SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-6392
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PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
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(Exact name of registrant as specified in its charter)
NEW HAMPSHIRE 02-018150
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1000 ELM STREET, MANCHESTER, NEW HAMPSHIRE 03105
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(Address of principal executive offices) (Zip Code)
(603) 669-4000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
___ ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at October 31, 1994
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Common Shares, $10.00 par value 1,000 shares
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
TABLE OF CONTENTS
Page No.
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Part I. Financial Information
Item 1. Financial Statements
Balance Sheets - September 30, 1994
and December 31, 1993 2
Statements of Income - Three and Nine
Months Ended September 30, 1994 and 1993 4
Statements of Cash Flows -
Nine Months Ended September 30, 1994 and 1993 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
Part II. Other Information
Item 1. Legal Proceedings 15
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
PART I. FINANCIAL INFORMATION
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
------------- -------------
(Thousands of Dollars)
<S> <C> <C>
ASSETS
- ------
Utility Plant, at original cost:
Electric................................................ $ 2,021,557 $ 1,980,050
Less: Accumulated provision for depreciation......... 466,230 441,076
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1,555,327 1,538,974
Construction work in progress........................... 9,751 8,573
Nuclear fuel, net....................................... 1,716 2,107
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Total net utility plant............................. 1,566,794 1,549,654
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Other Property and Investments:
Nuclear decommissioning trusts, at market in 1994 and
at cost in 1993 (Note 2)<F2>........................... 1,777 1,486
Investments in regional nuclear generating
companies and subsidiary company, at equity............ 19,659 19,816
Other, at cost.......................................... 394 429
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21,830 21,731
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Current Assets:
Cash and special deposits............................... 567 5,995
Notes receivable from affiliated companies.............. 61,750 -
Receivables, net........................................ 73,163 76,665
Accounts receivable from affiliated companies........... 1,717 859
Accrued utility revenues................................ 28,139 35,770
Fuel, materials, and supplies, at average cost.......... 42,363 41,187
Energy adjustment clause--current portion............... 15,416 -
Prepayments and other................................... 17,023 10,429
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240,138 170,905
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Deferred Charges:
Regulatory asset--rate agreement........................ 701,930 769,498
Regulatory asset--income taxes, net..................... 70,609 54,250
Unrecovered contract obligation--YAEC (Note 3)<F3>...... 21,297 24,150
Energy adjustment clause................................ 146,395 122,478
Unamortized debt expense................................ 17,844 19,643
Deferred receivable from affiliated company............. 33,284 33,284
Other................................................... 8,499 8,918
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999,858 1,032,221
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Total Assets........................................ $ 2,828,620 $ 2,774,511
============= =============
</TABLE>
See accompanying notes to financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1994 1993
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(Thousands of Dollars)
<S> <C> <C>
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock--$1 par value.
Authorized and outstanding 1,000 shares................ $ 1 $ 1
Capital surplus, paid in................................ 421,645 421,245
Retained earnings....................................... 108,444 60,840
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Total common stockholder's equity.............. 530,090 482,086
Preferred stock subject to mandatory redemption......... 125,000 125,000
Long-term debt.......................................... 929,485 999,985
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Total capitalization........................... 1,584,575 1,607,071
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Obligations Under Seabrook Power Contract
and Other Capital Leases................................. 846,267 815,553
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Current Liabilities:
Notes payable to affiliated company..................... - 2,500
Long-term debt--current portion......................... 94,000 94,000
Obligations under capital leases--current
portion................................................ 34,866 41,006
Accounts payable........................................ 24,735 27,119
Accounts payable to affiliated companies................ 14,197 17,576
Accrued taxes........................................... 19,020 122
Accrued interest........................................ 23,555 11,142
Accrued pension benefits................................ 34,538 31,890
Other................................................... 19,658 22,014
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264,569 247,369
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Deferred Credits:
Accumulated deferred income taxes....................... 52,563 18,076
Accumulated deferred investment tax credits............. 5,754 6,174
Deferred contract obligation--YAEC (Note 3)<F3>......... 21,297 24,150
Deferred revenue from affiliated company................ 33,284 33,284
Other................................................... 20,311 22,834
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133,209 104,518
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Commitments and Contingencies (Note 4)<F4>
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Total Capitalization and Liabilities........... $ 2,828,620 $ 2,774,511
============= =============
</TABLE>
See accompanying notes to financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating Revenues................................. $ 227,976 $ 222,717 $ 688,130 $ 639,782
---------- ---------- ---------- ----------
Operating Expenses:
Operation --
Fuel, purchased and net interchange power..... 53,090 51,903 162,655 154,829
Other......................................... 76,149 80,996 228,081 221,660
Maintenance...................................... 10,640 10,122 34,549 25,953
Depreciation..................................... 9,820 9,658 28,992 28,974
Amortization of regulatory assets, net........... 13,176 22,580 41,503 67,552
Federal and state income taxes................... 16,507 18,143 48,045 47,647
Taxes other than income taxes.................... 9,881 9,637 29,763 25,945
---------- ---------- ---------- ----------
Total operating expenses................... 189,263 203,039 573,588 572,560
---------- ---------- ---------- ----------
Operating Income................................... 38,713 19,678 114,542 67,222
---------- ---------- ---------- ----------
Other Income:
Equity in earnings of regional nuclear
generating companies and subsidary company..... 399 363 1,127 982
Other, net....................................... (907) 360 125 1,084
Income taxes--credit............................. 635 7,484 (1,137) 17,255
---------- ---------- ---------- ----------
Other income, net.......................... 127 8,207 115 19,321
---------- ---------- ---------- ----------
Income before interest charges............. 38,840 27,885 114,657 86,543
---------- ---------- ---------- ----------
Interest Charges:
Interest on long-term debt....................... 19,474 19,147 56,783 58,623
Other interest................................... 104 155 333 784
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Interest charges, net...................... 19,578 19,302 57,116 59,407
---------- ---------- ---------- ----------
Net Income......................................... $ 19,262 $ 8,583 $ 57,541 $ 27,136
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
PUBLIC SERVICE COMPANY of NEW HAMPSHIRE
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE> Nine Months Ended
<CAPTION> September 30,
----------------------
1994 1993
----------------------
(Thousands of Dollars)
<S> <C> <C>
Cash Flows From Operations:
Net Income ................................................. $ 57,541 $ 27,136
Adjusted for the following:
Depreciation.............................................. 28,992 28,974
Deferred income taxes and investment tax credits, net..... 48,707 28,902
Deferred energy costs, net of amortization................ (39,333) (29,358)
Amortization of regulatory asset.......................... 41,503 67,552
Other sources of cash..................................... 2,662 15,413
Other uses of cash........................................ (7,457) (2,164)
Changes in working capital:
Receivables and accrued utility revenues.................. 10,275 9,018
Fuel, materials, and supplies............................. (1,176) 379
Accounts payable.......................................... (5,763) 12,729
Accrued taxes............................................. 18,898 12,705
Other working capital (excludes cash)..................... 6,111 3,579
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Net cash flows from operations................................ 160,960 174,865
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Cash Flows Used For Financing Activities:
Net decrease in short-term debt............................. (2,500) (43,500)
Reacquisitions and retirements of long-term debt ........... (70,500) (70,500)
Cash dividends on preferred stock........................... (9,937) (9,938)
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Net cash flows used for financing activities.................. (82,937) (123,938)
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Investment Activities:
Investment in plant:
Electric utility plant...................................... (21,252) (24,799)
Nuclear fuel................................................ (362) (674)
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Net cash flows used for investments in plant................ (21,614) (25,473)
NU System Money Pool, net................................... (61,750) (26,500)
Other investment activities, net............................ (87) (147)
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Net cash flows used for investments........................... (83,451) (52,120)
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Net Decrease in Cash for the Period........................... (5,428) (1,193)
Cash and special deposits - beginning of period............... 5,995 2,328
---------- ----------
Cash and special deposits - end of period..................... $ 567 $ 1,135
========== ==========
</TABLE>
See accompanying notes to financial statements.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
<F1>1. General
The accompanying unaudited financial statements should be read in
conjunction with the Annual Report of Public Service Company of New
Hampshire (the company or PSNH), a wholly-owned subsidiary of
Northeast Utilities (NU), on Form 10-K for the year ended December 31,
1993 (1993 Form 10-K). In the opinion of the company, the
accompanying financial statements contain all adjustments necessary to
present fairly the financial position as of September 30, 1994, the
results of operations for the three and nine months ended September
30, 1994 and 1993, and the statements of cash flows for the nine
months ended September 30, 1994 and 1993. The results of operations
for the three and nine months ended September 30, 1994 and 1993 are
not necessarily indicative of the results expected for a full year.
Certain amounts in the accompanying financial statements of the
company for the period ended September 30, 1993 have been reclassified
to conform with the September 30, 1994 presentation.
<F2>2. Changes in Accounting Principles
Statement of Financial Accounting Standards No. 115 (SFAS 115): In
May 1993, the Financial Accounting Standards Board (FASB) issued SFAS
115, "Accounting for Certain Investments in Debt and Equity
Securities." SFAS 115 addresses the accounting and reporting for
certain investments in debt and equity securities, and expands the use
of fair value accounting for these securities. SFAS 115 is applicable
to PSNH with respect to its investments in nuclear decommissioning
trusts.
SFAS 115 requires investments in decommissioning trusts to be
presented at fair value and was adopted by PSNH on a prospective basis
in the first quarter of 1994.
<F3>3. Yankee Atomic Electric Company (YAEC)
YAEC owns a 185-MW nuclear power plant in Rowe, Massachusetts. PSNH
has a 7 percent equity investment approximating $1.8 million in YAEC.
PSNH had relied on YAEC for less than 1 percent of its capacity.
YAEC's owners voted to permanently shut down the YAEC unit in February
1992. Under the terms of the contracts with YAEC, the shareholders-
sponsors are responsible for their proportionate share of the
operating costs of the unit, including decommissioning. The nuclear
decommissioning costs of YAEC are included as part of PSNH's cost of
power.
YAEC has begun decommissioning its nuclear facility. On June 1, 1992,
YAEC filed a rate filing to obtain Federal Energy Regulatory
Commission (FERC) authorization to collect the closing and
decommissioning costs and to recover the remaining investment in the
YAEC nuclear power plant over the remaining period of the plant's
Nuclear Regulatory Commission (NRC) operating license. The bulk of
these costs has been agreed to by the YAEC joint owners and approved,
as a settlement, by the FERC. At September 30, 1994, PSNH's share of
the estimated remaining costs is approximately $21.3 million.
Management expects that PSNH will continue to be allowed to recover
such FERC-approved costs from its customers. Accordingly, PSNH has
recognized these costs as a regulatory asset, with a corresponding
obligation, on its Balance Sheets.
On October 26, 1994, YAEC submitted a revised decommissioning cost
estimate as part of its decommissioning plan with the NRC. Following
the receipt of NRC approval, this estimate will be filed with the
FERC. This revised cost estimate is expected to increase PSNH's share
of estimated remaining costs by $9.4 million over the $21.3 million
that is currently recorded.
For additional information regarding YAEC, see the Notes to Financial
Statements in PSNH's 1993 Form 10-K.
<F4>4. Commitments and Contingencies
Construction Program: For information regarding PSNH's construction
program, see the Notes to Financial Statements in PSNH's 1993 Form
10-K.
PSNH Rate Agreement: For information regarding the PSNH rate
agreement, see the Management's Discussion and Analysis of Financial
Condition and Results of Operations (MD&A) in PSNH's June 1994 Form
10-Q and the Notes to Financial Statements in PSNH's 1993 Form 10-K.
Environmental Matters: On a periodic basis, PSNH reviews known waste
disposal sites, and related reserves, for which the company expects to
bear legal liability. As a result of its latest review, PSNH
recorded a liability of $1.8 million for its estimated environmental
remediation costs, excluding any insurance recoveries or recoveries
from third parties.
For additional information regarding environmental matters, see
"Part II. Other Information - Item 5. Other Information" in PSNH's
June 1994 Form 10-Q and the Notes to Financial Statements in PSNH's
1993 Form 10-K.
Nuclear Insurance Contingencies: The Price-Anderson Act currently
limits public liability from a single incident at a nuclear power
plant to $8.8 billion. The first $200 million of liability would be
provided by purchasing the maximum amount of commercially available
insurance. Additional coverage of up to a total of $8.4 billion would
be provided by an assessment of $75.5 million per incident, levied on
each of the 111 nuclear units that are currently subject to the
Secondary Financial Protection Program in the United States, subject
to a maximum assessment of $10 million per incident per nuclear unit
in any year. In addition, if the sum of all public liability claims
and legal costs arising from any nuclear incident exceeds the maximum
amount of financial protection, each reactor operator can be assessed
an additional five percent, up to $3.8 million, or $419.0 million in
total, for all 111 nuclear units. The maximum assessment is to be
adjusted at least every five years to reflect inflationary changes.
Based on its ownership interest in Millstone 3, PSNH's maximum
liability would be $2.2 million per incident. In addition, through
contracts with the three Yankee regional nuclear generating companies
with operating plants, PSNH would be responsible for up to an
additional $11.1 million per incident. Payments for PSNH's ownership
interest in nuclear generating facilities would be limited to a
maximum of $1.7 million per incident per year.
For additional information regarding nuclear insurance contingencies,
see the Notes to Financial Statements in PSNH's 1993 Form 10-K.
Financing Arrangements for the Regional Nuclear Generating Companies:
For information regarding financing arrangements for the regional
nuclear generating companies, see the Notes to Financial Statements in
PSNH's 1993 Form 10-K.
Purchased Power Arrangements: For information regarding purchased
power arrangements, see the MD&A in this Form 10-Q, the MD&A in PSNH's
June 1994 Form 10-Q, the MD&A, and "Part II. Other Information - Item
1. Legal Proceedings" in PSNH's March 1994 Form 10-Q, and the Notes to
Financial Statements in PSNH's 1993 Form 10-K.
Hydro-Quebec: For information regarding Hydro-Quebec, see the Notes
to Financial Statements in PSNH's 1993 Form 10-K.
Property Taxes: For information regarding property taxes, see "Part
II. Other Information - Item 1. Legal Proceedings" in this Form 10-Q
and the Notes to Financial Statements in PSNH's 1993 Form 10-K.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
Management's Discussion and Analysis of Financial
Condition and Results of Operations
This section contains management's assessment of Public Service
Company of New Hampshire's (PSNH or the company) financial condition
and the principal factors having an impact on the results of
operations. The company is a wholly-owned subsidiary of Northeast
Utilities (NU). This discussion should be read in conjunction with
the company's financial statements and footnotes and the 1993 Form 10-
K and the First and Second Quarter 1994 Form 10-Qs.
FINANCIAL CONDITION
Overview
The company's net income increased to approximately $19 million and
$58 million for the three- and nine-month periods ended September 30,
1994, respectively, from approximately $9 million and $27 million for
the same periods in 1993. The increases in net income are primarily
attributable to the amortization of a regulatory liability for the
accelerated recognition of tax benefits as allowed under a global
settlement approved by the New Hampshire Public Utilities Commission
(NHPUC) in January 1994, increased revenues from the June 1993 and
1994 rate increases, a one-time charge to earnings in the third
quarter of 1993 for the costs of the company s employee reduction
programs and higher 1994 retail sales resulting from an improvement in
the New Hampshire economy and a colder winter.
Retail Wheeling and Utility Restructuring
See Part II. Other Information - Item 5. Legal Proceedings. for
information concerning retail wheeling and utility restructuring.
Regulatory Matters
On September 15, 1994, PSNH filed testimony and exhibits supporting a
request for a revised rate under its Fuel and Purchased Power
Adjustment Clause (FPPAC) to be effective on December 1, 1994. PSNH
estimates that it will underrecover its fuel and purchased power costs
for the period ending November 30, 1994 due to outages at the Seabrook
nuclear unit. PSNH requested recovery of these undercollections over
two six month FPPAC periods in order to maintain the FPPAC rate at its
current level.
The costs associated with purchases from certain independent power
producers (IPPs) over the level assumed in the rate agreement executed
by the Governor and the Attorney General of New Hampshire in 1989 and
subsequently approved by the New Hampshire Public Utilities Commission
(NHPUC) (the Rate Agreement) are deferred and recovered over ten-year
periods through the FPPAC. At September 30, 1994, IPP deferrals which
are included in energy adjustment clause, net on the balance sheets
were approximately $128 million. Most of these purchases are under
long-term rate orders (20-30 years) at prices significantly higher
than PSNH's current or projected avoided costs. PSNH has been
attempting to renegotiate these rate orders as required under the Rate
Agreement.
On September 23, 1994, the NHPUC approved settlement agreements and,
in turn, a fifth amendment to the Rate Agreement allowing the
settlement agreements to be implemented, with two wood-fired IPPs
covering approximately 19.8 MW of capacity. Under the Rate Agreement,
PSNH was required to make its best efforts to renegotiate rate orders
with eight woodburner IPPs, including these two. The six remaining
woodburners account for approximately 87 MW of capacity. The two
settling IPPs will give up their rights to sell their output to PSNH
in exchange for lump sum cash payments totalling approximately $40
million. The buyout payments will be added to the deferred balance of
IPP costs. PSNH will retain 100 percent of the savings resulting from
these arrangements during the remainder of the fixed rate period, and
they will be used to reduce the IPP deferred balance. Thereafter,
PSNH will retain 50 percent of the savings until the deferred balance
is amortized entirely. The balance of the savings will be flowed back
to customers through the fuel and purchased power adjustment clause.
The period during which appeals of the NHPUC decision could be filed
has lapsed. PSNH closed these transactions on October 27, 1994 and
November 8, 1994. PSNH is involved in mediation with the owners of
the other six facilities. PSNH must report to the NHPUC and a New
Hampshire legislative committee on the results of the negotiations by
November 14, 1994.
For additional information on this matter, see NU s 1993 Form 10-K,
under the caption Item 1. Business - New Hampshire Retail Rates.
As prescribed by the Rate Agreement, North Atlantic Energy Corporation
(NAEC) is phasing in its $700 million initial investment in Seabrook
1. As of June 30, 1994, NAEC has included in rates $490 million of
its Seabrook investment. The remaining investment ($210 million) will
be phased into rates over the next two years beginning in May 1995.
The deferred return associated with the amount of investment that has
not been included in rates was approximately $172 million through
September 30, 1994, including approximately $51 million which is
recorded as utility plant. This amount and the additional deferred
amounts associated with the remaining phase-in will be recovered under
NAEC's purchase agreement with PSNH over the period December 1997
through May 2001. PSNH will recover these deferred amounts from
customers over the period of June 1998 through May 2001.
Nuclear Matters
In the first nine months of 1994, Seabrook operated at a capacity
factor of 48.5 percent as compared to 91.4 percent for the same period
in 1993. The unit was taken out of service on January 25, 1994 when
an automatic trip from 100 percent power occurred for Seabrook when a
main steam isolation valve closed during quarterly surveillance
testing. The unit returned to service on February 18, 1994. The unit
began its scheduled 57-day refueling and maintenance outage on April
9, 1994. The outage was substantially extended and the unit returned
to service on July 31, 1994.
On November 4, 1994, the plan of reorganization of Great Bay Power
Corporation (GBPC)(formerly known as EUA Power Corporation), a joint
owner of Seabrook Station along with the Connecticut Light and Power
Company (CL&P) and NAEC, both wholly owned subsidiaries of NU, and
other non-System entities, was confirmed by the United States
Bankruptcy Court. The confirmation order will become final on
November 11, 1994. The closing of the plan of reorganization
financing, which consists of the purchase of 60 percent of the common
stock of GBPC by Omega Advisors and Elliott Associates is expected to
close on November 15, 1994, if all of the conditions precedent to
closing have been satisfied. The conditions include the absence of
any material adverse change and a requirement that Seabrook be
operating at full reactor power on the morning of the closing date.
At the time of closing, CL&P will be repaid by GBPC for the
outstanding principal and accrued interest on the debtor-in-possession
loans made by CL&P during the bankruptcy proceeding. At present, the
outstanding principal amount of these loans by CL&P total
approximately $7.3 million.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operations decreased approximately $14 million for
the first nine months of 1994, as compared with the same period in
1993, primarily due to higher deferred energy costs. Cash used for
financing activities was approximately $41 million lower in 1994, as
compared with the same period in 1993, primarily due to a lower
repayment of short-term debt. Cash used for investments was
approximately $31 million higher in 1994, as compared with 1993,
primarily due to an increase in short-term loans to other NU system
companies under the NU system Money Pool.
The system companies have entered into interest-rate cap contracts to
reduce the potential impact of upward changes in interest rates on
certain variable-rate tax-exempt pollution control revenue bonds held
by the company, CL&P, and Western Massachusetts Electric Company, as
well as a portion of the company Variable-Rate Term Loan. A total of
$567 million of total outstanding long-term variable-rate debt is
hedged by these interest-rate caps. The fair market value of
outstanding interest-rate cap contracts as of September 30, 1994 is
approximately $2.3 million.
The company's construction program expenditures amounted to
approximately $21 million for the first nine months of 1994, as
compared to approximately $25 million during the same period in 1993.
RESULTS OF OPERATIONS
Comparison of the Third Quarter of 1994 with the Third Quarter of 1993
- ----------------------------------------------------------------------
Operating revenues increased approximately $5 million in the third
quarter of 1994, as compared with 1993. The components of the change
in operating revenues are as follows:
Changes in Operating Revenues Increase
- ------------------------------- -------------------
(Millions of Dollars)
Regulatory decisions $ 4
Fuel, purchased power, and FPPAC cost recoveries (4)
Retail sales volume 4
Other revenues 1
---
Total revenue change $ 5
===
Revenues related to regulatory decisions increased primarily because
of the June 1994 rate increase. Fuel, purchased power and FPPAC cost
recoveries decreased in the second quarter of 1994 primarily due to
lower 1994 energy sales to other utilities, partially offset by
increased base rate recovery of energy costs as a result of the rate
increase and the timing in the recovery of expenses under the FPPAC.
Sales volume increased primarily as a result of higher retail sales
due to an improvement in the New Hampshire economy in 1994.
Fuel, purchased, and net interchange power expense increased
approximately $1 million in the third quarter of 1994, as compared
with 1993, primarily because of the timing in the recognition of
expenses under the FPPAC.
Other operation and maintenance expenses decreased approximately $4
million in the third quarter of 1994, as compared with 1993, primarily
due to the one-time charge associated with the 1993 employee reduction
programs.
Amortization of regulatory assets, net decreased approximately $9
million in the third quarter of 1994, as compared with 1993, primarily
because of the amortization in 1994 of the company's regulatory
liability as allowed under the 1993 Global Settlement, which reduces
amortization expense.
Federal and state income taxes increased $5 million in the third
quarter of 1994, as compared with 1993, primarily because of higher
book taxable income.
Comparison of the First Nine Months of 1994 with the First Nine Months
- ----------------------------------------------------------------------
of 1993
- -------
Operating revenues increased approximately $48 million in the first
nine months of 1994, as compared with 1993. The components of the
change in operating revenues are as follows:
Changes in Operating Revenues Increase
- ------------------------------- -------------------
(Millions of Dollars)
Regulatory decisions $15
Fuel, purchased power, and FPPAC cost recoveries 24
Retail sales volume 9
---
Total revenue change $48
===
Revenues related to regulatory decisions increased primarily because
of the June 1993 and 1994 rate increases. Fuel, purchased power and
FPPAC cost recoveries increased primarily due to increased base rate
recovery of energy costs as a result of the rate increases and and the
timing in the recovery of expenses under the FPPAC, partially offset
by lower 1994 energy sales to other utilities. Retail Sales volume
increased primarily as a result of higher retail sales due to an
improvement in the New Hampshire economy and a colder winter in 1994.
Retail sales increased 3.1 percent for the first nine months of
1994, as compared with 1993.
Fuel, purchased, and net interchange power expense increased
approximately $9 million in the first nine months of 1994, as compared
with 1993, primarily because of higher energy costs in 1994 associated
with energy purchases from other utilities, partially offset by the
timing in the recognition of expenses under the FPPAC.
Other operation and maintenance expenses increased approximately $15
million in the first nine months of 1994, as compared with 1993,
primarily due to higher storm-related expenses in 1994 and higher
costs under the Seabrook Power Contract as a result of maintenance
work during the two outages in 1994.
Amortization of regulatory assets, net decreased approximately $26
million in the first nine months of 1994, as compared with 1993,
primarily because of the amortization in 1994 of the company's
regulatory liability as allowed under the 1993 Global Settlement,
which reduces amortization expense.
Taxes other than income taxes increased approximately $4 million in
the first nine months of 1994, as compared with 1993, because of
higher New Hampshire gross receipts taxes in 1994 on a higher revenue
base.
Interest on long-term debt decreased approximately $2 million in the
first nine months of 1994, as compared with 1993, primarily because of
the $94 million repayment of the company's Term Loan in 1993 and 1994.
Federal and state income taxes increased approximately $19 million in
the first nine months of 1994, as compared with 1993, primarily
because of higher book taxable income.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
1. On October 15, 1993, the Merrimack County, New Hampshire,
Superior Court issued a decision dismissing PSNH's appeals of the
property taxes assessed against it by the Town of Bow, New Hampshire
for the years 1988, 1989, 1990 and 1991. The decision rejected the
"unit method" of valuation (essentially book cost) and approved the
"reproduction cost" method of valuation, resulting in property tax
valuations approximately three times greater than net book cost, with
a commensurate rise in property taxes in Bow. PSNH's 495-MW, coal-
fired Merrimack Station and 12.1-MW, hydroelectric Garvins Falls
Station are located in Bow. On November 2, 1994, PSNH's appeal to the
New Hampshire Supreme Court was rejected and the holding of the trial
court was affirmed. This decision will not impact PSNH's net income,
assets or liabilities because the taxes in question had previously
been paid and substantially all such amounts were included in base
rates. However, other towns in New Hampshire are employing the same
methodology to assess taxes against PSNH's property, and the long-term
effect of the decision could be adverse to PSNH's financial condition
in an amount not presently determinable.
For additional information on this matter, see NU's 1993 Form 10-K,
under the caption "Item 3 - Legal Proceedings."
2. On October 18, 1994, the NRC responded to Northeast Nuclear
Energy Company's (NNECO) response in the Millstone Unit 1 Feedwater
Coolant Injection System (FWCI) matter, stating that, upon
reconsideration by the NRC, the violation's severity level and
calculation of the civil penalty would not change. The NRC also
decided that further action against the NNECO manager was not
warranted. NNECO is a wholly-owned subsidiary of NU.
For additional information on this matter, see "Part II. Other
Information - Item 1. - Legal Proceedings" in PSNH s June 1994
Form 10-Q.
3. With respect to proceedings at the FERC on the 30th Amendment
to the New England Power Pool Agreement and related issues concerning
transmission access and discounted rates for pool-planned units, on
August 3, 1994 FERC granted a motion filed by certain of the parties
seeking to suspend the procedural schedule pending the filing of terms
of a settlement reached by the parties. The parties have agreed to
file joint status reports of their progress.
For additional information on this matter, see "Part II. Other
Information - Item 1. Legal Proceedings" in PSNH s June 1994 and March
1994 Form 10-Qs.
Item 5. Other Information
1. A bill has been introduced and regulatory proceedings
initiated in New Hampshire that involve the potential for retail
wheeling, electric utility industry restructuring, and regulatory
reform. To date, this bill has not been enacted and the regulatory
proceedings have not progressed to a point where management can assess
the likelihood that any of them might have an effect on PSNH.
For additional information on this matter, see Item 1. Business-
Retail Wheeling in NU s 1993 Form 10-K and the MD&As in PSNH s March
1994 and June 1994 Form 10-Qs.
2. On September 6, 1994, NU filed a Petition for Rehearing with
the First Circuit Court of Appeals from FERC's application of a
stringent "public interest standard" to the Seabrook Power Contract,
which Petition is pending.
For additional information on this matter, see "Part II. Other
Information - Item 5. Other Information" in PSNH s June 1994 Form 10-Q
and Item 3. Legal Proceedings in PSNH s 1993 Form 10-K.
Item 6. Exhibits and Reports on Form 8-K
(a) Listing of Exhibits:
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during this reporting period.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
---------------------------------------
Registrant
Date November 9, 1994 By /s/ Bernard M. Fox
-------------------- -----------------------------
Bernard M. Fox
Vice Chairman and Chief
Executive Officer,
and Director
Date November 9, 1994 By /s/ John W. Noyes
-------------------- -----------------------------
John W. Noyes
Vice President and
Controller
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