SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM U5S
ANNUAL REPORT
For the Year ended December 31, 1996
Filed pursuant to the Public Utility Holding Company Act of 1935 by
Eastern Utilities Associates, P.O. Box 2333, Boston, Massachusetts 02107
04-1271872
(I.R.S. Employer Identification No.)
<TABLE>
FORM U5S-ANNUAL REPORT
For the Calendar Year 1996
ITEMS
<CAPTION>
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF DECEMBER 31, 1996
% of
Name of Company Number of Common Voting Issuer Owner's
(add abbreviation used herein) Shares Owned Power Book Value Book Value
<S> <C> <C> <C> <C>
Eastern Utilities Associates Publicly Owned <F3> $371,856,845
(EUA or the Association)
EUA Service Corporation 100 100% <F4> 3,220,835 3,220,835
(EUA Service)
Blackstone Valley Electric 184,062 100% <F4> 36,232,083 36,232,083
Company (Blackstone)
Newport Electric Corporation 1,000,000 100% <F4> 21,719,956 21,719,956
(Newport)
Eastern Edison Company 2,891,357 100% <F4> 240,213,303 240,213,303
(Eastern Edison)
Montaup Electric Company 586,000 100% <F5> 183,555,220 183,555,220
(Montaup)
Preferred Stock <F5> 1,500,000 1,500,000
Debenture Bonds (Unsecured) <F5> 135,575,000 135,575,000
Pollution Control
Bonds (Unsecured) - Net <F5> 36,865,348 36,865,348
EUA Cogenex Corporation 1,000 100% <F4> 47,548,713 47,548,713
(EUA Cogenex)
EUA Citizens Conservation
Services, Inc. 10,000 100% <F7> 27,351 27,351
Northeast Energy Management, Inc. 10,000 100% <F7> 11,362,421 11,362,421
(NEM)
EUA Highland Corporation 10,000 100% <F7> 4,735,002 4,735,002
APS Cogenex L.L.C. 50% <F10> 37,434 37,434
</TABLE>
<TABLE>
ITEM 1. SYSTEM COMPANIES AND INVESTMENTS THEREIN AS OF DECEMBER 31, 1996
<CAPTION>
% of
Name of Company Number of Common Voting Issuer Owner's
(add abbreviation used herein) Shares Owned Power Book Value Book Value
<S> <C> <C> <C> <C>
EUA Cogenex-Canada Inc. 100 100% <F7> 421,295 421,295
(Cogenex Canada)
EUA WestCoast L.P. 50% <F9> 1,211,722 1,211,722
Promissory Note 1,681,280 1,681,280
EUA Energy Capital and
Services I 50% <F8> 5,589,899 5,589,899
Promissory Note 5,887,966 5,887,966
EUA Energy Capital and
Services II 50% <F8> 7,898,524 7,898,524
Promissory Note 12,091,381 12,091,381
EUA FRC II Energy Partners 50% <F8> 287,360 287,360
Micro Utility Partners of America 50% <F9> (695,910) (695,910)
Promissory Note 1,476,078 1,476,078
EUA Energy Services (1) 100 100% <F4> (50,495) (50,495)
Duke/Louis Dreyfus Energy Services L.L.C. (2) 30% <F10>
EUA Energy Investment Corporation 100 100% <F4> (13,040,331) (13,040,331)
(EUA Energy)
Eastern Unicord Corporation 1,000 100% <F6> (1,840,592) (1,840,592)
(Unicord)
EUA TransCapacity, Inc. 1,000 100% <F6> (4,173,089) (4,173,089)
TransCapacity, L.P. 80% <F9> (6,945,441) (6,945,441)
EUA Bioten, Inc. 100 100% <F6> (474,377) (474,377)
EUA Ocean State Corporation 1 100% <F4> 15,342,917 15,342,917
(EUA Ocean State)
Ocean State Power I 29.9% 29.9% <F8> 29,960,850 29,960,850
Ocean State Power II 29.9% 29.9% <F8> 22,637,739 22,637,739
*Eastern Edison Electric Company 100% <F4> 1,000 1,000
_________
<FN>
<F1> Organized under the Laws of the Commonwealth of Massachusetts on December
5, 1995 to engage in and carry on businesses providing energy-related
products and services to residential and commercial purchasers.
<F2> Organized under the Laws of Delaware on December 6, 1995 to engage in the
business of marketing energy and energy-related services in New England.
<F3> Cumulative Voting.
<F4> Wholly-owned by EUA.
<F5> Wholly-owned by Eastern Edison.
<F6> Wholly-owned by EUA Energy.
<F7> Wholly-owned by EUA Cogenex.
<F8> General Partnership.
<F9> Limited Partnership.
<F10> Limited Liability Company.
*Inactive
</FN>
</TABLE>
<TABLE>
ITEM 2. ACQUISITIONS OR SALES OF UTILITY ASSETS
<CAPTION>
Brief Description
Name of Company of Transaction Consideration Exemptions
(1) (2) (3) (4)
<S> <C> <C> <C>
Blackstone Valley Electric Sale of Building $975,000 44 (b)
Washington Highway
Lincoln, RI
Blackstone Valley Electric Sale of Land $ 50,000 44 (b)
Aetna Street
Central Falls, RI
Blackstone Valley Electric Sale of Land $ 2,000 44 (b)
Lee Street
Pawtucket, RI
Eastern Edison Company Sale of Land with
Buildings Thereon $ 70,000 44 (b)
North Main Street
Cohasset, MA
Eastern Edison Company Sale of Land $ 15,000 44 (b)
Bedford and Tenth Streets
Fall River, MA
</TABLE>
ITEM 3. ISSUE, SALE, PLEDGE, GUARANTEE OR ASSUMPTION OF SYSTEM SECURITIES
Type of Maximum Amount
Name of Issuer Security Outstanding During 1996 Exemption
(1) (2) (3) (4)
None.
The following refers to short-term borrowing by EUA system companies during
1996:
Highest Effective
Balance at Balance Date of Average
Year-end During Year Highest Interest Rate
(000) (000) Balance For Year
$51,848 $60,530 9/16/96 5.50%
EUA Cogenex is required under certain contracts with various government
entities and utility companies to maintain either a letter of credit or
performance bond to collateralize performance under the contract. These
contingent liabilities will only be drawn by the customer if EUA Cogenex fails
to perform under the construction contract. For the letters of credit, the
highest amount outstanding during 1996 and the year end balance was
approximately $5.7 million and $4.3 million, respectively. For the performance
bonds, the highest amount outstanding during 1996 and the year end balance was
$4.1 million.
<TABLE>
ITEM 4. ACQUISITION, REDEMPTION OR RETIREMENT OF SYSTEM SECURITIES
<CAPTION>
Name of Company
Acquiring,
Name of Issuer Redeeming Number of Shares or
and or Retiring Principal Amount
Title of Issue Securities Acquired, Redeemed, Consideration Authorization
(1) (2) or Retired (3) (4) (5)
<S> <C> <C> <C> <C>
Blackstone: Blackstone
First Mortgage Bonds:
9 1/2% due 2004 $1,500,000 $1,500,000 (a)
Eastern Edison: Eastern Edison
First Mortgage
and Collateral Trust Bonds:
4 7/8% due 1996 $7,000,000 $7,000,000 (a)
Newport: Newport
Preferred Stock,
$100 par value:
9.75% issue 900 shs. $ 90,000 (a)
First Mortgage Bonds:
8.95% due 2001 $650,000 $ 650,000 (a)
Small Business
Administration Loan:
6.5% due 2005 $90,780 $ 90,780 (a)
EUA Cogenex: EUA Cogenex
Unsecured Notes:
9.6% due 2001 $3,200,000 $3,200,000 (a)
10.56% due 2005 $3,500,000 $3,500,000 (a)
EUA Service: EUA Service
Secured Notes:
10.20% due 2008 $2,200,000 $2,200,000 (a)
EUA Ocean State: EUA Ocean State
Unsecured Notes:
9.59% due 2011 $2,476,660 $2,476,660 (a)
(a) Rule 42
</TABLE>
<TABLE>
ITEM 5. INVESTMENTS IN SECURITIES OF NONSYSTEM COMPANIES
<CAPTION>
% of Number of Shares
Voting or Principal Book
Name of Owner Name of Issuer Security Owned Power Amount Owned Value
(1) (2) (3) (4) (5) (6)
<S> <C> <C> <C> <C> <C>
Eastern Edison Aggregate number of
investments - six (6) $ 50,405
Montaup Yankee Atomic Capital Stock 4.5 6,903 shares 1,055,441
Electric Co. *
" " Conn. Yankee Capital Stock 4.5 15,750 shares 4,809,436
Atomic Power Co.*
" " Vermont Yankee Capital Stock 2.5 9,801 shares 1,368,146
Nuclear
Power Corp. *
" " Maine Yankee Capital Stock 4.0 20,000 shares 2,877,349
Atomic
Power Co. *
" " NE Hydro Trans. Capital Stock 3.3 130,812 shares 1,927,919
Electric Co. **
" " NE Hydro Capital Stock 3.3 644 shares 1,171,219
Trans. Corp. **
</TABLE>
___________
*Regional nuclear generating company.
**Owner of Transmission Facilities.
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS
<CAPTION>
Part I. As of December 31, 1996. Names of System Companies with which Connected
Blackstone
Eastern EUA Valley Newport Eastern
Utilities Service Electric Electric Edison
Associates Corporation Company Corporation Company
<S> <C> <C> <C> <C> <C> <C>
Russell A. Boss One Albion Road TR
Lincoln, RI 02865
J. Thomas Brett 275 Slater St.,Ste 1700
Ottawa, Canada K1P 5H9
Richard M. Burns One Liberty Square CM, AT, AS D, CM, AT, VP, AT, AS VP, AT VP, AT, AC
Boston, MA 02109 AS, AC, VP
John D. Carney P.O. Box 543 EVP D, EVP D, P D, P D, P
W. Bridgewater, MA 02379
Paul J. Choquette, Jr. 7 Jackson Walkway TR
Providence, RI 02940
Peter S. Damon 500 West Main Rd. TR
Middletown, RI 02842
James L. Day 7931 Rae Boulevard
Victor, NY 14564
Janice P. DeBarros Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Peter B. Freeman 100 Alumni Drive TR
Providence, RI 02906
David H. Gulvin P.O. Box 543 D, SVP D, SVP D, SVP D, SVP
W. Bridgewater, MA 02379
Barbara A. Hassan P.O. Box 543 VP VP VP VP
W. Bridgewater, MA 02379
Clifford J. Hebert, Jr. One Liberty Square T,S D,VP,T,S,C T,S T,S T,C
Boston, MA 02109
Darcy L. Immerman 100 Foot of John Street
Lowell, MA 01852
Michael J. Hirsh P.O. Box 543 VP VP VP VP
W. Bridgewater, MA 02379
Edward J. Kaitz Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Kevin A. Kirby P.O Box 543 D, VP VP VP VP
W. Bridgewater, MA 02379
Larry A. Liebenow 1082 Davol Street, 5th Fl. TR
Fall River, MA 02720
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued Names of System Companies with which Connected
<CAPTION>
Part I. As of December 31, 1996. Blackstone
Eastern EUA Valley Newport Eastern
Utilities Service Electric Electric Edison
Associates Corporation Company Corporation Company
<S> <C> <C> <C> <C> <C> <C>
Edward T. Liston Boott Mills South D, VP
100 Foot of John Street
Lowell, MA 01852
Jacek Makowski One Center Plaza Ste 270 TR
Boston, MA 02108
Wesley W. Marple, Jr. 413 Hayden Hall TR
Northeastern University
Boston, MA 02115
Stephen Morgan Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Peter Oatman 2970 Wilderness Pl.
Boulder, CO. 80301
William F. O'Connor P.O. Box 543 VP
W. Bridgewater, MA 02379
Basil G. Pallone Boot Mills South
100 Foot of John Street
Lowell, MA 01852
Donald G. Pardus One Liberty Square TR, CH, CEO D, CH D, CH D, CH D, CH
Boston, MA 02109
Robert G. Powderly P.O. Box 543 EVP D, EVP D, EVP D, EVP D, EVP
W. Bridgewater, MA 02379
Leonard Rozek 2970 Wilderness Pl.
Boulder, CO. 80301
William A. Sifflard 20 Thurber Blvd
Smithfield, RI 02917
Margaret M. Stapleton P.O. Box 111 TR
Boston, MA 02117
John R. Stevens One Liberty Square TR, COO, P D, P D, VCH D, VCH D, VCH
Boston, MA 02109
Thomas N. Stoner, Jr. 2970 Wilderness Pl.
Boulder, CO 80301
W. Nicholas Thorndike 150 Dudley Street TR
Brookline, MA 02146
Mark S. White Boott Mills South
100 Foot of John Street
Lowell, MA 01852
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued
<CAPTION>
Part I. As of December 31, 1996. Names of System Companies with which Connected
Montaup EUA EUA Energy EUA EUA
Electric Cogenex Investment Ocean State Energy
Company Corporation Corporation Corporation Services, Inc.
<S> <C> <C> <C> <C> <C>
Russell A. Boss One Albion Road
Lincoln, RI 02865
J. Thomas Brett 275 Slater St., Ste 1700
Ottawa, Canada K1P 5H9
Richard M. Burns One Liberty Square, VP, AT, AC D, CM, AT D, VP, AT, AC AT
Boston, MA 02109
John D. Carney P.O. Box 543 D, EVP D, EVP D, EVP EVP D
W. Bridgewater, MA 02379
Paul J. Choquette, Jr. 7 Jackson Walkway D
Providence, RI 02940
Peter S. Damon 500 West Main Road
Middletown, RI 02842
James L. Day 7931 Rae Boulevard VP
Victor, NY 14564
Janice P. DeBarros Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Peter B. Freeman 100 Alumni Drive
Providence, RI 02960
David H. Gulvin P.O. Box 543 D, VP
W. Bridgewater, MA 02379
Barbara A. Hassan P.O. Box 543
W. Bridgewater, MA 02379
Clifford J. Hebert, Jr. One Liberty Square T,C T,C T,C T,S T,C
Boston, MA 02109
Michael J. Hirsh P.O. Box 543
W. Bridgewater, MA 02379
Darcy L. Immerman Boott Mills South VP
100 Foot of John Street
Lowell, MA 01852
Edward J. Kaitz Boott Mills South VP
100 Foot of John Street
Lowell, MA 01852
Kevin A. Kirby P.O Box 543 D, VP D, VP D,VP
W. Bridgewater, MA 02379
Larry A. Liebenow 1082 Davol Street, 5th Fl.
Fall River, MA 02720
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued
<CAPTION>
Part I. As of December 31, 1996. Names of System Companies with which Connected
Montaup EUA EUA Energy EUA EUA
Electric Cogenex Investment Ocean State Energy
Company Corporation Corporation Corporation Services, Inc.
<S> <C> <C> <C> <C> <C> <C>
Edward T. Liston Boott Mills South D, P
100 Foot of John Street
Lowell, MA 01852
Jacek Makowski One Center Plaza, Ste 270
Boston, MA 02108
Wesley W. Marple, Jr. 413 Hayden Hall D
Northeastern University
Boston, MA 02115
Stephen Morgan Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Peter Oatman 2970 Wilderness Pl.
Boulder, CO. 80301
William F. O'Connor P.O. Box 543
W. Bridgewater, MA 02379
Basil G. Pallone Boott Mills South EVP
100 Foot of John Street
Lowell, MA 01852
Donald G. Pardus One Liberty Square D, CH D, CH D, CH D, CH D,CH
Boston, MA 02109
Robert G. Powderly P.O. Box 543 D, EVP D, EVP D, EVP D, EVP D
W. Bridgewater, MA 02379
Leonard Rozek 2970 Wilderness Pl.
Boulder, CO. 80301
William A. Sifflard 20 Thurber Blvd VP
Smithfield, RI 02917
Margaret M. Stapleton P.O. Box 111 D
Boston, MA 02117
John R. Stevens One Liberty Square D, P D, VCH D, P D, P D, P
Boston, MA 02109
Thomas N. Stoner, Jr. 2970 Wilderness Pl.
Boulder, CO 80301
W. Nicholas Thorndike 150 Dudley Street D
Brookline, MA 02146
Mark S. White Boott Mills South VP, ACM, AC
100 Foot of John Street
Lowell, MA 01852
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS
<CAPTION>
Part I. As of December 31, 1996. Names of System Companies with which Connected
EUA EUA Northeast EUA Citizens EUA EUA
Cogenex- TransCapacity Energy Conservation Highland Bioten
Canada Inc. Inc. Management Inc. Services Corp. Corp. Inc.
<S> <C> <C> <C> <C> <C> <C> <C>
Russell A. Boss One Albion Road
Lincoln, RI 02865
J. Thomas Brett 275 Slater St. Ste 1700 D
Ottawa, Canada K1P5H9
Richard M. Burns One Liberty Square VP, CM,AT D, AT VP,CM CM,AT CM,AT D,AT
Boston, MA 02109
John D. Carney P.O. Box 543 EVP D, EVP
W. Bridgewater, MA 02379
Paul J. Choquette, Jr. 7 Jackson Walkway
Providence, RI 02940
Peter S. Damon 500 West Main Rd.
Middletown, RI 02842
James L. Day 7931 Rae Boulevard
Victor, NY 14564
Janice P. DeBarros Boott Mills South VP
100 Foot of John Street
Lowell, MA 01852
Peter B. Freeman 100 Alumni Drive
Providence, RI 02906
David H. Gulvin P.O. Box 543
W. Bridgewater, MA 02379
Barbara A. Hassan P.O. Box 543
W. Bridgewater, MA 02379
Clifford J. Hebert, Jr. One Liberty Square T, AS T,C T,C T,C T,C T,C
Boston, MA 02109
Michael J. Hirsh P.O. Box 543
W. Bridgewater, MA 02379
Darcy L. Immerman Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Edward J. Kaitz Boott Mills South
100 Foot of John Street
Lowell, MA 01852
Kevin A. Kirby P.O Box 543
W. Bridgewater, MA 02379
Larry A. Liebenow 1082 Davol Street, 5th Fl.
Fall River, MA 02720
</TABLE>
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued
<CAPTION>
Part I. As of December 31, 1996. Names of System Companies with which Connected
EUA EUA Northeast EUA Citizens EUA EUA
Cogenex- TransCapacity Energy Conservation Highland Bioten
Canada Inc. Inc. Management Inc. Services Corp. Corp. Inc.
<S> <C> <C> <C> <C> <C> <C> <C>
Edward T. Liston Boott Mills South P D, P D,EVP D,EVP
100 Foot of John Street
Lowell, MA 01852
Jacek Makowski One Center Plaza, Ste 270
Boston, MA 02108
Wesley W. Marple, Jr. 413 Hayden Hall
Northeastern University
Boston, MA 02115
Stephen Morgan Boott Mills South P
100 Foot of John Street
Lowell, MA 01852
Peter Oatman 2970 Wilderness Pl. VP
Boulder, CO. 80301
William F. O'Connor P.O. Box 543
W. Bridgewater, MA 02379
Basil G. Pallone Boott Mills South VP VP EVP EVP
100 Foot of John Stre et
Lowell, MA 01852
Donald G. Pardus One Liberty Square CH D, CH D, CH D D D,CH
Boston, MA 02109
Robert G. Powderly P.O. Box 543 D, EVP D,EVP
W. Bridgewater, MA 02379
Leonard Rozek 2970 Wilderness Pl. VP
Boulder, CO. 80301
William A. Sifflard 20 Thurber Blvd
Smithfield, RI 02917
Margaret M. Stapleton P.O. Box 111
Boston, MA 02117
John R. Stevens One Liberty Square VCH D, P D, VCH D D D,P
Boston, MA 02109
Thomas N. Stoner, Jr. 2970 Wilderness Pl. P
Boulder, CO 80301
W. Nicholas Thorndike 150 Dudley Street
Brookline, MA 02146
Mark S. White Boott Mills South VP,AT,ACM VP,ACM,AC VP,ACM,
100 Foot of John Street AC
Lowell, MA 01852
</TABLE>
ITEM 6. OFFICERS AND DIRECTORS - Continued
Part I. As of December 31, 1996.
KEY:
CH - Chairman of the Board T - Treasurer
VCH - Vice Chairman of the Board TR - Trustee
P - President CM - Comptroller
EVP - Executive Vice President AT - Assistant Treasurer
SVP - Senior Vice President S - Secretary
VP - Vice President AS - Assistant Secretary
C - Clerk
AC - Assistant Clerk
D - Director
CEO - Chief Executive Officer
COO - Chief Operating Officer
ACM - Assistant Comptroller
<TABLE>
ITEM 6. OFFICERS AND DIRECTORS (continued)
Part II. As of December 31, 1996.
<CAPTION>
Position Held
Name of Name and Location of in Financial Applicable
Officer or Director Financial Institution Institution Exemption Rule
(1) (2) (3) (4)
<S> <C> <C> <C>
Russell A. Boss Fleet National Bank Director Rule 70<F1>
Providence, RI
Fleet Bank of MA Director Rule 70<F1>
Boston, MA
Fleet Bank, N.A. Director Rule 70<F1>
Hartford, CT
Paul J. Choquette, Jr. Fleet Financial Group Director Rule 70<F1>
Providence, RI
Peter S. Damon Bank of Newport Trustee, Rule 70<F1>
President
and CEO
_____________________
(Note: In the answer to this Part II of Item 6, the phrase "financial
connection within the provisions of Section 17(c) of the Act" is
regarded as being limited by the definitions in Paragraph (h) of Rule
70 under the Act as in effect at December 31, 1996).
Part III.
<FN>
<F1> Information is set out below as to cash compensation paid by the
Association and its subsidiaries for the years 1996, 1995 and 1994 to
each of the five highest paid executive officers of each Company whose
aggregate cash compensation for the year exceeded $100,000.
</FN>
</TABLE>
<TABLE>
ITEM 6. PART III - OFFICERS AND DIRECTORS (continued)
<CAPTION>
Long-Term All
Compensation Other
Name and Annual Compensation Restricted Compen-
Principal Fiscal Incentive Stock sation
Position Year Salary Bonus Other(1) Awards(2) (3)
<S> <C> <C> <C> <C> <C> <C>
EUA Service Corporation
Donald G. Pardus 1996 $412,025 - $12,383 - $10,275
Chairman 1995 400,025 $85,000 13,696 $319,400 10,000
1994 390,025 100,000 13,083 - 9,750
John R. Stevens 1996 $321,425 - $8,636 - $8,015
President 1995 312,025 $68,000 7,300 $202,561 7,800
1994 300,025 80,000 13,475 - 7,500
Robert G. Powderly 1996 $176,025 - $10,210 - $4,383
Executive Vice 1995 168,025 $32,787 9,790 $71,024 4,200
President 1994 156,025 40,999 8,350 - 3,900
John D. Carney 1996 $169,525 - $10,018 - $4,103
Executive Vice 1995 155,775 $32,787 4,026 $72,750 3,894
President 1994 140,025 34,207 4,229 - 3,500
David H. Gulvin 1996 $145,125 - $6,958 - $3,606
Senior Vice 1995 140,025 $25,045 2,803 $54,924 3,500
President 1994 134,625 33,925 3,053 - 3,645
</TABLE>
Blackstone, Eastern Edison and Newport Electric
The Chief Executive Officer and the four other most highly compensated
executive officers of Blackstone, Newport and Eastern Edison hold the same or
similar positions with EUA Service and are not paid directly by any of
Blackstone, Newport or Eastern Edison. The information required by this item
is the same as shown above under EUA Service Corporation.
<TABLE>
ITEM 6. PART III - OFFICERS AND DIRECTORS (continued)
Long-Term All
Compensation Other
Name and Annual Compensation Restricted Compen-
Principal Fiscal Incentive Stock sation
Position Year Salary Bonus Other<F1> Awards<F4> <F3>
<S> <C> <C> <C> <C> <C> <C>
EUA Cogenex Corporation
Edward T. Liston 1996 $157,025 - $6,381 - $3,750
President 1995 153,640 - 1,890 $52,900 3,842
1994 131,920 - 3,464 - 3,271
Basil G. Pallone<F5> 1996 $125,025 - $6,401 - $3,125
Executive 1995 122,486 - 2,783 $42,504 3,062
Vice President 1994 102,525 - 2,783 - 2,562
Edward J. Kaitz<F5> 1996 $105,025 - $2,582 - $2,625
Vice President 1995 102,958 - 2,598 $22,540 2,573
Mark S. White 1996 $101,875 - $5,466 - $2,546
Vice President
William A. Sifflard 1996 $101,025 - $2,942 - $2,525
Vice President
___________________
<FN>
<F1> Represents amounts reimbursed for tax liability accruing as a result of
personal use of company-owned automobiles.
<F2> Aggregate amount and value (including the value reflected in the table
under "Restricted Stock Awards") of shares held under Association's
Restricted Stock Plan to the officers listed above are as follows: Mr.
Pardus, 24,194 shares, including 13,887 shares granted in 1995, $420,371;
Mr. Stevens, 16,905 shares, including 8,807 shares granted in 1995,
$293,724; Mr. Powderly, 6,357 shares, including 3,088 shares granted in
1995, $110,453; Mr. Carney, 6,138 shares, including 3,163 shares granted
in 1995, $106,648; and Mr. Gulvin, 4,919 shares, including 2,388 shares
granted in 1995, $85,468. Dividends are paid on these shares.
<F3> Contributions made under the Association's Employees' Savings Plan.
<F4> Aggregate amount and value (including the value reflected in the table
under "Restricted Stock Awards") of shares held under Restricted Stock
Plans to the officers listed above are as follows: Mr. Liston, of the 2,300
shares granted in 1995, 1,534 shares remain held, $26,653; Mr. Pallone, of
the 1,848 shares granted in 1995, 1,232 shares remain held, $21,406; Mr.
Kaitz, of the 980 shares granted in 1995, 654 remain held, $11,363; Mr.
White, of 1,198 shares granted in 1995, 799 shares remain held, $13,883;
Mr. Sifflard, of 900 shares granted in 1995, 600 shares remain held,
$10,425. Cogenex stock awards vest 1/3 annually in each of the three years
subsequent to year of the award. Dividends are paid on these shares.
<F5> Terminated employment effective at close of business December 31, 1996.
</FN>
</TABLE>
(b) Securities Interest
<TABLE>
Common Shares of the Association
Beneficially Owned at January 3, 1997<F1>
<CAPTION>
Executive
Employees Stock
Jointly Savings Grant
Individual Owned<F2> Plan Plan Total
<S> <C> <C> <C> <C> <C>
Russell A. Boss 1,000 - - - 1,000<F3>
Richard M. Burns 364 - 615 3,886 4,865
John D. Carney - - 1,387 6,138 7,525
Paul J. Choquette 1,608 - - - 1,608
Peter S. Damon 200 910 - - 1,110
Peter B. Freeman 2,379 - - - 2,379
David H. Gulvin 1,718 285 1,321 4,919 8,243
Clifford J. Hebert, Jr. 1,576 - 1,927 3,112 6,615
Kevin A. Kirby 265 - 995 1,755 3,015
Larry A. Liebenow - 1,000 - - 1,000
Edward T. Liston 2,756 - 1,301 1,534 5,591
Wesley W. Marple 1,885 - - - 1,885<F4>
Jacek Makowski - 200 - - 200
Donald G. Pardus 2,642 8,079 5,134 24,194 40,049
Robert G. Powderly 1,387 212 1,854 6,357 9,810
Margaret M. Stapleton 1,449 - - - 1,449
John R. Stevens 1,326 4,501 1,944 16,905 24,676
W. Nicholas Thorndike 2,146 - - - 2,146
Trustees and Executive
Officers as a Group 71,025 33,887 28,863 74,364 208,139<F5>
<FN>
<F1> Unless otherwise indicated, beneficial ownership is based on sole
investment and voting power. Each individual's ownership represents less
than two-tenths of one percent of the outstanding common shares of the
Association.
<F2> Jointly owned with spouse.
<F3> In addition, Mr. Boss owns 5 shares of Blackstone's 4.25% Preferred Stock.
<F4> In addition, Mr. Marple's spouse owns 263 EUA common shares. Mr. Marple
disclaims any beneficial interest in such shares.
<F5> Represents one percent of the outstanding common shares of the Association.
</FN>
</TABLE>
(c) Contracts and Transactions with System Companies
See Section (e) below regarding severance agreements.
(d) Indebtedness to System Companies
None
(e) The Employees' Retirement Plan of Eastern Utilities Associates and its
Affiliated Companies (the "Pension Plan") is a tax-qualified defined benefit
plan available to employees who have completed one year of service and have
attained the age of twenty-one. All of the officers referred to in the Summary
Compensation Table above participate in the Pension Plan. Trustees who are not
also employees of the EUA System are not covered by the Pension Plan. The
benefits of participants become fully vested after five years of service.
Annual lifetime benefits are determined under formulas applicable to all
employees, regardless of position, and the amounts depend on length of credited
service and salaries prior to retirement. Benefits are equal to one and six
tenths percent of salaries (averaged over the four years preceding retirement)
for each year of credited service up to thirty-five, reduced for each year by
one and two tenths percent of the participants' estimated age sixty-five Social
Security benefit, plus seventy-five hundredths percent of salaries for each
year of credited service in excess of thirty-five years up to the Pension
Plan maximum of forty years.
Any contributions to provide benefits under the Pension Plan are made by the
EUA System in amounts determined by the Pension Plan's actuaries to meet the
funding standards established by the Employee Retirement Income Security Act of
1974, as amended. Any contributions are actuarially determined and cannot
appropriately be allocated to individual participants. The annual benefits
shown in the table below are straight life annuity amounts, without reduction
for primary Social Security benefits as described above. Federal law limits
the annual benefits payable from qualified pension plans in the form of a life
annuity, after reduction for Social Security benefits, to $125,000 (for 1997)
plus adjustments for increases in the cost of living. The number of years of
service credited at present under the Pension Plan to Messrs. Pardus, Stevens,
Carney, Powderly and Gulvin are thirty-four, thirty-one, thirty, seventeen and
thirty-seven, respectively.
Average Years of Service
Annual Salary 15 20 25 30 35 40
$100,000 $ 24,000 $ 32,000 $ 40,000 $ 48,000 $ 56,000 $ 59,750
200,000 48,000 64,000 80,000 96,000 112,000 119,500
300,000 72,000 96,000 120,000 144,000 168,000 179,250
400,000 96,000 128,000 160,000 192,000 224,000 239,000
500,000 120,000 160,000 200,000 240,000 280,000 298,750
600,000 144,000 192,000 240,000 288,000 336,000 358,500
The Association has a Key Executive Plan for certain officers of the
Association and its subsidiaries. This plan provides for the annual payment of
supplemental retirement benefits equal to 25% of the officer's base salary when
he retires, for a period of fifteen (15) years following the date of
retirement. In addition, in the event of the death of the participant prior to
retirement an amount equal to 200% of the officer's base salary at that time
will be paid to his beneficiary. A grantor trust has been established by the
Association to help ensure the performance of its payment obligations under the
Key Executive Plan. Any amounts not covered by trust payments or otherwise
will be paid from funds available to the EUA System.
The Association maintains non-qualified, unfunded retirement plans ("The
Restoration Plans") to restore benefits under the qualified plans' formulas
which are not covered under the qualified plan trusts due to federal
limitations on either earnings, contributions or benefits. Payments or
contributions which exceed the applicable federal limitations are made outside
the qualified plans in the same manner and under the same conditions as are
applicable to benefits payable from, or contributions payable to, the qualified
plans. A grantor trust has been established by the Association to help ensure
the performance of its payment obligations under these plans. Any amounts not
covered by trust payments or otherwise will be paid from funds available to the
EUA System.
Severance agreements with executive officers of the Association and certain
of its affiliates provide that an officer's rate of compensation, benefits,
position, responsibilities and other conditions of employment will not be
reduced during the term of the agreement, which is thirty-six months commencing
upon the date on which a Change in Control, as defined in the agreements, of
the Association occurs. If within thirty-six months after a Change in Control
the officer's employment is terminated for any reason other than Cause, as
defined in the agreements, the Association will, (i) pay the officer within
five business days a lump-sum cash amount generally equal to the present value
of the additional wages and retirement benefits that the executive would have
received in return for completing an additional three years of service, (ii)
continue or vest certain fringe benefits and common share grants, (iii)
reimburse legal fees and expenses incurred as a result of the termination or to
enforce the provisions of the severance agreement and (iv) reimburse a portion
of the taxes on certain of the foregoing payments, including any amount
contributing a "parachute payment" under the Internal Revenue Code. If
the officer leaves the employ of the Association or a subsidiary following a
reduction in his position, compensation, responsibilities, authority or other
benefits existing prior to the Change in Control, or suffers a relocation of
regular employment of more than fifty miles, such departure will be deemed to
be a termination for reason other than Cause.
(f) Rights to Indemnity
Article 32 of EUA's Declaration of Trust, as set forth in Exhibit B-1(a) to
Form U5S of EUA for the year ended December 31, 1986, is incorporated herein by
reference.
<TABLE>
ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS
<CAPTION>
Accounts Charged
if any, Per Books
Name of Recipient of Disbursing
Name of Company or Beneficiary Purpose Company Amount
(1) (2) (3) (4) (5)
<S> <C> <C> <C> <C>
Blackstone Tillinghast, Collins Lobbying 426.4 $17,401
& Graham Expenditures
Blackstone David Correira, Esq. Lobbying 426.4 $21,000
Expenditures
Blackstone United Way Donations 426.1 $13,500
Blackstone Rhode Island Good Donations 426.1 $10,252
Neighbor Energy Fund
Blackstone Miscellaneous Donations 426.1 $20,989
Donations less
than $10,000
Blackstone Edison Electric Lobbying 426.4 $5,928
Institute Expenditures
Blackstone Miscellaneous Lobbying 426.1 $235
Expenditures
Eastern Edison Stonehill College Donations 426.1 $15,000
Eastern Edison Edison Electric Lobbying 426.4 $12,074
Institute Expenditures
Eastern Edison United Way Donations 426.1 $23,000
Eastern Edison Miscellaneous Donations 426.1 $8,540
Donations less
than $10,000
Newport United Way Donations 426.1 $12,000
Newport Miscellaneous Donations 426.1 $14,530
Donations less
than $10,000
Newport Edison Electric Lobbying 426.4 $2,094
Institute Expenditures
Newport Tillinghast, Collins Lobbying 426.4 $7,640
& Graham Expenditures
Newport David Correira, Esq. Lobbying 426.4 $9,000
Expenditures
</TABLE>
<TABLE>
ITEM 7. CONTRIBUTIONS AND PUBLIC RELATIONS (continued)
Accounts Charged
If any, Per Books
Name of Recipient of Disbursing
Name of Company of Beneficiary Purpose Company Amount
(1) (2) (3) (4) (5)
<S> <C> <C> <C> <C>
Montaup Miscellaneous Donations 426.1 $12,680
Donations Less than
$10,000
Montaup Seabrook #1 Lobbying 426.4 $1,446
Expenditures
Montaup Millstone #3 Lobbying 426.4 $486
Expenditures
Montaup Edison Electric Lobbying 426.4 $196
Institute Expenditures
</TABLE>
ITEM 8. SERVICE, SALES AND CONSTRUCTION CONTRACTS
Part I.
None
Part II.
No
Part III.
No
ITEM 9. WHOLESALE GENERATORS AND FOREIGN UTILITY COMPANIES
None
ITEM 10. FINANCIAL STATEMENTS AND EXHIBITS (*Filed herewith)
The following financial statements and supplemental schedules are filed as a
part of this Annual Report.
FINANCIAL STATEMENTS
1 - Consolidating Balance Sheets - December 31, 1996 of Eastern Utilities
Associates and Subsidiary Companies, Eastern Edison Company and
Subsidiary, EUA Cogenex Corporation and Subsidiaries, and EUA Energy
Investment Corporation and Subsidiaries.
2 - Consolidating Statements of Capitalization - December 31, 1996 of
Eastern Utilities Associates and Subsidiary Companies, Eastern Edison
Company and Subsidiary, EUA Cogenex Corporation and Subsidiaries, and
EUA Energy Investment Corporation and Subsidiaries.
3 - Consolidating Income Statements for the year ended December 31, 1996 of
Eastern Utilities Associates and Subsidiary Companies, Eastern Edison
Company and Subsidiary, EUA Cogenex Corporation and Subsidiaries, and
EUA Energy Investment Corporation and Subsidiaries.
4 - Consolidating Statements of Cash Flows for the year ended December 31,
1996 of Eastern Utilities Associates and Subsidiary Companies, Eastern
Edison Company and Subsidiary, EUA Cogenex Corporation and
Subsidiaries, and EUA Energy Investment Corporation and Subsidiaries.
5 - Consolidating Statements of Retained Earnings and Other Paid-In Capital
for the year ended December 31, 1996 of Eastern Utilities Associates
and Subsidiary Companies, Eastern Edison Company and Subsidiary, EUA
Cogenex Corporation and Subsidiaries, and EUA Energy Investment
Corporation and Subsidiaries.
6 - Notes to Consolidated Financial Statements (page 56).
Exhibits
Exhibit A - (incorporated herein by reference)
A-1 Form 10-K of EUA, Blackstone and Eastern Edison for 1996 (including
Annual Reports to Shareholders and Proxy Statement, portions of which
are incorporated therein by reference; File Nos. 1-5366, 0-8480, and
0-2602).
Exhibit B -
B-1 Declaration of Trust of EUA, dated April 2, 1928, as amended (Exhibit
A-3, File No. 70-3188; Exhibit 1 to EUA's 8-K reports for April in each
of the years 1957, 1962, 1966, 1968, 1972, and 1973, File No. 1-5366;
Exhibit A-1 (a), Amendment No. 2 to Form U-1, File No. 70-5997, Exhibit
4-3, Registration No. 2-72589; Exhibit 1 to Certificate of
Notification, File No. 70-6713; Exhibit 1 to Certificate of
Notification, File No. 70-7084; Exhibit 3-2, Form 10-K of EUA for 1987,
File No. 1-5366).
B-2 Charter of Blackstone (formerly Blackstone Valley Gas and Electric
Company), as amended (Exhibit (a)(1) and (a)(2), Form 1-A filed March,
1957, File No. 24B-970; Exhibit A-2, Form U5S of EUA for the year 1958,
File No. 1-5366; Exhibit (1), Form 8-K for March, 1965 File No. 0-2602;
Exhibit A-2, Form U5S of EUA for the year 1966, File No. 1-5366 and
Exhibit (1), Form 8-K for June 1976, File No. 0-2602; Exhibit (1),
Form 10-Q for quarter ended June 30, 1988, File No. 0-2602); Exhibit
3-3, Form 10-K of Blackstone for 1989, File No. 0-2602).
B-3 By-laws of Blackstone, (Exhibit A-2, Form U-1 filed October 16, 1990,
File No. 70-7769).
B-4 Restated and Amended Articles of Organization of Eastern Edison,
(Exhibit B-4 to Form U5S of EUA for 1993).
B-5 By-laws of Eastern Edison, as amended (Exhibit 3-2, Form 10-K of
Eastern Edison for 1980, File No. 0-8480).
B-6 Charter of Montaup Electric Company ("Montaup"), as amended (Exhibits
A-6(a), A-6(b) and A-6(c) to Post Effective Amendment No. 18 to Form
U-1, File No. 70-5388; Exhibit 3, Form 10-K of EUA for 1977, File No.
1-5366; and Exhibit 6 to Form U5S of EUA for 1979).
B-7 By-laws of Montaup, as amended (Exhibit 4, Form 10-K of EUA for 1977,
File No. 1-5366).
B-8 Charter of EUA Service Corporation (Exhibit A-1, File No. 37-67).
B-9 By-laws of EUA Service Corporation, as amended (Exhibit 2, Form 10-K of
EUA for 1977, File No. 1-5366).
B-10 Charter of EUA Cogenex Corporation, as amended (Exhibit A-1, File No.
70-7287, Exhibit B-15 to Form U5S of EUA for 1986).
B-11 By-Laws of EUA Cogenex Corporation, as amended (Exhibit A-2, File No.
70-7287, to Form U5S of EUA for 1986).
B-12 Agreement of Limited Partnership among Onsite Energy and EUA Cogenex
Corporation dated as of November 30, 1988 (Exhibit A-4 to Post-
Effective Amendment No. 3 of Form U-1, File No. 70-7825, dated October
21, 1991).
B-13 EUA/FRCII Energy Associates Agreement of Limited Partnership dated as
of September 19, 1989 (Exhibit A-5 to Post-Effective Amendment No. 3
of Form U-1, File No. 70-7825, dated October 21, 1991).
B-14 Micro Utility Partners of America, L.P., Agreement of Limited
Partnership dated as of December 20, 1988 (Exhibit A-6 to Post-
Effective Amendment No. 3 of Form U-1, File No. 70-7825, dated October
21, 1991).
B-15 Energy Capital and Services I, LP, Agreement of Limited Partnership
dated as of April 10, 1990 (Exhibit A-7 to Post-Effective Amendment
No. 3 of Form U-1, File No. 70-7825, dated October 21, 1991).
B-16 EUA/SYCOM General Partnership Agreement dated as of September 20, 1989
(Exhibit A-9 to Post-Effective Amendment No. 3 of Form U-1, File No.
70-7825, dated October 21, 1991).
B-17 EUA/Highland Energy Partners, Agreement of Limited Partnership dated
as of September 27, 1990 (Exhibit A-10 to Post-Effective Amendment
No. 3 of Form U-1, File No. 70-7825, dated October 21, 1991).
B-18 Articles of Organization of EUA Energy Investment Corporation (Exhibit
B-14 to Form U5S of EUA for 1987).
B-19 By-Laws of EUA Energy Investment Corporation (Exhibit B-15 to Form U5S
of EUA for 1987).
B-20 Articles of Organization of EUA Ocean State Corporation (Exhibit B-16
to Form U5S of EUA for 1988).
B-21 By-Laws of EUA Ocean State Corporation (Exhibit B-17 to Form U5S of
EUA for 1988).
B-22 Charter of Newport, as amended (Exhibit B-18 to Form U5S of EUA for
1990).
B-23 By-Laws of Newport (Exhibit B-19 to Form U5S of EUA for 1990).
B-24 Ocean State Power Amended and Restated General Partnership Agreement
among EUA Ocean State, Ocean State Power Company, TCPL Power Ltd.,
Narragansett Energy Resources Company and NECO Power, Inc.
(collectively, the "OSP Partners") dated as of December 2, 1988, as
amended March 27, 1989 (Exhibit 10-107, Form 10-K of EUA for 1989,
File No. 1-5366, Exhibits 10-3.12, 10-4.12 and 10-5.12, Form 10K of
EUA for 1994, File No. 1-5366).
B-25 Ocean State Power II Amended and Restated General Partnership
Agreement among EUA Ocean State, JMC Ocean State Corporation, Makowski
Power, Inc., TCPL Power Ltd., Narragansett Energy Resources Company
and Newport Electric Power Corporation (collectively, the "OSP II
Partners") dated as of September 29, 1989 (Exhibit 10-110, Form 10-K
of EUA for 1989, File No. 1-5366).
B-26 Articles of Organization of EUA Transcapacity, Inc. (Exhibit A-1 File
No. 70-8283).
B-27 By-Laws of EUA Transcapacity, Inc. (Exhibit A-2 File No. 70-8283).
B-28 Amended and Restated Agreement of Limited Partnership of TransCapacity
Limited Partnership (Exhibit A-2 File No. 70-8283).
B-29 Articles of Incorporation of Cogenex Canada (Exhibit A-1 File No. 70-
8441).
B-30 By-Law No.1 of Cogenex Canada (Exhibit A-2 File No. 70-8441).
B-31 Articles of Organization of NEM (Exhibit A-2 File No. 70-8255).
B-32 By-Laws of NEM (Exhibit A-3 File No. 70-8255).
B-33 Articles of Organization of EUA Highland (Exhibit A-2 File No.
70-8523).
B-34 By-Laws of EUA Highland (Exhibit A-3 File No. 70-8523).
B-35 Articles of Organization of EUA Citizens Conservation Service, Inc.
(Exhibit A-1 File No. 70-8473).
B-36 By-Laws of EUA Citizens Conservation Services, Inc. (Exhibit A-2 File
No. 70-8473).
B-37 Articles of Organization of EUA Bioten, Inc. (Exhibit A-1 File No.
70-8617).
B-38 By-laws of EUA Bioten, Inc. (Exhibit A-2 File No. 70-8617).
B-39 Certificate of Formation of APS Cogenex L.L.C. (Exhibit A-1 File No.
70-8663).
B-40 Limited liability company operating agreement for APS Cogenex L.L.C.
(Exhibit B-2 File No. 70-8663).
B-41 1995 Agreement of General Partnership of BIOTEN General Partnership
(Exhibit A-3 File No. 70-8617).
B-42 Articles of Organization of Energy Services (Exhibit A-1 File No.
70-8769).
B-43 By-Laws of EUA Energy Services, Inc. (Exhibit A-2 File No. 70-8769).
B-44 Operating Agreement of Duke/Louis Dreyfus Energy Services (New
England) L.L.C. (Exhibit B-1 File No. 70-8769 filed under confidential
treatment request).
Exhibit C -
(a)
C-1 Form of 8% Debenture Bonds due 2000 of Montaup (Exhibit 4-10,
Registration File No. 2-41488).
C-2 Form of 8-1/4% Debenture Bonds due 2003 of Montaup (Exhibit B-3, Form
U5S of EUA for year 1973).
C-3 Form of 14% Debenture Bonds due 2005 of Montaup (Exhibit 4-11,
Registration No. 2-55990).
C-4 Form of 10% Debenture Bonds due 2008 of Montaup (Exhibit 5-3,
Registration No. 2-65785).
C-5 Form of 16-1/2% Debenture Bonds due 2010 of Montaup (Exhibit 4-11,
Form 10-K of EUA for 1980, File No. 1-5366).
C-6 Form of 12-3/8% Debenture Bonds due 2013 of Montaup (Exhibit 4-13,
Form 10-K of EUA for 1983, File No. 1-5366).
C-7 Form of 9% Debenture Bonds due 2020 of Montaup (Exhibit 4-10, Form
10-K of Eastern Edison for 1990, File No. 0-8480).
C-8 Form of 9-3/8% Debenture Bonds due 2020 of Montaup (Exhibit 4-11, Form
10-K of Eastern Edison for 1990, File No. 0-8480).
C-9 Indenture of First Mortgage and Deed of Trust dated as of September 1,
1948 of Eastern Edison (Exhibit 4-1, Registration No. 2-77468), and
twenty-six supplements thereto (Exhibit A, File No. 70-3015; Exhibit
A-3, File No. 70-3371; Exhibit C to Certificate of Notification, File
No. 70-3371; Exhibit D to Certificate of Notification, File No. 3619;
Exhibit D to Certificate of Notification, File No. 70-3798; Exhibit F
to Certificate of Notification, File No. 70-4164; Exhibit D to
Certificate of Notification, File No. 70-4748; Exhibit C to
Certificate of Notification, File No. 70-5195; Exhibit F to
Certificate of Notification, File No. 70-5379; Exhibit C to
Certificate of Notification, File No. 70-5719; Exhibit 5-24
Registration No. 2-65785; Exhibit F to Certificate of Notification,
File No. 70-6463; Exhibit C to Certificate of Notification, File No.
70-6608; Exhibit C to Certificate of Notification, File No. 70-6737;
Exhibit F to Certificate of Notification, File No. 70-6851; Exhibit
4-31, Form 10-K of EUA for 1984, File No. 1-5366; Exhibit F to
Certificate of Notification, File No. 70-7254; Exhibit C to
Certificate of Notification, File No. 70-7373; Exhibit C to
Certificate of Notification, File No. 70-7373; Exhibit C to
Certificate of Notification, File No. 70-7373; Exhibit F to
Certificate of Notification, File No. 20-7511; Exhibit 4-34, Form
10-K of Eastern Edison for 1990, File No. 0-8480; Exhibit 4-24, Form
10-K of Eastern Edison for 1992, File No. 0-8480; Exhibit 4-35, Form
10-K of Eastern Edison for 1990, File No. 0-8480; Exhibit 4-36, Form
10-K of Eastern Edison for 1990, File No. 0-8480; Exhibit C-33 to
Form U5S of EUA for 1993; Exhibit C-34 to Form U5S of EUA for 1993;
Exhibit 4-29.08, Form 10-K of Eastern Edison for 1994, File No.
0-8480).
C-10 Form of Eastern Edison Medium Term Note (Exhibit 4-36, Form 10-K of
Eastern Edison for 1990, File No. 0-8480).
C-11 First Mortgage Indenture and Deed of Trust dated as of December 1,
1980 of Blackstone (Exhibit A, Form 8-K of EUA dated January 14, 1981,
File No. 1-5366).
C-12 First Supplemental Indenture dated as of August 1, 1989 of Blackstone
(Exhibit 4-33, Form 10-K of EUA for 1989, File 1-5366).
C-13 Second Supplemental Indenture dated as of November 26, 1990 of
Blackstone (Exhibit 4-3, Form 10-K of BVE for 1990, File No. 0-2602).
C-14 Loan Agreement between Rhode Island Industrial Facilities Corporation
and Blackstone dated as of December 1, 1984 (Exhibit 10-72, Form 10-K
of EUA for 1984, File No. 1-5366).
C-15 Note Purchase Agreement dated as of January 13, 1988 of Service
(Exhibit 4-38, Form 10-K of EUA for 1987, File No. 1-5366).
C-16 Note Agreement dated as of June 28, 1990 of EUA Cogenex with the
Prudential Insurance Company of America (Exhibit 4-46, Form 10-K of
EUA for 1990, File No. 1-5366).
C-17 Note Agreement dated as of October 29, 1991 between EUA Cogenex and
Prudential Insurance Company of America (Exhibit 4-55, Form 10-K of
EUA for 1991, File No. 1-5366).
C-18 Note Purchase Agreement dated as of September 29, 1992 of EUA Cogenex
and the Prudential Life Insurance Company of America (Exhibit 4-44 to
Form 10-K of EUA for 1992, File No. 1-5366).
C-19 Indenture dated September 1, 1993 between EUA Cogenex and the Bank of
New York as Trustee (Exhibit 4-4.10, Form 10-K of EUA for 1993, File
No. 1-5366).
C-20 Guaranty, dated June 28, 1990, made by Eastern Utilities Associates in
favor of The Prudential Insurance Company of America (Exhibit B-2 to
Form U-1, File No. 70-7655, dated June 14, 1990).
C-21 Indenture of First Mortgage dated as of June 1, 1954 of Newport, as
supplemented on August 1, 1959, April 1, 1962, October 1, 1964, April
1, 1967, September 1, 1969, September 1, 1970, June 1, 1978, October
1, 1978, May 1, 1986, December 1, 1987 and November 1, 1989 (Exhibit
4-49, Form 10-K of EUA for 1990, File No. 1-5366).
C-22 United States Government Small Business Administration Loan to Newport
entitled, "Base Closing Economic Injury Loan", signed May 30, 1975 and
amended on October 6, 1983 (Exhibit 4-50, Form 10-K of EUA for 1990,
File No. 1-5366).
C-23 Indenture of Second Mortgage dated as of September 1, 1982 of Newport,
as supplemented on December 1, 1988 (Exhibit 4-51, Form 10-K of EUA
for 1990, File No. 1-5366).
C-24 Note Purchase Agreement dated as of January 16, 1992 between EUA Ocean
State Corporation and John Hancock Mutual Life Insurance Company
(Exhibit 4-56, Form 10-K of EUA for 1991, File No. 1-5366).
C-25 Guaranty, dated January 16, 1992 made by EUA in favor of John Hancock
Mutual Life Insurance Company (Exhibit 10-125, Form 10-K of EUA for
1991, File No. 1-5366).
C-26 Trust Agreement dated as of July 1, 1993 between Massachusetts
Industrial Finance Agency and Shawmut Bank, N.A. (filed as Exhibit
10-1.08 to Eastern Edison's Form 10-K for 1993, File No. 0-8480).
C-27 Loan Agreement dated as of July 1, 1993 between Massachusetts
Industrial Finance Agency and Eastern Edison (filed as Exhibit 10-2.08
to Eastern Edison's Form 10-K for 1993, File No. 0-8480).
C-28 Power Purchase Agreement entered into as of September 20, 1993 by and
between Meridian Middleboro Limited Partnership and Eastern Edison
Company (filed as Exhibit 10-3.08 to Eastern Edison's Form 10-K for
1993, File No. 0-8480).
C-29 Inducement Letter dated July 14, 1993 from Eastern Edison to the
Massachusetts Industrial Finance Agency and Goldman, Sachs & Company
and Citicorp Securities Markets, Inc. (filed as Exhibit 10-4.08 to
Eastern Edison's Form 10-K for 1993, File No. 0-8480).
C-30 Indenture dated September 1, 1993 between EUA Cogenex and the Bank of
New York as Trustee (filed as Exhibit 4-4.10 to EUA's Form 10-K for
1993, File No. 1-5366).
C-31 Loan Agreement between the Rhode Island Port Authority and Economic
Development Corporation and Newport Electric Corporation dated as of
January 6, 1994 (filed as Exhibit 4-14.14 to EUA's Form 10-K for 1993,
File No. 1-5366).
C-32 Trust Indenture between the Rhode Island Authority and Economic
Development Corporation and Newport Electric Corporation dated as of
January 1, 1994 (filed as Exhibit 4-5.14 to EUA's Form 10-K for 1993,
File No. 1-5366).
C-33 Letter of Credit and Reimbursement Agreement among Newport and the
Canadian Imperial Bank of Commerce dated January 6, 1994 (filed as
Exhibit 4-6.14 to EUA's Form 10-K for 1993, File No. 1-5366).
C-34 Memorandum of understanding by and between Canal Electric Company and
Montaup Electric Company dated September 23, 1993 (Exhibit 10-39.05,
Eastern Edison 10-K for 1993, File No. 0-8480).
C-35 Ancillary Agreement by and between Algonquin Gas Transmission Company,
Canal Electric Company and Montaup Electric Company dated October 8,
1993 (Exhibit 10-40.05 of Eastern Edison 10-K for 1993, File No.
0-8480).
(b) None
*Exhibit D - Tax allocation agreement for 1997 pursuant to Rule 45(c).
Exhibit E - Other documents. None.
Exhibit F - Supporting schedules. None.
*Exhibit G - Financial Data Schedules. Filed electronically via EDGAR.
Exhibit H - None.
Exhibit I - None.
SIGNATURE
The undersigned system company has duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized, pursuant to
the requirements of the Public Utility Holding Company Act of 1935.
EASTERN UTILITIES ASSOCIATES
and Subsidiaries
By /s/ Clifford J. Hebert, Jr.
Clifford J. Hebert, Jr.
(Treasurer)
April 30, 1997
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
ASSETS
<CAPTION>
Blackstone
Eastern EUA Valley
EUA Utilities Service Electric
Consolidated Eliminations Associates Corporation Company
<S> <C> <C> <C> <C> <C>
Utility plant and other inv.:
Utility plant in service $1,067,056,370 $ $ $32,924,212 $138,660,925
Less acc. prov. for deprec.
and amortization 350,816,615 12,719,559 51,951,917
Net utility plant in service 716,239,755 20,204,653 86,709,008
Construction work in progress 3,839,078 133,826 705,107
Net utility plant 720,078,833 20,338,479 87,414,115
Non-utility property 110,114,889 70,206
Less acc. prov. for deprec. 37,461,599 24,316
Net non-utility property 72,653,290 45,890
Inv. in subs. (at equity) 71,626,024 351,230,893 351,230,893
Excess carrying values of inv.
in subsidiaries 17,488 17,488
Other 68,013,736 1,000
Total Utility Plant and Other 932,389,371 351,230,893 351,240,381 20,338,479 87,460,005
Current Assets:
Cash and temp. cash inv. 12,454,862 111,991 4,087,520 798,008
Notes receivable 24,690,590 28,644,994 28,644,994
Accounts receivable - Net:
Customers 66,088,563 11,140,885
Accrued unbilled revenue 10,282,095 1,195,861
Others 13,781,571 2,908,811 3,675,738 699,882 2,540,635
Accounts rec. - ass. cos. 0 31,578,280 572,364 4,738,260 482,037
Mats and Supplies (at avg cost):
Fuel 6,923,811
Plant mats. and op. supplies 7,207,179 52,502 872,689
Other current assets 7,668,440 26,562 586,453 417,306
Total Current Assets 149,097,111 63,132,085 33,031,649 10,164,617 17,447,421
Deferred Debits:
Unamortized debt expense 4,624,621 84,396 638,899
Unrecovered regulatory plant 41,915,275
Other deferred debits 129,003,419 15,661,024 998,990 26,766,241
Total Deferred Debits 175,543,315 15,661,024 1,083,386 27,405,140
Total Assets 1,257,029,797 414,362,978 399,942,054 31,586,482 132,312,566
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
ASSETS (CONTINUED)
<CAPTION>
EUA
Newport Eastern EUA Energy EUA EUA
Electric Edison Cogenex Investment Energy Ocean State
Corporation Consol. Consol. Consol. Corp. Corp.
<S> <C> <C> <C> <C> <C> <C>
Utility plant and other inv.:
Utility plant in service $80,284,782 $815,186,451 $ $ $ $
Less acc. prov. for deprec.
and amortization 24,681,407 261,463,732
Net utility plant in service 55,603,375 553,722,719
Construction work in progress 194,686 2,805,459
Net utility plant 55,798,061 556,528,178
Non-utility property 2,715,349 105,637,560 1,691,774
Less acc. prov. for deprec. 9,697 36,636,495 791,091
Net non-utility property 2,705,652 69,001,065 900,683 0
Inv. in subs. (at equity) 13,209,511 37,434 5,780,491 52,598,588
Excess carrying values of inv.
in subsidiaries
Other 94,789 67,569,816 200,872 146,477 782
Total Utility Plant and Other 55,798,061 572,538,130 136,608,315 6,882,046 146,477 52,599,370
Current Assets:
Cash and temp. cash inv. 291,838 2,104,747 4,662,227 387,629 560 10,342
Notes receivable 19,973,139 4,717,451
Accounts receivable - Net:
Customers 4,950,607 27,632,767 22,364,304
Accrued unbilled revenue 710,072 8,376,162
Others 895,797 3,464,380 3,780,570 1,605,734 27,646
Accounts rec. - ass. cos. 223,771 25,485,628 76,220
Mats and Supplies (at avg cost):
Fuel 80,078 6,843,733
Plant mats. and op. supplies 763,956 3,805,026 1,713,006
Other current assets 360,082 3,598,199 2,591,234 84,435 4,169
Total Current Assets 8,276,201 81,310,642 55,160,700 6,795,249 28,206 14,511
Deferred Debits:
Unamortized debt expense 467,257 2,456,039 558,402 419,628
Unrecovered regulatory plant 41,915,275
Other deferred debits 5,403,820 76,863,010 2,833,293 477,041
Total Deferred Debits 5,871,077 121,234,324 3,391,695 477,041 0 419,628
Total Assets 69,945,339 775,083,096 195,160,710 14,154,336 174,683 53,033,509
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1996
LIABILITIES
<CAPTION>
Blackstone
Eastern EUA Valley
EUA Utilities Service Electric
Consol Eliminations Associates Corporation Company
<S> <C> <C> <C> <C> <C>
Capitalization:
Common equity $371,812,933 $351,230,893 $371,856,845 $3,220,835 $21,719,956
Non-redeem. pref. stock of subs 6,900,625 6,129,500
Redeemable preferred stock of
subsidiaries - net 29,664,502
Pref. stock redemption cost (2,629,731)
Long-term debt - net 406,336,687 9,000,000 35,000,000
Total Capitalization 812,085,016 351,230,893 371,856,835 12,220,835 77,361,582
Current Liabilities:
LT debt due within one year 27,512,409 1,100,000 1,500,000
Notes payable 51,847,759 28,644,994 23,837,000 735,000
Accounts payable 33,811,169 23,205 883,757 509,410
Acc payable-ass. cos. 0 31,137,789 34,094 529,267 16,759,353
Customer deposits 3,528,545 1,113,164
Taxes accrued 3,004,422 2,908,811 5,687 1,414,546
Interest accrued 9,612,070 440,491 111,417 522,968 898,610
Dividends accrued 79,395 72,187
Other current liabilities 23,163,401 812,446 70,367 1,156,453
Total Current Liabilities 152,559,170 63,132,085 24,818,162 3,112,046 24,158,723
Other Liabilities:
Unamortized investment credit 20,673,336 2,561,056
Other def. credits & other liab. 102,536,250 404,507 14,759,180 14,002,398
Total Other Liabilities 123,209,586 404,507 14,759,180 16,563,454
Accumulated deferred taxes 169,176,025 2,862,540 1,494,421 14,228,807
Commitments and contingencies (Note J)
Total Liabilities & Cap. 1,257,029,797 414,362,978 399,942,054 31,586,482 132,312,566
( ) Denotes Contra
</TABLE>
The accompanying notes are an integral part of the financial statements.
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
<TABLE>
LIABILITIES (CONTINUED)
<CAPTION>
EUA
Newport Eastern EUA Energy EUA EUA
Electric Edison Cogenex Investment Energy Ocean State
Corp. Consol. Consol. Consol. Corp. Corp.
<S> <C> <C> <C> <C> <C> <C>
Capitalization:
Common equity
Non-redeem. pref. stock of subs $21,719,956 $240,213,303 $47,548,713 ($13,040,330) ($50,495) 15,342,917
Redeemable preferred stock of 771,050 75
subsidiaries - net
Pref. stock redemption cost 29,664,502
Long-term debt - net (2,629,731)
Total Capitalization 20,544,162 222,402,309 90,800,000 28,590,216
Current Liabilities: 43,035,168 489,650,383 138,348,788 (13,040,330) (50,495) 43,933,133
LT debt due within one year
Notes payable 735,749 21,700,000 2,476,660
Accounts payable 895,000 2,040,000 22,464,685 28,476,824 223,244 1,821,000
Acc payable-ass. cos. 286,383 27,390,728 4,682,330 28,056 1,771 5,529
Customer deposits 9,582,479 3,949,832 221,684 41,454 130 19,496
Taxes accrued 676,876 1,152,736 585,769
Interest accrued 590,386 2,977,390 450,569 474,655
Dividends accrued 451,398 4,895,269 2,482,523 441,701 33 248,642
Other current liabilities 7,208
Total Current Liabilities 1,645,363 16,080,986 3,220,533 176,228 1,025
Other Liabilities: 14,870,842 58,486,941 55,808,093 29,164,263 225,178 5,047,007
Unamortized investment credit
Other def. credits & other liab. 1,209,595 16,902,685
Total Other Liabilities 1,393,232 67,604,386 5,529,217 (1,156,670)
Accumulated deferred taxes 2,602,827 84,507,071 5,529,217 (1,156,670)
Commitments and contingencies (Note J) 9,436,502 142,438,701 (4,525,388) (812,927) 4,053,369
Total Liabilities & Cap.
( ) Denotes Contra 69,945,339 775,083,096 195,160,710 $14,154,336 174,683 53,033,509
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION
DECEMBER 31, 1996
(1 of 2)
<CAPTION>
Blackstone
Eastern EUA Valley
EUA Utilities Service Electric
Consol. Elimin. Associates Corp. Company
<S> <C> <C> <C> <C> <C>
Common Equity:
Common shs, $5 par value of Regist. 102,179,985 92,856,906 102,179,985 1,000 $9,203,100
Other paid-in capital 221,159,783 133,740,226 221,159,783 2,500,000 17,907,930
Common share expense (3,930,679) (742,214) (3,886,767)
Retained earnings 52,403,844 125,375,975 52,403,844 719,835 9,121,052
Total Common Equity 371,812,933 351,230,893 371,856,845 3,220,835 36,232,082
Non-Redeemable Preferred:
4.25%, $100 par value, 35,000 shs 3,500,000 3,500,000
5.60%, $100 par value, 25,000 shs 2,500,000 2,500,000
3.75%, $100 par value, 7,689 shs 768,900
$.01 par value, 7,500 shares(3) 75
Premium, net of expense 131,650 129,500
Total Non-Redeemable 6,900,625 6,129,500
Redeemable Preferred:
6.625%, $100 par val., 300,000 shs 30,000,000
Expense, net of premium (335,498)
Preferred stock redemption cost (2,629,731)
Sinking Fund Due Within One Year 0
Total Redeemable 27,034,771
Long-Term Debt:
Secured Notes:
10.2% due 2008 10,100,000 10,100,000
Unsecured Notes:
9.59% due 2011 31,066,876
7% due 2000 50,000,000
7.22% due 1997 15,000,000
9.6% due 2001 16,000,000
10.56% due 2005 31,500,000
Variable Rate Bonds:
Demand due 2014 (5) 6,500,000 6,500,000
Revenue Refunding due 2011 (5) 7,925,000
1st Mort. & Collateral Trust Bonds:
5.875% due 1998 20,000,000
6.875% due 2003 40,000,000
8% due 2023 40,000,000
6.35% due 2003 8,000,000
7.78% Secured medium-term notes 35,000,000
5.75% due 1998 40,000,000
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION (Continued)
DECEMBER 31, 1996
(1 of 2)
<CAPTION>
Newport Eastern EUA EUA EUA EUA
Electric Edison Cogenex Energ Energy Ocean State
Corp. Consol. Consol. Consol. Corp. Corporation
<S> <C> <C> <C> <C> <C> <C>
Common Equity:
Common shs, $5 par value of Regist. 11,368,779 72,283,925 $100 $1 $1
Other paid-in capital 9,000,000 47,249,633 47,273,465 999 9,808,199
Common share expense (742,214) (43,912)
Retained earnings 2,093,391 120,723,657 275,148 (13,041,330) (50,495) 5,534,717
Total Common Equity 21,719,956 240,213,303 47,548,713 (13,040,330) (50,495) 15,342,917
Non-Redeemable Preferred:
4.25%, $100 par value, 35,000 shs
5.60%, $100 par value, 25,000 shs
3.75%, $100 par value, 7,689 shs 768,900
$.01 par value, 7,500 shares(3) 75
Premium, net of expense 2,150
Total Non-Redeemable 771,050 75
Redeemable Preferred:
6.625%, $100 par val., 300,000 shs 30,000,000
Expense, net of premium (335,498)
Preferred stock redemption cost (2,629,731
Sinking Fund Due Within One Year
Total Redeemable 0 27,034,771
Long-Term Debt:
Secured Notes:
10.2% due 2008
Unsecured Notes:
9.59% due 2011 31,066,876
7% due 2000 50,000,000
7.22% due 1997 15,000,000
9.6% due 2001 16,000,000
10.56% due 2005 31,500,000
Variable Rate Bonds:
Demand due 2014 (5)
Revenue Refunding due 2011 (5) 7,925,000
1st Mort. & Collateral Trust Bonds:
5.875% due 1998 20,000,000
6.875% due 2003 40,000,000
8% due 2023 40,000,000
6.35% due 2003 8,000,000
7.78% Secured medium-term notes 35,000,000
5.75% due 1998 40,000,000
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION (continued)
DECEMBER 31, 1996
(2 0F 2)
<CAPTION>
Blackstone
Eastern EUA Valley
EUA Utilities Service Electric
Consol Elimin Associates Corp. Company
<S> <C> <C> <C> <C> <C>
Long-Term Debt (continued):
Pollution Control Revenue Bonds:
5.875% due 2008 40,000,000
First Mortgage Bonds:
9.5% due 2004 (Series B) 12,000,000 12,000,000
10.35% due 2010 (Series C) 18,000,000 18,000,000
9% due 1999 1,386,000
9.8% due 1999 8,000,000
8.95% due 2001 3,250,000
Second Mortgage Bonds:
6.5% SBA Loan due 2005 718,911
Unamortized (Discount) - Net (597,691)
433,849,096 10,100,000 36,500,000
Less portion due within one year 27,512,409 1,100,000 1,500,000
Total Long-Term Debt 406,336,687 9,000,000 35,000,000
Total Capitalization 812,085,016 351,230,893 371,856,845 12,220,835 77,361,582
</TABLE>
(1) Authorized 36,000,000 shares, outstanding 20,435,997
(2) Authorized and Outstanding.
(3) The Preferred Stock shall be entitled to an annual dividend per share
at a rate equal to 33% of the net income of Citizens Conservation
Services divided by 7,500.
(4) Authorized 400,000 shares, outstanding 300,000.
(5) Weighted average interest rate was 3.5% for 1996.
The accompanying notes are an integral part of the financial statements.
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION (Continued)
DECEMBER 31, 1996
(2 of 2)
<CAPTION>
Newport Eastern EUA EUA EUA EUA
Electric Edison Cogenex Energy Energy Ocean State
Corp. Consol Consol Consol Corp. Corporation
<S> <C> <C> <C> <C> <C> <C>
Long-Term Debt (continued):
Pollution Control Revenue Bonds:
5.875% due 2008 40,000,000
First Mortgage Bonds:
9.5% due 2004 (Series B)
10.35% due 2010 (Series C)
9% due 1999 1,386,000
9.8% due 1999 8,000,000
8.95% due 2001 3,250,000
Second Mortgage Bonds:
6.5% SBA Loan due 2005 718,911
Unamortized (Discount) - Net (597,691)
21,279,911 222,402,309 31,066,876
Less portion due within one year 735,749 0 21,700,000 2,476,660
Total Long-Term Debt 20,544,162 222,402,309 90,800,000 28,590,216
Total Capitalization 43,035,168 489,650,383 138,348,788 ($13,040,330) ($50,495) 43,933,133
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
Blackstone
Eastern EUA Valley
EUA Utilities Service Electric
Consol Elimin. Associates Corp. Company
<S> <C> <C> <C> <C> <C>
Operating Revenues $527,067,784 $ $ $ $
Operating Expenses:
Operation 365,825,855 176,036,406 1,089,044 45,122,502 109,680,364
Maintenance 25,047,534 1,025,617 2,925 1,030,344 3,207,957
Depreciation and amortization 45,478,239 1,209,347 2,508 1,217,240 5,594,431
Taxes Other than income 23,932,505 2,516,817 8,315 2,542,812 8,506,473
Inc. Taxes - Current (credit) 1,466,498 (20,078) (4,219,727) 230,953 2,720,538
- Deferred 9,475,735 (18,415) 4,125,240 96,054 (564,832)
Total Operating Expenses 471,226,366 180,749,694 1,008,305 50,239,905 50,239,905
Operating Income 55,841,418 (49,254,087) (1,008,305) (50,239,905) 7,765,841
Other Income and Deductions:
Interest and dividend income 7,761,655 1,252,283 1,396,894 11,155 26,586
Equity in earnings of jointly-
owned companies 10,698,280 31,547,494 31,547,494
All. for other funds used during
construction 451,980 876 9 877 49,754
Other (deds) income - net (2,708,276) 50,286,014 12,546 51,661,191 3,664
Total Other Income 16,203,639 83,086,667 32,956,943 51,673,223 80,004
Inc. Before Int. Charges 72,045,057 33,832,580 31,948,638 1,433,318 7,845,845
Interest Charges:
Interest on long-term debt 34,035,304 1,030,175 3,312,764
Amort. of debt exp & prem. 2,619,935 27,697 101,535
Other int. exp. (principally
short-term notes) 4,199,636 2,287,660 1,334,797 15,012 423,115
All. for borr. funds used dur.
construction - (credit) (1,735,355) (2,569) (26) (2,569) (56,192)
Total Interest Charges 39,119,520 2,285,091 1,334,771 1,070,315 3,781,222
Net Income 32,925,537 31,547,489 30,613,867 363,003 4,064,623
Preferred Dividends Requirement 2,311,665 288,750
Earnings available for
common shareholders $30,613,872 31,547,489 30,613,867 $363,003 $3,775,873
Earnings per EUA Common Share: 20,436,217
weighted average shares outstanding $1.50
</TABLE>
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENTS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
Newport Eastern EUA EUA EUA EUA
Electric Edison Cogenex Energ Energy Ocean State
Corp. Consol. Consol. Consol. Corp. Corporation
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues 60,495,092 $404,808,169 $56,316,662 $32,696 $ $
Operating Expenses:
Operation 45,389,971 285,051,615 51,293,348 3,967,582 42,019 225,816
Maintenance 2,321,327 18,169,492 1,330,949 5,498 4,659
Depreciation and amortization 2,773,547 26,809,802 9,771,849 455,379 35,316 27,514
Taxes Other than income 3,961,569 10,704,567 700,091 16,247 317 8,931
Inc. Taxes - Current (credit) 1,301,917 10,784,428 (5,883,524) (2,299,283) (1,188,882)
- Deferred 386,259 5,274,268 (57,755) 202,632 (4,546)
Total Operating Expenses 56,134,590 356,794,172 57,154,958 2,348,055 77,652 (926,508)
Operating Income 4,360,502 48,013,997 (838,296) (2,315,359) (77,652) 926,508
Other Income and Deductions:
Interest and dividend income 76,130 290,808 7,157,628 14,479 40,258
Equity in earnings of jointly-
owned companies 1,587,392 (38,566) (535,391) 9,684,845
All. for other funds used during
construction 37,348 364,833 25 6 4
Other (deds) income - net 302,350 1,291,432 (2,627,574) 226,629 27,190 (3,319,690)
Total Other Income 415,828 3,534,465 4,491,513 (294,277) 27,190 6,405,417
Inc. Before Int. Charges 4,776,330 51,548,462 3,653,217 (2,609,636) (50,462) 7,331,925
Interest Charges:
Interest on long-term debt 1,543,802 15,233,504 9,777,404 3,137,655
Amort. of debt exp & prem. 126,521 2,184,527 151,680 27,975
Other int. exp. (principally
short-term notes) 277,818 1,468,323 1,574,117 1,379,883 33 14,198
All. for borr. funds used dur.
construction - (credit) (42,959) (307,901) (1,328,244) (20) (13)
Total Interest Charges 1,905,182 18,578,453 10,174,957 1,379,863 33 3,179,815
Net Income 2,871,148 32,970,009 (6,521,740) (3,989,499 (50,495) 4,152,110
Preferred Dividends Requirement 35,415 1,987,500
Earnings available for
common shareholders $2,835,733 30,982,509 (6,521,740) (3,989,499) ($50,495) $4,152,110
</TABLE>
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
Blackstone
Eastern EUA Valley
EUA Utilities Service Electric
Consol Elimin Associates Corp. Company
<S> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $32,925,537 $31,547,489 $30,613,867 $363,003 $4,064,623
Adjustments to Reconcile Net Income
to Net Cash Provided by Op Act.:
Depreciation and amortization 50,689,677 695,976 1,244,962 5,976,168
Amortization of nuclear fuel 1,676,308
Deferred taxes 11,610,630 4,496,260 96,054 (561,237)
Non-cash (Gains)/Exp on Sales
of Inv. in En. Svngs Projects 8,262,320
Investment tax credit, net (1,207,188) (182,016)
All. for other funds used during (451,980) (834) (877) (49,754)
Coll. and sales of proj. notes
and leases receivable 7,775,899
Other - net 6,372,969 15,082,578 11,199,568 3,558,188 (554,543)
Changes in Op. Assets and Liab.:
Accounts receivable (5,776,787) 5,552,311 (1,097,891) 3,825,806 2,388,736
Materials and supplies 2,384,731 4,518 66,381
Notes receivable (3,817,001) (12,501,237)
Accounts payable (1,957,554) (4,432,201) (3,463,739) (568,099) (383,423)
Accrued taxes (1,539,385) 117,067 (854,122) (4,463) (362,638)
Other - net 8,746,781 (1,237,171) (457,583) (215,030) 740,064
Net Cash Prov. from (Used in)
Operating Activities 115,694,957 34,128,002 28,631,099 8,304,062 11,142,361
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures (62,730,072) 834 (1,270,841) (4,196,158)
Coll. on Notes and Lease
Rec. of EUA Cogenex 3,665,055
Inc/Dec in other investments (3,888,652)
Investments in subsidiaries (550,000) (550,000)
Net Cash Used in Inv. Act. (60,953,669) (549,166) (550,000) (1,270,841) (4,196,158)
CASH FLOW FROM FINANCING ACTIVITIES:
Redemptions:
Long-term debt (20,617,441) (2,200,000) (1,500,000)
Preferred stock (90,000)
Prem. on reac. and fin. exp. (15,011) (18,285)
EUA common share dividends paid (33,617,583) (46,630,073) (33,617,583) (4,588,665)
Subsidiary pref. div. paid (2,313,859) (288,750)
Cap. cont./(return of capital (200) 550,000 (200) (1,000,000)
Net inc. (decr) in st debt 12,307,454 12,501,237 5,479,000 (524,000)
Net Cash (Used in) Provided from
Financing Activities (44,346,640) (33,578,836) (28,157,068) (3,200,000) (6,901,415)
NET INCREASE (DECREASE) IN CASH 8,394,648 (75,969) 3,833,221 44,788
Cash and temporary cash investments 4,060,214 187,960 254,299 753,220
Cash and temporary cash investments 12,454,862 $111,991 $4,087,520 $798,008
Cash paid during the year for:
Interest (net of amounts cap.) $40,658,281 ($2,568) $1,333,593 $1,149,664 $3,389,908
Income Taxes (refund) $11,530,036 ($752,892) $83,385 $3,300,782
Conv. of inv. in energy svgs proj.
to notes and leases receivable $7,779,372
</TABLE>
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
EUA
Newport Eastern EUA Energy EUA EUA
Electric Edison Cogenex Investment Energy Ocean State
Corp. Consol Consol Consol Corp. Corporation
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $2,871,148 $32,970,009 ($6,521,740) ($3,989,499) ($50,495) $4,152,110
Adjustments to Reconcile Net Income
to Net Cash Provided by Op Act.:
Depreciation and amortization 3,172,571 28,607,086 10,455,096 449,807 35,316 52,695
Amortization of nuclear fuel 1,676,308
Deferred taxes 387,861 5,218,247 1,429,691 373,841 169,913
Non-cash (Gains)/Exp on Sales
of Inv. in En. Svngs Projects
Investment tax credit, net 8,262,320
All. for other funds used during (86,160) (939,012)
Coll. and sales of proj. notes (37,349) (364,834)
and leases receivable
Other - net 7,775,899
Changes in Op. Assets and Liab.: (942,292) (2,333,341) 8,361,265 431,589 1,735,113
Accounts receivable
Materials and supplies 735,464 (1,862,479) (3,959,664) (226,802) (27,646)
Notes receivable 7,563 673,312 1,632,957
Accounts payable (3,817,001)
Accrued taxes (245,427) 185,641 (1,870,680) (46,913) 1,901 984
Other - net (78,606) (241,413) 328,344 (209,420)
Net Cash Prov. from (Used in) 1,101,115 9,266,745 (1,686,495) (1,219,656) 33 (19,583)
Operating Activities
CASH FLOW FROM INVESTING ACTIVITIES: 6,885,888 72,856,269 24,206,993 (8,044,634) (40,891) 5,881,812
Construction expenditures
Coll. on Notes and Lease (3,134,692) (26,006,378) (27,625,278) (314,099) (181,792)
Rec. of EUA Cogenex
Inc/Dec in other investments 3,665,055
Investments in subsidiaries 147,776 (36,434) (3,999,994)
Net Cash Used in Inv. Act.
CASH FLOW FROM FINANCING ACTIVITIES: (3,134,692) (25,858,602) (23,996,657) (4,314,093) (181,792)
Redemptions:
Long-term debt
Preferred stock (740,780) (7,000,000) (6,700,000) (2,476,661)
Prem. on reac. and fin. exp. (90,000)
EUA common share dividends paid 3,274
Subsidiary pref. div. paid (2,360,000) (34,320,408) (5,361,000)
Cap. cont./(return of capital (37,609) (1,987,500)
Net inc. (decr) in st debt 1,550,000
Net Cash (Used in) Provided from (449,000) (2,118,000) 8,098,455 12,277,993 223,243 1,821,000
Financing Activities (3,674,115) (45,425,908) 2,948,455 12,277,993 223,243 (6,016,661)
NET INCREASE (DECREASE) IN CASH 77,081 1,571,759 3,158,791 (80,734) 560 (134,849)
Cash and temporary cash investments 214,757 532,988 1,503,436 468,363 0 145,191
Cash and temporary cash investments $291,838 $2,104,747 $4,662,227 $387,629 $560 $10,342
Cash paid during the year for:
Interest (net of amounts cap.) $1,540,593 15,240,616 13,341,743 $686,586 $0 $3,973,010
Income Taxes (refund) $1,418,475 $13,266,567 ($5,480,385) ($2,472,769) $456 $2,166,417
Conv. of inv. in energy svgs proj.
to notes and leases receivable $7,779,372
</TABLE>
The accompanying notes are an integral part of the financial statements.
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
DECEMBER 31, 1996
<CAPTION>
Blackstone
Eastern EUA Valley
EUA Utilities Service Electric
Consol. Elimin Assoc. Corp. Company
<S> <C> <C> <C> <C> <C>
Bal. of ret. earnings at beg. of year $56,227,840 $141,278,839 $56,227,840 $356,832 $9,933,844
Additions:
Net Income (Loss) 32,925,537 31,547,489 30,613,867 363,003 4,064,623
Total 89,153,377 172,826,328 86,841,707 719,835 13,998,467
Deductions:
Dividends:
Preferred - subsidiaries 2,311,665 288,750
Common - subsidiaries 46,630,073 4,588,665
Common - reg. - $1.645 per share 33,617,583 33,617,583
Total Dividends 35,929,248 46,630,073 33,617,583 4,877,415
Other 820,285 820,280 820,280
Total Deductions 36,749,533 47,450,353 34,437,863 4,877,415
Bal. of ret. earnings at end of year $52,403,844 $125,375,975 $52,403,844 $719,835 9,121,052
Other Paid-In Capital at
Beginning of Year $220,729,950
Additions:
Cancellation of Res. Stock (758 shs.) 3,790 3,790
Amort. restricted stock costs 490,020 490,020
Deductions:
Common Share Purchase Plan Adjustment 155 155
Currency Conversion 63,822 63,822
Other Paid-In Capital at End of Year 221,159,783 221,159,783
</TABLE>
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
<TABLE>
EASTERN UTILITIES ASSOCIATES AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED
EARNINGS AND OTHER PAID-IN CAPITAL (Continued)
DECEMBER 31, 1996
<CAPTION>
EUA
Newport Eastern EUA Energy EUA EUA
Electric Edison Cogenex Inv. Energy Svcs. Ocean State
Corp. Consol. Consol Cons. Corporation Corporation
<S> <C> <C> <C> <C> <C> <C>
Bal. of ret. earnings at beg. of year $1,620,932 $124,878,567 $6,796,888 ($9,051,831) $6,743,607
Additions:
Net Income (Loss) 2,871,148 32,970,009 (6,521,740) (3,989,499) ($50,495) 4,152,110
Total 4,492,080 157,848,576 275,148 (13,041,330) (50,495) 10,895,717
Deductions:
Dividends:
Preferred - subsidiaries 35,415 1,987,500
Common - subsidiaries 2,360,000 34,320,408 5,361,000
Common - reg. - $1.645 per share
Total Dividends 2,395,415 36,307,908 5,361,000
Other 3,274 817,011
Total Deductions 2,398,689 37,124,919 5,361,000
Bal. of ret. earnings at end of year $2,093,391 $120,723,657 $275,148 ($13,041,330) ($50,495) 5,534,717
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
<CAPTION>
ASSETS
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Utility plant and other investments:
Utility plant in service $815,186,451 $233,752,112 $581,434,339
Less accumulated provision for depreciation
and amortization 261,463,732 84,711,104 176,752,628
Net Utility plant in service 553,722,719 149,041,008 404,681,711
Construction work in progress 2,805,459 1,462,392 1,343,067
Net utility plant 556,528,178 150,503,400 406,024,778
Non-utility property 2,715,349 105,735 2,609,614
Less accumulated provision for dep 9,697 9,697
Net non-utility property 2,705,652 96,038 2,609,614
Investments in subsidiaries (at equity) 13,209,511 $357,495,568 357,495,568 13,209,511
Other 94,789 50,405 44,384
Total Utility Plant and Other Investments 572,538,130 357,495,568 508,145,411 421,888,287
Current Assets:
Cash and temporary cash investments 2,104,747 926,530 1,178,217
Accounts receivable - Net:
Customers 27,632,767 26,244,401 1,388,366
Accrued unbilled revenue 8,376,162 8,376,162
Others 3,464,380 2,431,592 1,032,788
Accounts receivable - associated companies 25,485,628 48,102,261 5,737,520 67,850,369
Materials and supplies (at average cost):
Fuel 6,843,733 6,843,733
Plant materials and operating supplies 3,805,026 1,743,803 2,061,223
Other current assets 3,598,199 587,964 3,010,235
Total Current Assets 81,310,642 48,102,261 46,047,972 83,364,931
Deferred Debits:
Unamortized debt expense 2,456,039 2,429,889 26,150
Unrecovered Regulatory Plant Costs (Note A) 41,915,275 41,915,275
Other deferred debits 76,863,010 30,143,513 46,719,497
Total Deferred Debits 121,234,324 32,573,402 88,660,922
Total assets $775,083,096 $405,597,829 $586,766,785 $593,914,140
( ) Denotes Contra
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
LIABILITIES
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Capitalization:
Common equity $240,213,303 $183,555,220 $240,213,303 $183,555,220
Redeemable preferred stock - net 29,664,502 29,664,502
Redeemable preferred stock of subsidiaries -net 1,500,000 1,500,000
Preferred Stock Redemption Cost (2,629,731) (2,629,731)
Long-term debt - net 222,402,309 172,440,348 222,402,309 172,440,348
Total Capitalization 489,650,383 357,495,568 489,650,383 357,495,568
Current Liabilities:
Notes payable 2,040,000 2,040,000
Accounts payable 27,390,728 1,303,885 26,086,843
Accounts payable - associated companies 3,949,832 42,970,761 45,501,703 1,418,890
Customer deposits 1,152,736 1,152,736
Taxes accrued 2,977,390 2,125,584 851,806
Interest accrued 4,895,269 5,131,500 4,895,269 5,131,500
Other current liabilities 16,080,986 4,659,834 11,421,152
Total Current Liabilities 58,486,941 48,102,261 61,679,011 44,910,191
Other Liabilities:
Unamortized investment credit 16,902,685 3,920,756 12,981,929
Other deferred credits and other liab. 67,604,386 11,202,401 56,401,985
Total Other Liabilities 84,507,071 15,123,157 69,383,914
Accumulated deferred taxes 142,438,701 20,314,234 122,124,467
Commitments and contingencies (Note J)
Total liabilities and capitalization $775,083,096 $405,597,829 $586,766,785 $593,914,140
( ) Denotes Contra
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF CAPITALIZATION
DECEMBER 31, 1996
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Common Equity:
Common shares $72,283,925 $58,600,000 $72,283,925 $58,600,000
Other paid-in capital 47,249,633 29,528,000 47,249,633 29,528,000
Common share expense (43,912) (43,912)
Retained earnings 120,723,657 95,427,220 120,723,657 95,427,220
Total Common Equity 240,213,303 183,555,220 240,213,303 183,555,220
Redeemable Preferred:
6.625%, $100 par value, 300,000 shares 30,000,000 30,000,000
Redeemable preferred stock of subsidiaries 1,500,000 1,500,000
Expense, net of premium (335,498) (335,498)
Preferred stock redemption cost (2,629,731) (2,629,731)
Total Redeemable 27,034,771 1,500,000 27,034,771 1,500,000
Long-Term Debt:
First Mortgage and Collateral Trust Bonds:
5.875% due 1998 20,000,000 20,000,000
6.875% due 2003 40,000,000 40,000,000
8% due 2023 40,000,000 40,000,000
6.35% due 2003 8,000,000 8,000,000
7.78% Secured medium-term notes 35,000,000 35,000,000
5.75% due 1998 40,000,000 40,000,000
Pollution Control Revenue Bonds:
5.875% due 2008 40,000,000 40,000,000
Debenture Bonds:
8% due 2000 8,500,000 8,500,000
8.25% due 2003 12,800,000 12,800,000
14% due 2005 26,000,000 26,000,000
10% due 2008 9,275,000 9,275,000
16.5% due 2010 19,000,000 19,000,000
12.375% due 2013 30,000,000 30,000,000
10.125% due 2008 36,865,348 36,865,348
9% due 2020 5,000,000 5,000,000
9.375% due 2020 25,000,000 25,000,000
Unamortized (Discount) - Net (597,691) (597,691)
222,402,309 172,440,348 222,402,309 172,440,348
Less portion due within one year 0 0
Total Long-Term Debt 222,402,309 172,440,348 222,402,309 172,440,348
Total Capitalization $489,650,383 $357,495,568 $489,650,383 $357,495,568
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATING INCOME STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Operating Revenues $404,808,169 $186,398,851 $265,092,881 $326,114,139
Operating Expenses:
Operation 285,051,615 186,398,851 220,455,535 250,994,931
Maintenance 18,169,492 7,461,507 10,707,985
Depreciation and amortization 26,809,802 10,044,544 16,765,258
Taxes Other than income 10,704,567 4,795,210 5,909,357
Income Taxes - Current 10,784,428 8,730,224 2,054,204
- Deferred 5,274,268 314,571 4,959,697
Total Operating Expenses 356,794,172 186,398,851 251,801,591 291,391,432
Operating Income 48,013,997 13,291,290 34,722,707
Other Income and Deductions:
Interest and dividend income 290,808 19,994,750 20,052,764 232,794
Equity in earnings of jointly-owned companies 1,587,392 17,364,344 17,364,344 1,587,392
Allowance for other funds used during constr. 364,833 30,122 334,711
Other (deductions) income - net 1,291,432 (30,281) 1,321,713
Total Other Income 3,534,465 37,359,094 37,416,949 3,476,610
Income Before Interest Charges 51,548,462 37,359,094 50,708,239 38,199,317
Interest Charges:
Interest on long-term debt 15,233,504 19,994,750 15,233,504 19,994,750
Amortization of debt expense and premium 2,184,527 1,911,721 272,806
Other interest expense (principally
short-term notes) 1,468,323 655,462 812,861
Allowance for borrowed funds used during
construction - (credit) (307,901) (62,457) (245,444)
Total Interest Charges 18,578,453 19,994,750 17,738,230 20,834,973
Net Income 32,970,009 17,364,344 32,970,009 17,364,344
Preferred Dividends Requirement 1,987,500 1,987,500
Earnings Available for Common Stockholders $30,982,509 $17,364,344 $30,982,509 $17,364,344
Weighted average shares outstanding 2,891,357
Earnings per share $10.72
( ) Denotes Contra
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income $32,970,009 $17,364,344 $32,970,009 $17,364,344
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Depreciation and Amortization 28,607,086 12,262,744 16,344,342
Amortization of nuclear fuel 1,676,308 1,676,308
Deferred taxes 5,218,247 322,136 4,896,111
Investment tax credit, net (939,012) (310,848) (628,164)
Allowance for other funds used during constr. (364,834) (30,123) (334,711)
Other - Net (2,333,341) 1,164,486 (83,342) (1,085,513)
Changes in Operating Assets and Liabilities:
Accounts receivable (1,862,479) (5,939,767) (2,313,097) (5,489,149)
Materials and supplies 673,312 124,650 548,662
Accounts payable 185,641 5,939,767 6,953,376 (827,968)
Accrued taxes (241,413) 716,474 (957,887)
Other - net 9,266,745 4,222,511 5,044,234
Net Cash Provided from Operating Activ. 72,856,269 18,528,830 54,834,490 36,550,609
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures (26,006,378) (8,879,998) (17,126,380)
Decrease in Other Investments 147,776 147,776
Net Cash Used in Investing Activities (25,858,602) (8,879,998) (16,978,604)
CASH FLOW FROM FINANCING ACTIVITIES:
Redemptions:
Long-term debt (7,000,000) (7,000,000)
Eastern Edison common share dividends paid (34,320,408) (18,066,380) (34,320,408) (18,066,380)
Preferred dividends paid (1,987,500) (462,450) (1,987,500) (462,450)
Net Decrease in short-term debt (2,118,000) (2,118,000)
Net Cash (Used In) Financing Activities (45,425,908) (18,528,830) (45,425,908) (18,528,830)
NET INCREASE IN CASH 1,571,759 528,584 1,043,175
Cash and temporary cash investments
at beginning of year 532,988 397,944 135,044
Cash and temporary cash investments
at end of year $2,104,747 $926,528 $1,178,219
Cash paid during the year for:
Interest (Net of Amounts Capitalized) $15,240,616 $19,994,750 $15,398,907 $19,836,459
Income Taxes $13,266,567 $8,410,054 $4,856,513
( ) Denotes Contra
</TABLE>
<TABLE>
EASTERN EDISON COMPANY AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF RETAINED EARNINGS AND OTHER PAID-IN CAPITAL
DECEMBER 31, 1996
<CAPTION>
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Balance of retained earnings at begin. of year $124,878,567 $96,591,706 $124,878,567 $96,591,706
Additions:
Net Income 32,970,009 17,364,344 32,970,009 17,364,344
Total 157,848,576 113,956,050 157,848,576 113,956,050
Deductions:
Dividends:
Preferred 1,987,500 462,450 1,987,500 462,450
Common 34,320,408 18,066,380 34,320,408 18,066,380
Total Dividends 36,307,908 18,528,830 36,307,908 18,528,830
Other 817,011 817,011
Total Deductions 37,124,919 18,528,830 37,124,919 18,528,830
Balance of retained earnings at end of period $120,723,657 $95,427,220 $120,723,657 $95,427,220
( ) Denotes Contra
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
<CAPTION>
ASSETS
EUA EUA EUA EUA EUA EUA
Cogenex Cogenex Nova Day NEM Cogenex
Consolidated Eliminations Corporation (Division) (Division) Inc. Canada
<S> <C> <C> <C> <C> <C> <C> <C>
Utility Plant and Other Investments:
Non-utility property $105,637,560 $53,965,856 $1,269,576 $2,113,094 $8,696,666
Less accumulated provision for depres. 36,636,495 22,066,500 828,747 801,711 3,017,967
Net non-utility property 69,001,065 31,899,356 440,829 1,311,383 5,678,699 0
Investments in subsidiaries (at equity) 37,434 51,974,368 52,011,802 0 0
Other 67,569,816 52,661,702 (186,000) 0 200,012 5,897,908
Total Utility Plant and Other Invest. 136,608,315 51,974,368 136,572,860 254,829 1,311,383 5,878,711 5,897,908
Current Assets:
Cash and temporary cash invest. 4,662,227 1,543,211 141,129 293,539 568,629 50,242
Notes receivable 19,973,139 12,583,828 30,148,680 72,958 32,548 891,568
Accounts receivable - Net:
Customers 22,364,304 6,963,996 1,556,852 1,521,954 595,548 21,839
Others 3,780,570 926,649 4,607,342 5,224 54,387 (191,914) 100
Accounts receivable - assoc. companies 76,220 7,309,233 6,847,107 305,247 89,658 0
Materials and supplies (at average cost):
Plant materials and operating supplies 1,713,006 312,766 63,569 1,339,641 582,772
Other current assets 2,591,234 (312,765) 1,525,918 25,526 30,886 11,632
Total Current Assets 55,160,700 20,819,711 51,699,823 3,446,577 2,605,744 972,263 975,381
Deferred Debits:
Unamortized debt expense 558,402 558,402
Other deferred debits 2,833,293 1,269,293 0 1,205 1,260,128 246,157
Total Deferred Debits 3,391,695 1,827,695 0 1,205 1,260,128 246,157
Total Assets $195,160,710 $72,794,079 $190,100,378 $3,701,406 $3,918,332 $8,111,102 $7,119,446
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
<CAPTION>
ASSETS (Continued)
EUA EUA EUA EUA EUA EUA EUA
Citizens Highland MUPA WestCoast FRC II EC&S I EC&S II
Corporation Corporation (Partner.) (Partner.) (Partner.) (Partner.) (Partner.)
<S> <C> <C> <C> <C> <C> <C> <C>
Utility Plant and Other Investments:
Non-utility property $2,901,957 $1,304,875 $0 $4,155,160 $77,490 $11,612,555 $19,540,331
Less accumulated provision for depres. 143,602 393,805 0 2,187,522 77,490 1,685,148 5,434,003
Net non-utility property 2,758,355 911,070 0 1,967,638 0 9,927,407 14,106,328
Investments in subsidiaries (at equity)
Other 52,431 5,612,040 0 98,008 0 313,645 2,920,070
Total Utility Plant and Other Invest. 2,810,786 6,523,110 0 2,065,646 0 10,241,052 17,026,398
Current Assets:
Cash and temporary cash invest. 162,730 169,458 487 1,114,874 118,932 85,595 413,401
Notes receivable 159,571 894,637 357,005 0 0 0
Accounts receivable - Net:
Customers 976,699 5,719,658 309,784 336,020 831,500 914,325 2,616,129
Others (22,901) 701 0 32,000 0 0 222,280
Accounts receivable - assoc. companies 55,164 88,277 0 0 0 0 0
Materials and supplies (at average cost):
Plant materials and operating supplies 39,790 0 0 0 0 0
Other current assets 0 300,244 0 25 0 (42,555) 426,793
Total Current Assets 1,171,692 6,477,699 1,204,908 1,839,924 950,432 957,365 3,678,603
Deferred Debits:
Unamortized debt expense
Other deferred debits 50,598 5,912 0 0 0 0 0
Total Deferred Debits 50,598 5,912 0 0 0 0 0
Total Assets $4,033,076 $13,006,721 $1,204,908 $3,905,570 $950,432 $11,198,417 $20,705,001
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
<CAPTION>
LIABILITIES
EUA EUA EUA EUA EUA EUA
Cogenex Cogenex Nova Day NEM Cogenex
Consolidated Eliminations Corporation (Division) (Division) Inc. Canada
<S> <C> <C> <C> <C> <C> <C> <C>
Capitalization:
Common equity $47,548,713 $16,546,068 $46,481,590 $108,889 $1,046,934 $11,273,720 $421,295
Redeemable preferred stock of $0
subsidiaries - net 75
Partnerships' capital $0 15,358,959
Long-term debt - net $90,800,000 15,543,740 90,800,000 0 0
Total Capitalization 138,348,788 47,448,767 137,281,590 108,889 1,046,934 11,273,720 421,295
Current Liabilities:
Long-term debt due within one year 21,700,000 21,700,000 0 0
Notes payable 22,464,685 16,097,006 17,923,000 755,650 1,767,073 340,000 3,648,300
Accounts payable 4,682,330 2,454,763 3,171,220 219,954 532,191 107,667
Accounts payable - associated companies 221,684 5,516,431 666,693 732,305 200,027 8,362 2,591,231
Customer deposits 585,769 0 0 0 0
Taxes accrued 450,569 37,736 14,208 55,316 9,775 336,360
Interest accrued 2,482,523 1,632,802 2,482,523 1,351,623 281,179
Dividends declared 0 160,000 160,000
Other current liabilities 3,220,533 (47,739) 2,575,537 31,728 1,351
Total Current Liabilities 55,808,093 25,850,999 48,533,181 3,146,576 2,791,596 508,362 6,683,558
Deferred Credits:
Other deferred credits 5,529,217 (505,687) 4,125,450 445,941 79,802 366,900 14,593
Total Deferred Credits 5,529,217 (505,687) 4,125,450 445,941 79,802 366,900 14,593
Accumulated deferred taxes (4,525,388) 160,157 0 0 (4,037,880)
Commitments and contingencies
Total Liabilities and Capitalization $195,160,710 $72,794,079 $190,100,378 $3,701,406 $3,918,332 $8,111,102 $7,119,446
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
<CAPTION>
LIABILITIES (Continued)
EUA EUA EUA EUA EUA EUA EUA
Citizens Highland MUPA WestCoast FRC II EC&S I EC&S II
Corporation Corporation (Partner.) (Partner.) (Partner.) (Partner.) (Partner.)
<S> <C> <C> <C> <C> <C> <C> <C>
Capitalization:
Common equity $27,351 $4,735,002 $0 $0 $0 $0 $0
Redeemable preferred stock of
subsidiaries - net 75
Partnerships' capital (691,932) 2,454,600 97,870 5,594,898 7,903,523
Long-term debt - net 0 803,326 923,235 0 5,179,796 8,637,383
Total Capitalization 27,426 4,735,002 111,394 3,377,835 97,870 10,774,694 16,540,906
Current Liabilities:
Long-term debt due within one year
Notes payable 3,461,282 7,153,209 0 0 0 235,500 3,277,677
Accounts payable 118,773 532,527 1,086,194 69,733 748,961 138,170 411,703
Accounts payable - associated companies 339,890 1,199,607 0 0 0 0 0
Customer deposits 0 360,718 225,051
Taxes accrued 3,350 31,560 0 37,736 0 0 0
Interest accrued 0 0 0 0 0 0
Dividends declared
Other current liabilities 63,827 30,165 7,320 59,548 103,601 50,053 249,664
Total Current Liabilities 3,987,122 8,947,068 1,093,514 527,735 852,562 423,723 4,164,095
Deferred Credits:
Other deferred credits 2,871 (12,027) 0 0 0 0 0
Total Deferred Credits 2,871 (12,027) 0 0 0 0 0
Accumulated deferred taxes 15,657 (663,322) 0 0 0 0 0
Commitments and contingencies
Total Liabilities and Capitalization $4,033,076 $13,006,721 $1,204,908 $3,905,570 $950,432 $11,198,417 $20,705,001
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION
DECEMBER 31, 1996
<CAPTION>
EUA EUA EUA EUA EUA EUA
Cogenex Cogenex Nova Day NEM Cogenex
Consolidated Eliminations Corporation (Division) (Division) Inc. Canada
<S> <C> <C> <C> <C> <C> <C> <C>
Common Equity:
Common Shares, $.01 par value $100 $1,400 $100 $1,100 $100
Other Paid-In Capital 47,273,465 15,802,671 46,175,934 0 1,097,532 11,502,050 (64,132)
Retained Earnings 275,148 16,100,958 305,556 108,889 (50,598) (229,430) 485,327
Total Common Equity 47,548,713 31,905,029 46,481,590 108,889 1,046,934 11,273,720 421,295
Non-Redeemable Preferred: 0
$.01 par value, 7,500 shares<F1> 75
Total Non-Redeemable 75 0 0 0 0 0
Long-Term Debt: 0
Unsecured Notes:
7.00% due 2000 50,000,000 50,000,000
7.22% due 1997 15,000,000 15,000,000
9.6% due 2001 16,000,000 16,000,000
10.56% due 2005 31,500,000 31,500,000
112,500,000 0 112,500,000 0 0 0 0
Less portion due within one year 21,700,000 21,700,000
Total Long-Term Debt 90,800,000 0 90,800,000 0 0 0 0
Total Capitalization $138,348,788 $31,905,029 $137,281,590 $108,889 $1,046,934 $11,273,720 $421,295
<FN>
<F1> The Preferred Stock shall be entitled to an annual dividend per share at a rate equal
to 33% of the net income of Citizens Conservation Services divided by 7,500.
</FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CAPITALIZATION (Continued)
DECEMBER 31, 1996
<CAPTION>
EUA EUA EUA EUA EUA EUA EUA
Citizens Highland MUPA West Coast FRC II EC&S I EC &S II
Corporation Corporation (Partn.) (Partner.) (Partner.) (Partner.) (Partner.)
<S> <C> <C> <C> <C> <C> <C> <C>
Common Equity:
Common Shares, $.01 par value $100 $100
Other Paid-In Capital 4,364,752 0 0 0 0 0
Retained Earnings 27,251 370,150 (691,932) 2,454,601 97,870 5,594,899 7,903,523
Total Common Equity 27,351 4,735,002 (691,932) 2,454,601 97,870 5,594,899 7,903,523
Non-Redeemable Preferred:
$.01 par value, 7,500 shares<F1> 75
Total Non-Redeemable 75 0 0 0 0 0 0
Long-Term Debt:
Unsecured Notes:
7.00% due 2000
7.22% due 1997
9.6% due 2001
10.56% due 2005
0 0 0 0 0 0 0
Less portion due within one year
Total Long-Term Debt 0 0 0 0 0 0 0
Total Capitalization $27,426 $4,735,002 ($691,932) $2,454,601 $97,870 $5,594,899 $7,903,523
<FN>
<F1> The Preferred Stock shall be entitled to an annual dividend per share at a rate equal
to 33% of the net income of Citizens Conservation Services divided by 7,500.
</FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENTS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
<CAPTION>
EUA EUA EUA EUA EUA EUA
Cogenex Cogenex Nova Day NEM Cogenex
Consolidated Eliminations Corporation (Division) (Division) Inc. Canada
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues $56,316,662 $4,063,641 $22,728,649 $6,687,190 $6,716,843 $3,718,917 $
Operating Expenses:
Operation 51,293,348 4,188,157 27,548,521 8,348,522 6,211,015 61,203 1,743
Maintenance 1,330,949 604,211 35,739 0 6,268
Depreciation and amortization 9,771,849 57,638 4,885,331 160,688 80,390 785,464 20,924
Taxes - Other than income 700,091 0 261,299 185,331 194,635 400
- Income (credit) (5,883,524) 0 (7,182,905) 0 0 679,943 360,931
- Deferred (57,755) (393,103) 0 0 292,667
Total Operating Expenses 57,154,958 4,245,795 25,723,354 8,730,280 6,486,040 1,825,945 383,598
Operating Income (838,296) (182,154) (2,994,705) (2,043,090) 230,803 1,892,972 (383,598)
Other Income and Deductions:
Interest and dividend income 7,157,628 2,826,724 8,807,558 12,249 0 0 985,573
Equity in earnings of jointly- 0
owned companies (38,566) 2,615,935 2,577,369 0 0
Allowance for other funds used during 0
construction 25 (25)
Other (deductions) income - net (2,627,574) 374,199 (2,361,889) 114,813 0 65 6,168
Total Other Income 4,491,513 5,816,833 9,023,038 127,062 0 65 991,741
Income (Loss) Before Interest charges 3,653,217 5,634,679 6,028,333 (1,916,028) 230,803 1,893,037 608,143
Interest Charges:
Interest on long-term debt 9,777,404 1,910,789 9,777,404 0 0
Amortization of debt expense and premium 151,680 151,680 0 0
Other interest expense (principally 0 0
short-term notes) 1,574,117 480,179 1,258,961 93,158 105,670 218,958
Allowance for borrowed funds use during 0
construction - (credit) (1,328,244) 627,775 (522,026) 0 0
Total Interest Charges 10,174,957 3,018,743 10,666,019 93,158 105,670 0 218,958
Net Income (Loss) before pref. ret. (6,521,740) 2,615,936 (4,637,686) (2,009,186) 125,133 1,893,037 389,185
Preferred Return Requirement 0 0
Net (Loss) Income ($6,521,740) $2,615,936 ($4,637,686) ($2,009,186) $125,133 $1,893,037 $389,185
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING INCOME STATEMENTS (Continued)
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
<CAPTION>
EUA EUA EUA EUA EUA EUA EUA
Citizens Highland MUPA WestCoast FRC II EC&S I EC&S II
Corporation Corporation (Partn.) (Partn.) (Partn.) (Partn.) (Partn.)
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues $1,908,467 $10,285,465 $0 $2,343,338 $22,941 $1,714,572 $4,253,921
Operating Expenses:
Operation 1,604,132 9,367,808 2,482 1,881,380 913 126,971 326,815
Maintenance 2,254 3,537 4,994 58,700 2,093 112,334 500,819
Depreciation and amortization 133,142 402,282 0 376,784 11,305 765,733 2,207,444
Taxes - Other than income 11,205 47,221 0 0 0 0 0
- Income (credit) 18,895 239,612 0 0 0 0 0
- Deferred 15,657 27,024
Total Operating Expenses 1,785,285 10,087,484 7,476 2,316,864 14,311 1,005,038 3,035,078
Operating Income 123,182 197,981 (7,476) 26,474 8,630 709,534 1,218,843
Other Income and Deductions:
Interest and dividend income 3,286 162,194 0 9,651 0 0 3,841
Equity in earnings of jointly-
owned companies
Allowance for other funds used during
construction
Other (deductions) income - net 643 (13,175) 0 0
Total Other Income 3,929 149,019 0 9,651 0 0 3,841
Income (Loss) Before Interest charges 127,111 347,000 (7,476) 36,125 8,630 709,534 1,222,684
Interest Charges:
Interest on long-term debt 134,952 537,536 0 302,079 936,222
Amortization of debt expense and premium
Other interest expense (principally
short-term notes) 160,697 216,852 0 0 0 0 0
Allowance for borrowed funds use during
construction - (credit) (78,617) (99,826) 0 0 0 0 0
Total Interest Charges 82,080 117,026 134,952 537,536 0 302,079 936,222
Net Income (Loss) before pref. ret. 45,031 229,974 (142,428) (501,411) 8,630 407,455 286,462
Preferred Return Requirement 0 0 0
Net (Loss) Income $45,031 $229,974 ($142,428) ($501,411) $8,630 $407,455 $286,462
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
<CAPTION>
EUA EUA EUA EUA EUA EUA
Cogenex Cogenex Nova Day NEM Cogenex
Consolidated Eliminations Corporation (Division) (Division) Inc Canada
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) ($6,521,740) $2,615,935 ($4,637,687) ($2,009,186) $125,133 $1,893,037 $389,185
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activ.:
Depreciation and amortization 10,455,096 5,429,782 161,915 80,389 885,144
Deferred taxes 1,429,691 1,094,343 292,667
Non-cash (Gains)/Expenses on Sales of 0
Invest. in Energy Savings Projects 8,262,320 2,273,653
Collections & sales of proj. notes
& Leases receivable 7,775,899 6,953,646
Equity earnings 0 (2,577,369) (2,577,369)
Other - net 8,361,265 (6,765,148) 1,785,627 214,766 (18,049) (342,438) (279,477)
Net Changes to Working Capital: 0
Accounts receivable (3,959,664) (3,536,576) (3,753,493) 2,738,431 8,695 107,164 (7,938)
Materials and supplies 1,632,957 (312,765) 21,086 1,253,298 (10,541)
Accounts payable (1,870,680) 3,287,731 (2,121,441) (379,197) 284,993 3,622 2,698,898
Accrued taxes 328,344 37,737 (126) 19,552 (2,676) 272,473
Other - net (1,686,495) 473,802 (2,967,698) 86,078 104,510 11,938
Net Cash Prov. from (Used in) Operat. Act. 24,206,993 (6,776,653) 1,500,323 2,085,657 572,454 2,839,196 3,085,079
CASH FLOW FROM INVESTING ACTIVITIES:
Expenditures for invest. in energy
savings projects (27,625,278) (151,630) (18,113,955) (76,380) (259,536) 440 (3,248,117)
Collections on notes and leases rec. 3,665,055 2,846,907 22,808 15,053 780,287
Investments in subsidiaries (36,434) 11,628,801 11,592,367
Net Cash Provided from (Used in)
Financing Activities (23,996,657) 11,477,171 (3,674,681) (53,572) (244,483) 440 (2,467,830)
CASH FLOW FROM FINANCING ACTIVITIES:
Redemption: 0
Long-term debt (6,700,000) (8,083,174) (6,700,000)
Dividends declared 0 (2,612,000) (2,612,000)
Capital contribution - EUA 1,550,000 1,550,000
Partner's contribution(withdrawal) 0 1,032,009
Net increase (decrease) in short-term debt 8,098,455 4,962,647 8,359,000 (1,675,796) (100,000) 340,000 (529,344)
Net Cash Provided from (Used in)
Financing Activities 2,948,455 (4,700,518) 3,209,000 (1,675,796) (100,000) (2,272,000) (529,344)
NET INCREASE (DECREASE) IN CASH 3,158,791 0 1,034,642 356,289 227,971 567,636 87,905
Cash and temporary cash investments
at beginning of year 1,503,436 0 508,570 (215,160) 65,567 993 (37,663)
Cash and temporary cash investments
at end of year $4,662,227 $0 $1,543,212 $141,129 $293,538 $568,629 $50,242
Cash paid during the year for:
Interest (net of amounts capital.) $13,341,743 $627,775 $14,068,444 $0
Income Taxes (refund) ($5,480,385) ($6,008,306) $501,564
Conversion of investments in energy
savings projects
to notes and leases receivable $7,779,372 $5,461,992
( ) Denotes contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF CASH FLOWS (Continued)
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
<CAPTION>
EUA EUA EUA EUA EUA EUA EUA
Citizens Highland MUPA WestCoast FRC II EC&S I EC&S II
Corporation Corporation (Partn.) (Partn.) (Partn.) (Partn.) (Partn.)
<S> <C> <C> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) $45,031 $229,974 ($142,428) ($501,411) $8,630 $407,455 $286,462
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activ.:
Depreciation and amortization 133,141 402,282 1,175 376,784 11,305 765,734 2,207,445
Deferred taxes 15,657 27,024
Non-cash (Gains)/Expenses on Sales of
Invest. in Energy Savings Projects 5,105,379 713,288 0 170,000
Collections & sales of proj. notes 208,707 108,363 0 113,760 391,423
& Leases receivable
Equity earnings
Other - net 26,340 209,348 0
Net Changes to Working Capital:
Accounts receivable (651,919) (5,308,402) (6,139) 399,303 513,824 (547,827) (987,939)
Materials and supplies 56,349 0
Accounts payable 125,000 677,796 469,965 (507,554) 104,684 (13,903) 74,188
Accrued taxes 2,968 36,154 37,736
Other - net (37,105) (4,502) 80,572 79,503 38,990 5,600 1,389,421
Net Cash Prov. from (Used in) Operat. Act. (340,887) 1,640,109 403,145 706,012 677,433 730,819 3,531,000
CASH FLOW FROM INVESTING ACTIVITIES:
Expenditures for invest. in energy (1,726,621) (7,223,340) 0 9,778,151 0 (2,990,548) (3,917,002)
savings projects 0 0 0
Collections on notes and leases rec.
Investments in subsidiaries
Net Cash Provided from (Used in) (1,726,621) (7,223,340) 0 9,778,151 0 (2,990,548) (3,917,002)
Financing Activities
CASH FLOW FROM FINANCING ACTIVITIES:
Redemption:
Long-term debt (315,359) (8,931,582) 0 2,091,943 (928,176)
Dividends declared
Capital contribution - EUA
Partner's contribution(withdrawal) (88,299) (916,661) (572,744) 2,169,713 440,000
Net increase (decrease) in short-term debt 2,240,519 5,602,402 0 0 (2,035,679) 860,000
Net Cash Provided from (Used in)
Financing Activities 2,240,519 5,602,402 (403,658) (9,848,243) (572,744) 2,225,977 371,824
NET INCREASE (DECREASE) IN CASH 173,011 19,171 (513) 635,920 104,689 (33,752) (14,178)
Cash and temporary cash investments (10,281) 150,287 1,000 478,954 14,243 119,347 427,579
at beginning of year $162,730 $169,458 $487 $1,114,874 $118,932 $85,595 $413,401
Cash and temporary cash investments
at end of year
Cash paid during the year for:
Interest (net of amounts capital.) $900 ($99,826)
Income Taxes (refund) ($13,875) $40,232
Conversion of investments in energy
savings projects
to notes and leases receivable $2,152,947 $0 $164,433
( ) Denotes contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED
EARNINGS AND OTHER PAID-IN CAPITAL
DECEMBER 31, 1996
<CAPTION>
EUA EUA EUA EUA EUA EUA
Cogenex Cogenex Nova Day NEM Cogenex
Consolidated Eliminations Corporation (Division) (Division) Inc. Canada
<S> <C> <C> <C> <C> <C> <C> <C>
Balance of retained earnings at
beginning of year 6,796,888 $15,012,702 $4,943,244 $2,118,075 ($175,731) $437,533 $95,831
Additions: 0
Net Income (Loss) (6,521,740) 38,566 (7,215,056) (2,009,186) 125,133 1,893,037 389,185
Partners Capital contribution 0 2,609,713
Other additions 0 0
Total 275,148 17,660,981 (2,271,812) 108,889 (50,598) 2,330,570 485,016
Deductions: 0
Dividends: 0
Common - subsidiaries 0 2,560,000 2,560,000
Partners withdrawals 0 1,577,704
Other deductions 0 64,132 64,132
Total 0 4,201,836 0 0 0 2,560,000 64,132
Balance of retained earnings at
end of period 275,148 13,459,145 (2,271,812) 108,889 (50,598) (229,430) 420,884
Other Paid-In Capital at beginning of yr. 45,787,287 15,866,802 44,689,755 1,097,532 11,502,050 0
Additions: $0
Capital Contribution - EUA 1,550,000 1,550,000
Deductions:
Foreign currency translation adjust. 63,822 63,822
Other Paid-In Capital at end of period $47,273,465 $15,866,802 $46,175,933 $0 $1,097,532 $11,502,050 $0
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA COGENEX CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF RETAINED
EARNINGS AND OTHER PAID-IN CAPITAL (Continued)
DECEMBER 31, 1996
<CAPTION>
EUA EUA EUA EUA EUA EUA EUA
Citizens Highland MUPA West Coast FRC II EC&S I EC&S II
Corporation Corporation (Partn.) (Partn.) (Partn.) (Partn.) (Partn.)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance of retained earnings at
beginning of year ($17,780) $140,176 ($461,205) $3,872,672 $661,984 $3,017,730 $7,177,061
Additions:
Net Income (Loss) 45,031 229,974 (142,428) (501,411) 8,630 407,455 286,462
Partners Capital contribution 2,169,713 440,000
Other additions
Total 27,251 370,150 (603,633) 3,371,261 670,614 5,594,898 7,903,523
Deductions:
Dividends:
Common - subsidiaries
Partners withdrawals 88,299 916,661 572,744
Other deductions
Total 0 0 88,299 916,661 572,744 0 0
Balance of retained earnings at
end of period 27,251 370,150 (691,932) 2,454,600 97,870 5,594,898 7,903,523
Other Paid-In Capital at beginning of yr. 4,364,752
Additions:
Capital Contribution - EUA
Deductions:
Foreign currency translation adjust.
Other Paid-In Capital at end of period $0 $4,364,752 $0 $0 $0 $0 $0
( ) Denotes Contra
The accompanying notes are an integral part of the financial statements.
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord EUA
ASSETS Consolidated Eliminations Corporation Transcap. Corporation Bioten
<S> <C> <C> <C> <C> <C> <C>
Utility plant and other investments:
Non-utility property $1,691,774 $1,691,774
Less accumulated provision for deprec. 791,091 791,091
Net non-utility property 900,683 900,683
Investments in subsid. (at equity) 5,780,491 (6,488,058) (2,623,237) 317,539 1,598,131
Other investments & notes receiv. 200,872 65,818 9,820 125,234
Total Utility Plant and Other Invest. 6,882,046 (6,488,058) (2,557,419) 910,503 317,539 1,723,365
Current Assets:
Cash and temporary cash investments 387,629 15,530 372,099
Notes receivable 4,717,451 15,765,671 16,765,671 3,717,451
Accounts receivable - Net 1,605,734 (204,114) 1,593,678 456 215,714
Accounts receivable - assoc. comp. 91,173 89,987 1,186
Other current assets 84,435 39,806 44,629
Total Current Assets 6,795,249 15,856,844 16,706,880 2,010,406 1,642 3,933,165
Deferred Debits:
Other deferred debits 477,041 466,676 10,365
Total Deferred Debits 477,041 466,676 10,365
Total assets $14,154,336 $9,368,786 $14,616,137 $2,931,274 $319,181 $5,656,530
( ) Denotes Contra
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING BALANCE SHEETS
DECEMBER 31, 1996
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord EUA
LIABILITIES Consolidated Eliminations Corporation Transc. Corporation Bioten
<S> <C> <C> <C> <C> <C> <C>
Capitalization:
Common equity ($13,040,330 ($6,488,058) ($13,040,330 ($4,173,089) ($1,840,592) ($474,377)
Total Capitalization (13,040,330) (6,488,058) (13,040,330) (4,173,089) (1,840,592) (474,377)
Current Liabilities:
Notes Payable 28,476,824 15,765,671 28,421,751 7,674,539 2,245,096 5,901,109
Accounts payable 28,056 5,757 22,299
Accounts payable - assoc. comp. 41,454 3,356 24,205 8,605 2,120 9,880
Interest accrued 441,701 87,817 441,701 67,127 20,690
Other current liabilities 176,228 176,228
Total Current Liabilities 29,164,263 15,856,844 28,893,414 7,948,798 2,267,906 5,910,989
Deferred Credits:
Minority Interest (Loss) (1,156,670) (1,156,670)
Total Deferred Credits (1,156,670) (1,156,670) 0
Accumulated deferred taxes (812,927) (1,236,947) 312,235 (108,133) 219,918
Commitments and contingencies (Note J)
Total liabilities and capitalization $14,154,336 $9,368,786 $14,616,137 $2,931,274 $319,181 $5,656,530
( ) Denotes Contra
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF CAPITALIZATION
DECEMBER 31, 1996
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord EUA
Consolidated Eliminations Corporation Transc Corporation Bioten
<S> <C> <C> <C> <C> <C> <C>
Common Equity:
Common shares $1 $21 $1 $10 $10 $1
Other paid-in capital 999 $1,001,089 999 1,000,090 990 9
Retained earnings (13,041,330) ($7,489,168) (13,041,330) (5,173,189) (1,841,592) (474,387)
Total Common Equity (13,040,330) (6,488,058) (13,040,330) (4,173,089) (1,840,592) (474,377)
Total Capitalization ($13,040,330 ($6,488,058) ($13,040,330 ($4,173,089) ($1,840,592) ($474,377)
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING INCOME STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord EUA
Consolidated Eliminations Corporation Transc Corporation Bioten
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues $32,696 $ $ $32,696 $ $
Operating Expenses:
Operation $3,967,582 $863,746 $3,094,429 $9,407
Maintenance 5,498 5,498
Depreciation and amortization 455,379 12,535 407,063 35,781
Taxes - Other than income 16,247 15,501 274 472
Income Taxes - Current (credit) (2,299,283) (855,703) (1,443,580)
- Deferred (credit) 202,632 356,088 (153,456)
Total Operating Expenses 2,348,055 397,665 1,904,730 45,660
Operating Income (Loss) (2,315,359) (397,665) (1,872,034) (45,660)
Other Income and Deductions:
Interest and dividend income 14,479 701,328 709,926 5,881
Equity in earnings of jointly-owned companies (535,391) (2,968,594) (3,103,767) (400,218)
Allowance for other funds used during construction 6 6
Other income (deductions) - net 226,629 47,312 124 0 179,193
Total Other Income (294,277) (2,267,266) (2,346,523) 6,005 0 (221,025)
Loss Before Interest Charges (2,609,636) (2,267,266) (2,744,188) (1,866,029) 0 (266,685)
Interest Charges:
Other interest expense (principally
short-term notes) 1,379,883 701,328 1,245,331 835,880
Allowance for borrowed funds used during const. (20) (20)
Total Interest Charges 1,379,863 701,328 1,245,311 835,880
Net Income (Loss) (3,989,499) (2,968,594) (3,989,499) (2,701,909) 0 (266,685)
Earnings (Loss) Avail. for Common Shareholders ($3,989,499) ($2,968,594) ($3,989,499) ($2,701,909) $0 ($266,685)
EUA Energy Common Shares outstanding 100
Loss per share ($39,894.99)
( ) Denotes Contra
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord EUA
Consolidated Eliminations Corporation Transc Corporation Bioten
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Income (Loss) ($3,989,499) ($2,968,594) ($3,989,499) ($2,701,909) $0 ($266,685)
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided by Operating Activities:
Depreciation and Amortization 449,807 7,679 406,347 35,781
Deferred Taxes 373,841 307,379 (153,456) 219,918
Other - Net 431,589 2,968,594 2,997,414 2,551 400,218
Changes in Operating Assets and Liabilities:
Accounts receivable (226,802) 183,721 477,042 (416,249) (103,874)
Notes receivable (3,817,001) (5,775,935) (6,775,936) (2,817,000)
Accounts payable (46,913) (198,442) (20,765) (55,574) (169,016)
Accrued taxes
Other - net (1,219,656) 14,720 (1,271,606) 66,670
Net Cash (Used In) Provided from
Operating Activities (8,044,634) (5,775,936) (8,268,292) (2,851,620) (2,700,658)
CASH FLOW FROM INVESTING ACTIVITIES:
Construction expenditures (314,099) (314,099)
Increase/Decrease in Other Investments (3,999,994) 0 (3,999,994)
Net Cash (Used in) Investing Activities (4,314,093) 0 (3,999,994) (314,099) 0
CASH FLOW FROM FINANCING ACTIVITIES:
Net increase in short-term debt 12,277,993 5,775,936 12,277,994 3,075,277 2,700,658
Net Cash Provided From Financing Activities 12,277,993 5,775,936 12,277,994 3,075,277 2,700,658
NET (DECREASE) INCREASE IN CASH (80,734) 9,708 (90,442)
Cash and temporary cash investments
at beginning of year 468,363 5,822 462,541
Cash and temporary cash investments
at end of year $387,629 $15,530 $372,099
Cash paid during the year for:
Interest (Net of Amounts Capitalized $686,586 ($20) $686,606
Income Taxes (refund) ($2,472,769) ($1,148,466) ($1,029,522) $456 ($295,237)
( ) Denotes Contra
</TABLE>
<TABLE>
EUA ENERGY INVESTMENT AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF RETAINED
EARNINGS AND OTHER PAID-IN CAPITAL
DECEMBER 31, 1996
<CAPTION>
EUA EUA
Energy Energy Eastern
Investment Investment EUA Unicord EUA
Consolidated Eliminations Corporation Transc Corporation Bioten
<S> <C> <C> <C> <C> <C> <C>
Balance of retained earnings at begin. ($9,051,831) ($4,520,574) ($9,051,831) ($2,471,280) ($1,841,592) ($207,702)
Additions:
Net Income (Loss) (3,989,499) ($2,968,594) (3,989,499) (2,701,909) 0 (266,685)
Balance of retained earnings at end of ($13,041,330 ($7,489,168) ($13,041,330 ($5,173,189) ($1,841,592) ($474,387)
( ) Denotes Contra
</TABLE>
Notes to Consolidated Financial Statements
December 31, 1996
(A) Nature of Operations and Summary of Significant Accounting Policies:
General: Eastern Utilities Associates (EUA) is a diversified energy services
holding company. Its subsidiaries are principally engaged in the generation,
transmission, distribution and sale of electricity; energy related services
such as energy management; and promoting the conservation and efficient use of
energy.
Estimates: 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 assets and 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.
Basis of Consolidation: The consolidated financial statements include the
accounts of EUA and all subsidiaries. All material intercompany transactions
between the consolidated subsidiaries have been eliminated.
System of Accounts: The accounts of EUA and its consolidated subsidiaries are
maintained in accordance with the uniform system of accounts prescribed by the
regulatory bodies having jurisdiction.
Jointly Owned Companies: Montaup Electric Company (Montaup) follows the
equity method of accounting for its stock ownership investments in jointly
owned companies including four regional nuclear generating companies. Montaup's
investments in these nuclear generating companies range from 2.50% to 4.50%.
Montaup is entitled to electricity produced from these facilities based on its
ownership interests and is billed for its entitlement pursuant to contractual
agreements which are approved by the Federal Energy Regulatory Commission
(FERC).
One of the four facilities, Yankee Atomic, is being decommissioned, but Montaup
is required to pay, and has received FERC authorization to recover, its
proportionate share of any unrecovered costs and costs incurred after the
plant's retirement. Montaup's share of all unrecovered assets and the total
estimated costs to decommission the unit aggregated approximately $7.8 million
at December 31, 1996 and is included with Other Liabilities on the Consolidated
Balance Sheet. Also, due to recoverability, a regulatory asset has been
recorded for the same amount and is included with Other Assets.
In December 1996, the Board of Directors of Connecticut Yankee voted to retire
the generating station. Connecticut Yankee certified to the NRC that it had
permanently closed power generation operations and removed fuel from the
reactor. Montaup has a 4.5% equity ownership in Connecticut Yankee. Montaup's
share of all unrecovered assets and the total estimated costs to decommission
the unit aggregated approximately $34.1 million at December 31, 1996 and is
included with Other Liabilities on the Consolidated Balance Sheet. Also, due to
anticipated recoverability, a regulatory asset has been recorded for the same
amount and is included with Other Assets.
Montaup also has a stock ownership investment of 3.27% in each of two companies
which own and operate certain transmission facilities between the Hydro Quebec
electric system and New England.
EUA Ocean State Corporation (EUA Ocean State) follows the equity method of
accounting for its 29.9% partnership interest in the Ocean State Power Project
(OSP). Also, EUA Energy Investment follows the equity method of accounting for
its 40% partnership interest (9.9% voting power) in BIOTEN, G.P. and for its
20% stock ownership (9.9% voting power) in Separation Technologies, Inc. These
ownership interests and Montaup's stock ownership investments are included in
"Investments in Jointly Owned Companies" on the Consolidated Balance Sheet.
Plant and Depreciation: Utility plant is stated at original cost. The cost of
additions to utility plant includes contracted work, direct labor and material,
allocable overhead, allowance for funds used during construction and indirect
charges for engineering and supervision. For financial statement purposes,
depreciation is computed on the straight-line method based on estimated
useful lives of the various classes of property. On a consolidated basis,
provisions for depreciation on utility plant were equivalent to a composite
rate of approximately 3.7% in 1996 based on the average depreciable property
balances at the beginning and end of each year. Non-utility property and
equipment of EUA Cogenex Corporation (EUA Cogenex) is stated at original cost.
For financial statement purposes, depreciation on office furniture and
equipment, computer equipment and real property is computed on the straight-
line method based on estimated useful lives ranging from five to forty years.
Project equipment is depreciated over the term of the applicable contracts or
based on the estimated useful lives, whichever is shorter, ranging from five to
fifteen years.
Other Assets: The components of Other Assets at December 31, 1996 are detailed
as follows:
(In Thousands) 1996
Regulatory Assets:
Unamortized losses on reacquired debt $ 14,088
Unrecovered plant and
decommissioning costs 41,915
Deferred FAS 109 costs (Note B) 58,712
Deferred FAS 106 costs 4,054
Mendon Road judgment (Note J) 6,154
Other regulatory assets 6,363
Total regulatory assets 131,286
Other deferred charges and assets:
Unamortized debt expenses 4,625
Goodwill 6,848
Other 32,784
Total Other Assets $ 175,543
Regulatory Accounting: EUA's Core Electric companies are subject to certain
accounting rules that are not applicable to other industries. These accounting
rules allow regulated companies, in appropriate circumstances, to establish
regulatory assets and liabilities which defer the current financial impact of
certain costs that are expected to be recovered in future rates. EUA believes
that its Core Electric operations continue to meet the criteria established in
these accounting standards. Effects of legislation and/or regulatory
initiatives or EUA's own initiatives could ultimately cause the Core Electric
companies to no longer follow these accounting rules. In such an event, a non-
cash write-off of regulatory assets and liabilities could be required at that
time.
Allowance for Funds Used During Construction (AFUDC) and Capitalized Interest:
AFUDC represents the estimated cost of borrowed and equity funds used to
finance the EUA System's construction program. In accordance with regulatory
accounting, AFUDC is capitalized as a cost of utility plant in the same manner
as certain general and administrative costs. AFUDC is not an item of current
cash income but is recovered over the service life of utility plant in the form
of increased revenues collected as a result of higher depreciation expense. The
combined rate used in calculating AFUDC was 9.0% in 1996. The caption
"Allowance for Borrowed Funds Used During Construction" also includes interest
capitalized for non-regulated entities in accordance with Financial Accounting
Standards Board (FASB) Statement No. 34.
Operating Revenues: Utility revenues are based on billing rates authorized by
applicable federal and state regulatory commissions. Eastern Edison Company
(Eastern Edison), Blackstone Valley Electric Company (Blackstone) and Newport
Electric Corporation (Newport) (collectively, the Retail Subsidiaries) accrue
the estimated amount of unbilled base rate revenues at the end of each month to
match costs and revenues more closely. In addition they also record the
difference between fuel costs incurred and fuel costs billed. Montaup
recognizes revenues when billed. Montaup, Blackstone, and Newport also record
revenues related to rate adjustment mechanisms.
EUA Cogenex's revenues are recognized based on financial arrangements
established by each individual contract. Under paid-from-savings contracts,
revenues are recognized as energy savings are realized by customers. Revenue
from the sale of energy savings projects and sales-type leases are recognized
when the sales are complete. Interest on the financing portion of the
contracts is recognized as earned at rates established at the outset of the
financing arrangement. All construction and installation costs are recognized
as contract expenses when the contract revenues are recorded. In circumstances
in which material uncertainties exist as to contract profitability, cost
recovery accounting is followed and revenues received under such contracts are
first accounted for as recovery of costs to the extent incurred.
Federal Income Taxes: EUA and its subsidiaries generally reflect in income the
estimated amount of taxes currently payable, and provide for deferred taxes on
certain items subject to temporary timing differences to the extent permitted
by the various regulatory agencies. EUA's rate-regulated subsidiaries defer
recognition of annual investment tax credits (ITC) and amortize these credits
over the productive lives of the related assets.
Cash and Temporary Cash Investments: EUA considers all highly liquid
investments and temporary cash investments with a maturity of three months or
less when acquired to be cash equivalents.
(B) Income Taxes:
EUA adopted FASB statement No. 109, "Accounting for Income Taxes" (FAS 109),
which requires recognition of deferred income taxes for temporary differences
that are reported in different years for financial reporting and tax purposes
using the liability method. Under the liability method, deferred tax
liabilities or assets are computed using the tax rates that will be in effect
when temporary differences reverse. Generally, for regulated companies, the
change in tax rates may not be immediately recognized in operating results
because of ratemaking treatment and provisions in the Tax Reform Act of 1986.
Total deferred tax assets and liabilities for 1996 are comprised as follows:
Deferred Tax Deferred Tax
(In Thousands) Assets (In Thousands) Liabilities
Plant Related Plant Related
Differences $18,442 Differences $188,425
Alternative Refinancing
Minimum Tax 852 Costs 1,623
NOL Carryforward 1,655 Pensions 1,313
Pensions 4,012
Acquisitions 3,965
Other 5,657 Other 12,042
Total $34,583 Total $203,403
As of December 31, 1996, EUA has recorded on its Consolidated Balance Sheet a
regulatory liability to ratepayers of approximately $21.2 million. This amount
primarily represents excess deferred income taxes resulting from the reduction
in the federal income tax rate and also include deferred taxes provided on
investment tax credits. Also at December 31, 1996, a regulatory asset of
approximately $58.7 million, has been recorded, representing the cumulative
amount of federal income taxes on temporary depreciation differences which were
previously flowed through to ratepayers.
<TABLE>
NOTE B - INCOME AND DEFERRED TAXES:
Components of income and deferred tax expense for Eastern Utilities Associates
and Subsidiary Companies for 1996 are as follows:
<CAPTION>
EUA
Eastern EUA Energy
EUA Utilities Service Services
Consolidated Eliminations Associates Corporation Corporation
<S> <C> <C> <C> <C> <C>
Federal:
Current ($231,268) ($20,078) ($4,219,727) $219,879 $0
Deferred $9,838,696 (18,413) 4,125,240 36,959 0
Investment Tax Credit, Net ($1,124,988) 0 0 0
$8,482,440 (38,491) (94,487) 256,838 0
State:
Current $2,822,754 0 11,074 0
Deferred ($362,963) 0 59,095 0
$2,459,791 0 0 70,169 0
Charged to Operations-Federal & State $10,942,231 (38,491) (94,487) 327,007 0
Charged to Other Income $0
Current $4,797,682 0 0 (27,190)
Deferred $2,134,897 371,020 0 0
Investment Tax Credit, Net ($82,200) 0 0 0
Total $17,792,610 ($38,491) $276,533 $327,007 ($27,190)
Federal income tax expense was different than the amounts computed by applying
the statutory rates to book income subject to tax for the following reasons:
Tax Computed at Statutory Rates $17,751,348 ($13,472) ($229,983) $241,503 ($27,190)
(Decrease) Increase in Tax From: $0
Equity Component of AFUDC ($189,369)
Depreciation of Equity AFUDC $1,794 4,243
Amortization and Utilization of ITC ($1,207,188)
State Tax, Net of Federal Income Tax Bene. $1,952,311 45,610
Other ($516,286) (25,019) 506,516 35,651
Total $17,792,610 ($38,491) $276,533 $327,007 ($27,190)
</TABLE>
<TABLE>
NOTE B - INCOME AND DEFERRED TAXES: (Continued)
Components of income and deferred tax expense for Eastern Utilities Associates
and Subsidiary Companies for 1996 are as follows:
<CAPTION>
Blackstone Eastern EUA EUA
Valley Newport Edison Cogenex Energy EUA
Electric Electric Company Corporation Investment Ocean State
Company Company Consolidated Consolidated Consolidated Corporation
<S> <C> <C> <C> <C> <C> <C>
Federal:
Current $2,900,635 $1,304,536 $9,111,295 ($6,077,643) ($2,301,260) ($1,189,061)
Deferred (530,707) 386,259 5,152,053 452,393 202,632 (4,546)
Investment Tax Credit, Net (182,016) (3,960) (939,012) 0 0 0
2,187,912 1,686,835 13,324,336 (5,625,250) (2,098,628) (1,193,607)
State:
Current 1,919 1,341 2,612,145 194,118 1,978 179
Deferred (34,125) 0 122,215 (510,148) 0 0
(32,206) 1,341 2,734,360 (316,030) 1,978 179
Charged to Operations-Federal & State 2,155,706 1,688,176 16,058,696 (5,941,280) (2,096,650) (1,193,428)
Charged to Other Income
Current 40,132 13,509 1,232,164 792,624 (399,111) 3,145,554
Deferred 0 0 (67,224) 1,484,297 172,608 174,196
Investment Tax Credit, Net 0 (82,200) 0 0 0 0
Total $2,195,838 $1,619,485 $17,223,636 ($3,664,359) ($2,323,153) $2,126,322
Federal income tax expense was different than the amounts computed by applying
the statutory rates to book income subject to tax for the following reasons:
Tax Computed at Statutory Rates $2,191,162 $1,571,722 $17,567,776 ($3,565,136) ($2,209,429) $2,197,451
(Decrease) Increase in Tax From:
Equity Component of AFUDC (17,346) (13,038) (127,501) (31,484)
Depreciation of Equity AFUDC 282,848 166,978 (452,275)
Amortization and Utilization of ITC (182,016) (86,160) (939,012)
State Tax, Net of Federal Income Tax Bene. (20,934) 872 1,896,531 27,061 1,711 1,460
Other (57,876) (20,889) (721,883) (126,284) (115,435) (41,105)
Total $2,195,838 $1,619,485 $17,223,636 ($3,664,359) ($2,323,153) $2,126,322
</TABLE>
<TABLE>
NOTE B - INCOME AND DEFERRED TAXES:
Components of income and deferred tax expense for Eastern Edison Company and Subsidiary for 1996
are as follows:
Eastern Eastern Montaup
Edison Edison Electric
Consolidated Eliminations Company Company
<S> <C> <C> <C> <C>
Federal:
Current $9,111,295 $7,512,104 $1,599,191
Deferred 5,152,053 350,395 4,801,658
Investment Tax Credit, Net (939,012) (310,848) (628,164)
13,324,336 0 7,551,651 5,772,685
State:
Current 2,612,145 1,528,968 1,083,177
Deferred 122,215 (35,824) 158,039
2,734,360 0 1,493,144 1,241,216
Charged to Operations (Federal & State) 16,058,696 9,044,795 7,013,901
Charged to Other Income
Current 1,232,164 25,353 1,206,811
Deferred (67,224) 0 (67,224)
Investment Tax Credit, Net $0 0 0
Total $17,223,636 $0 $9,070,148 $8,153,488
Federal income tax expense was different than the amounts computed by applying the statutory
rates to book income subject to tax for the following reasons:
Tax Computed at Statutory Rates $17,567,776 $8,636,534 $8,931,242
(Decrease) Increase in Tax From:
Equity Component of AFUDC (127,501) (10,425) (117,076)
Depreciation of Equity AFUDC (452,275) (96,925) (355,350)
Amortization and Utilization of ITC (939,012) (310,848) (628,164)
State Tax, Net of Federal Income Tax 1,896,531 973,298 923,233
Other (721,883) (121,486) (600,397)
Total $17,223,636 $0 $9,070,148 $8,153,488
</TABLE>
<TABLE>
NOTE B - INCOME AND DEFERRED TAXES:
Components of income and deferred tax expense for EUA Cogenex Corporation and Subsidiary Companies for 1996 are as follows:
<CAPTION>
EUA EUA
Cogenex EUA Northeast Citizens EUA EUA
Corporation Cogenex Energy Conservation Highland Cogenex
Consolidated Elimin. Corporation Mgmt, Inc. Svs, Inc. Corporation Canada
<S> <C> <C> <C> <C> <C> <C> <C>
Federal:
Current ($6,077,643) ($7,327,742) $677,406 $6,986 $204,776 $360,931
Deferred 452,393 125,193 284,519 15,657 27,024 0
Investment Tax Credit, Net 0 0 0 0 0 0
(5,625,250) 0 (7,202,549) 961,925 22,643 231,800 360,931
State:
Current 194,118 144,836 2,537 11,909 34,836 0
Deferred (510,148) (518,296) 8,148 0 0 0
(316,030) 0 (373,460) 10,685 11,909 34,836 0
Charged to Operations (Federal & State) (5,941,280) 0 (7,576,009) 972,610 34,552 266,636 360,931
Charged to Other Income
Current 792,624 792,624 0 0 0 0
Deferred 1,484,297 1,484,297 0 0 0 0
Investment Tax Credit, Net $0 0 0 0 0 0
Total ($3,664,359) $0 ($5,299,088) $972,610 $34,552 $266,636 $360,931
Federal income tax expense was different than the amounts computed by applying
the statutory rates to book income subject to tax for the following reasons:
Tax Computed at Statutory Rates ($3,565,136) ($5,032,320) $1,002,975 $27,854 $173,813 $262,541
(Decrease) Increase in Tax From:
Equity Component of AFUDC 0 0 0 0 0 0
Depreciation of Equity AFUDC 0 0 0
Amortization and Utilization of ITC 0 0 0 0 0 0
State Tax, Net of Federal Income Tax 27,061 (10,269) 6,945 7,741 22,643 0
Other (126,284) (256,499) (37,311) (1,043) 70,179 98,390
Total ($3,664,359) $0 ($5,299,088) $972,610 $34,552 $266,636 $360,931
</TABLE>
<TABLE>
NOTE B - INCOME AND DEFERRED TAXES:
Components of income and deferred tax expense for EUA Energy Investment
Corporation and Subsidiary Companies for 1996 are as follows:
<CAPTION>
EUA Energy EUA EUA
Investment Energy EUA Unicord EUA
Consolidated Eliminations Corporation TransCapacity Corporation Bioten
<S> <C> <C> <C> <C> <C>
Federal:
Current ($2,301,260) ($857,174) ($1,444,086) $0 $0
Deferred 202,632 356,088 (153,456) 0 0
Investment Tax Credit, Net 0 0 0 0 0
(2,098,628) 0 (501,086) (1,597,542) 0 0
State:
Current 1,978 1472 506 0 0
Deferred 0 0 0 0 0
1,978 0 1,472 506 0 0
Charged to Operations (Federal & State) (2,096,650) 0 (499,614) (1,597,036) 0 0
Charged to Other Income
Current (399,111) 0 0 0 (399,111)
Deferred 172,608 (47,310) 0 0 219,918
Investment Tax Credit, Net 0 0 0 0 0
Total ($2,323,153) $0 ($546,924) ($1,597,036) $0 ($179,193)
Federal income tax expense was different than the amounts computed by applying
the statutory rates to book income subject to tax for the following reasons:
Tax Computed at Statutory Rates ($2,209,429) ($548,740) ($1,504,631) $0 ($156,058)
(Decrease) Increase in Tax From:
Equity Component of AFUDC 0 0 0 0 0
Depreciation of Equity AFUDC 0.00 0.00 0.00
Amortization and Utilization of ITC 0 0 0 0 0
State Tax, Net of Federal Income Tax 1,711 957 329 0 425
Other (115,435) 859 (92,734) 0 (23,560)
Total ($2,323,153) $0 ($546,924) ($1,597,036) $0 ($179,193)
</TABLE>
EUA has $0.9 million of alternative minimum tax credits which have no
expiration and can be utilized to reduce the consolidated regular tax
liability.
(C) Capital Stock:
The changes in the number of common shares outstanding and related increases in
Other Paid-In Capital during the year ended December 31, 1996 were as follows:
Number of Common Shares Issued
Dividend Common Other
Reinvestment Shares Paid-In
and Employee At Par Capital
Savings Plans (000) (000)
(767) $ (4) $ 4
The preferred stock provisions of the Retail Subsidiaries place certain
restrictions upon the payment of dividends on common stock by each company. At
December 31, 1996 each company was in excess of the minimum requirements which
would make these restrictions effective.
In the event of involuntary liquidation, the holders of non-redeemable
preferred stock of the Retail Subsidiaries are entitled to $100 per share plus
accrued dividends. In the event of voluntary liquidation, or if redeemed at
the option of these companies, each share of the non-redeemable preferred stock
is entitled to accrued dividends plus the following:
Company Issue Amount
Blackstone: 4.25% issue $104.40
5.60% issue 103.82
Newport: 3.75% issue 103.50
(D) Redeemable Preferred Stock:
Eastern Edison's 6 5/8% Preferred Stock issue is entitled to an annual
mandatory sinking fund sufficient to redeem 15,000 shares commencing September
1, 2003. The redemption price is $100 per share plus accrued dividends. All
outstanding shares of the 6 5/8% issue are subject to mandatory redemption on
September 1, 2008, at a price of $100 per share plus accrued dividends.
In the event of liquidation, the holders of Eastern Edison's 6 5/8% Preferred
Stock are entitled to $100 per share plus accrued dividends.
In October 1996, Newport redeemed the remaining 900 shares of its 9.75%
Preferred Stock, representing 500 shares under the mandatory sinking fund
provision and 400 shares under the optional provision of the sinking fund.
(E) Long-Term Debt:
The various mortgage bond issues of Blackstone, Eastern Edison, and Newport are
collateralized by substantially all of their utility plant. In addition,
Eastern Edison's bonds are collateralized by securities of Montaup, which are
wholly-owned by Eastern Edison, in the principal amount of approximately $236
million.
Blackstone's Variable Rate Demand Bonds are collateralized by an irrevocable
letter of credit which expires on January 21, 1998. The letter of credit
permits an extension of one year upon mutual agreement of the bank and
Blackstone.
Newport's Variable Rate Electric Energy Facilities Revenue Refunding Bonds are
collateralized by an irrevocable Letter of Credit which expires on January 6,
1998, and permits an extension of one year upon mutual agreement of the Bank
and Newport. EUA Service Corporation's (EUA Service) 10.2% Secured Notes due
2008 are collateralized by certain real estate and property of the company.
In September, Eastern Edison used available cash to redeem $7 million of 4 7/8%
First Mortgage Bonds at maturity.
The EUA System's aggregate amount of current cash sinking fund requirements and
maturities of long-term debt, (excluding amounts that may be satisfied by
available property additions) for each of the five years following 1996 are:
$27.5 million in 1997, $72.5 million in 1998, $21.9 million in 1999, $62.5
million in 2000, and $14.3 million in 2001.
As a result of the June 1996 $5.9 million charge to earnings and lower than
anticipated sales, EUA Cogenex was not in compliance with the interest coverage
covenant contained in certain of its unsecured note agreements and therefore
EUA Cogenex was in default under said note agreements. EUA Cogenex has reached
agreement with lenders to modify the interest coverage covenant contained in
these note agreements through January 1, 1998, and to waive the default created
by the June 1996 charge.
(F) Fair Value Of Financial Instruments:
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate:
Cash and Temporary Cash Investments: The carrying amount approximates fair
value because of the short-term maturity of these instruments.
Long Term Notes Receivable and Net Investment in Sales-Type Leases: The fair
value of these assets are based on market rates of similar securities.
Preferred Stock and Long-Term Debt of Subsidiaries: The fair value of the
System's redeemable preferred stock and long-term debt were based on quoted
market prices for such securities at December 31, 1996.
Carrying Fair
Amount ($000) Value ($000)
EUA
Cash and Temporary Cash Investments 112 112
Redeemable Preferred Stock - -
Long-Term Debt - -
EUA Service
Cash and Temporary Cash Investments 4,088 4,088
Redeemable Preferred Stock - -
Long-Term Debt 10,100 10,585
Blackstone
Cash and Temporary Cash Investments 798 798
Redeemable Preferred Stock - -
Long-Term Debt 36,500 37,596
Newport
Cash and Temporary Cash Investments 292 292
Redeemable Preferred Stock - -
Long-Term Debt 21,280 21,987
Eastern Edison - Consolidated
Cash and Temporary Cash Investments 2,105 2,105
Redeemable Preferred Stock 30,000 30,300
Long-Term Debt 223,000 225,870
EUA Cogenex - Consolidated
Cash and Temporary Cash Investments 4,662 4,662
Redeemable Preferred Stock - -
Long-Term Notes Receivable and
Net Investment in Sales-Type Leases 52,599 54,869
Long-Term Debt 112,500 118,040
EUA Energy - Consolidated
Cash and Temporary Cash Investments 388 388
Redeemable Preferred Stock - -
Long-Term Debt - -
EUA Ocean State
Cash and Temporary Cash Investments 10 10
Redeemable Preferred Stock - -
Long-Term Debt 31,067 36,342
EUA Energy Services
Cash and Temporary Cash Investments 1 1
Redeemable Preferred Stock - -
Long-Term Debt - -
(G) Lines Of Credit:
EUA System companies maintain short-term lines of credit with various banks
aggregating approximately $140 million. At December 31, 1996, unused short-
term lines of credit were approximately $89 million. In accordance with
informal agreements with the various banks, commitment fees are required to
maintain certain lines of credit. During 1996, the weighted average interest
rate for short-term borrowings was 5.5%.
(H) Jointly Owned Facilities:
At December 31, 1996, in addition to the stock ownership interests discussed
in Note A, Nature of Operations and Summary of Significant Accounting Policies
- -Jointly Owned Companies, Montaup and Newport had direct ownership interests in
the following electric generating facilities:
Accumulated
Provision For Net Construc-
Utility Depreciation Utility tion
Percent Plant in and Plant in Work in
($ in thousands) Owned Service Amortization Service Progress
Montaup:
Canal Unit 2 50.00% $83,194 $41,843 $41,351 $446
Wyman Unit 4 1.96% 4,051 2,130 1,921
Seabrook Unit 1 2.90% 194,928 29,983 164,945 251
Millstone Unit 3 4.01% 178,854 49,560 129,294 170
Newport:
Wyman Unit 4 0.67% 1,285 726 559
The foregoing amounts represent Montaup's and Newport's interest in each
facility, including nuclear fuel where appropriate, and are included on the
like-captioned lines on the Consolidated Balance Sheet. At December 31, 1996,
Montaup's total net investment in nuclear fuel of the Seabrook and Millstone
Units amounted to $2.8 million and $1.8 million, respectively.
Montaup's and Newport's shares of related operating and maintenance expenses
with respect to units reflected in the table above are included in the
corresponding operating expenses.
(I) Financial Information By Business Segments:
The Core Electric Business includes results of the electric utility operations
of Blackstone, Eastern Edison, Newport and Montaup.
Energy Related Business includes results of our diversified energy related
subsidiaries, EUA Cogenex, EUA Ocean State and EUA Energy Investment
Corporation (EUA Energy) and EUA Energy Services. Corporate results include
the operations of EUA Service and EUA Parent.
<TABLE>
<CAPTION> Pre-Tax Depreciation Cash Equity in
Operating Operating Income and Construction Subsidiary
($ in thousands) Revenues Income Taxes Amortization Expenditures Earnings
<S> <C> <C> <C> <C> <C> <C>
Year Ended
December 31, 1996
Core Electric $ 470,719 $ 80,042 $ 19,902 $ 35,178 $ 33,337 $ 1,587
Energy Related 56,349 (11,536) (9,231) 10,290 28,121 9,111
Corporate (1,723) 271 10 1,272
Total $ 527,068 $ 66,783 $ 10,942 $ 45,478 $ 62,730 $10,698
</TABLE>
December 31,
($ in thousands) 1996
Total Plant and Other Investments
Core Electric $ 715,796
Energy Related 196,236
Corporate 20,357
Total Plant and Other Investments 932,389
Other Assets
Core Electric 232,443
Energy Related 66,212
Corporate 25,985
Total Other Assets 324,640
Total Assets $1,257,029
(J) Commitments And Contingencies:
Nuclear Fuel Disposal and Nuclear Plant Decommissioning Costs: The owners (or
lead participants) of the nuclear units in which Montaup has an interest have
made, or expect to make, various arrangements for the acquisition of uranium
concentrate, the conversion, enrichment, fabrication and utilization of nuclear
fuel and the disposition of that fuel after use. The owners (or lead
participants) of United States nuclear units have entered into contracts with
the Department of Energy (DOE) for disposal of spent nuclear fuel in accordance
with the Nuclear Waste Policy Act of 1982 (NWPA). The NWPA requires (subject
to various contingencies) that the federal government design, license,
construct and operate a permanent repository for high level radioactive wastes
and spent nuclear fuel and establish a prescribed fee for the disposal of such
wastes and nuclear fuel. The NWPA specifies that the DOE provide for the
disposal of such waste and spent nuclear fuel starting in 1998. Objections on
environmental and other grounds have been asserted against proposals for
storage as well as disposal of spent nuclear fuel. The DOE now estimates that
a permanent disposal site for spent fuel will not be ready to accept fuel
for storage or disposal until as late as the year 2010. Montaup owns a 4.01%
interest in Millstone III and a 2.9% interest in Seabrook I. Northeast
Utilities, the operator of the units, indicates that Millstone III has
sufficient on-site storage facilities which, with rack additions, can
accommodate its spent fuel for the projected life of the unit. At the Seabrook
Project, there is on-site storage capacity which, with rack additions, will be
sufficient to at least the year 2011.
The Energy Policy Act of 1992 requires that a fund be created for the
decommissioning and decontamination of the DOE uranium enrichment facilities.
The fund will be financed in part by special assessments on nuclear power
plants in which Montaup has an interest. These assessments are calculated
based on the utilities' prior use of the government facilities and have been
levied by the DOE, starting in September 1993, and will continue over 15 years.
This cost is passed on to the joint owners or power buyers as an additional
fuel charge on a monthly basis and is currently being recovered by Montaup
through rates.
Also, Montaup is recovering through rates its share of estimated
decommissioning costs for Millstone III and Seabrook I. Montaup's share of the
current estimate of total costs to decommission Millstone III is $18.6 million
in 1996 dollars, and Seabrook I is $13.1 million in 1996 dollars. These
figures are based on studies performed for the lead owners of the units.
Montaup also pays into decommissioning reserves pursuant to contractual
arrangements with other nuclear generating facilities in which it has an equity
ownership interest or life of the unit entitlement. Such expenses are
currently recoverable through rates.
Pensions: EUA maintains a non-contributory defined benefit pension plan
covering substantially all employees of the EUA System (Retirement Plan).
Retirement Plan benefits are based on years of service and average compensation
over the four years prior to retirement. It is the EUA System's policy to fund
the Retirement Plan on a current basis in amounts determined to meet the
funding standards established by the Employee Retirement Income Security Act of
1974.
Total pension expense for the Retirement Plan for 1996 included the following
components:
($ in thousands) 1996
Service cost-benefits earned
during the period $ 3,126
Interest cost on projected
benefit obligations 9,765
Actual loss (return) on assets (16,451)
Net amortization and deferrals 4,060
Total periodic pension expense $ 500
Assumptions used to determine pension costs:
Discount Rate 7.25%
Compensation Increase Rate 4.25%
Long-Term Return on Assets 9.50%
The following table sets forth the actuarial present value of benefit
obligations and funded status at December 31, 1996:
($ in thousands) 1996
Accumulated benefit obligations
Vested $ (118,739)
Non-vested (254)
Total (118,993)
Projected benefit obligations (136,286)
Plan assets at fair value,
primarily stocks and bonds 161,300
Unrecognized net (gain) (29,963)
Unamortized net
assets at January 1 4,513
Net pension (liability) $ (436)
The discount rate and compensation increase rate used to determine pension
obligations, effective January 1, 1997 are 7.5% and 4.25%, respectively, and
were used to calculate the plan's funded status at December 31, 1996.
At December 31, 1996, approximately $1.4 million was included in other
liabilities for unfunded non-qualified benefits related to the 1995 voluntary
retirement incentive offer.
EUA also maintains non-qualified supplemental retirement plans for certain
officers of the EUA System (Supplemental Plans). Benefits provided under the
Supplemental Plans are based primarily on compensation at retirement date. EUA
maintains life insurance on certain participants of the Supplemental Plans to
fund in whole, or in part, its future liabilities under the Supplemental Plans.
As of December 31, 1996, approximately $4.4 million was included in accrued
expenses and other liabilities for these plans. For the year ended December
31, 1996 expenses related to the Supplemental Plans were $1.5 million.
EUA also provides a defined contribution 401(k) savings plan for substantially
all employees. EUA's matching percentage of employees' voluntary contributions
to the plan amounted to $1.3 million in 1996.
Post-Retirement Benefits: Retired employees are entitled to participate in
health care and life insurance benefit plans. Health care benefits are subject
to deductibles and other limitations. Health care and life insurance benefits
are partially funded by EUA System companies for all qualified employees.
The EUA System adopted Statement of Financial Accounting Standard No. 106,
"Accounting for Post-Retirement Benefits Other Than Pensions," (FAS 106) as of
January 1, 1993. This standard establishes accounting and reporting standards
for such post-retirement benefits as health care and life insurance. Under FAS
106 the present value of future benefits is recorded as a periodic expense over
employee service periods through the date they become fully eligible for
benefits. With respect to periods prior to adopting FAS 106, EUA elected to
recognize accrued costs (the Transition Obligation) over a period of 20 years,
as permitted by FAS 106. The resultant annual expense, including amortization
of the Transition Obligation and net of capitalized and deferred amounts, was
approximately $6.1 million in 1996.
The total cost of post-retirement benefits other than pensions for 1996
includes the following components:
($ in thousands) 1996
Service cost $ 1,123
Interest cost 4,449
Actual return on plan assets (253)
Amortization of transition obligation 3,313
Other amortizations & deferrals - net (1,211)
Net periodic post-retirement
benefit cost $ 7,421
Assumptions used to determine post-retirement benefit costs
Discount rate 7.25%
Health care cost trend rate
- near-term 9.00%
- long-term 5.00%
Compensation increase rate 4.25%
Long-term return on assets
- union 8.50%
- non-union 7.50%
Reconciliation of funded status:
($ in thousands) 1996
Accumulated post-retirement benefit obligation (APBO):
Retirees $(36,518)
Active employees fully eligible
for benefits (5,952)
Other active employees (19,652)
Total $(62,122)
Plan assets at fair value, primarily
notes and bonds 17,743
Unrecognized transition obligation 53,001
Unrecognized net loss (gain) (17,551)
(Accrued)/prepaid post-retirement
benefit cost $ (8,929)
The discount rate and compensation increase rate used to determine post-
retirement benefit obligations effective January 1, 1997 are 7.5% and 4.25%,
respectively, and were used to calculate the funded status of post-retirement
benefits at December 31 , 1996.
Increasing the assumed health care cost trend rate by 1% each year would
increase the total post-retirement benefit cost for 1996 by $800,000 and
increase the total accumulated post-retirement benefit obligation by $7.5
million.
The EUA System has also established separate irrevocable external Voluntary
Employees' Beneficiary Association Trust Funds for union and non-union
retirees. Contributions to the funds commenced in March 1993 and totaled
approximately $7.8 million in 1996.
Long-Term Purchased Power Contracts: The EUA System is committed under long-
term purchased power contracts, expiring on various dates through September
2021, to pay demand charges whether or not energy is received. Under terms in
effect at December 31, 1996, the aggregate annual minimum commitments for such
contracts are approximately $122 million in 1997, $116 million in 1998, $114
million in 1999, $111 million in 2000, $111 million in 2001 and will aggregate
$1.0 billion for the ensuing years. In addition, the EUA System is required to
pay additional amounts depending on the actual amount of energy received under
such contracts. The demand costs associated with these contracts are reflected
as Purchased Power-Demand on the Consolidated Statement of Income. Such costs
are currently recoverable through rates.
Environmental Matters: There is an extensive body of federal and state
statutes governing environmental matters, which permit, among other things,
federal and state authorities to initiate legal action providing for liability,
compensation, cleanup, and emergency response to the release or threatened
release of hazardous substances into the environment and for the cleanup of
inactive hazardous waste disposal sites which constitute substantial hazards.
Because of the nature of the EUA System's business, various by-products and
substances are produced or handled which are classified as hazardous under the
rules and regulations promulgated by the United States Environmental Protection
Agency (EPA) as well as state and local authorities. The EUA System generally
provides for the disposal of such substances through licensed contractors, but
these statutory provisions generally impose potential joint and several
responsibility on the generators of the wastes for cleanup costs. Subsidiaries
of EUA have been notified with respect to a number of sites where they may be
responsible for such costs, including sites where they may have joint and
several liability with other responsible parties. It is the policy of the
EUA System companies to notify liability insurers and to initiate claims. EUA
is unable to predict whether liability, if any, will be assumed by, or can be
enforced against, the insurance carrier in these matters.
On December 13, 1994, the United States District Court for the District of
Massachusetts (District Court) issued a judgment against Blackstone, finding
Blackstone liable to the Commonwealth of Massachusetts (Commonwealth) for the
full amount of response costs incurred by the Commonwealth in the cleanup of a
by-product of manufactured gas at a site at Mendon Road in Attleboro,
Massachusetts. The judgment also found Blackstone liable for interest and
litigation expenses calculated to the date of judgment. The total liability is
approximately $5.9 million, including approximately $3.6 million in interest
which has accumulated since 1985. Due to the uncertainty of the ultimate
outcome of this proceeding and anticipated recoverability, Blackstone recorded
the $5.9 million District Court judgment as a deferred debit. This amount is
included with Other Assets at December 31, 1996.
Blackstone filed a Notice of Appeal of the District Court's judgment and filed
its brief with the United States Court of Appeals for the First Circuit (First
Circuit) on February 24, 1995. On October 6, 1995 the First Circuit vacated
the District Court's judgment and ordered the District Court to refer the
matter to the EPA to determine whether the chemical substance, ferric
ferrocyanide (FFC), contained within the by-product is a hazardous substance.
On January 20, 1995, Blackstone entered into an escrow agreement with the
Commonwealth whereby Blackstone deposited $5.9 million with an escrow agent who
transferred the funds into an interest bearing money market account. The
distribution of the proceeds of the escrow account will be determined upon the
final resolution of the judgment. No additional interest expense will accrue
on the judgment amount.
On January 28, 1994, Blackstone filed a complaint in the District Court,
seeking, among other relief, contribution and reimbursement from Stone &
Webster Inc., of New York City and several of its affiliated companies (Stone &
Webster), and Valley Gas Company of Cumberland, Rhode Island (Valley) for any
damages incurred by Blackstone regarding the Mendon Road site. On November 7,
1994, the court denied motions to dismiss the complaint which were filed by
Stone & Webster and Valley. This proceeding was stayed in December 1995
pending final EPA determination as to whether FFC is hazardous.
In addition, Blackstone has notified certain liability insurers and has filed
claims with respect to the Mendon Road site, as well as other sites. Blackstone
reached settlement with one carrier for reimbursement of legal costs related to
the Mendon Road case. In January 1996, Blackstone received the proceeds of the
settlement.
As of December 31, 1996, the EUA System had incurred costs of approximately
$5.7 million (excluding the $5.9 million Mendon Road judgment) in connection
with these sites, substantially all of which relate to Blackstone. These
amounts have been financed primarily by internally generated cash. Blackstone
is currently amortizing all of its incurred costs over a five-year period
consistent with prior regulatory recovery periods and is recovering certain of
those costs in rates.
EUA estimates that additional costs of up to $2.8 million (excluding the $5.9
million Mendon Road judgment) may be incurred at these sites through 1998,
substantially all of which relates to sites at which Blackstone is a
potentially responsible party. Estimates beyond 1998 cannot be made since site
studies, which are the basis of these estimates, have not been completed. As a
result of the recoverability of cleanup costs in rates and the uncertainty
regarding both its estimated liability, as well as its potential contributions
from insurance carriers and other responsible parties, EUA does not believe
that the ultimate impact of the environmental costs will be material to the
financial position of the EUA System or to any individual subsidiary and thus
no loss provision is required at this time.
The Clean Air Act Amendments created new regulatory programs and generally
updated and strengthened air pollution control laws. These amendments expanded
the regulatory role of the EPA regarding emissions from electric generating
facilities and a host of other sources. EUA System generating facilities were
first affected in 1995, when EPA regulations took effect for facilities owned
by the EUA System. Montaup's coal-fired Somerset Unit #6 is utilizing lower
sulfur content coal to meet the 1995 air standards. EUA does not anticipate
the impact from the Amendments to be material to the financial position of the
EUA System.
In November of 1996, the EPA proposed to toughen the nation's ozone standards
as well as the particulate matters standards. The effect that such rules will
have on the EUA System cannot be determined by management at this time. On
December 23, 1996, Eastern Edison, Montaup, the Massachusetts Attorney General
and Division of Energy Resources reached a settlement in principle regarding
electric utility industry restructuring in the state of Massachusetts. The
proposed settlement includes a plan for emissions reductions related to
Montaup's Somerset Station Units 5 and 6, and to Montaup's 50% ownership share
of Canal Electric's Unit #2. The basis for SO2 and NO x emission reductions in
the proposed settlement is an allowance cap calculation. Montaup may meet its
allowance caps by any combination of control technologies, fuel switching,
operational changes, and/or the use of purchased or surplus allowances. The
settlement is expected to be submitted to the MDPU in March 1997.
In April 1992, the Northeast States for Coordinated Air Use Management
(NESCAUM), an environmental advisory group for eight northeast states including
Massachusetts and Rhode Island, issued recommendations for NOx controls for
existing utility boilers required to meet the ozone non-attainment requirements
of the Clean Air Act. The NESCAUM recommendations are more restrictive than
the Clean Air Act requirements. The Massachusetts Department of Environmental
Management has amended its regulations to require that Reasonably Available
Control Technology (RACT) be implemented at all stationary sources potentially
emitting 50 tons or more per year of NOx Similar regulations have been issued
in Rhode Island. Montaup has initiated compliance, through, among other
things, selective noncatalytic reduction processes.
A number of scientific studies in the past several years have examined the
possibility of health effects from EMF that are found wherever there is
electricity. While some of the studies have indicated some association between
exposure to EMF and health effects, many others have indicated no direct
association. The research to date has not conclusively established a direct
causal relationship between EMF exposure and human health. Additional studies,
which are intended to provide a better understanding of EMF, are continuing. On
October 31, 1996, the National Academy of Sciences issued a literature review
of all research to date, "Possible Health Effects of Exposure to Residential
Electric and Magnetic Fields." Its most widely reported conclusion stated,
"No clear, convincing evidence exists to show that residential exposures to
EMF are a threat to human health."
Some states have enacted regulations to limit the strength of magnetic fields
at the edge of transmission line rights-of-way. Rhode Island has enacted a
statute which authorizes and directs the Energy Facility Siting Board to
establish rules and regulations governing construction of high voltage
transmission lines of 69kv or more. Management cannot predict the
ultimate outcome of the EMF issue.
Guarantee of Financial Obligations: EUA has guaranteed or entered into equity
maintenance agreements in connection with certain obligations of its
subsidiaries. EUA has guaranteed the repayment of EUA Cogenex's $31.5 million,
10.56% unsecured long-term notes due 2005 and EUA Ocean State's $31.1 million,
9.59% unsecured long-term notes due 2011. In addition, EUA has entered into
equity maintenance agreements in connection with the issuance of EUA Service's
10.2% Secured Notes and EUA Cogenex's 7.22% and 9.6% Unsecured Notes. Under the
December 1992 settlement agreement with EUA Power, EUA reaffirmed its guarantee
of up to $10 million of EUA Power's share of the decommissioning costs of
Seabrook I and any costs of cancellation of Seabrook I or Seabrook II. EUA
guaranteed this obligation in 1990 in order to secure the release to EUA Power
of a $10 million fund established by EUA Power at the time EUA Power acquired
its Seabrook interest. EUA has not provided a reserve for this guarantee
because management believes it unlikely that EUA will ever be required to honor
the guarantee.
Montaup is a 3.27% equity participant in two companies which own and operate
transmission facilities interconnecting New England and the Hydro Quebec system
in Canada. Montaup has guaranteed approximately $4.8 million of the
outstanding debt of these two companies. In addition, Montaup and Newport have
minimum rental commitments which total approximately $12.7 million and $1.6
million, respectively under a noncancelable transmission facilities support
agreement for years subsequent to 1996.
Other: In the fourth quarter of 1996 EUA Cogenex was notified by
Ridgewood/Mass. Corporation that it intended to seek damages related to
certain claims and alleged misrepresentations by EUA Cogenex regarding the sale
of its cogeneration portfolio. As part of the "Agreement for Assignment for
Beneficial Interests," Ridgewood exercised these rights under the mandatory
arbitration clause contained within said agreement. A date has not been
determined for the arbitration proceedings at this time. EUA Cogenex has filed
a counter claim against Ridgewood for its failure to pay for certain
transitional expenses as stipulated in the "Assignment Agreement."
On January 10, 1997, the Internal Revenue Service (IRS) issued a report in
connection with its examination of the consolidated income tax returns of EUA
for 1992 and 1993. The report includes an adjustment to disallow EUA's
inclusion of its investment in EUA Power's Preferred Stock as a deduction in
determining Excess Loss Account (ELA) taxable income relating to the
redemption of EUA Power's Common and Preferred Stock in 1993. The IRS has
taken the position that the redemption of the Preferred Stock resulted in a
capital loss transaction and not a deduction in determining ELA. The Company
disagrees with the IRS's position and filed a protest in March 1997. EUA
believes that it will ultimately prevail in this matter. However, if the
ultimate resolution of this matter is a favorable decision for the IRS and EUA
has not generated sufficient capital gain transactions to offset the capital
loss then EUA would be required to record a charge that could have a material
impact on financial results in the year of the charge but would not materially
impact the financial position of the company.
In early 1997, ten plaintiffs brought suit against numerous defendants,
including EUA, for injuries and illness allegedly caused by exposure to
asbestos over approximately a thirty-year period, at premises, including some
owned by EUA companies. The total damages claimed in all of these complaints
is $25 million in compensatory and punitive damages, plus exemplary damages and
interest and costs. Each complaint names between fifteen and twenty-eight
defendants, including EUA. These complaints have been referred to the
applicable insurance companies, and EUA is consulting with those insurers to
determine the availability and extent of coverage. EUA cannot predict the
ultimate outcome of this matter at this time.
Exhibit D
EASTERN UTILITIES ASSOCIATES AND
AFFILIATED CORPORATIONS
Federal Income Tax Allocation Agreement
Pursuant to Rule 45(c). Public Utility Holding
Company Act of 1935 and I.R.C. Regulation Section
1.1552-1(a) (1) and Section 1.1502-33(d)(3)
This agreement made as of April 30, 1997, among Eastern Utilities
Associates (the designation of the trustees for the time being under a
Declaration of Trust dated April 2, 1928, as amended) (EUA); Eastern Edison
Company, a Massachusetts corporation (Eastern); Blackstone Valley Electric
Company, a Rhode Island corporation (Blackstone); Newport Electric Corporation,
a Rhode Island corporation (Newport); Montaup Electric Company, a Massachusetts
corporation (Montaup); EUA Service Corporation, a Massachusetts corporation
(EUA Service); EUA Cogenex Corporation, a Massachusetts corporation (Cogenex);
EUA Energy Investment Corporation, a Massachusetts corporation (EUA Energy);
EUA Ocean State Corporation, a Rhode Island corporation (Ocean State); Eastern
Unicord Corporation, a Massachusetts corporation (Unicord); Northeast Energy
Management, Inc., a Massachusetts corporation (NEM); EUA TransCapacity, Inc., a
Massachusetts corporation (TransCapacity); EUA Cogenex-Canada, Inc., a Canadian
corporation (Cogenex-Canada); EUA Bioten, Inc., a Massachusetts corporation
(Bioten); EUA Highland Corporation, a Massachusetts corporation (Highland); EUA
Citizens Conservation Services, Inc., a Massachusetts Corporation (CCS); and
EUA Energy Services, Inc., a Massachusetts corporation (EUA ESI).
W I T N E S S E T H T H A T :
WHEREAS, the term "AFFILIATES" as used herein shall be deemed to refer to
Eastern, Blackstone, Newport, Montaup, EUA Service, Cogenex, EUA Energy, Ocean
State, Unicord, NEM, TransCapacity, EUA Cogenex-Canada, Bioten, Highland, CCS
and EUA ESI, the AFFILIATES together with EUA, and the CONSOLIDATED AFFILIATES
as a collective taxpaying unit is sometimes referred to as the "GROUP" and
WHEREAS, EUA owns directly or indirectly at least 80 percent of the issued
and outstanding shares of each class of voting common stock of each of the
AFFILIATES; each of the CONSOLIDATED AFFILIATES is a member of an affiliated
group within the meaning of Section 1504 of the Internal Revenue Code of 1954,
as mended (the "Code"), of which EUA is the common parent; and the GROUP
presently participates in the filing of a consolidated income tax return.
Definitions
A. Corporate Tax Benefit - The amount by which the consolidated tax is
reduced by including a net corporate tax loss or other net tax benefit in the
consolidated return. The value of the benefit of the operating loss shall be
determined by applying the then current corporate income tax rate to the amount
of the loss. The value of a credit is the actual tax savings (100%). The
value of capital losses used to offset capital gains shall be computed at the
then current tax rate applicable to capital gains for corporations. The value
of any corporate tax benefit to be reimbursed to a member shall be reduced by
the amount of any alternate minimum tax attributable to such member.
B. Separate Return Tax - The tax on the corporate taxable income of an
associate company computed as though such company were not a member of the
consolidated group.
C. Excess Tax Credits - The investment tax credit, alternate minimum tax
credit, research and development credit, energy tax credit or other similar
credit that would be allowable in the consolidation (were it not for a
limitation provided by law) in excess of the amount of such credits which could
be utilized on a separate return basis with regard to such limitations.
EUA and the AFFILIATES agree as follows:
Allocation Procedures in Accordance with I.R.C. Regulation
Sections 1.1552-1(a)(1) and 1.1502-33(d)(3)
A. General Rule
Step 1 - The consolidated tax liability shall be apportioned among the
companies in the ratio that each member's separate taxable income bears to the
sum of the separate taxable incomes of all members having taxable income.
Step 2 - An additional amount will be allocated to the members at 100% of
the excess of the member's separate tax liability over the consolidated tax
liability allocated to the member under Step 1. Under no circumstances shall
the tax allocated to a member exceed its separate tax liability.
Step 3 - The total of the amounts allocated under Step 2 is credited to
those members who had "corporate tax benefits" as follows:
(a) Those members having a negative allocation under Step 2;
(b) If the total of the "corporate tax benefits" is greater than the total
reduction in the consolidated tax, then the benefits arising from the
inclusion of negative taxable incomes in the consolidated return shall
be recognized and paid prior to the benefits arising from excess tax
credits.
(c) If the total benefits attributable to the negative taxable incomes of
the members are not absorbed in the consolidated return, the benefit
allocated to each company shall be in proportion to their respective
negative taxable incomes.
(d) If the total benefits attributable to the excess tax credits are not
applied in the consolidated return, the benefit allocated to each
company shall be in proportion to their respective excess tax credits.
Step 4 - If the total consolidated tax liability shall result in an
"Alternative Minimum Tax" liability position then an additional amount will be
added to Steps 1 and 2. This additional amount will be allocated to the
members based upon their proportionate amounts of alternate minimum taxable
income.
Step 5 - Reimbursement - Benefiting members will reimburse the others no
later than 90 days after the filing of the consolidated tax return.
B. Unused Corporate Tax Benefits
A member that is entitled to payment for a tax benefit, but does not
receive such payment because of the rules in Step 3 shall retain such right for
the future to the extent that such benefit can be applied against the
consolidated tax liability. Uncompensated corporate tax benefits arising
from negative taxable income shall have priority over the benefits attributable
to excess tax credits.
C. Tax Adjustments
In the event of any adjustments to the tax returns of any of the
CONSOLIDATED AFFILIATES filed (by reason of an amended return, a claim for
refund or an audit by the Internal Revenue Service), the liability, if any, of
each of the AFFILIATES under Section A shall be redetermined to give effect to
any such adjustment as if it had been made as part of the original computation
of tax liability, and payments between EUA and the appropriate AFFILIATES shall
be made within 120 days after any such payments are made or refunds are
received, or, in the case of contested proceedings, within 120 days after a
final determination of the contest. Interest and penalties, if any,
attributable to such an adjustment shall be paid by each AFFILIATE to EUA in
proportion to the increase in such AFFILIATE'S separate return tax liability
computed under Section A of this Agreement that is required to be paid to EUA.
In any situation in which the Group's tax liability is adjusted by a revenue
agent's report or a court settlement and an item-by-item modification is not
made, the Group shall consult its accountants for assistance in determining a
fair allocation of the adjusted liability.
D. Subsidiaries of Affiliates
If at any time, any of the AFFILIATES acquires or creates one or more
subsidiary corporations that are includible corporations of the Group, they
shall be subject to this Agreement and all references to the AFFILIATES herein
shall be interpreted to include such subsidiaries as a group.
E. Successors
This Agreement shall be binding on and insure to the benefit of any
successor, by merger, acquisition of assets or otherwise, to any of the parties
hereto (including but not limited to any successor of EUA or any of the
AFFILIATES succeeding to the tax attributes of such corporation under Section
381 of the Code) to the same extent as if such successor had been an original
party to this agreement.
F. Special Rule
In making the tax allocations provided for in this agreement,
notwithstanding any of the foregoing, no corporate tax benefits shall be
allocated to EUA. Although the separate corporate taxable income or taxable
loss of EUA and any tax credits attributable to EUA will be included in
the consolidated return, only the tax savings attributable to such items shall
be allocated to the other AFFILIATES as if EUA were not a member of the Group.
In making this allocation, the tax savings of EUA shall be allocated only to
members of the Group having taxable income.
Also, in making the tax allocations, only those tax consequences
attributable to non-affiliated transactions shall remain with EUA Service
Corporation in accordance with Section A of this Agreement. All others will be
allocated to the other AFFILIATES.
G. Termination Clause
This Agreement shall apply to the taxable year ending December 31, 1997,
unless all of the members of the Group agree in writing to terminate the
Agreement prior to the end of the taxable year. The Agreement shall be
renewable on a year to year basis for subsequent taxable years, provided all of
the members of the Group agree in writing, prior to the end of the immediately
preceding taxable year, to extend the Agreement one additional year.
Notwithstanding any termination, this Agreement shall continue in effect with
respect to any payment or refunds due for all taxable periods prior to
termination.
IN WITNESS WHEREOF, the duly authorized representatives of the parties
have set their hands this 30th day of April, 1997.
EASTERN UTILITIES ASSOCIATES
By /s/ Donald G. Pardus
Title: Chairman of the Board
EUA SERVICE CORPORATION EUA COGENEX-CANADA
By /s/ Robert G. Powderly By /s/ Edward T. Liston
Title: Executive Vice President Title: President
BLACKSTONE VALLEY ELECTRIC COMPANY EUA ENERGY INVESTMENT CORPORATION
By /s/ John D. Carney By /s/ John R. Stevens
Title: President Title: President
EASTERN EDISON COMPANY EASTERN UNICORD CORPORATION
By /s/ Michael J. Hirsh By /s/ John R. Stevens
Title: Vice President Title: President
MONTAUP ELECTRIC COMPANY EUA TRANSCAPACITY, INC.
By /s/ Richard M. Burns By /s/ John R. Stevens
Title: Vice President Title: President
EUA COGENEX CORPORATION EUA BIOTEN, INC.
By /s/ Edward T. Liston By /s/ John R. Stevens
Title: President Title: President
NORTHEAST ENERGY MANAGEMENT, INC. EUA OCEAN STATE CORPORATION
By /s/ Edward T. Liston By /s/ Clifford J. Hebert
Title: President Title: Treasurer
EUA HIGHLAND CORPORATION NEWPORT ELECTRIC CORPORATION
By /s/ Edward T. Liston By /s/ Barbara A. Hassan
Title: Executive Vice President Title: Vice President
EUA CITIZENS CONSERVATION SERVICES, INC. EUA ENERGY SERVICES, INC.
By /s/ Edward T. Liston By /s/ Kevin A. Kirby
Title: Executive Vice President Title: Vice President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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