<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-5464
(LOGO) MASSACHUSETTS ELECTRIC COMPANY
(Exact name of registrant as specified in charter)
MASSACHUSETTS 04-1988940
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
25 Research Drive, Westborough, Massachusetts 01582
(Address of principal executive offices)
Registrant's telephone number, including area code
(508-389-2000)
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 ( )
Common stock, par value $25 per share, authorized and
outstanding: 2,398,111 shares at March 31, 1998.
<PAGE>
<TABLE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
MASSACHUSETTS ELECTRIC COMPANY
Statements of Income
Periods Ended March 31
(Unaudited)
<CAPTION>
Three Months Twelve Months
------------ -------------
1998 1997 1998 1997
---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C>
Operating revenue $396,714 $405,518$1,615,281 $1,553,236
-------- ------------------ ----------
Operating expenses:
Purchased electric energy, principally from
New England Power Company, an affiliate 283,582 295,200 1,133,429 1,128,523
Other operation 50,782 48,546 219,386 213,011
Maintenance 8,752 7,424 38,234 30,470
Depreciation 14,253 12,638 51,309 47,959
Taxes, other than income taxes 8,949 8,873 31,219 30,687
Income taxes 7,553 8,596 41,411 27,071
-------- ------------------ ----------
Total operating expenses 373,871 381,277 1,514,988 1,477,721
-------- ------------------ ----------
Operating income 22,843 24,241 100,293 75,515
Other income (expense) - net (2,878) (1,896) (2,518) (1,071)
-------- ------------------ ----------
Operating and other income 19,965 22,345 97,775 74,444
-------- ------------------ ----------
Interest:
Interest on long-term debt 6,871 7,083 27,400 27,447
Other interest 1,419 1,742 6,891 6,828
Allowance for borrowed funds used during
construction - credit (136) (116) (449) (660)
-------- ------------------ ----------
Total interest 8,154 8,709 33,842 33,615
-------- ------------------ ----------
Net income $ 11,811 $ 13,636$ 63,933 $ 40,829
======== ================== ==========
Statements of Retained Earnings
Retained earnings at beginning of period $201,156 $165,936$ 166,803 $ 150,671
Net income 11,811 13,636 63,933 40,829
Dividends declared on cumulative
preferred stock (240) (778) (2,283) (3,114)
Dividends declared on common stock (15,588) (11,991) (27,578) (21,583)
Premium on redemption of preferred stock - - (3,736) -
-------- ------------------ ----------
Retained earnings at end of period $197,139 $166,803$ 197,139 $ 166,803
======== ================== ==========
The accompanying notes are an integral part of these financial statements.
Per share data is not relevant because the Company's common stock is wholly-
owned by New England Electric System.
</TABLE>
<PAGE>
<TABLE>
MASSACHUSETTS ELECTRIC COMPANY
Balance Sheets
(Unaudited)
<CAPTION>
March 31, December 31,
ASSETS 1998 1997
------ ---- ----
(In Thousands)
<S> <C> <C>
Utility plant, at original cost $1,590,785 $1,579,309
Less accumulated provisions for depreciation 474,391 465,796
---------- ----------
1,116,394 1,113,513
Construction work in progress 14,848 13,363
---------- ----------
Net utility plant 1,131,242 1,126,876
---------- ----------
Current assets:
Cash 10,099 6,743
Accounts receivable:
From sales of electric energy 176,641 158,627
Other (including $3,718,000 and $1,321,000
from affiliates) 5,216 2,112
Less reserves for doubtful accounts 13,521 12,808
---------- ----------
168,336 147,931
Unbilled revenues 47,235 49,513
Materials and supplies, at average cost 10,025 9,599
Prepaid and other current assets 20,851 22,255
---------- ----------
Total current assets 256,546 236,041
---------- ----------
Deferred charges and other assets 43,389 45,450
---------- ----------
$1,431,177 $1,408,367
========== ==========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common stock, par value $25 per share, authorized
and outstanding 2,398,111 shares $ 59,953 $ 59,953
Premiums on capital stocks 45,945 45,945
Other paid-in capital 193,224 193,224
Retained earnings 197,139 201,156
Unrealized gain on securities, net 189 129
---------- ----------
Total common equity 496,450 500,407
Cumulative preferred stock 15,739 15,739
Long-term debt 343,359 338,387
---------- ----------
Total capitalization 855,548 854,533
---------- ----------
Current liabilities:
Long-term debt due in one year 10,000 20,000
Short-term debt (including $1,525,000 and $4,800,000
to affiliates) 30,300 34,700
Accounts payable (including $180,775,000 and $179,211,000
to affiliates) 215,366 195,023
Accrued liabilities:
Taxes 5,511 8,275
Interest 7,171 9,183
Other accrued expenses 25,778 22,081
Customer deposits 4,522 4,487
Dividends payable 15,828 5,036
---------- ----------
Total current liabilities 314,476 298,785
---------- ----------
Deferred federal and state income taxes 185,451 179,474
Unamortized investment tax credits 15,191 15,463
Other reserves and deferred credits 60,511 60,112
---------- ----------
$1,431,177 $1,408,367
========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
MASSACHUSETTS ELECTRIC COMPANY
Statements of Cash Flows
Quarters Ended March 31
(Unaudited)
<CAPTION>
1998 1997
---- ----
(In Thousands)
<S> <C> <C>
Operating activities:
Net income $ 11,811 $ 13,636
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 14,253 12,639
Deferred income taxes and investment tax credits, net 5,834 (5,365)
Allowance for funds used during construction (136) (116)
Decrease (increase) in accounts receivable,
net and unbilled revenues (18,127) 2,658
Decrease (increase) in materials and supplies (426) (133)
Decrease (increase) in prepaid and other current assets 1,404 2,214
Increase (decrease) in accounts payable 20,343 1,097
Increase (decrease) in other current liabilities (1,044) 23,585
Other, net 2,455 2,562
-------- --------
Net cash provided by operating activities $ 36,367 $ 52,777
-------- --------
Investing activities:
Plant expenditures, excluding allowance for
funds used during construction $(18,488) $(22,546)
Other investing activities (87) (306)
-------- --------
Net cash used in investing activities $(18,575) $(22,852)
-------- --------
Financing activities:
Dividends paid on common stock $ (4,796) $ (7,194)
Dividends paid on preferred stock (240) (779)
Long-term debt - issues 25,000 -
Long-term debt - retirements (30,000) -
Changes in short-term debt (4,400) (21,900)
-------- --------
Net cash provided by (used in)
financing activities $(14,436) $(29,873)
-------- --------
Net increase in cash and cash equivalents $ 3,356 $ 52
Cash and cash equivalents at beginning of period 6,743 2,356
-------- --------
Cash and cash equivalents at end of period $ 10,099 $ 2,408
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Note A - Hazardous Waste
- ------------------------
The Federal Comprehensive Environmental Response, Compensation
and Liability Act, more commonly known as the "Superfund" law,
imposes strict, joint and several liability, regardless of fault,
for remediation of property contaminated with hazardous substances.
A number of states, including Massachusetts, have enacted similar
laws.
The electric utility industry typically utilizes and/or
generates in its operations a range of potentially hazardous
products and by-products. Massachusetts Electric Company (the
Company) currently has in place an internal environmental audit
program and an external waste disposal vendor audit and
qualification program intended to enhance compliance with existing
federal, state, and local requirements regarding the handling of
potentially hazardous products and by-products.
The Company has been named as a potentially responsible party
(PRP) by either the United States Environmental Protection Agency
or the Massachusetts Department of Environmental Protection for 16
sites at which hazardous waste is alleged to have been disposed.
Private parties have also contacted or initiated legal proceedings
against the Company regarding hazardous waste cleanup. The most
prevalent types of hazardous waste sites with which the Company has
been associated are manufactured gas locations. (Until the early
1970s, New England Electric System (NEES) was a combined electric
and gas holding company system.) The Company is aware of
approximately 35 such manufactured gas locations in Massachusetts.
The Company has been identified as a PRP at eight of these
manufactured gas locations, which are included in the 16 PRP sites
discussed above. The Company is engaged in various phases of
investigation and remediation work at 17 of the manufactured gas
locations. The Company is currently aware of other possible
hazardous waste sites, and may in the future become aware of
additional sites, that it may be held responsible for remediating.
In 1993, the Massachusetts Department of Public Utilities
approved a settlement agreement regarding the rate recovery of
remediation costs of former manufactured gas sites and certain
other hazardous waste sites located in Massachusetts. Under that
agreement, qualified costs related to these sites are paid out of
a special fund established on the Company's books. The Company
made an initial $30 million contribution to the fund. Rate-
recoverable contributions of $3 million, adjusted since 1993 for
inflation, are added annually to the fund along with interest and
any recoveries from insurance carriers. At March 31, 1998, the
fund had a balance of $46 million.
<PAGE>
Predicting the potential costs to investigate and remediate
hazardous waste sites continues to be difficult. There are also
significant uncertainties as to the portion, if any, of the
investigation and remediation costs of any particular hazardous
waste site that may ultimately be borne by the Company. The NEES
companies have recovered amounts from certain insurers, and, where
appropriate, the Company intends to seek recovery from other
insurers and from other PRPs, but it is uncertain whether, and to
what extent, such efforts will be successful. At March 31, 1998,
the Company had total reserves for environmental response costs of
$49 million. This represents an increase from the balance at the
end of 1997. Since the majority of the sites for which increased
reserves were recognized are covered by rate agreements, this
increase in the reserves did not have an adverse effect on net
income. The Company believes that hazardous waste liabilities for
all sites of which it is aware, and which are not covered by a rate
agreement, are not material to its financial position.
Note B - Comprehensive Income
- -----------------------------
In the first quarter of 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive
Income (FAS 130). The statement establishes standards for
reporting comprehensive income and its components. Comprehensive
income for the period is equal to net income plus "other
comprehensive income," which, for the Company, consists of the
change in unrealized holding gains on available-for-sale securities
during the period. Other comprehensive income was immaterial for
the Company for the quarters ended March 31, 1998 and 1997,
respectively.
Note C - New Accounting Standards
- ---------------------------------
In 1997, the Financial Accounting Standards Board (FASB)
released Statement of Financial Accounting Standards No. 131,
Disclosure about Segments of an Enterprise and Related Information
(FAS 131), which goes into effect in 1998. FAS 131 requires the
reporting in financial statements of certain new additional
information about operating segments of a business. Application of
FAS 131 is not required for interim reporting in the initial year
of application. The Company is currently evaluating the impact
that FAS 131 will have on its future reporting requirements.
In February 1998, the FASB issued Statement of Financial
Accounting Standards No. 132, Employers' Disclosures about Pensions
and Other Postretirement Benefits (FAS 132) which revises
disclosure requirements for pension and other postretirement
benefits. The Company is currently evaluating the effects of FAS
<PAGE>
132 on its reporting requirements and will adopt FAS 132 in its
financial statements for the year ending December 31, 1998. The
adoption of FAS 132 will have no impact on the Company's operating
results, financial position, or cash flows.
Note D
- ------
In the opinion of the Company, these statements reflect all
adjustments (which include normal recurring adjustments) necessary
for a fair statement of the results of its operations for the
periods presented and should be considered in conjunction with the
notes to the financial statements in the Company's 1997 Annual
Report.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
- -----------------------------------------------------------------
This section contains management's assessment of Massachusetts
Electric Company's (the Company) financial condition and the
principal factors having an impact on the results of operations.
This discussion should be read in conjunction with the Company's
financial statements and footnotes and the 1997 Annual Report on
Form 10-K.
Earnings
- --------
Net income for the first quarter of 1998 decreased $2 million
as compared to the corresponding period in 1997. The decrease
reflects a reduction in kilowatthour (kWh) deliveries as well as a
retroactive purchased power billing adjustment from New England
Power Company (NEP).
Industry Restructuring
- ----------------------
For a full discussion of industry restructuring activities in
Massachusetts, Rhode Island, and New Hampshire, stranded cost
recovery, the New England Electric System (NEES) companies'
proposed divestiture of its nonnuclear generating business,
accounting implications of industry restructuring and divestiture,
workforce reductions, and the impact of industry restructuring on
the distribution business, see the "Industry Restructuring" section
in the Company's Form 10-K for 1997 and the Company's 1997 Annual
Report.
Risk Factors
This report contains statements that may be considered forward
looking as defined under the securities laws. Actual results may
differ materially for reasons discussed in the "Industry
Restructuring" sections of the Company's Form 10-K for 1997 and the
Company's 1997 Annual Report.
While the Company believes that the previously described
settlement and legislation and the sale agreement with USGen New
England, Inc. (USGen) and other developments constitute substantial
progress in reducing the impacts associated with industry
restructuring, significant risks remain. These include, but are
not limited to: (i) the potential that ultimately the Massachusetts
Settlement will not be implemented in the manner anticipated by the
Company, (ii) the possibility that a voter referendum in November
1998 could overturn the Massachusetts legislation, followed by
<PAGE>
materially adverse legislative or regulatory actions, (iii) the
possibility of federal legislation that would increase the risk to
shareholders above those contained in the Massachusetts settlement
and statute, and (iv) the failure of NEP and The Narragansett
Electric Company to complete the sale of the nonnuclear generating
business to USGen. The major factors affecting the Company relate
to the possibility of adverse regulatory or judicial decisions or
legislation which limit the level of revenues the Company is
allowed to charge for its services or affect the costs the Company
incurs.
Year 2000 Computer Issues
- -------------------------
For a full discussion of the Company's Year 2000 computer
issues, including a description of the modification process,
timeline, and estimated total costs, refer to the "Financial
Review" section of the Company's 1997 Annual Report, filed in
conjunction with the Company's Form 10-K for 1997.
Operating Revenue
- -----------------
The following table summarizes the changes in operating revenue:
Increase (Decrease) in Operating Revenue
First Quarter
-------------
1998 vs 1997
-------------
(In millions)
Purchased power and transmission-related $(16)
1997 Purchased power cost adjustment
(PPCA) mechanism 6
Distribution rate increase 4
Deliveries to ultimate customers and other (3)
----
$ (9)
====
Historically, the Company purchased all of its electrical
requirements from NEP under the provisions of an all-requirements
contract at NEP's standard resale rate. Effective March 1, 1998,
the contract was amended, terminating the all-requirements
provision of the contract. The Company's customers also gained the
right to choose their power supplier. NEP continues to supply
power to the Company, at new lower rates, for customers who choose
<PAGE>
to continue to take power from the Company. These new rates
include the recovery by NEP of its generation-related stranded
costs. Commencing in March 1998, the revenues that the Company is
billing to its customers related to NEP's costs are all subject to
true-up mechanisms based on NEP's actual billings. Prior to March,
only the fuel component of purchased power expense was subject to
a similar true-up mechanism.
The Massachusetts Settlement provided for the end of the
Company's PPCA mechanism in 1997. Prior to Federal Energy
Regulatory Commission approval, which occurred in the fourth
quarter of 1997, PPCA refund provisions continued to be accrued.
In the first quarter of 1997, approximately $6 million of such
refund provisions were accrued, and were subsequently reversed in
the fourth quarter of 1997.
In March 1998, the Company also put into effect a $45 million
rate increase. This increase reflects changes to the distribution
cost of service that include an $11 million increase in annual
depreciation expense, a $3 million annual contribution to a storm
fund and increased amortization of unfunded deferred income taxes
of approximately $1 million per year over 6 years.
The decrease in kWh deliveries to ultimate customers of 1.2
percent is reflective of milder winter weather in the first quarter
of 1998 as compared to the corresponding period in 1997.
Operating Expenses
- ------------------
The following table summarizes the changes in operating expenses:
Increase (Decrease) in Operating Expenses
First Quarter
-------------
1998 vs 1997
------------
(In millions)
Purchased power and operation and maintenance:
Purchased power and transmission costs $(7)
Other (1)
Depreciation 2
Taxes (1)
---
$(7)
===
<PAGE>
As noted above, effective March 1, 1998, NEP's billings to the
Company were significantly changed in connection with the
restructuring of the electric utility industry in Massachusetts.
Not only were NEP's rates reduced but the transmission portion of
NEP's costs are billed separately and are recorded in operation and
maintenance expense instead of as a component of purchased power
expense. Partially offsetting these decreases in rates was a
retroactive billing by NEP in February 1998 related to certain
meter reading corrections which increased purchased power expense
by approximately $2 million.
The decrease in other operation and maintenance expenses
primarily reflects lower charges to postretirement benefits other
than pensions and lower bad-debt related expenses, partially offset
by increased distribution-related expenses.
The increase in depreciation expense primarily reflects a portion
of the $11 million increase in annual depreciation expense provided
for in the Massachusetts industry restructuring settlement, and
depreciation expense on new utility plant expenditures.
Utility Plant Expenditures and Financing
- ----------------------------------------
Cash expenditures for utility plant totaled $18 million for the
first three months of 1998. The funds necessary for utility plant
expenditures during the period were primarily provided by net cash
from operating activities, after the payment of dividends.
In the first three months of 1998, the Company issued $25
million of long-term debt and retired $30 million of mortgage bonds
and decreased its short-term debt outstanding by $4 million. The
Company plans to issue an additional $30 million of long-term debt
to refinance maturing bonds and to fund capital expenditures.
At March 31, 1998, the Company had $30 million of short-term
debt outstanding, including $29 million of commercial paper
borrowings. At March 31, 1998, the Company had lines of credit
with banks totaling $65 million which are available to provide
liquidity support and other corporate purposes. There were no
borrowings under these lines of credit at March 31, 1998.
For the twelve-month period ended March 31, 1998, the ratio of
earnings to fixed charges was 4.05.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security-Holders
- ------------------------------------------------------------
On March 18, 1998, the Annual Meeting of Stockholders was
held. The following actions were taken by the unanimous vote of
the 2,398,111 shares having general voting rights represented at
the meeting:
The number of directors was fixed at seven.
The following were elected as directors of the Company:
Cheryl A. LaFleur
Robert L. McCabe
Lydia M. Pastuszek
Lawrence J. Reilly
Christopher E. Root
Richard P. Sergel
Dennis E. Snay
John G. Cochrane was elected Treasurer and Robert King Wulff
was elected Clerk.
Coopers & Lybrand L.L.P. was selected as auditor for 1998.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
The Company is filing the following revised exhibit for
incorporation by reference into its registration statement on
Form S-3, Commission File No. 33-59145.
12 Statement re computation of ratios
The Company is filing Financial Data Schedules.
The Company filed a report on Form 8-K dated December 31,
1997, containing Item 5, Other Events.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report on Form 10-Q
for the quarter ended March 31, 1998 to be signed on its behalf
by the undersigned thereunto duly authorized.
MASSACHUSETTS ELECTRIC COMPANY
s/John G. Cochrane
John G. Cochrane, Treasurer,
Authorized Officer, and
Principal Financial Officer
Date: May 13, 1998
Exhibit Index
<PAGE>
Exhibit Index
-------------
Exhibit Description Page
- ------- ----------- ----
12 Statement re computation of Filed herewith
ratios
27 Financial Data Schedule Filed herewith
<PAGE>
<TABLE>
MASSACHUSETTS ELECTRIC COMPANY
Computation of Ratio of Earnings to Fixed Charges
(SEC Coverage)
(Unaudited)
<CAPTION>
12 Months
Ended
March 31, 1998 Years Ended December 31,
Actual -------------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
(In Thousands)
Net Income $ 63,933 $ 65,758 $37,926 $29,101 $34,726 $23,779
- ----------
Add income taxes and fixed charges
- ----------------------------------
Current federal income taxes 24,046 34,244 25,867 9,437 (6,762) 5,606
Deferred federal income taxes 10,196 912 (6,052) 6,156 24,932 3,430
Investment tax credits - net (1,098) (1,103) (1,118) (1,132) (1,228) (1,228)
Massachusetts franchise tax 7,396 7,514 4,479 3,935 4,681 3,348
Interest on long-term debt 27,400 27,612 27,089 25,901 20,967 23,403
Interest on short-term debt and other6,891 7,214 6,473 6,784 6,366 3,638
-------- -------- ------- ------- ------- -------
Net earnings available for fixed charges $138,764 $142,151 $94,664 $80,182 $83,682 $61,976
-------- -------- ------- ------- ------- -------
Fixed charges:
Interest on long-term debt $ 27,400 $ 27,612 $27,089 $25,901 $20,967 $23,403
Interest on short-term debt and other6,891 7,214 6,473 6,784 6,366 3,638
-------- -------- ------- ------- ------- -------
Total fixed charges $ 34,291 $ 34,826 $33,562 $32,685 $27,333 $27,041
======== ======== ======= ======= ======= =======
Ratio of earnings to fixed charges 4.05 4.08 2.82 2.45 3.06 2.29
- ----------------------------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE BALANCE SHEET AND RELATED STATEMENTS OF INCOME,
RETAINED EARNINGS AND CASH FLOWS OF MASSACHUSETTS ELECTRIC
COMPANY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<PERIOD-TYPE> 3-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,131,242
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 256,546
<TOTAL-DEFERRED-CHARGES> 43,389 <F1>
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,431,177
<COMMON> 59,953
<CAPITAL-SURPLUS-PAID-IN> 239,169
<RETAINED-EARNINGS> 197,139
<TOTAL-COMMON-STOCKHOLDERS-EQ> 496,450 <F3>
0
15,739
<LONG-TERM-DEBT-NET> 343,359
<SHORT-TERM-NOTES> 1,525
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 28,775
<LONG-TERM-DEBT-CURRENT-PORT> 10,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 535,329
<TOT-CAPITALIZATION-AND-LIAB> 1,431,177
<GROSS-OPERATING-REVENUE> 396,714
<INCOME-TAX-EXPENSE> 7,553
<OTHER-OPERATING-EXPENSES> 366,318
<TOTAL-OPERATING-EXPENSES> 373,871
<OPERATING-INCOME-LOSS> 22,843
<OTHER-INCOME-NET> (2,878)
<INCOME-BEFORE-INTEREST-EXPEN> 19,965
<TOTAL-INTEREST-EXPENSE> 8,154
<NET-INCOME> 11,811
240
<EARNINGS-AVAILABLE-FOR-COMM> 11,571
<COMMON-STOCK-DIVIDENDS> 15,588
<TOTAL-INTEREST-ON-BONDS> 6,871
<CASH-FLOW-OPERATIONS> 36,367
<EPS-PRIMARY> 0 <F2>
<EPS-DILUTED> 0 <F2>
<FN>
<F1> Total deferred charges includes other assets.
<F2> Per share data is not relevant because the Company's common stock is
wholly-owned by New England Electric System.
<F3> Total common stockholders equity includes the unrealized gain on
securities.
</FN>
