<PAGE>
File No. 70-
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D.C. 20549
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
GRANITE STATE ELECTRIC COMPANY
407 Miracle Mile, Suite 1
Lebanon, New Hampshire 03766
(Name of company filing this statement and
address of principal executive offices)
NEW ENGLAND ELECTRIC SYSTEM
(Name of top registered holding company parent of applicant)
Howard W. McDowell Robert King Wulff
Treasurer Corporation Counsel
25 Research Drive 25 Research Drive
Westborough, MA 01582 Westborough, MA 01582
(Names and address of agents for service)
<PAGE>
Item 1. Description of Proposed Transaction
- --------------------------------------------
Granite State Electric Company (Granite or Company) is a
subsidiary of New England Electric System (NEES), a holding company
registered under the Public Utility Holding Company Act of 1935
(the Act), and is an electric utility incorporated and doing
business solely in New Hampshire.
By this Application/Declaration, Granite seeks authorization
to issue and sell, on or before December 31, 1995, one or more
long-term notes in an aggregate principal amount not to exceed
$5 million.
Granite forecasts that during 1995 it will invest
approximately $5 million in property additions and improvements.
The Company expects internally generated funds to provide
approximately 70% of the funds necessary to meet these costs.
Granite will also retire approximately $3.5 million of long-term
notes and receive a $1 million capital contribution from NEES
during 1995. The balance, of approximately $5 million, needs to be
funded from external sources.
As of December 31, 1994, Granite had outstanding $2,525,000 of
short-term debt and $12 million of long-term debt. The long-term
debt consists of three long-term notes: (i) $5 million at 9.44%
due in 2001; (ii) $2 million at 8.55% due in 1996; and
(iii) $5 million at 7.37% due in 2023. This does not include
$2.4 million of long-term debt retired on February 1. To date this
year, the Company's short-term debt level has reached a peak of
$5,000,000.
Proposed Issue and Sale of Long-Term Notes
- ------------------------------------------
Granite proposes to issue and sell, on or before December 31,
1995, one or more long-term notes in an aggregate principal amount
not to exceed $5 million (hereinafter Notes). Each Note would be
issued pursuant to a note agreement (Note Agreement), the specific
terms of which will be negotiated with a purchaser. Granite
expects that each Note will have a maturity date not to exceed 30
years and will bear interest at a fixed rate not to exceed 11%.
The Note Agreements may provide for sinking funds and limitations
on callability or refundability, depending on market conditions.
The Company proposes that the Notes will be redeemable at any time
at its option, upon reasonable notice, at the then outstanding
principal amount plus accrued interest and redemption premium, and
may include a yield to maturity premium. Granite's currently
outstanding notes are noncallable or contain provisions restricting
the ability of Granite to call them (see File Nos. 70-6998, 70-7288
and 70-8075). These outstanding Notes also contain provisions
limiting the ability of Granite to issue dividends. Granite may
elect not to include such a dividend limitation for the Notes.
<PAGE>
The proceeds from the issue and sale of the Notes will be
applied by Granite to the payment of short-term borrowings incurred
for, or to the cost of, or to the reimbursement of the treasury
for, retirement of outstanding notes, capitalizable additions and
improvements to the plant and property of Granite, or other
capitalizable expenditures.
Granite will not be able to determine the specific terms and
conditions upon which it will issue and sell each Note until it has
undertaken preliminary negotiations with potential lenders.
Item 2. Fees, Commissions and Expenses
- ---------------------------------------
The estimated fees and expenses in connection with the
proposed issue and sale of each Note, are set forth in Exhibit G
hereto. Certain services in connection with the proposed
transactions, including services in connection with negotiating the
terms of the Notes with potential investors will be performed at
the actual cost thereof by New England Power Service Company, an
affiliated service company operating pursuant to Section 13 of the
Act and the Commission's rules thereunder. The services of such
company will also consist of services performed by the Executive
and Administrative Department, the Corporate Department (including
attorneys), the Treasury Department (including accountants), and
the Office Services Department. The only other expense is the
$2,000 filing fee under the Act.
Item 3. Applicable Statutory Provisions
- ----------------------------------------
The proposed issue and sale of Notes are subject to Sections
6(a) and 7 of the Act.
Item 4. Regulatory Approval
- ----------------------------
The New Hampshire Public Utilities Commission (NHPUC) has
jurisdiction over the proposed transaction. No Federal commission
(other than the Securities and Exchange Commission) has
jurisdiction over the proposed transaction.
By its order dated February 4, 1993, as extended by a
supplemental order dated December 19, 1994, the NHPUC has already
granted Granite the authority to issue and sell the $5 million of
long-term notes proposed herein. (See Exhibits D-1 through D-4).
The NHPUC orders are conditional upon Granite submitting to the
NHPUC for its review, prior to soliciting bids from potential
investors, a copy of any private placements memoranda to be used.
The proposed transaction would be consummated only after approval
<PAGE>
by your Commission and the approval by the NHPUC of the private
placement memorandum.
Item 5. Procedure
- ------------------
It is requested that the Commission take action with respect
to this Application/Declaration without a hearing being held and
that an order be issued allowing this Application/Declaration to
become effective as soon as practicable. Specifically, Granite
requests that the Commission issue an order approving the terms and
conditions of the issue and sale of the Notes.
Granite (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 Corporate Regulation 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 it is to become
effective.
Item 6. Exhibits and Financial Statements
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(a) Exhibits
A-1 Form of the proposed Note Agreement (the proposed
Note is an exhibit thereto).
D-1 Application to the New Hampshire Public Utilities
Commission.
D-2 Application to the New Hampshire Public Utilities
Commission for an extension.
D-3 Certified copy of order of the New Hampshire
Public Utilities Commission.
D-4 Certified copy of extension order of the New
Hampshire Public Utilities Commission.
*F Opinion of Counsel.
G Schedule of Fees and Expenses.
H Proposed Form of Notice.
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(b) Financial Statements **
*1-a Balance sheet of Granite as of March 31, 1995,
actual and pro forma.
*1-b Balance sheet of NEES and subsidiaries
consolidated, for the twelve months ended March
31, 1995, actual and pro forma.
*2-a Statement of Income and Retained Earnings of
Granite for the twelve months ended March 31,
1995, actual and pro forma.
*2-b Statement of Income and Retained Earnings of NEES
and subsidiaries consolidated, for the twelve
months ended March 31, 1995, actual and pro
forma.
*3-a Financial data schedules for Granite, actual and
pro forma.
*3-b Financial data schedules for NEES and
subsidiaries consolidated, actual and pro forma
* To be supplied by amendment.
** Pro forma effect of the issuance of a $5 million Note has
been shown.
Item 7. Statement of Effect on the Quality of the Human
Environment
- ------------------------------------------------------------------
The transaction proposed by this Application/Declaration does
not involve any major Federal action significantly affecting the
quality of the human environment.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, the undersigned company has duly caused this
Application/Declaration to be signed on its behalf by the
undersigned officer thereunto duly authorized.
GRANITE STATE ELECTRIC COMPANY
s/Howard W. McDowell
By:
Howard W. McDowell
Treasurer
May 3, 1995
<PAGE>
EXHIBIT AND FINANCIAL STATEMENT
INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
A-1 Form of the proposed Note Agreement Filed under cover
of Form SE
D-1 Application to the New Hampshire Filed herewith
Public Utilities Commission
D-2 Application to the New Hampshire Filed herewith
Public Utilities Commission for
an extension
D-3 Certified copy of order of the New Filed under cover
Hampshire Public Utilities of Form SE
Commission
D-4 Certified copy of extension order Filed under cover
of the New Hampshire Public Utilities of Form SE
Commission
F Opinion of Counsel To be filed by
amendment
G Schedule of Fees and Expenses Filed herewith
H Proposed Form of Notice Filed herewith
FINANCIAL
STATEMENT NO.
- -------------
1-a Balance Sheet of Granite as of To be filed by
March 31, 1995, actual and pro forma amendment
1-b Balance sheet of NEES and subsidiaries To be filed by
consolidated, for the twelve months amendment
ended March 31, 1995, actual and
pro forma
2-a Statement of Income and Retained To be filed by
Earnings of Granite for the twelve amendment
months ended March 31, 1995, actual
and pro forma
2-b Statement of Income and Retained To be filed by
Earnings of NEES and subsidiaries amendment
consolidated, for the twelve months
ended March 31, 1995, actual and
pro forma
3-a Financial data schedules for Granite, To be filed by
actual and pro forma amendment
3-b Financial data schedules for NEES and To be filed by
subsidiaries consolidated, actual and amendment
pro forma
<PAGE>
Exhibit D-1
STATE OF NEW HAMPSHIRE
PUBLIC UTILITIES COMMISSION
PETITION OF
GRANITE STATE ELECTRIC COMPANY
FOR AUTHORIZATION AND APPROVAL
TO ISSUE AND SELL ONE OR
MORE LONG-TERM NOTES
Docket No. DF 92-219
<PAGE>
Docket No. DF 92-219
THE STATE OF NEW HAMPSHIRE
BEFORE THE
PUBLIC UTILITIES COMMISSION
Petition of Granite State Electric Company for
Authority to Issue and Sell Long-Term Securities
To the Public Utilities Commission:
1. Granite State Electric Company (the Company) is a New
Hampshire corporation with its principal office at 4 Park
Street, Concord, New Hampshire. The Company owns and
operates properties in New Hampshire for the purchase and
distribution of electricity at retail in various towns in
New Hampshire including Hanover, Lebanon, Walpole, Salem,
and surrounding communities. The Company is a subsidiary of
New England Electric System (NEES), a public utility holding
company registered under the Public Utility Holding Company
Act of 1935.
2. The Company had outstanding at September 30, 1992, 60,400
shares of common capital stock with a par value of $100 per
share, the aggregate par value being $6,040,000. All of the
common stock is owned by NEES. The retained earnings of the
Company were $5,481,261. There were outstanding $2,050,000
of short-term debt and $13,200,000 of long-term debt.
3. The Company proposes to issue, on or before December 31,
1994, one or more long-term notes in a principal amount not
exceeding $10 million (the Notes). Each Note will be issued
pursuant to a note agreement, the specific terms of which
will be negotiated with the purchaser. The Notes will
mature in not exceeding 30 years and will bear interest at
a fixed rate not exceeding 11%.
<PAGE>
- 2 -
4. As described int he testimony of John G. Cochrane, attached
as Schedule 1 hereto, projected construction expenditures
plus long-term debt retirements are expected to exceed the
Company's projected internally generated funds. The Company
will apply the proceeds from the sale of the Notes to the
payment of short-term borrowings incurred for or to the cost
of, or to the reimbursement of the treasury for, retirement
of outstanding notes, capitalizable additions and
improvements to the plant and property of the Company, or
other capitalizable expenditures.
5. The Company believes that the proposed issuance of the Notes
as set forth herein is consistent with the public good.
<PAGE>
- 3 -
Granite State Electric Company requests:
A. That your Honorable Commission, under the terms of Chapter
369 of the New Hampshire Revised Statutes, find that the
issuance and sale by Granite State Electric of one or more
long-term Notes in a principal amount not to exceed $10
million, with an interest rate not to exceed 11% per annum,
and to mature in not to exceed 30 years, are consistent
with the public good; and that your Honorable Commission
approve and authorize (i) such issuance and sale of the
Notes, and (ii) the use of the proceeds of such issuance and
sale of the Notes for the purposes set forth in this
Petition.
B. That your Honorable Commission set a date for hearing hereon
at which the Company may present evidence and that your
Honorable commission take such further steps and make such
other findings and orders as in its judgment appear
necessary or advisable to carry out the proposed
transactions.
Respectfully submitted,
GRANITE STATE ELECTRIC COMPANY
By: Lydia M. Pastuszek /s/
Lydia M. Pastuszek
President
Dated: November 18, 1992
<PAGE>
- 4 -
List of Schedules:
Schedule 1 - Testimony of John G. Cochrane
Schedule 2 - Financial Statements, consisting of:
A. Actual and Pro-forma Balance Sheets of Granite
as of September 30, 1992.
B. Actual and Pro-forma Statements of Income and
Retained Earnings of Granite as of September
30, 1992.
C. Estimated Sources and Application of Funds and
Capitalization Statement for Granite for the
period 1989 - 1994.
<PAGE>
Exhibit D-2
STATE OF NEW HAMPSHIRE
PUBLIC UTILITIES COMMISSION
PETITION OF
GRANITE STATE ELECTRIC COMPANY
FOR EXTENSION OF AUTHORIZATION
TO ISSUE AND SELL ONE OR
MORE LONG-TERM NOTES
Docket No. DF 92-219
<PAGE>
Docket No. DF 92-219
THE STATE OF NEW HAMPSHIRE
BEFORE THE
PUBLIC UTILITIES COMMISSION
Petition of Granite State Electric Company for Extension of
Authority to Issue and Sell Long-Term Securities
------------------------------------------------
To the Public Utilities Commission:
1. Granite State Electric Company (the Company) is a New
Hampshire corporation with its principal office at 407
Miracle Mile; Suite 1, Lebanon, New Hampshire. The
Company owns and operates properties in New Hampshire
for the purchase and distribution of electricity at
retail in various towns in New Hampshire including
Hanover, Lebanon, Walpole, Salem, and surrounding
communities. The Company is a subsidiary of New
England Electric System (NEES), a public utility
holding company registered under the Public Utility
Holding Company Act of 1935.
2. By Order No. 20,741 dated February 4, 1993, the Company
was granted authority to issue, on or before December
31, 1994, one or more long-term notes in a principal
amount not exceeding $10 million (the Notes).
3. Under authority of Order No. 20,741, and Supplemental
Order No's 20,818 and 20,948, the Company issued a
$5 million, 30-year, 7.37% note on November 4, 1993.
This issuance leaves $5 million of authority remaining
through December 31, 1994.
4. The Company requests an extension of the existing
authority and proposes to issue, on or before December
31, 1995, one or more long-term notes in a principal
amount not exceeding the remaining $5 million. As
detailed in Order No. 20,471, said notes will not be
issued until the Commission reviews the terms and
conditions of the financing to determine whether the
financing is appropriate and in the public good.
5. Furthermore, due to reasons described in the Affidavit
of John G. Cochrane attached hereto as Schedule 1
(Affidavit), the Company proposes that the maximum
interest rate be increased from 10% to 11%.
<PAGE>
6. The proceeds of the remaining $5 million of authority
will be used as described in the Affidavit.
7. The Company believes that the continued authority to
issue the Notes as set forth herein is consistent with
the public good.
<PAGE>
Granite State Electric Company requests:
A. That your Honorable Commission, under the terms of
Chapter 369 of the New Hampshire Revised Statutes,
extend the authority granted under Order No. 20,741
through December 31, 1995. Said extension of authority
to be consistent with all terms of Order No. 20,741
except that the interest rate shall not exceed 11% per
annum.
B. That Your Honorable Commission take all steps and make
such other findings and orders as in its judgment
appear necessary or advisable to carry out the proposed
extension.
Respectfully submitted,
GRANITE STATE ELECTRIC COMPANY
s/Marcy L. Reed
By
Marcy L. Reed
Assistant Treasurer
Dated: November 4, 1994
<PAGE>
List of Schedules
-----------------
Schedule 1 Affidavit of John G. Cochrane
Schedule A Estimated Sources and Application of Funds
and Capitalization Statement for Granite
State Electric Company for the period 1995.
<PAGE>
STATE OF NEW HAMPSHIRE
PUBLIC UTILITIES COMMISSION
AFFIDAVIT OF
GRANITE STATE ELECTRIC COMPANY
FOR EXTENSION OF AUTHORIZATION
TO ISSUE AND SELL ONE OR
MORE LONG-TERM NOTES
Docket No. DF 92-219
<PAGE>
Schedule 1
THE STATE OF NEW HAMPSHIRE
BEFORE THE
PUBLIC UTILITIES COMMISSION
Granite State Electric Company's Request
for Extension of Authority to Issue Long-Term Notes
---------------------------------------------------
Affidavit
I, John G. Cochrane, hereby depose and state the following:
1. I am Vice-President and Director of Corporate Finance for
New England Power Service Company (NEPSCO). My business
address is 25 Research Drive, Westborough, Massachusetts
01582. NEPSCO provides engineering, construction, and
financial services to New England Electric System (NEES)
companies, including Granite State Electric Company (Granite
or the Company).
2. Since my last testimony before the New Hampshire Public
Utilities Commission regarding the Docket No. DF 92-219, the
Company received Order No. 20,741 and Supplemental Orders
No. 20,818 and 20,948 authorizing the issuance and sale of
$10 million of long-term notes through December 31, 1994.
3. Under the authority granted in the above referenced orders,
the Company issued $5 million of 30-year notes at 7.37% on
November 4, 1993.
4. Granite proposes to extend the current authority which
expires on December 31, 1994, so that it can issue and sell,
on or before December 31, 1995, one or more Notes in
aggregate principal amount not to exceed the remaining
$5 million. Each note will be issued pursuant to a note
agreement, the specific terms of which will be negotiated
with a purchaser. The Company expects that the terms of the
note will be as described in Docket No. DF 92-219, with the
exception of the maximum interest rate.
5. Prior to soliciting bids from potential investors for a note
issuance, Granite State will forward a copy of the private
placement memorandum for the NHPUC to review.
6. The proceeds from the sale of the proposed Notes will be
applied by Granite to the payment of short-term borrowings
incurred for, or to the cost of, or to the reimbursement of
<PAGE>
the treasury for, retirement of outstanding notes,
capitalizable additions and improvements to the plant and
property of Granite, or other capitalizable expenditures.
As outlined in Schedule A, the Company's estimated sources
and uses of funds for 1995, Granite forecasts that it will
invest approximately $4.5 million in new property additions
and improvements and retire approximately $3.4 million of
notes. Internally generated funds plus capital
contributions will provide about $3.3 million of the funds
necessary to meet these costs next year. The $3.4 million
of note retirements/refundings include a $1 million sinking
fund payment on December 1 for the 8.55% note and $2.4
million for retirement of the remaining 12.55% notes. The
12.55% notes become callable on February 1, 1995. In
addition, the Company estimates short-term debt will be
$2.0 million at December 31, 1994.
7. Since the issue of long-term notes in November of 1993, the
Company's short-term debt has averaged $69,000. As of
June 30, 1994, the Company's short-term debt balance was
zero. Due to uncertainty in future market conditions and
the timing of the issuance of the long-term notes in 1995,
the Company is requesting authorization of a maximum
interest rate not exceeding 11%. As of November 4, 1994
assuming Granite were to issue a Note in the amount of
$5,000,000 with no sinking fund, the cost of money to the
Company would have been 9.35% for a 10-year note and 9.60%
for a 30-year note.
8. The capital structure of the Company as of June 30, 1994 is
comprised of $14,000,000 of long-term debt and $17,937,660
of common equity. The long-term debt consists of four
notes, including the one issued under this order. The
common equity equals the sum of 60,400 shares of $100 par
value common stock for an aggregate par value of $6,040,000,
plus $4,000,000 other paid-in-capital, plus $7,897,660 of
retained earnings. There was no short-term debt outstanding
as of June 30, 1994.
10. In my opinion, the proposed issuance of Notes will be
consistent with the public good of the State of New
Hampshire.
Signed under the pains and penalties of perjury this fourth
day of November, 1994.
s/John G. Cochrane
______________________________
John G. Cochrane
Vice President and
Director of Corporate Finance
NEPSCO
<PAGE>
Schedule A
GRANITE STATE ELECTRIC COMPANY
SOURCES AND APPLICATION OF FUNDS AND CAPITALIZATION
(Millions of Dollars)
Actual Estimated
------ ----------------
1993 1994 1995
------ ---- ----
SOURCE OF FUNDS
Internal
1. Depreciation and Amortization $ 1.9 $ 2.0 $ 2.1
2. Deferred FIT (net) (0.1) 0.1 0.1
3. Investment Tax Credits (net) (0.1) (0.1) -
4. Changes in Working Capital and 0.4 - (1.4)
Other Balance Sheet Items
5. Retained Earnings 1.1 1.4 1.5
----- ----- -----
6. Total Internal Funds 3.2 3.4 2.3
7. Less AFDC - - -
----- ----- -----
8. Total Internal Funds ex. AFDC 3.2 3.4 2.3
External Funds
9. Long-Term Debt 5.0 - 5.0
10. Common Equity - - 1.0
----- ----- -----
11. Subtotal 5.0 - 6.0
12. Change in Short-Term Debt (2.9) 1.7 (0.4)
----- ----- -----
13. Total External Funds 2.1 1.7 5.6
Total Source of Funds $ 5.3 $ 5.1 $ 7.9
===== ===== =====
APPLICATION OF FUNDS
Construction Requirements
14. Plant and Equipment $ 3.9 $ 3.7 $ 4.5
15. Retirement of Debt 1.4 1.4 3.4
----- ----- -----
Total Application of Funds $ 5.3 $ 5.1 $ 7.9
===== ===== =====
CAPITALIZATION DATA
Amount
Short-Term Debt $ 0.3 $ 2.0 $ 1.6
Long-Term Debt 15.8 14.4 16.0
Common Equity 17.3 18.7 21.2
----- ----- -----
Total Capitalization $33.4 $35.1 $38.8
===== ===== =====
Ratios
Short-Term Debt 0.9% 5.7% 4.1%
Long-Term Debt 47.3% 41.0% 41.2%
Common Equity 51.8% 53.3% 54.7%
----- ----- -----
Total Capitalization 100.0% 100.0% 100.0%
===== ===== =====
<PAGE>
Exhibit G
Schedule of Estimated Fees and Expenses in
Connection with the Proposed
Issue and Sale of $5 Million Granite Notes
Fee for filing under the 1935 Act $ 2,000
Services of NEPSCO*:
Executive and Administrative Department 500
Corporate Department (including attorneys) 4,000
Treasury Department (including accountants) 5,500
Other Departments 500
---------
$ 15,500
Services of Counsel for the Purchasers 50,000
Miscellaneous 13,000
=========
Total $ 80,500
____________________
* New England Power Service Company (NEPSCO) is an
affiliated service company operating pursuant to the
provisions of Section 13 of the Act and the Commission's
rules thereunder. The services of NEPSCO are performed
at the actual cost thereof.
<PAGE>
Exhibit H
PROPOSED FORM OF NOTICE
-----------------------
Granite State Electric Company (70- )
Granite State Electric Company (Granite), 407 Miracle Mile,
Suite 1, Lebanon, New Hampshire, an electric utility subsidiary of
New England Electric System, a registered holding company, has
filed a declaration with this Commission pursuant to Sections 6(a)
and 7 of the Public Utility Holding Company Act of 1935.
Granite proposes to issue and sell, on or before December 31,
1995, one or more long-term notes in an aggregate principal amount
not to exceed $5 million (the Notes). The Notes will be issued
pursuant to note agreements, the specific terms of which will be
negotiated with individual purchasers (Note Agreements). The Notes
will have a maturity not to exceed 30 years. The Note Agreements
may provide for a sinking fund and may contain limitations on
callability or refundability depending on market conditions.
