PUBLIC SERVICE CO OF NEW HAMPSHIRE
10-Q, 1996-08-14
ELECTRIC SERVICES
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                                   FORM 10-Q

                       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 June 30, 1996


                                       OR
   [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               For the transition period from         to

                         Commission File Number 1-6392


                    PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE


             (Exact name of registrant as specified in its charter)

                      NEW HAMPSHIRE                               02-018150


         (State or other jurisdiction                  (I.R.S. Employer
          of incorporation or organization)         Identification No.)

          1000 ELM STREET, MANCHESTER, NEW HAMPSHIRE             03105
         (Address of principal executive offices)              (ZipCode)

                                 (603) 669-4000


              (Registrant's telephone number, including area code)

                                 Not Applicable


              (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 July 31, 1996

        Common Shares, $10.00 par value                     1,000 shares
                    PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

                               TABLE OF CONTENTS



                                                            Page No.


Part I.  Financial Information

    Item 1. Financial Statements

        Balance Sheets - June 30, 1996 and
        December 31, 1995                                                    2

        Statements of Income - Three Months and
        Six Months Ended June 30, 1996 and 1995                              4

        Statements of Cash Flows - Six
        Months Ended June 30, 1996 and 1995                                  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                                          14

     Item 4.     Submission of Matters to a
                 Vote of Security Holders                                   14

     Item 5.     Other Information                                          14

     Item 6.     Exhibits and Reports on Form 8-K                           15

Signatures                                                                  17




                   
                                   PART I.  FINANCIAL INFORMATION

PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>

                                                                June 30,     December 31,
                                                                  1996           1995
                                                             -------------  -------------
                                                                 (Thousands of Dollars)
<S>                                                             <C>            <C>
ASSETS
- ------

Utility Plant, at cost:
  Electric................................................   $  2,124,121   $  2,109,590

     Less: Accumulated provision for depreciation.........        532,638        513,244
                                                             -------------  -------------
                                                                1,591,483      1,596,346
  Unamortized acquisition costs...........................        536,421        588,910
  Construction work in progress...........................         13,720         15,975
  Nuclear fuel, net.......................................          1,309          1,585
                                                             -------------  -------------
      Total net utility plant.............................      2,142,933      2,202,816
                                                             -------------  -------------

Other Property and Investments:                              
  Nuclear decommissioning trusts, at market...............          2,707          2,436
  Investments in regional nuclear generating                 
   companies and subsidiary company, at equity............         19,128         19,300
  Other, at cost..........................................          1,810          1,103
                                                             -------------  -------------
                                                                   23,645         22,839
                                                             -------------  -------------

Current Assets:                                              
  Cash....................................................            287            117
  Notes receivable from affiliated companies..............           -            19,100
  Receivables, net........................................         90,785         91,535
  Accounts receivable from affiliated companies...........            922          1,486
  Accrued utility revenues................................         32,174         33,984
  Fuel, materials, and supplies, at average cost..........         38,812         41,717
  Accumulated deferred income taxes--current portion......         18,031            494
  Prepayments and other...................................         26,640         10,702
                                                             -------------  -------------
                                                                  207,651        199,135
                                                             -------------  -------------
Deferred Charges:                                            
  Regulatory assets:
   Income taxes, net......................................        154,394        192,690
   Unrecovered contractual obligation.....................         14,007         18,814
   Recoverable energy costs (Note 4)<F4>..................        262,342        220,093
   Other..................................................          2,357          2,404
  Unamortized debt expense................................         13,150         14,165
  Deferred receivable from affiliated company.............         33,284         33,284
  Other...................................................          4,496          3,396
                                                             -------------  -------------
                                                                  484,030        484,846
                                                             -------------  -------------

      Total Assets........................................   $  2,858,259   $  2,909,636
                                                             =============  =============

</TABLE>
See accompanying notes to financial statements.

                                           

                                           



PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>

                                                                June 30,     December 31,
                                                                  1996           1995
                                                             -------------  -------------
                                                                 (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................................        422,712        422,385
  Retained earnings.......................................        162,945        143,039
                                                             -------------  -------------
           Total common stockholder's equity..............        585,658        565,425
  Preferred stock subject to mandatory redemption.........        100,000        125,000
  Long-term debt..........................................        686,485        686,485
                                                             -------------  -------------
           Total capitalization...........................      1,372,143      1,376,910
                                                             -------------  -------------

Obligations Under Seabrook Power Contracts
 and Other Capital Leases.................................        872,858        874,292
                                                             -------------  -------------

Current Liabilities:                                                       
  Notes payable to banks..................................         50,000           -
  Notes payable to affiliated company.....................          1,400           -
  Long-term debt--current portion.........................         25,000        172,500
  Obligations under Seabrook Power Contracts and other                     
   capital leases--current portion........................         39,290         40,996
  Accounts payable........................................         31,915         39,012
  Accounts payable to affiliated companies................         21,124         26,656
  Accrued taxes...........................................         18,296            798
  Accrued interest........................................          8,432          9,648
  Accrued pension benefits................................         40,740         38,606
  Refundable energy costs.................................         50,299          1,403
  Other...................................................         11,581         17,674
                                                             -------------  -------------
                                                                  298,077        347,293
                                                             -------------  -------------
Deferred Credits:                                            
  Accumulated deferred income taxes.......................        239,071        229,057
  Accumulated deferred investment tax credits.............          4,785          5,060
  Deferred contractual obligation.........................         14,007         18,814
  Deferred revenue from affiliated company................         33,284         33,284
  Other...................................................         24,034         24,926
                                                             -------------  -------------
                                                                  315,181        311,141
                                                             -------------  -------------

Commitments and Contingencies (Note 5)<F5>


                                                             -------------  -------------
           Total Capitalization and Liabilities...........   $  2,858,259   $  2,909,636
                                                             =============  =============
                                                                           
</TABLE>                                                                   
See accompanying notes to financial statements.                            

                                           



PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
                                                      Three Months Ended     Six Months Ended
                                                           June 30,              June 30,
                                                    --------------------- ---------------------
                                                       1996       1995       1996       1995
                                                    ---------- ---------- ---------- ----------
                                                              (Thousands of Dollars)

<S>                                                   <C>        <C>        <C>        <C>
Operating Revenues................................. $ 261,897  $ 232,849  $ 531,437  $ 485,186
                                                    ---------- ---------- ---------- ----------
Operating Expenses:                                 
  Operation --                                      
     Fuel, purchased and net interchange power.....    79,138     64,179    159,365    138,309
     Other.........................................    77,627     73,830    153,084    145,532
  Maintenance......................................     7,954     12,996     15,423     20,873
  Depreciation.....................................    10,420     10,861     21,366     21,046
  Amortization of regulatory assets, net...........    14,301     13,975     28,602     28,111
  Federal and state income taxes...................    19,108     15,151     43,225     36,821
  Taxes other than income taxes....................    11,193     10,377     23,548     21,156
                                                    ---------- ---------- ---------- ----------
        Total operating expenses...................   219,741    201,369    444,613    411,848
                                                    ---------- ---------- ---------- ----------
Operating Income...................................    42,156     31,480     86,824     73,338
                                                    ---------- ---------- ---------- ----------
                                                    
Other Income:                                      
  Equity in earnings of regional nuclear            
    generating companies and subsidary company.....       515        510      1,031        775
  Other, net.......................................     5,918      1,563      6,403         47
  Income taxes.....................................    (3,077)      (236)    (2,939)       742
                                                    ---------- ---------- ---------- ----------
        Other income, net..........................     3,356      1,837      4,495      1,564
                                                    ---------- ---------- ---------- ----------
        Income before interest charges.............    45,512     33,317     91,319     74,902
                                                    ---------- ---------- ---------- ----------

Interest Charges:                                   
  Interest on long-term debt.......................    14,985     19,555     32,114     39,373
  Other interest...................................     6,541       (130)     6,674       (186)
                                                    ---------- ---------- ---------- ----------
        Interest charges, net......................    21,526     19,425     38,788     39,187
                                                    ---------- ---------- ---------- ----------

                                                     
Net Income......................................... $  23,986  $  13,892  $  52,531  $  35,715
                                                    ========== ========== ========== ==========





</TABLE>
See accompanying notes to financial statements.

                                                   



PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
                                                                 Six Months Ended
                                                                     June 30,
                                                             -----------------------
                                                                 1996        1995
                                                             ----------- -----------
                                                              (Thousands of Dollars)
<S>                                                            <C>          <C>
Operating Activities:
  Net Income................................................ $   52,531  $   35,715
  Adjustments to reconcile to net cash                       
   from operating activities:                                
    Depreciation............................................     21,366      21,046
    Deferred income taxes and investment tax credits, net...     46,928      34,057
    Recoverable energy costs, net of amortization...........      6,647      (3,510)
    Amortization of acquisition costs.......................     28,602      28,111
    Other sources of cash...................................     26,934      12,498
    Other uses of cash......................................     (1,997)        (72)
  Changes in working capital:                                
    Receivables and accrued utility revenues................      3,124       3,939
    Fuel, materials, and supplies...........................      2,905      (7,177)
    Accounts payable........................................    (12,629)    (11,853)
    Accrued taxes...........................................     17,498      15,251
    Other working capital (excludes cash)...................    (38,650)    (13,143)
                                                             ----------- -----------
Net cash flows from operating activities....................    153,259     114,862
                                                             ----------- -----------
                                                             
Financing Activities:
  Net increase in short-term debt...........................     51,400        -
  Reacquisitions and retirements of long-term debt..........   (172,500)    (47,000)
  Cash dividends on preferred stock.........................     (6,625)     (6,625)
  Cash dividends on common stock............................    (26,000)       -
                                                             ----------- -----------
Net cash flows used for financing activities................   (153,725)    (53,625)
                                                             ----------- -----------
                                                             
Investment Activities:                                       
  Investment in plant:                                       
    Electric utility plant..................................    (17,796)    (26,498)
    Nuclear fuel............................................        133        (234)
                                                             ----------- -----------
  Net cash flows used for investments in plant..............    (17,663)    (26,732)
  NU System Money Pool......................................     19,100     (34,250)
  Other investment activities, net..........................       (801)       (479)
                                                             ----------- -----------
Net cash flows from (used for) investments..................        636     (61,461)
                                                             ----------- -----------
Net Increase (Decrease) in Cash For The Period..............        170        (224)
                                                             
Cash - beginning of period..................................        117         296
                                                             ----------- -----------
Cash - end of period........................................ $      287  $       72
                                                             =========== ===========


</TABLE>
See accompanying notes to financial statements.

                                          

                                          















                       
                    PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE

                   NOTES TO FINANCIAL STATEMENTS (UNAUDITED)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A.   Presentation

          The accompanying unaudited financial statements should be read in
          conjunction with Management's Discussion and Analysis of Financial
          Condition and Results of Operations (MD&A) in this Form 10-Q, the
          Annual Report of Public Service Company of New Hampshire (the company
          or PSNH) on Form 10-K for the year ended December 31, 1995 (1995 Form
          10-K), the First Quarter 1996 Form 10-Q, and the company's Form 8-Ks
          dated January 31, 1996, March 30, 1996, June 3, 1996, June 28, 1996,
          and July 22, 1996.  In the opinion of the company, the accompanying
          financial statements contain all adjustments necessary to present
          fairly the financial position as of June 30, 1996, the results of
          operations for the three-month and six-month periods ended June 30,
          1996 and 1995, and the statements of cash flows for the six-month
          periods ended June 30, 1996 and 1995.  All adjustments are of a
          normal, recurring, nature except those described below in Note 4.  The
          results of operations for the three-month and six-month periods ended
          June 30, 1996 and 1995 are not necessarily indicative of the results
          expected for a full year.

          Certain reclassifications of prior period data have been made to
          conform with the current period presentation.

          Northeast Utilities (NU) is the parent company of the Northeast
          Utilities system (the system).  The system furnishes retail electric
          service in Connecticut, New Hampshire, and western Massachusetts
          through four wholly owned subsidiaries, The Connecticut Light and
          Power Company (CL&P), PSNH, Western Massachusetts Electric Company
          (WMECO), and Holyoke Water Power Company (HWP).  A fifth wholly owned
          subsidiary, North Atlantic Energy Corporation (NAEC), sells all of its
          capacity and output of the Seabrook nuclear power plant to PSNH.  In
          addition to its retail electric service, the system furnishes firm and
          other wholesale electric services to various municipalities and other
          utilities.  The system serves about 30 percent of New England's
          electric needs and is one of the 20 largest electric utility systems
          in the country as measured by revenues.

          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 disclosures of contingent liabilities at the date of
          the financial statements and the reported amounts of revenues and
          expenses during the reporting period.  Actual results could differ
          from those estimates.

2.   NEW ACCOUNTING STANDARD

     The Financial Accounting Standards Board (FASB) has issued Statement of
     Financial Accounting Standards (SFAS) 121, "Accounting for the Impairment
     of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which
     established accounting standards for evaluating and recording asset
     impairment.  The company adopted SFAS 121 as of January 1, 1996.  SFAS 121
     requires the evaluation of long-lived assets for impairment when certain
     events occur or when conditions exist that indicate the carrying amounts of
     assets may not be recoverable.

     Based on the current regulatory environment in the system's service areas,
     as of June 30, 1996, SFAS 121 did not have a material impact on the
     company's financial position or results of operations. This conclusion may
     change in the future as competitive factors influence wholesale and retail
     pricing in the electric utility industry or if the cost-of-service based
     regulatory structure were to change.  For further information, see PSNH's
     1995 Form 10-K and PSNH's First Quarter 1996 Form 10-Q.

3.   NUCLEAR DECOMMISSIONING

     For information on nuclear decommissioning, see the company's First Quarter
     1996 Form 10-Q and the company's 1995 Form 10-K.

4.   RECOVERABLE ENERGY COSTS

     The company's Form 8-K dated June 3, 1996 discusses the New Hampshire
     Public Utilities Commission's (NHPUC) order requiring PSNH to refund $41.5
     million of small power producer costs.  These refunds began in June 1996.
     Management believes that the $41.5 million will be recoverable through
     future rates, in accordance with the PSNH Rate Agreement, and has
     recognized a regulatory asset for this amount.  As of June 30, 1996, PSNH
     had net recoverable energy costs of approximately $262 million. For further
     information on PSNH Recoverable Energy Costs, see PSNH's 1995 Form 10-K and
     the PSNH's Form 8-K dated June 3, 1996.

5.   COMMITMENTS AND CONTINGENCIES

      A.  Construction Program:  For information regarding PSNH's construction
          program, see PSNH's 1995 Form 10-K.

      B.  Nuclear Performance:

          Millstone:  PSNH owns a 2.85  percent joint ownership interest in the
          Millstone 3 nuclear generating unit.  PSNH has disclosed within its
          1995 Form 10-K, its First Quarter 1996 Form 10-Q and within Form 8-K's
          dated January 31, 1996, March 30, 1996, June 3, 1996, June 28, 1996,
          and July 22, 1996 that the Millstone power station was placed on the
          NRC's watch list, the three Millstone units are currently out of
          service, and the company is currently responding to NRC requests for
          information.  For additional information on Millstone, see the SEC
          filings referenced above and the MD&A in this Form 10-Q.

          Connecticut Yankee (CY):  For information regarding CY, see the MD&A
          in this Form 10-Q, PSNH's First Quarter 1996 Form 10-Q, and PSNH's
          Form 8-Ks dated June 3, 1996 and July 22, 1996.

      C.  Environmental Matters: For information regarding environmental
          matters, see PSNH's 1995 Form 10-K.

      D.  Nuclear Insurance Contingencies:  For information regarding nuclear
          insurance contingencies, see PSNH's 1995 Form 10-K.

      E.  Long-Term Contractual Arrangements:  For information regarding long-
          term contractual arrangements, see PSNH's 1995 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 PSNH's financial statements and footnotes in this
Form 10-Q,  the 1995 Form 10-K, the First Quarter 1996 Form 10-Q, and the Form
8-Ks dated January 31, 1996, March 30, 1996, June 3, 1996, June 28, 1996, and
July 22, 1996.

FINANCIAL CONDITION

Overview

Net income was approximately $24 million for the three months ended June 30,
1996, an increase of approximately $10 million from the same period in 1995. Net
income was approximately $53 million for the six months ended June 30, 1995, an
increase of approximately $17 million from the same period in 1995. The
increases in net income for the three-and six-month periods were primarily due
to higher retail-kilowatt hour sales, the June 1, 1995 and 1996 retail-rate
increases, and lower interest on long-term debt.

Rate Matters

In 1995, the New Hampshire Legislature created a committee to review the
electric-power industry's structure and called for the New Hampshire Public
Utilities Commission (NHPUC) to initiate a two-year retail-wheeling pilot
program.  PSNH is currently participating in the pilot program.

In response to legislation passed by the New Hampshire Legislature calling for
customer choice no later than July 1, 1998, the NHPUC established a procedural
schedule for a generic proceeding to develop a statewide restructuring plan and
to provide guidance on setting an interim stranded cost recovery charge.  The
schedule calls for the NHPUC to issue its preliminary restructuring plan and
hold preliminary technical sessions in August 1996.  Written comments will be
due in September and will be followed by additional technical sessions and
hearings.  In January 1997, a final order is expected that will implement retail
choice for all customers by January 1, 1998.  Utilities must submit compliance
filings no later than June 30, 1997.

For further information on New Hampshire's restructuring, see PSNH's 1995 Form
10-K.

On June 3, 1996, the NHPUC issued an order to PSNH regarding the refund through
the Fuel and Purchased Power Adjustment Clause (FPPAC) of $41.5 million
(including $5.9 million of interest). For further information on the NHPUC's
order see PSNH's Form 8-K dated June 3, 1996.

Nuclear Performance

PSNH has a 2.85-percent ownership interest in Millstone 3. In addition, PSNH is
obligated to purchase North Atlantic Energy Corporation's (NAEC) 35.98-percent
share of the capacity and output generated by Seabrook 1.

Millstone units 1, 2, and 3 have been out-of-service since November 4, 1995,
February 21, 1996, and March 30, 1996, respectively. For further information on
the current Millstone outages see PSNH's Form 8-Ks dated January 31, 1996, March
30, 1996, June 3, 1996,  June 28, 1996, and July 22, 1996, and the First Quarter
1996 Form 10-Q.

The NRC has recently informed NU that it will require the creation of an
independent, third-party corrective action verification team to verify that
corrective actions have been taken at Millstone to address design and
configuration management issues.  The NRC has indicated that it will issue an
order confirming the requirement for such a team and reconfirming its
requirement that NU seek formal approval by the NRC commissioners for restart of
the Millstone units.  Management cannot presently estimate the effect these
efforts will have on the timing of restart or what additional costs, if any,
this may cause.

Based on PSNH's 2.85-percent ownership interest in Millstone 3, monthly
replacement-power costs attributable to the Millstone 3 outage are not expected
to be significant for PSNH.

In addition to the costs of replacement power, there are, and will be,
incremental operation and maintenance (O&M) costs associated with the Millstone
outages and the Nuclear Regulatory Commission (NRC) review. Because it cannot be
known with any certainty how long each unit will remain out of service,
management can only provide general estimates of the amount of costs that will
be incurred. Management estimates that PSNH's portion of these costs to be
expensed will be about $2 million 1996, approximately $1 million of which were
expensed during the first six months of 1996, including a reserve for future
costs of $1 million. It is likely that these costs will rise as NU and the NRC
identify additional issues that need to be resolved.

Seabrook 1 operated at a capacity factor of 93% through June 1996, as compared
to 94% for the same period in 1995.

Connecticut Yankee

PSNH has a 5-percent ownership interest in the Connecticut Yankee Atomic Power
Company (CYAPC) which operates the Connecticut Yankee nuclear power plant (CY).

On July 22, 1996, CY was taken out of service as a precautionary measure to
address a hypothetical accident scenario involving the plant's service water
system.  On August 8, 1996, after evaluating certain other pending technical and
regulatory issues, CY's management decided to delay the restart of the unit and
to begin a scheduled September refueling outage.  The refueling outage was
accelerated in order to allow time to resolve the pending issues.

On August 9, 1996, the NRC requested that CYAPC submit, within thirty days,
additional information that would reconfirm the basis for continued operation of
CY and address the implications of certain issues related to CY's design basis.
NU cannot estimate at this time whether compliance with this request will impact
the restart date for CY.

CYAPC cannot presently estimate whether the outage will extend beyond the 60
days planned for the refueling outage. Although a vote by the NRC Commissioners
is not required prior to restart of the unit at this time, CYAPC will work
closely with the NRC staff to evaluate and implement the corrective actions
necessary to address the pending issues.  Management cannot presently estimate
the additional costs associated with the outage.

For further information on the current CY outage see PSNH's Form 8-Ks dated June
3, 1996, and July 22, 1996, and the First Quarter 1996 Form 10-Q.

Liquidity And Capital Resources

Cash provided from operations increased approximately $38 million in the first
six months of 1996, from 1995, primarily due to higher energy sales to NU
affiliated companies, the retail rate increases and lower interest on long-term
debt. Cash used for financing activities increased approximately $100 million in
the first six months of 1996, from 1995, primarily due to the repayment of the
$172.5 million Series A first mortgage bond and the payment of common stock
dividends, partially offset by an increase in short-term debt. Cash used for
investments decreased approximately $60 million in the first six months of 1996,
from 1995, primarily due to increased borrowings under the NU system money pool.

In May 1996 Standard & Poor's (S&P) and Moody's downgraded the ratings of CYAPC
bonds. All PSNH, NAEC and CYAPC securities remain on S&P's CreditWatch.  These
rating actions could adversely affect the future availability and cost of funds.

NAEC has entered into interest-rate swap agreements to reduce interest-rate risk
associated with its $225 million variable-rate bank note.  These swap agreements
are not used for trading purposes. The differential paid or received as interest
rates change is recognized in income when realized.  As of June 30, 1996, NAEC
had outstanding swap agreements with a total notional value of approximately
$225 million. The settlement amount associated with the swap agreements
increased interest expense by approximately $.6 million for NAEC during the
first six months of 1996. NAEC's interest-rate swap agreements effectively fix
its variable-rate bank note at 7.05 percent.



RESULTS OF OPERATIONS

Comparison of the Second Quarter of 1996 with the Second Quarter of 1995



Changes in Operating Revenues                     Increase/(Decrease)
                                                 (Millions of Dollars)

Fuel, purchased-power, and FPPAC cost recoveries                     $26
Regulatory decisions                                                   2
Retail sales                                                           2
Other revenues                                                        (1)
                                                                     ----  
Total revenue change                                                 $29



Fuel, purchased-power, and FPPAC cost recoveries increased primarily due to
higher energy sales to NU affiliated companies.  Revenues related to regulatory
decisions increased primarily due to the June 1, 1995 and 1996 retail-rate
increases for PSNH.  Retail sales increased approximately 1.8 percent for the
second quarter of 1996, from 1995, primarily due to modest economic growth in
1996.

Fuel, purchased, and net interchange power expense increased $15 million
primarily due to the timing in the recognition of fuel expenses under the FPPAC
and higher purchased power costs, partially offset by lower fossil fuel costs.

Other operation and maintenance expense decreased approximately $1 million
primarily due to a decrease in maintenance expenses resulting from lower fossil
maintenance costs, partially offset by higher other operation expenses primarily
due to higher Seabrook operating expenses and an increase in marketing expenses.

Federal and state income taxes increased approximately $7 million primarily due
to higher book taxable income.

Other income, net increased approximately $5 million primarily due to the
deferral of the interest expense associated with the FPPAC refund.

Other interest charges increased approximately $6 million primarily due to
interest expense associated with the FPPAC refund.

Interest on long-term debt decreased approximately $5 million
primarily due to the repayment of the $172.5 million Series A first mortgage
bond.



Comparison of the First Six Months of 1996 with the First Six Months of 1995



Changes in Operating Revenues                     Increase/(Decrease)
                                                 (Millions of Dollars)

Fuel, purchased-power, and FPPAC cost recoveries                     $36
Retail sales                                                           7
Regulatory decisions                                                   4
Other revenues                                                        (1)
                                                                     ----
Total revenue change                                                 $46



Fuel, purchased-power, and FPPAC cost recoveries increased primarily due to an
increase in energy sales to NU affiliated companies. Retail sales increased
approximately 2.5 percent primarily due to mild weather in 1995 and modest
economic growth in 1996. Revenues related to regulatory decisions increased
primarily due to the June 1, 1995 and the June 1, 1996 retail-rate increases.

Fuel, purchased, and net interchange power expense increased approximately $21
million primarily due to the timing in the recognition of fuel expenses under
the FPPAC and higher purchased power costs, partially offset by lower fossil
costs.

Other operation and maintenance expense increased approximately $2 million
primarily due to a decrease in maintenance expense due to lower fossil
maintenance costs, partially offset by an increase in other operation expenses
primarily as a result of greater recognition of pension costs, higher Seabrook
operating expenses and an increase in marketing expenses.

Federal and state income taxes increased approximately $10 million primarily due
to higher book taxable income.

Other income, net increased approximately $7 million primarily due to the
deferral of interest expense associated with the FPPAC refund.

Other interest charges increased approximately $7 million primarily due to
interest expense associated with the FPPAC refund.

Interest on long-term debt decreased approximately $7 million primarily due to
the repayment of the $172.5 million Series A first mortgage bond.





                           PART II. OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

1.   NU has learned that the Office of the U.S. Attorney for Connecticut
together with the U.S. Environmental Protection Agency is investigating possible
criminal violations of federal environmental laws at the Millstone facilities.
This investigation may have arisen out of allegations made by a former employee
in a Connecticut state lawsuit alleging he was wrongfully terminated in the
January 1996 nuclear workforce reduction.  NU has been informed by the
government that it is a target of the investigation, but that no one in senior
management is either a target or a subject of this investigation.

2.   On May 13, 1996, the New Hampshire Supreme Court (Court) ruled in PSNH's
appeal of the NHPUC's June 1995 decision that state law does not require
electric utility franchises in New Hampshire to be exclusive. The Court ruled
that the NHPUC can alter existing exclusive franchise orders if it is determined
to be in the public good to do so.  The Court expressly indicated, however, that
its decision does not discuss whether such an alteration of the franchise would
require compensation to the utility.  The decision arose from a NHPUC
proceeding initiated to address Freedom Energy Company, LLC's (Freedom) petition
seeking permission from the NHPUC to operate as an electric utility in New
Hampshire.  The remaining issues related to Freedom's petition are still pending
at the NHPUC.

For additional information on this proceeding, see "Item 1. Business - Rates -
New Hampshire Retail Rates - Electric Industry Restructuring in New Hampshire"
in PSNH's 1995 Form 10-K.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At the Annual Meeting of Stockholders of PSNH held on May 6, 1996,
stockholders voted to fix the number of directors for the ensuing year at eight.
The vote fixing the number of directors at eight was 1,000 shares in favor,
representing 100 percent of the issued and outstanding shares of common stock of
PSNH.

     At the Annual Meeting, the following eight directors were elected, each by
a vote of 1,000 shares in favor, to serve on the Board of Directors for the
ensuing year:  John C. Collins, Bernard M. Fox, William T. Frain, Jr., Cheryl W.
Grise, Gerald Letendre, Hugh C. MacKenzie, Jane E. Newman and Robert P. Wax.

ITEM 5.   OTHER INFORMATION

1.   On May 11, 1996, the NHPUC denied PSNH's Motion for Rehearing requesting
that the NHPUC reconsider its decision to review whether PSNH had used its "best
efforts" to negotiate settlements with thirteen nonutility generators (NUGs)
listed in the Rate Agreement.  The NHPUC has scheduled hearings in this matter
to begin in October 1996.
     For additional information on this proceeding, see "Item 1. Business -
Rates - New Hampshire Retail Rates - NUGs" in NU's 1995 Form 10-K and PSNH's
Form 10-Q for the quarter ended March 31, 1996.

2.   On July 23, 1996, the United States Court of Appeals for the District of
Columbia held that the United States Department of Energy (DOE) is obligated
under the Nuclear Waste Policy Act (NWPA) of 1982 to start disposing spent
nuclear fuel (SNF) no later than January 31, 1998.  This decision followed a
request by numerous utilities, including certain NU subsidiaries, and state
utility commissions to review the DOE's final interpretation declaring that it
had no obligation under the NWPA or its contracts with utilities to accept SNF
absent an operational repository.  The decision of the DOE was vacated, and the
case was remanded for further proceedings consistent with the appellate court's
opinion.

     For additional information on this proceeding, see "Item 1. Business -
Electric Operations - Nuclear Generation - High-Level Radioactive Waste" in
PSNH's 1995 Form 10-K.

3.   On July 24, 1996, NU submitted the report of the Fundamental Cause
Assessment Team (FCAT) to the NRC.  The FCAT was created by the nuclear
committee of the NU Board of Trustees to assist it in identifying fundamental
causes of the decline in performance of the Millstone Units.  The FCAT
identified the following fundamental causes: (1) the top levels of NU management
did not consistently exercise effective leadership and articulate and implement
appropriate vision and direction, (2) the nuclear organization did not establish
and maintain high standards and expectations, and (3) the nuclear organization's
leadership, management and interpersonal skills were weak.  The FCAT's findings
will be factored into the recovery plan that is being developed for the
Millstone units.

     For additional information regarding actions taken by the Board of Trustees
with respect nuclear performance, see PSNH's First Quarter 1996 Form 10-Q.

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:

1.   PSNH filed a Form 8-K dated June 3, 1996 disclosing:

      -   The NRC had issued a report critical to the operations at Millstone.
          In addition, the NRC is requiring NU to perform inspections at the
          three Millstone plants and to submit a response to the NRC prior to
          the restart of the three Millstone units.

      -   CY filed documents with the NRC expressing its view that the specific
          issues identified at Millstone are not present to the same degree.

      -   The NHPUC ordered PSNH to refund $41.5 million of small power producer
          costs.  PSNH expects to recover these costs in the future.

2.   PSNH filed a Form 8-K dated June 28, 1996 disclosing:

      -   On July 2, 1996, Northeast Utilities Service Company, acting as agent
          for the system companies, filed a response to the NRC outlining design
          and configuration discrepancies at Millstone 3 and the costs estimated
          to repair them.

3.   PSNH filed a Form 8-K dated July 22, 1996 disclosing:

      -   Revised estimates for replacement power and the incremental
          costs associated with getting the nuclear unit back on-line.

      -   CY was shutdown voluntarily by its operator, Connecticut Yankee Atomic
          Power Company, to analyze CY's service water system.

                                   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: August 13, 1996                 By:  /s/ Bernard M. Fox
                                              
                                               Bernard M. Fox
                                               Chairman, Chief Executive
                                               Officer and Director



Date: August 13, 1996                 By:  /s/ John J. Roman
                                              
                                               John J. Roman
                                               Vice President and Controller

                                       
                                       
                                       





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