SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: January 25, 1994
EASTERN UTILITIES ASSOCIATES
(Exact name of registrant as specified in this charter)
Massachusetts 1-5366 04-1271872
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
One Liberty Square, Boston, Massachusetts 02109
(Address of principal executive offices) (Zip Code)
Item 5. Other Events.
(a) Eastern Utilities Associates' ("EUA") indirect subsidiary, Montaup
Electric Company ("Montaup"), today announced that generating unit #5 at its
Somerset Station has been placed in deactivated reserve.
This 69 mw generating unit is 42 years old. It has been out of service
for the past 5 months because of mechanical problems. During this period of
time an assessment of the cost and feasibility of repairing and refurbishing
the unit to meet reliability standards and Clean Air Act requirements has been
conducted. The study concluded that it was not economic to repair this unit.
Montaup's power supply remains sufficient to meet its commitments. It is
envisioned that new replacement capacity will not be needed until the year
2000.
Deactivating may result in the loss of jobs for about 30 of the 140
employees at the Somerset Station. Donald G. Pardus, Chairman of Montaup, in a
meeting with the employee representatives today, pledged Company efforts to
minimize the impact on employees. Alternatives to layoffs are being
investigated to reduce the number of employees affected.
(b) By complaint dated December 17, 1992, Montaup commenced a declaratory
judgment action in which it sought to have the Massachusetts Superior Court
determine its rights under the Power Purchase Agreement between it and the
defendant Aquidneck Power Limited Partnership ("Aquidneck"). Montaup sought a
declaration that the Power Purchase Agreement was binding on the parties
according to its terms. The defendant had asserted, in effect, that Montaup
had either an express or implied obligation to negotiate new terms and
conditions to the Power Purchase Agreement. Specifically, the defendants
sought to amend, through negotiations, certain milestone events to which they
were bound in the Power Purchase Agreement as written. The first milestone
event required the defendant to provide Montaup with written documentation that
it had title to, or lease of a certain site in Rhode Island, and that it do so
no later than January 1, 1993. Aquidneck failed to meet the milestone.
Accordingly, on January 5, 1993, Montaup exercised its rights to terminate the
Power Purchase Agreement effective immediately.
By counterclaim dated January 11, 1994, Aquidneck claimed certain breaches
of the Power Purchase Agreement, including an alleged failure on the part of
Montaup to renegotiate the terms and conditions of the Power Purchase Agreement
relating to the first milestone event.
By motion to implead third parties dated January 20, 1994, the defendant
seeks to join EUA and EUA's subsidiary, EUA Service Corporation, as parties
necessary for the just adjudication of the subject controversy. In its
counterclaim, Aquidneck alleges that EUA and EUA Service Corporation conspired
to void the obligations of Montaup under the Power Purchase Agreement. In
addition, Aquidneck alleges that Montaup and/or the other parties sought to be
joined did not comply with the provisions of the Power Purchase Agreement by
failing to adequately and promptly assist the defendant in certain permitting
activities.
Aquidneck apparently claims $11,000,000 of damages on the theory that EUA
can "avoid an approximately an eleven million dollar ($11,000,000) obligation
to purchase capacity and power which it does not currently need." Because
Aquidneck alleges that the actions of Montaup, EUA and EUA Service Corporation
constitute a violation of Massachusetts General Laws, Chapter 93A, section 1
et seq. and that, the actions complained of in the counterclaim were undertaken
willfully and knowingly, Aquidneck seeks treble damages and a
Montaup, EUA and EUA Service Corporation intend to vigorously defend the
counterclaim. As asserted in its complaint for declaratory judgement, Montaup
claims that the documents in question, including the Power Purchase Agreement,
are unambiguous and that the parties are entitled to performance according to
their terms. Montaup asserts that it was entitled to terminate the Power
Purchase Agreement. In any event, Montaup believes that the defendants
apparent damage theory has no basis in law.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EASTERN UTILITIES ASSOCIATES
(Registrant)
By: /s/ John R. Stevens
John R. Stevens,
President
Date: January 25, 1994
