<PAGE>
File No. 70-6971
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 9
to
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NEW ENGLAND ENERGY INCORPORATED
25 Research Drive
Westborough, Massachusetts 01582
(Name of company filing this statement
and address of principal executive offices)
NEW ENGLAND ELECTRIC SYSTEM
(Name of top registered holding company in parent system)
John G. Cochrane Robert King Wulff
Treasurer Corporation Counsel
25 Research Drive 25 Research Drive
Westborough, MA 01582 Westborough, MA 01582
(Names and Addresses of agents for service)
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Purpose of this Post-Effective Amendment No. 9
- ----------------------------------------------
By this Post-effective Amendment No. 9, Applicant New
England Energy Incorporated (NEEI) requests that the Commission
extend through 1998 its authorization to enter into interest rate
protection arrangements, including but not limited to contractual
arrangements with one or more parties (the Counterparty) for the
purpose of exchanging interest payment obligations (Swap
Agreements).
1. Item 1. is amended to include the following:
- -------------------------------------------------
A. Background
----------
NEEI is a subsidiary of New England Electric System (NEES),
a registered holding company under the Public Utility Holding
Company Act of 1935 (the Act). NEEI is engaged in various
activities relating to fuel supply for the NEES system as
authorized by the Commission.
By order dated April 7, 1995, (HCAR No. 26268), the
Commission authorized NEEI to enter into a credit agreement with
a group of banks headed by Credit Suisse (Credit Agreement). The
terms of the Credit Agreement provide for borrowings by NEEI up
to a total amount outstanding of $225 million. The amount of the
facility available under the Credit Agreement reduces
incrementally according to a set schedule through April 7, 2002.
Total borrowings by NEEI at September 30, 1995 were $180 million.
Interest paid on borrowings under the Credit Agreement can,
at NEEI's option, be calculated based on: (i) LIBOR Rates of
various maturities up to one year (subject to availability), (ii)
Credit Suisse's Base Rate, and (iii) competitive bid advances.
B. Extension of Current Authorization to Enter Into Interest
Rate Protection Arrangements
---------------------------------------------------------
By order dated March 7, 1986 (HCAR No. 24046), NEEI was
authorized to enter into one or more Swap Agreements on or before
December 31, 1987 covering a total notional amount of up to $200
million for a term or terms ranging between three and seven
years. By order dated December 17, 1987 (HCAR No. 24531) this
authority was expanded to include other interest rate protection
mechanisms, with the total notional amount that could be covered
by arrangements remaining at $200 million. Post-effective
Amendment No. 3 (dated November 4, 1987) in this file sets forth
the proposed interest rate protection arrangements, including
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Swap Agreements. NEEI now requests that this authority to enter
into such arrangements be extended through December 31, 1998.
Under the additional types of mechanisms being considered,
NEEI would either pay a fixed rate on a portion of its debt or
establish an interest rate cap on a portion of its debt.
Depending on how long the fixed rate or the capped rate is set,
NEEI may pay the Counterparty an upfront fee, establish an
interest rate floor, and/or share with the Counterparty a portion
of the savings realized on the spread between the fixed or capped
rate and the floating rate. Such interest rate protection
mechanisms generally run from two to five years. Under some
arrangements, the rates are locked in at the time the terms are
agreed upon, but the payments do not begin until some point in
the future.
In no event will the fixed rate of interest paid by NEEI
exceed by more than 1.5% per annum the yield on direct
obligations of the U.S. Government with maturities comparable to
the term of such agreements, plus any intermediary fee required
and any amounts required in excess of what NEEI receives from the
Counterparty to meet its obligations under the Credit Agreement.
NEEI may be obligated to pay an arrangement fee and various
legal fees and other expenses in connection with interest rate
protection transactions. Also, in the event an intermediary
between the Counterparty and NEEI is necessary for the purpose of
guaranteeing payment obligations, such intermediary would require
a fee, which would not exceed 1/2% per annum on the notional
amount. NEEI may also be required to pay amounts in addition to
the payments received under any given interest rate swap in order
to meet fully its interest payment obligations under the Credit
Agreement.
The total notional amount to be covered at any one time
under all of the agreements shall not exceed the lesser of $175
million or the amount of the available facility under the Credit
Agreement. Currently, NEEI has two swaps outstanding with a
combined notional amount of $75 million. On October 21, 1993
NEEI entered into a three year Swap Agreement with Merrill Lynch
Capital Services, Inc. for a notional amount of $50 million. On
June 7, 1995, NEEI entered into a three year Swap Agreement with
Citibank, N.A. for a notional amount of $25 million.
NEEI continues to believe that the ability to enter into
such arrangements would be advantageous in order to reduce
exposure to increases in short-term interest rates and to improve
its ability to project interest costs. Having the flexibility to
select among different interest rate protection mechanisms would
give NEEI the ability to elect transactions having the lowest
estimated costs.
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In summary, NEEI requests that the Commission extend and
continue through 1998 its authorization for NEEI to enter into
interest rate swap arrangements and other types of interest rate
protection mechanisms as described and previously approved by the
Commission by orders dated August 16, 1984 (HCAR No. 23397),
March 7, 1986 (HCAR No. 24046), December 17, 1987 (HCAR No.
24531), December 29, 1989 (HCAR No. 25015), September 19, 1991
(HCAR No. 25378, and December 1, 1993 (HCAR No. 25935). The
total notional amount to be covered at one time under all such
arrangements and mechanisms shall not exceed the lesser of
$175 million or the amount of the available facility under the
Credit Agreement.
2. Item 2. Fees, Commissions and Expenses is amended to
include the following:
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In addition to fees described in Post-effective Amendment
No. 9, services incidental to the transactions described herein
will be performed by New England Power Service Company at the
actual cost thereof. New England Power Service Company is an
affiliated service company operating pursuant to Section 13 of
the Act and the Commission's rules thereunder. It is estimated
that the cost of such services will not exceed $20,000 through
December 31, 1998. These amounts include a $2,000 filing fee
paid by wire transfer to the Commission at the time of filing
this Amendment.
3. Item 5. Procedure is amended to include the following:
-------------------------------------------------------
Applicant requests that the Commission issue its order on or
before December 31, 1995, or as soon as practicable thereafter.
Applicant (i) does not request a recommended decision by a
hearing officer, (ii) does not request a recommended decision by
any other responsible officer of the Commission, (iii) hereby
specifies that the Division of Investment Management may assist
in the preparation of the Commission's Decision, and (iv) hereby
requests that there be no 30-day waiting period between the date
of issuance of the Commission's order and the date on which it is
to become effective.
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PAGE 5
4. Item 6. Exhibits and Financial Statements.
-------------------------------------------
Reference is made to the quarterly reports by NEEI under
Rule 24 (File Nos. 70-5543, 70-6513, 70-6823, 70-7055, 70-6958)
providing detailed information on its oil and gas exploration and
development activities.
The following exhibits are hereby added:
G-1 Financial Data Schedule - NEEI
G-2 Financial Data Schedule - NEES
N-1 Form of Notice
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PAGE 6
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned Company has duly caused this
Post-effective Amendment No. 9 (Commission File No. 70-6971) to
be signed on its behalf by the undersigned officer thereunto duly
authorized by such Company.
NEW ENGLAND ENERGY INCORPORATED
s/John G. Cochrane
By _____________________________
John G. Cochrane
Treasurer
Dated: October 19, 1995
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EXHIBIT INDEX
-------------
Exhibit Description Page
- ------- ----------- ----
N-1 Form of Notice Filed herewith
G-1 Financial Data Schedule - NEEI Filed herewith
G-2 Financial Data Schedule - NEES Filed herewith
<PAGE>
EXHIBIT N-1
FORM OF NOTICE
New England Energy Incorporated (NEEI), 25 Research Drive,
Westborough, Massachusetts 01582, a fuel supply subsidiary of New
England Electric System, a registered holding company, has filed
a Post-effective Amendment to the application/declaration in this
proceeding with this Commission pursuant to Section 6(a), 7,
9(a), and 10 of the Public Utility Holding Company Act of 1935
(Act) and Rule 50 thereunder.
By order dated August 16, 1984, (HCAR No. 23397), NEEI was
authorized to enter into interest payment exchange contracts with
one or more parties, on or before December 31, 1985, covering a
total notional amount of up to $150 million for a term or terms
ranging between three and seven years. By orders dated December
17, 1987, December 29, 1989, September 19, 1991, and December 1,
1993 (HCARs Nos. 24531, 25015, 25378, and 25935), this authority
was extended through December 31, 1995 and the total notional
amount increased to $200 million. NEEI now seeks to further
extend this authorization through December 31, 1998 and reduce
the total notional amount.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> OPUR1
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET AND RELATED STATEMENTS OF INCOME, RETAINED EARNINGS
AND CASH FLOWS OF THE NEW ENGLAND ENERGY INCORPORATED, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 255,851
<TOTAL-CURRENT-ASSETS> 44,315
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 300,166
<COMMON> 2
<CAPITAL-SURPLUS-PAID-IN> 248
<RETAINED-EARNINGS> (22,643)
<TOTAL-COMMON-STOCKHOLDERS-EQ> (2,922)
0
0
<LONG-TERM-DEBT-NET> 193,000
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0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 129,559
<TOT-CAPITALIZATION-AND-LIAB> 300,166
<GROSS-OPERATING-REVENUE> 73,932
<INCOME-TAX-EXPENSE> (3,853)
<OTHER-OPERATING-EXPENSES> 77,095
<TOTAL-OPERATING-EXPENSES> 73,242
<OPERATING-INCOME-LOSS> 690
<OTHER-INCOME-NET> 4
<INCOME-BEFORE-INTEREST-EXPEN> 694
<TOTAL-INTEREST-EXPENSE> 2,357
<NET-INCOME> (1,663)
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 2,357
<CASH-FLOW-OPERATIONS> 71,253
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<TABLE> <S> <C>
<PAGE>
<ARTICLE> OPUR1
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED STATEMENTS OF
INCOME, RETAINED EARNINGS AND CASH FLOWS OF NEW ENGLAND ELECTRIC SYSTEM,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,808,158
<OTHER-PROPERTY-AND-INVEST> 397,066
<TOTAL-CURRENT-ASSETS> 494,973
<TOTAL-DEFERRED-CHARGES> 427,020 <F1>
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 5,127,217
<COMMON> 64,970
<CAPITAL-SURPLUS-PAID-IN> 736,823
<RETAINED-EARNINGS> 784,549
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,584,852
0
147,016 <F2>
<LONG-TERM-DEBT-NET> 1,630,248
<SHORT-TERM-NOTES> 226,180 <F3>
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 32,520
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,504,911
<TOT-CAPITALIZATION-AND-LIAB> 5,127,217
<GROSS-OPERATING-REVENUE> 2,240,908
<INCOME-TAX-EXPENSE> 111,044
<OTHER-OPERATING-EXPENSES> 1,849,680
<TOTAL-OPERATING-EXPENSES> 1,960,724
<OPERATING-INCOME-LOSS> 280,184
<OTHER-INCOME-NET> 18,846
<INCOME-BEFORE-INTEREST-EXPEN> 299,030
<TOTAL-INTEREST-EXPENSE> 104,906
<NET-INCOME> 177,762
8,689 <F2>
<EARNINGS-AVAILABLE-FOR-COMM> 177,762
<COMMON-STOCK-DIVIDENDS> 150,405
<TOTAL-INTEREST-ON-BONDS> 101,411
<CASH-FLOW-OPERATIONS> 355,062
<PAGE>
<EPS-PRIMARY> 2.74
<EPS-DILUTED> 2.74
<FN>
<F1> Total deferred charges includes other assets and accrued Yankee Atomic costs.
<F2> Preferred stock reflects preferred stock of subsidiaries. Preferred stock dividends reflect preferred stock dividends of
subsidiaries.
<F3> Short-term notes includes commercial paper obligations.
</FN>
