. 2155 618,000 9.
10. Intangible assets (from Schedule RC-M) ........................................................ 2143 17,000 10.
11. Other assets (from Schedule RC-F) ............................................................. 2160 4,424,000 11.
12. Total assets (sum of items 1 through 11) ...................................................... 2170 94,940,000 12.
-------------------------------
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE>
<TABLE>
<S> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 3/31/97 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: 00623
</TABLE>
Schedule RC--Continued
<TABLE>
<CAPTION>
-------------------------------------------------------------
Dollar Amounts in Thousands / / / / / / / / Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES / / / / / / / / / / / / / / / / / / / / / / / /
13. Deposits: / / / / / / / / / / / / / / / / / / / / / / /
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E, part I) RCON 2200 14,450,000 13.a.
(1) Noninterest-bearing(1) ....RCON 6631 2,917,000... / / / / / / / / / / / / / / / / / / / / / / / 13.a.(1)
(2) Interest-bearing ...........RCON 6636 11,533,000... / / / / / / / / / / / / / / / / / / / / / / / 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs
(from Schedule RC-E part II) RCFN 2200 23,456,000 13.b.
(1) Noninterest-bearing .......RCFN 6631 1,062,000 / / / / / / / / / / / / / / / / / / / / / / /
(2) Interest-bearing ..........RCFN 6636 22,394,000 / / / / / / / / / / / / / / / / / / / / / / / 13.b.(2)
14. Federal funds purchased and securities sold under agreements to
repurchase RCFD 2800 15,195,000 14
15. a. Demand notes issued to the U.S. Treasury ................ RCON 2840 0
b. Trading liabilities (from Schedule RC-D)................. RCFD 3548 18,911,000 15.b.
16. Other borrowed money, (includes mortgage indebtedness nd
obligations under capitalized leases): / / / / / / / / / / / / / / / / / / / / / / /
a. With original maturity of one year or less .............. RCFD 2332 7,701,000
b. With original maturity of more than one year ............ RCFD 2333 4,438,000
17. Not applicable ............................................... 17.
18. Bank's liability on acceptances executed and outstanding ..... RCFD 2920 618,000 18.
19. Subordinated notes and debentures ............................ RCFD 3200 1,226,000 19.
20. Other liabilities (from Schedule RC-G) ....................... RCFD 2930 3,971,000 20.
21. Total liabilities (sum of items 13 through 20) ............... RCFD 2948 89,966,000
/ / / / / / / / / / / / / / / / / / / / / / /
22. Not applicable 22.
EQUITY CAPITAL / / / / / / / / / / / / / / / / / / / / / / /
23. Perpetual preferred stock and related surplus ................ RCFD 3838 600,000 23.
24. Common stock ................................................. RCFD 3230 1,002,000 24.
25. Surplus (exclude all surplus related to preferred stock) ..... RCFD 3839 540,000 25.
26. a. Undivided profits and capital reserves .................. RCFD 3632 3,241,000 26.a.
b. Net unrealized holding gains (losses) on
available-for-sale securities ................................ RCFD 8434 ( 31,000)
27. Cumulative foreign currency translation adjustments .......... RCFD 3284 ( 378,000)
28. Total equity capital (sum of items 23 through 27) ............ RCFD 3210 4,974,000
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28) ........................ RCFD 3300 94,940,000 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below
that best describes the most comprehensive level of auditing work Number
performed for the bank by independent external ------------------------
auditors as of any date during 1996 ...................... RCFD 6724 1 M.1
-------------------------------------
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may
be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- -------------------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
<PAGE>
State of New York,
Banking Department
I, PETER M. PHILBIN, Deputy Superintendent of Bank of the State of
New York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated March 20, 1996, providing for an increase in
authorized capital stock from $1,351,666,670 consisting of 85,166,667 shares
with a par value of $10 each designated as Common Stock and 500 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$1,501,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York,
this 21st day of March in the Year of our Lord one thousand
---- -----
nine hundred and ninety-six.
Peter M. Philbin
------------------------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a
Managing Director and an Assistant Secretary of Bankers Trust Company, do hereby
certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by
the Superintendent of Banks on the 5th of March, 1903.
3. The organization certificate as heretofore amended is hereby
amended to increase the aggregate number of shares which the corporation shall
have authority to issue and to increase the amount of its authorized capital
stock in conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter
to have is One Billion, Three Hundred Fifty One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars ($1,351,666,670),
divided into Eighty-Five Million, One Hundred Sixty-Six Thousand, Six
Hundred Sixty-Seven (85,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter
to have is One Billion, Five Hundred One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars ($1,501,666,670),
divided into One Hundred Million, One Hundred Sixty Six Thousand, Six
Hundred Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE>
6. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
20th day of March, 1996.
James T. Byrne, Jr.
-------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
-------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
------------------------
Lea Lahtinen
Sworn to before me this 20th day
of March, 1996.
Sandra L. West
- --------------------------
Notary Public
SANDRA L. WEST
Notary Public State of New York Counterpart filed in the
No. 31-4942101 Office of the Superintendent of
Qualified in New York County Banks, State of New York,
Commission Expires September 19, 1996 This 21st day of March, 1996
<PAGE>
Exhibit 99
LETTER OF TRANSMITTAL
THE CONNECTICUT LIGHT AND POWER COMPANY
Offer for All Outstanding
First and Refunding Mortgage Bonds, 1997 Series B Due June 1, 2002
in Exchange for
First and Refunding Mortgage 7 3/4 Bonds, 1997 Series C Due June 1, 2002
------------------
Pursuant to the Prospectus Dated July __, 1997
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ____ __,
1997 UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS
OF OLD BONDS MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
- --------------------------------------------------------------------------------
To: Bankers Trust Company, as Exchange Agent
By Mail: By Facsimile: By Hand or Express Delivery:
Bankers Trust Company (212) _________ Bankers Trust Company
Four Albany Street Four Albany Street
New York, NY 10006. Confirm by Telephone: New York, NY 10006.
(212) _________
Delivery of this Letter of Transmittal to an address, or transmission
via telegram, telex or facsimile, other than as set forth above will not
constitute a valid delivery. The instructions accompanying this Letter of
Transmittal should be read carefully before this Letter of Transmittal is
completed.
The undersigned acknowledges that he or she has received and reviewed
the Prospectus, dated July __, 1997 (the "Prospectus"), of The Connecticut
Light and Power Company, a Connecticut corporation ("CL&P"), and this Letter of
Transmittal and the accompanying instructions (the "Letter of Transmittal"),
which together constitute CL&P's offer (the "Exchange Offer") to exchange an
aggregate principal amount of up to $200,000,000 of First and Refunding Mortgage
7 3/4 Bonds, 1997 Series C (the "New Bonds"), which have been registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
registration statement of which the Prospectus constitutes a part, for a like
principal amount of its outstanding First and Refunding Mortgage Bonds, 1997
Series B (the "Old Bonds"), upon the terms and subject to the conditions set
forth in the Prospectus.
If this Letter of Transmittal is signed by the registered holder(s) of
the Old Bonds tendered hereby, the signature must correspond with the name(s) as
written on the face of the Old Bonds without alteration, enlargement or any
change whatsoever. If any tendered Old Bonds are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal. If any
tendered Old Bonds are registered in different names on several certificates, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations or certificates.
This Letter of Transmittal is to be used by Holders (as defined below)
if: (i) certificates representing Old Bonds are to be physically delivered to
the Exchange Agent herewith by Holders; (ii) tender of Old Bonds is to be made
by book-entry transfer to the Exchange Agent's account at The Depository Trust
Company ("DTC") pursuant to the procedures set forth in the Prospectus under
"The Exchange Offer-- Procedures for Tendering Old Bonds" by any financial
institution that is a participant in DTC and whose name appears on a security
position listing as the owner of Old Bonds (such participants, acting on behalf
of Holders are referred to herein, together with such Holders, as "Acting
Holders"); or (iii) tender of Old Bonds is to be made according to the
guaranteed delivery procedures set forth in the Prospectus under "The Exchange
Offer--Guaranteed Delivery Procedure," and, in each case, instructions are being
transmitted through the DTC Automated Tender Offer Program ("ATOP"). Delivery
of documents to DTC does not constitute delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any person:
(i) in whose name Old Bonds are registered on the books of CL&P or any other
person who has obtained a properly completed bond power from the registered
Holder; or (ii) whose Old Bonds are held of record by DTC and who desires to
deliver such Old Bonds by book-entry transfer at DTC.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
<PAGE>
All capitalized terms used herein and not defined shall have the
meaning ascribed to them in the Prospectus.
The instructions included with this Letter of Transmittal must be
followed. Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Exchange Agent. See Instruction 8 herein.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD
BONDS MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
List below the Old Bonds to which this Letter of Transmittal relates.
If the space provided below is inadequate, list the certificate numbers and
principal amounts on a separately executed schedule and affix the schedule to
this Letter of Transmittal. Partial tenders of Old Bonds will be accepted only
in principal amounts equal to $1,000 or integral multiples thereof.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
DESCRIPTION OF OLD BONDS
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Certificate
Number(s)* Aggregate
(Attach Principal
Name(s) and Address(es) of signed Amount
Holder(s) list if Tendered (if less
(Please fill in if blank) necessary) than all)**
- -----------------------------------------------------------------------------------------------
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
-------------------- --------------------
- -----------------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF OLD BONDS TENDERED
- -----------------------------------------------------------------------------------------------
* Need not be completed by Holders tendering by book-entry transfer.
** Need not be completed by Holders who wish to tender with respect to all Old
Bonds listed. See Instruction 2.
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[_] CHECK HERE IF TENDERED OLD BONDS ARE BEING DELIVERED BY DTC TO THE EXCHANGE
AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:_____________________________________________
DTC Book-Entry Account No.:________________________________________________
Transaction Code No:_______________________________________________________
If Holders desire to tender Old Bonds pursuant to the Exchange Offer and (i)
certificates representing such Old Bonds are not lost but are not immediately
available, (ii) time will not permit this Letter of Transmittal, certificates
representing such Old Bonds or other required documents to reach the Exchange
Agent prior to the Expiration Date or (iii) the procedures for book-entry
transfer cannot be completed prior the Expiration Date, such Holders may
effect a tender of such Old Bonds in accordance with the guaranteed delivery
procedures set forth in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedure." DTC participants may also accept the Offer by submitting
the notice of guaranteed delivery through ATOP.
[_] CHECK HERE IF TENDERED OLD BONDS ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Holder(s) of Old Bonds:_________________________________________
Window Ticket No. (if any):________________________________________________
Date of Execution of
Notice of Guaranteed Delivery:_____________________________________________
Name of Eligible Institution that Guaranteed Delivery:
___________________________________________________________________________
If Delivered by Book-Entry Transfer:
Name of Tendering Institution:_____________________________________________
DTC Book-Entry Account No.:________________________________________________
Transaction Code No.:______________________________________________________
[_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:______________________________________________________________________
Address:___________________________________________________________________
___________________________________________________________________________
[_] CHECK HERE IF TENDERED BONDS ARE ENCLOSED HEREWITH.
<PAGE>
Ladies and Gentlemen:
Subject to the terms of the Exchange Offer, the undersigned hereby
tenders to CL&P the principal amount of Old Bonds indicated above. Subject to
and effective upon the acceptance for exchange of the principal amount of Old
Bonds tendered in accordance with this Letter of Transmittal, the undersigned
sells, assigns and transfers to, or upon the order of, CL&P all right, title and
interest in and to the Old Bonds tendered hereby. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent its agent and attorney-
in-fact (with full knowledge that the Exchange Agent also acts as the agent of
CL&P and as Trustee under the Indenture for the Old Bonds and the New Bonds)
with respect to the tendered Old Bonds with full power of substitution to (i)
deliver certificates for such Old Bonds to CL&P, or transfer ownership of such
Old Bonds on the account books maintained by DTC together, in either such case,
with all accompanying evidences of transfer and authenticity to, or upon the
order of, CL&P and (ii) present such Old Bonds for transfer on the books of CL&P
and receive all benefits and otherwise exercise all rights of beneficial
ownership of such Old Bonds, all in accordance with the terms of the Exchange
Offer. The power of attorney granted in this paragraph shall be deemed
irrevocable and coupled with an interest.
The undersigned hereby represents and warrants that he or she has full
power and authority to tender, sell, assign and transfer the Old Bonds tendered
hereby and that CL&P will acquire good and unencumbered title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim, when the same are acquired by CL&P. The undersigned also
acknowledges that this Exchange Offer is being made in reliance upon an
interpretation by the staff of the Securities and Exchange Commission that the
New Bonds issued in exchange for the Old Bonds pursuant to the Exchange Offer
may be offered for sale, resold and otherwise transferred by any holder thereof
(other than (i) a broker-dealer who purchased such Old Bonds directly from CL&P
to resell pursuant to Rule 144A or any other available exemption under the
Securities Act of 1933, as amended (the "Securities Act"), or (ii) a person that
is an "affiliate" of CL&P within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that the holder is acquiring the New Bonds in
its ordinary course of business and is not participating, and has no arrangement
or understanding with any person to participate, in the distribution of the New
Bonds.
The undersigned hereby further represents to CL&P that (i) the New
Bonds acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of such holder's business, (ii) such holder has no arrangements or
understandings with any person to participate in the distribution of such New
Bonds and (iii) such holder is not an "affiliate", as defined under Rule 405 of
the Securities Act, of CL&P or, if such holder is an affiliate, that such holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable. The undersigned acknowledges and
agrees that any person participating in the Exchange Offer for the purpose of
distributing the New Bonds must comply with the registration and prospectus
delivery requirements of the Securities Act, in connection with a secondary
resale or transaction of the New Bonds acquired by such person. The undersigned
understands that such secondary resale transaction should be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K of the
Securities and Exchange Commission. If the undersigned is not a broker-dealer,
the undersigned represents that it is not engaged in, and does not intend to
engage in, a distribution of New Bonds. If the undersigned is a broker-dealer
that will receive New Bonds for its own account in exchange for Old Bonds that
were acquired as a result of market-making or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such New Bonds; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or CL&P to be necessary or desirable to
complete the assignment and transfer of the Old Bonds tendered hereby.
For purposes of the Exchange Offer, CL&P shall be deemed to have
accepted validly tendered Old Bonds when CL&P has given oral or written notice
thereof to the Exchange Agent. If any tendered Old Bonds are not accepted for
exchange pursuant to the Exchange Offer for any reason, certificates for any
such unaccepted Old Bonds will be returned (except as noted below with respect
to tenders through DTC), without expense, to the undersigned at the address
shown below or at a different address as may be indicated under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
All authority conferred or agreed to be conferred by this Letter of
Transmittal and every obligation of the undersigned hereby shall survive the
death, incapacity or dissolution of the undersigned and every obligation under
this Letter of Transmittal shall be binding upon the undersigned's heirs,
executors, administrators, legal representatives, trustees in bankruptcy,
successors and assigns.
The undersigned understands that tenders of Old Bonds pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering Old Bonds" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and CL&P upon the terms
and subject to the conditions of the Exchange Offer. The tender may be
withdrawn only in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal Rights" section of the Prospectus.
The undersigned understands that delivery and tender of the Old Bonds
is not effective and risk of loss of the Old Bonds does not pass to the Exchange
Agent until receipt by the Exchange Agent of this Letter of Transmittal,
properly completed and duly executed with all accompanying evidences of
authority and other documents in a form satisfactory to CL&P.
<PAGE>
Unless otherwise indicated under "Special Issuance Instructions,"
please issue the certificates representing the New Bonds issued in exchange for
the Old Bonds accepted for exchange and return any Old Bonds not tendered or not
exchanged in the name(s) of the undersigned (or in either such event, in the
case of Old Bonds tendered by DTC, by credit to the account at DTC). Similarly,
unless otherwise indicated under "Special Delivery Instructions," please send
the certificates representing the New Bonds issued in exchange for the Old Bonds
accepted for exchange and any certificates for Old Bonds not tendered or not
exchanged (and accompanying documents, as appropriate) to the undersigned at the
address shown below the undersigned's signature, unless, in either event, tender
is being made through DTC. In the event that both "Special Issuance
Instructions" and "Special Delivery Instructions" are completed, please issue
the certificates representing the New Bonds issued in exchange for the Old Bonds
accepted for exchange and return any Old Bonds not tendered or not exchanged in
the name(s) of, and send said certificates to, the person(s) so indicated. The
undersigned recognizes that CL&P has no obligation pursuant to the "Special
Issuance Instructions" and "Special Delivery Instructions" to transfer any Old
Bonds from the name of the registered holder(s) thereof if CL&P does not accept
for exchange any of the Old Bonds so tendered.
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(To Be Completed by All Tendering Holders of
Old Bonds Regardless of Whether Old Bonds Are Being Physically
Delivered Herewith)
This Letter of Transmittal must be signed by the Holder(s) of Old Bonds
exactly as their name(s) appear(s) on certificate(s) for Old Bonds or, if
tendered by a participant in DTC, exactly as such participant's name appears on
a security position listing as the owner of Old Bonds, or by person(s)
authorized to become registered Holder(s) by endorsements and documents
transmitted with this Letter of Transmittal. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer or other person
acting in a fiduciary or representative capacity, such person must set forth his
or her full title below under "Capacity" and submit evidence satisfactory to
CL&P of such person's authority to so act. See Instruction 3.
X__________________________________ Date:__________________________________
X__________________________________ Date:__________________________________
Signature(s) of Holder(s) or
Authorized Signatory
Name(s):___________________________ Address________________________________
___________________________ ________________________________
(Please Print) (Including Zip Code)
Capacity:__________________________ Area Code and Telephone No.:________________
Social Security No.:__________________________
MEDALLION SIGNATURE GUARANTEE
(If Required by Instruction 3)
________________________________________________________________________________
(Name of Eligible Institution Guaranteeing Signatures)
________________________________________________________________________________
(Address (including zip code) and Telephone Number (including area code) of
Firm)
________________________________________________________________________________
(Authorized Signature)
________________________________________________________________________________
(Printed Name)
________________________________________________________________________________
(Title)
Date:_____________________________, 1997
<PAGE>
___________________________________ ________________________________________
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 3 and 4) (See Instructions 1, 3 and 4)
To be completed ONLY if To be completed ONLY if certificates for
certificates for Old Bonds not Old Bonds not exchanged and/or New Bonds
exchanged and/or New Bonds are to are to be sent to someone other than the
be issued in the name of and sent person or persons whose signature(s)
to someone other than the person appear(s) on this Letter of Transmittal
or persons whose signature(s) above or to such person or persons at an
appear(s) on this Letter of address other than shown in the box
Transmittal above, or if Old entitled "Description of Old Bonds" on
Bonds delivered by book-entry this Letter of Transmittal above.
transfer which are not accepted
for exchange are to be returned
by credit to an account maintained
at the Book-Entry Transfer Facility
other than the account indicated
above.
Issue: New Bonds and/or Old Mail: New Bonds and/or Old Bonds to:
Bonds to:
Name(s):_________________________ Name(s):_______________________________
(Please Type or Print) (Please Type or Print)
_________________________________ _______________________________________
(Please Type or Print) (Please Type or Print)
Address:_______________________________
Address:_________________________
_______________________________________
_________________________________ (Zip Code)
(Zip Code)
(Complete Substitute Form W-9)
[_]
Credit unexchanged Old Bonds
delivered by book-entry
transfer to the Book-Entry
Transfer Facility account set
forth below.
_________________________________
(Book-entry Transfer Facility
Account Number, if applicable)
__________________________________ _______________________________________
IMPORTANT: THIS LETTER OF TRANSMITTAL (TOGETHER WITH THE CERTIFICATES FOR OLD
BONDS OR A BOOK ENTRY CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE
NOTICE OF GUARANTEED DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO
5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions
of the Exchange Offer for All Outstanding
First and Refunding Mortgage Bonds, 1997 Series B Due June 1, 2002
in Exchange for
First and Refunding Mortgage 7 3/4 Bonds, 1997 Series C Due June 1, 2002
1. Delivery of this Letter of Transmittal and Old Bonds; Guaranteed
Delivery Procedure. The certificates for the tendered Old Bonds (or a
confirmation of a book-entry transfer into the Exchange Agent's account at DTC
of all Old Bonds delivered electronically), as well as a properly completed and
duly executed copy of this Letter of Transmittal and any other documents
required by this Letter of Transmittal must be received by the Exchange Agent at
its address set forth herein prior to 5:00 p.m., New York City time, on the
Expiration Date. The method of delivery of the tendered Old Bonds, this Letter
of Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the Holder and, except as otherwise provided below, the
delivery will be deemed made only when actually received by the Exchange Agent.
Instead of delivery by mail, it is recommended that the Holder use an overnight
or hand delivery service. In all cases, sufficient time should be allowed to
assure timely delivery. No Letter of Transmittal or Old Bonds should be sent to
CL&P.
Holders who wish to tender their Old Bonds and (i) whose Old Bonds are not
immediately available or (ii) who cannot deliver their Old Bonds, this Letter of
Transmittal or any other documents required hereby to the Exchange Agent prior
to the Expiration Date must tender their Old Bonds and follow the guaranteed
delivery procedures set forth in the Prospectus. Pursuant to such procedures:
(i) such tender must be made by or through an Eligible Institution; (ii) prior
to the Expiration Date, the Exchange Agent must have received from the Eligible
Institution a properly completed and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery) setting forth the name and
address of the Holder of the Old Bonds, the certificate number or numbers of
such Old Bonds and the principal amount of Old Bonds tendered, stating that the
tender is being made thereby and guaranteeing that, within five business days
after the Expiration Date, this Letter of Transmittal together with the
certificate(s) representing the Old Bonds (or a confirmation of electronic mail
delivery of book-entry delivery into the Exchange Agent's account at DTC) and
any of the required documents will be deposited by the Eligible Institution with
the Exchange Agent; and (iii) such properly completed and executed Letter of
Transmittal, as well as all other documents required by this Letter of
Transmittal and the certificate(s) representing all tendered Old Bonds in proper
form for transfer (or a confirmation of electronic mail delivery of book-entry
delivery into the Exchange Agent's account at DTC), must be received by the
Exchange Agent within five business days after the Expiration Date, all as
provided in the Prospectus under the Caption "The Exchange Offer--Guaranteed
Delivery Procedures." Any Holder of Old Bonds who wishes to tender his Old
Bonds pursuant to the guaranteed delivery procedures described above must ensure
that the Exchange Agent receives the Notice of Guaranteed Delivery prior to 5:00
p.m., New York City time, on the Expiration Date.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Bonds will be determined by
CL&P in its sole discretion, which determination will be final and binding.
CL&P reserves the absolute right to reject any and all Old Bonds not properly
tendered or any Old Bonds CL&P's acceptance of which would, in the opinion of
counsel for CL&P, be unlawful. CL&P also reserves the right to waive any
irregularities or conditions of tender as to particular Old Bonds. CL&P's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in this Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with
tenders of Old Bonds must be cured within such time as CL&P shall determine.
Neither CL&P, the Exchange Agent nor any other person shall be under any duty to
give notification of defects or irregularities with respect to tenders of Old
Bonds, nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Bonds will not be deemed to have been made until
such defects or irregularities have been cured or waived. Any Old Bonds
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned
without cost by the Exchange Agent to the tendering holders of Old Bonds, unless
otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders. If less than the entire principal amount of any Old
Bonds is tendered, the tendering Holder should fill in the principal amount
tendered in the third column of the chart entitled "Description of Old Bonds."
Partial tenders of Old Bonds will be accepted in all denominations of $1,000 and
integral multiples in excess thereof. The entire principal amount of Old Bonds
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Old Bonds is not
tendered, Old Bonds for the principal amount of Old Bonds not tendered and a
certificate or certificates representing New Bonds issued in exchange for any
Old Bonds accepted will be sent to the Holder at his or her registered address,
unless a different address is provided in the appropriate box on this Letter of
Transmittal or unless tender is made through DTC, promptly after the Old Bonds
are accepted for exchange.
<PAGE>
3. Signatures on this Letter of Transmittal; Bond Powers and Endorsements;
Guarantees of Signatures. If this Letter of Transmittal is signed by the
registered holder(s) of the Old Bonds tendered hereby, the signature must
correspond with the name(s) as written on the face of the Old Bonds without
alteration, enlargement or any change whatsoever. If any tendered Old Bonds are
owned of record by two or more joint owners, all such owners must sign this
Letter of Transmittal. If any tendered Old Bonds are registered in different
names on several certificates, it will be necessary to complete, sign and submit
as many separate copies of this Letter of Transmittal as there are different
registrations or certificates.
If this Letter of Transmittal is signed by the registered Holder(s) of Old
Bonds tendered hereby and the certificate(s) for New Bonds issued in exchange
therefor is to be issued (or any untendered principal amount of Old Bonds is to
be reissued) to the registered Holder, such Holder need not and should not
endorse any tendered Old Bonds, nor provide a separate bond power. In any other
case, such holder must either properly endorse the Old Bonds tendered or
transmit a properly completed separate bond power with this Letter of
Transmittal, with the signatures on the endorsement or bond power guaranteed by
a recognized member of a Medallion Signature Guarantee Program.
If this Letter of Transmittal is signed by a person other than the
registered Holder(s) of any Old Bonds listed, such Old Bonds must be endorsed or
accompanied by appropriate bond powers signed as the name of the registered
Holder(s) appears on the Old Bonds.
If this Letter of Transmittal or any Old Bonds or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, or officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by CL&P, evidence
satisfactory to CL&P of their authority so to act must be submitted with this
Letter of Transmittal.
Endorsements on Old Bonds or signatures on bond powers required by this
Instruction 3 must be guaranteed by an eligible guarantor institution which is a
member of one of the following recognized Medallion Signature Guarantee
Programs: the Securities Transfer Agents Medallion Program; the New York Stock
Exchange Medallion Signature Program; or the Stock Exchange Medallion Program.
Signatures on this Letter of Transmittal must be guaranteed by a recognized
member of a Medallion Signature Guarantee Program unless the Old Bonds tendered
pursuant thereto are tendered (i) by a registered Holder (including any
participant in DTC whose name appears on a security position listing as the
owner of Old Bonds) who has not completed the box set forth herein entitled
"Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" or (ii) for the account of a member of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc. or a commercial bank or trust company having an office or correspondent in
the United States (each of the foregoing being referred to as an "Eligible
Institution").
4. Special Issuance and Delivery Instructions. Tendering Holders should
indicate, in the applicable spaces, the name and address to which New Bonds or
substitute Old Bonds for principal amounts not tendered or not accepted for
exchange are to be issued or sent, if different from the name and address of the
person signing this Letter of Transmittal (or in the case of tender of the Old
Bonds through DTC, if different from DTC). In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated.
5. Transfer Taxes. CL&P will pay all transfer taxes, if any, applicable to
the exchange of Old Bonds pursuant to the Exchange Offer. If, however,
certificates representing New Bonds or Old Bonds for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
registered in the name of any person other than the person signing this Letter
of Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Bonds pursuant to the Exchange Offer, then the amount of any
such transfer taxes (whether imposed on the registered Holder or any other
person) will be payable by the tendering Holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with this Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering Holder.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the Old Bonds listed in this Letter of
Transmittal.
6. Waiver of Conditions. CL&P reserves the absolute right to amend, waive or
modify specified conditions in the Exchange Offer in the case of any Old Bonds
tendered.
7. Mutilated, Lost, Stolen or Destroyed Old Bonds. Any tendering Holder
whose Old Bonds have been mutilated, lost, stolen or destroyed should contact
the Exchange Agent at the address indicated herein for further instruction.
8. Requests for Assistance or Additional Copies. Questions and requests for
assistance and requests for additional copies of the Prospectus or this Letter
of Transmittal may be directed to the Exchange Agent at the address specified in
the Prospectus. Holders may also contract their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
<PAGE>
9. No Conditional Tenders. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering Holders of Old Bonds, by
execution of this Letter of Transmittal, shall waive any right to receive notice
of the acceptance of their Old Bonds for exchange. Neither CL&P, the Exchange
Agent nor any other person is obligated to give notice of any defect or
irregularity with respect to any tender of Old Bonds, nor shall any of them
incur any liability for failure to give any such notice.
(DO NOT WRITE IN SPACE BELOW)
- --------------------------------------------------------------------------------
Certificate Surrendered Old Bonds Tendered Old Bonds Accepted
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Delivery Prepared by Checked Date
by ---------------------
-------------- --------------------
- --------------------------------------------------------------------------------
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Old Bonds are
accepted for payment is required to provide the Exchange Agent (as payer) with
such Holder's correct TIN on Substitute Form W-9 below or otherwise establish a
basis for exemption from backup withholding. If such Holder is an individual,
the TIN is his social security number. If the Exchange Agent is not provided
with the correct TIN, a $50 penalty may be imposed by the Internal Revenue
Service, and payments made with respect to New Bonds purchased pursuant to the
Exchange Offer may be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on Substitute
Form W-9. A foreign person may qualify as an exempt recipient by submitting to
the Exchange Agent a properly completed Internal Revenue Service Form W-8,
signed under penalties of perjury, attesting to that Holder's exempt status. A
Form W-8 can be obtained from the Exchange Agent. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the Holder or other payee. Backup withholding is not
an additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
Purpose of Substitute Form W-9
To prevent backup withholding on payments made with respect to the Exchange
Offer, the Holder is required to provide the Exchange Agent with either: (i) the
Holder's correct TIN by completing the form below, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such Holder is awaiting a
TIN) and that (A) the Holder has not been notified by the Internal Revenue
Service that the Holder is subject to backup withholding as a result of failure
to report all interest or dividends or (B) the Internal Revenue Service has
notified the Holder that the Holder is no longer subject to backup withholding;
or (ii) an adequate basis for exemption.
What Number to Give the Exchange Agent
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered Holder of
the Old Bonds. If the Old Bonds are held in more than one name or are held not
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer identification Number on Substitute Form W-9" for
additional guidance on which number to report.
<PAGE>
- --------------------------------------------------------------------------------
PAYER'S NAME:
- --------------------------------------------------------------------------------
SUBSTITUTE Part 1-PLEASE PROVIDE
YOUR TIN IN THE BOX AT -----------------
RIGHT AND CERTIFY BY Social Security
SIGNING AND DATING BELOW Number
Form W-9 OR
-----------------
Employer
Identification
Number
Department of the Treasury ------------------------- --------------------
Internal Revenue Service
Part 2-Certification-Under Part 3-
Payer's Request for Penalties of Perjury, I
Taxpayer Identification certify that: Awaiting TIN [_]
Number (TIN) and
Certification (1) The number shown in
this form is my
correct Taxpayer
Identification Number
(or I am waiting for a
number to be issued to
me) and
(2) I am not subject to
backup withholding
either because I have
not been notified by
the Internal Revenue
Service ("IRS") that I
am subject to backup
withholding as a result
of failure to report all
interest or dividends, or
the IRS has notified me
that I am no longer subject
to backup withholding.
----------------------------------------------------
Certificate Instructions-You must cross out item (2)
in Part 2 above if you have been notified by the IRS
that you are subject to backup withholding because
of under reporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you were subject to backup withholding you
received another notification from the IRS stating
that you are no longer subject to backup
withholding, do not cross out item (2).
SIGNATURE Date
---------------- -----------------
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO HOLDERS OF NEW BONDS PURSUANT
TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number within 60 days, 31 percent of all
reportable payments made to me thereafter will be withheld until I provide a
number.
------------------- ------------------
Signature Date
- --------------------------------------------------------------------------------
<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
First and Refunding Bonds, 1997 Series B
of
The Connecticut Light and Power Company
As set forth in the Prospectus, dated July __, 1997 (the "Prospectus"), of
The Connecticut Light and Power Company (the "Company") and in the accompanying
Letter of Transmittal and instructions thereto (the "Letter of Transmittal"),
this form or one substantially equivalent hereto must be used to accept CL&P's
exchange offer (the "Exchange Offer") to purchase all of its outstanding First
and Refunding Bonds, 1997 Series B (the "Old Bonds") if (i) certificates
representing the Old Bonds to be tendered for purchase and payment are not lost
but are not immediately available, (ii) time will not permit the Letter of
Transmittal, certificates representing such Old Bonds or other required
documents to reach the Exchange Agent prior to the Expiration Date or (iii) the
procedures for book-entry transfer cannot be completed prior to the Expiration
Date. This form may be delivered by an Eligible Institution by mail or hand
delivery or transmitted, via telegram, telex or facsimile, to the Exchange Agent
at its address set forth below not later than 5:00 p.m., New York City Time, on
_____ __, 1997, unless the Offer is extended. All capitalized terms used herein
but not defined herein shall have the meanings ascribed to them in the
Prospectus.
The Exchange Agent is:
Bankers Trust Company
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Express Delivery:
Bankers Trust Company (212)__________ Bankers Trust Company
Four Albany Street Four Albany Street
New York, NY 10006. Confirm by Telephone: New York, NY 10006.
(212)_________
</TABLE>
Delivery of this instrument to an address, or transmission via telegram,
telex or facsimile, other than as set forth above will not constitute a valid
delivery.
Ladies and Gentlemen:
The undersigned hereby tender(s) to CL&P, upon the terms and subject to the
conditions set forth in the Exchange Offer and the Letter of Transmittal,
receipt of which is hereby acknowledged, the aggregate principal amount of Old
Bonds set forth below pursuant to the guaranteed delivery procedures set forth
in the Prospectus under the caption "The Exchange Offer-Guaranteed Delivery
Procedure."
The undersigned understands that partial tenders of Old Bonds will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof. The undersigned understands that tenders of Old Bonds pursuant to the
Exchange Offer may not be withdrawn after 5:00 p.m., New York City time, on the
Expiration Date. Tenders of Old Bonds may also be withdrawn if the Exchange
Offer is terminated without any such Old Bonds being purchased thereunder or as
otherwise provided in the Prospectus under the caption "The Exchange Offer-
Withdrawal Rights."
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death or incapacity of the undersigned,
and every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.
<PAGE>
PLEASE COMPLETE AND SIGN
<TABLE>
<S> <C>
- ------------------------------------------------------- --------------------------------------------------------------------------
Signature(s) of Registered Owner(s) or Authorized Name(s) of Registered
Signatory:____________________________________________ Holder(s)_________________________________________________________________
______________________________________________________ __________________________________________________________________________
______________________________________________________ __________________________________________________________________________
______________________________________________________
Principal Amount of Old Bonds Tendered: Address:__________________________________________________________________
______________________ __________________________________________________________________________
______________________________________________________
Certificate No(s). of Old Bonds (if available): Area Code and Telephone No.:
______________________________________________________ _____________________________________
______________________________________________________
Date: ________________________________________________ If Old Bonds will be delivered by book-entry transfer at The Depository
Taxpayer Identification or Trust Company, insert Depository Account No.:
Social Security __________________________________________________________________________
No._____________________________________ --------------------------------------------------------------------------
- -------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Old Bonds exactly as its (their) name(s) appear on certificates for
Old Bonds or on a security position listing as the owner(s) of Old Bonds, or by
person(s) authorized to become registered holder(s) by endorsement and documents
transmitted with this Notice of Guaranteed Delivery. If signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must
provide the following information.
Please print name(s) and address(es)
Name(s): ___________________________________________________________________
___________________________________________________________________
Capacity: ___________________________________________________________________
Address(es): ___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial bank
or trust company having an office or a correspondent in the United States,
hereby (a) represents that each holder of Old Bonds on whose behalf this tender
is being made "own(s)" the Old Bonds covered hereby within the meaning of
Rule 14e-4 under the Securities Exchange Act of 1934, as amended, (b) represents
that such tender of Old Bonds complies with such Rule 14e-4, and (c) guarantees
that, within five New York Stock Exchange trading days from the date of this
Notice of Guaranteed Delivery, a properly completed and duly executed Letter of
Transmittal, together with certificates representing the Old Bonds covered
hereby in proper form for transfer (or confirmation of the book-entry transfer
of such Old Bonds into the Exchange Agent's account at The Depository Trust
Company, pursuant to the procedure for book-entry transfer set forth in the
Prospectus) and required documents will be deposited by the undersigned with the
Exchange Agent.
The undersigned acknowledges that it must deliver the Letter of Transmittal
and Old Bonds tendered hereby to the Exchange Agent within the time period set
forth above and that failure to do so could result in financial loss to the
undersigned.
- --------------------------------------------------------------------------------
- ------------------------------------- -----------------------------------------
Name of Firm: ______________________ _________________________________________
Authorized Signature
Address: ____________________________ Name: ___________________________________
_____________________________________ Title: __________________________________
Area Code and Telephone No.: ________ Date: ___________________________________
- ------------------------------------- -----------------------------------------
NOTE: DO NOT SEND OLD BONDS WITH THIS FORM. OLD BONDS SHOULD BE SENT TO THE
EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED
LETTER OF TRANSMITTAL.
<PAGE>
The Connecticut Light and Power Company
Offer for All Outstanding
First and Refunding Mortgage Bonds, 1997 Series B Due June 1, 2002
in Exchange for
First and Refunding Mortgage 7 3/4 Bonds, 1997 Series C Due June 1, 2002
To Our Clients:
Enclosed for your consideration is a Prospectus, dated July __ , 1997 (the
"Prospectus"), and the related Letter of Transmittal and instructions thereto
(the "Letter of Transmittal"), relating to the offer (the "Exchange Offer") of
The Connecticut Light and Power Company ("CL&P") to exchange its First and
Refunding Mortgage 7 3/4 Bonds, 1997 Series C Due June 1, 2002 (the "New Bonds")
for its outstanding First and Refunding Mortgage Bonds, 1997 Series B Due June
1, 2002 (the "Old Bonds"), upon the terms and subject to the conditions
described in the Prospectus. The Exchange Offer is being made in order to
satisfy certain obligations of CL&P contained in the Registration Rights
Agreement dated as of June 19, 1997.
This material is being forwarded to you as the beneficial owner of the Old
Bonds carried by us in your account but not registered in your name. A tender
of such Old Bonds may only be made by us as the holder of record and pursuant to
your instructions. Therefore, CL&P urges beneficial owners of Old Bonds
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee to contact such Holder promptly if they wish to exchange Old Bonds
in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender on
your behalf any or all of the Old Bonds held by us for your account, pursuant to
the terms and conditions set forth in the enclosed Prospectus and Letter of
Transmittal.
Your instructions should be forwarded to us as promptly as possible in
order to permit us to tender the Old Bonds on your behalf in accordance with the
provisions of the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on ________________, unless extended by CL&P. Any Old Bonds
tendered pursuant to the Exchange Offer may be withdrawn at any time prior to
5:00 p.m. on the Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Bonds.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer--Certain Conditions to
the Exchange Offer."
3. Any transfer taxes incident to the transfer of Old Bonds from the
holder to CL&P will be paid by CL&P, except as otherwise provided in the
Instructions in the Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on
_______________, 1997, unless extended by CL&P.
If you wish to have us tender your Old Bonds, please so instruct us by
completing, executing and returning to us the instruction form on the back of
this Letter of Transmittal. The Letter of Transmittal is furnished to you for
your information only and may not be used directly by you to tender Old Bonds.
<PAGE>
INSTRUCTIONS WITH RESPECT TO
THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your Letter of Transmittal and
the enclosed material referred to therein relating to the Exchange Offer made by
CL&P with respect to its Old Bonds.
This will instruct you to tender the Old Bonds held by you for the account
of the undersigned, upon and subject to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal.
Please tender the Old Bonds held by you for my account as indicated below:
______________________________________________
Aggregate Principal Amount of Old Bonds
______________________________________________
First and Refunding Mortgage 7 3/4 Bonds,
1997 Series C Due June 1, 2002
[_] Please do not tender any Old Bonds
held by you for my account.
Dated: , 1997
____________________________________________
____________________________________________
Signature(s)
____________________________________________
____________________________________________
____________________________________________
Please print name(s) here
____________________________________________
____________________________________________
Address(es)
____________________________________________
Area Code and Telephone Number(s):
____________________________________________
Tax Identification or Social Security No(s).
None of the Old Bonds held by us for your account will be tendered unless
we receive written instructions from you to do so. Unless a specific contrary
instruction is given in the space provided, your signature(s) hereon shall
constitute an instruction to us to tender all the Old Bonds held by us for your
account.
<PAGE>
The Connecticut Light and Power Company
Offer for all Outstanding
First and Refunding Mortgage Bonds, 1997 Series B Due June 1, 2002
in Exchange for
First and Refunding Mortgage 7 3/4 Bonds, 1997 Series C Due June 1, 2002
To: Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees: _______, 1997
The Connecticut Light and Power Company ("CL&P") is offering, upon and
subject to the terms and conditions set forth in the Prospectus, dated July __ ,
1997 (the "Prospectus"), to exchange (the "Exchange Offer") its First and
Refunding Mortgage 7 3/4 Bonds, 1997 Series C Due June 1, 2002 for its
outstanding First and Refunding Mortgage Bonds, 1997 Series B Due June 1, 2002
(the "Old Bonds"). The Exchange Offer is being made in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement dated
as of June 19, 1997.
We are requesting that you contact your clients for whom you hold Old Bonds
regarding the Exchange Offer. For your information and for forwarding to your
clients for whom you hold Old Bonds registered in your name or in the name of
your nominee, or who hold Old Bonds registered in their names, we are enclosing
the following documents:
1. Prospectus dated July __ , 1997;
2. The Letter of Transmittal for your use and for the information of your
clients;
3. A Notice of Guaranteed Delivery to be used to accept the Exchange
Offer if certificates for Old Bonds are not immediately available or time will
not permit all required documents to reach the Exchange Agent prior to the
Expiration Date (as defined in below) or if the procedure for book-entry
transfer cannot be completed on a timely basis;
4. A form of Letter of Transmittal which may be sent to your clients for
whose account you hold Old Bonds registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions with
regard to the Exchange Offer;
5. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9;
6. Return envelopes addressed to Bankers Trust Company, Exchange Agent for
the Old Bonds; and
7. A Letter of Transmittal from the President of CL&P.
Your prompt action is requested. We urge you to contact your clients as
promptly as possible. The Exchange Offer will expire at 5:00 p.m., New York
City time, on __________________, unless extended by CL&P (the "Expiration
Date"). The Old Bonds tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to 5:00 p.m. on the Expiration Date. The Exchange Offer is
not conditioned on any minimum principal amount of Old Bonds being tendered.
To participate in the Exchange Offer, a duly executed and properly
completed Letter of Transmittal, with any required signature guarantees and any
other required documents, should be sent to the Exchange Agent, all in
accordance with the instructions set forth in the Letter of Transmittal and the
Prospectus.
If holders of Old Bonds wish to tender, but it is impracticable for them to
forward their certificates for Old Bonds prior to the expiration of the Exchange
Offer or to comply with the book-entry transfer procedures on a timely basis, a
tender may be effected by following the guaranteed delivery procedures described
in the Prospectus under "The Exchange Offer--Guaranteed Delivery Procedures."
CL&P will, upon request, reimburse brokers, dealers, commercial banks and
trust companies for reasonable and necessary costs and expenses incurred by them
in forwarding the Prospectus and the related documents to the beneficial owners
of Old Bonds held by them as nominee or in a fiduciary capacity. CL&P will pay
or cause to be paid all stock transfer taxes applicable to the exchange of Old
Bonds pursuant to the Exchange Offer, except as set forth in Instruction 5 of
the Letter of Transmittal.
<PAGE>
Any inquiries you may have with respect to the Exchange Offer, or requests
for additional copies of the enclosed materials, should be directed to Bankers
Trust Company, Exchange Agent for the Old Bonds, at its address and telephone
number set forth on the front of the Letter of Transmittal.
Very truly yours,
The Connecticut Light and Power Company
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF CL&P OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY OTHER
PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM
WITH RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
PROSPECTUS OR THE LETTER OF TRANSMITTAL.
Enclosures
