<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Earliest Event Reported: March 31, 1999
MASSACHUSETTS ELECTRIC COMPANY
(exact name of registrant as specified in charter)
Massachusetts 0-5464 04-1988940
(state or other (Commission (I.R.S. Employer
jurisdiction of File No.) Identification No.)
incorporation)
25 Research Drive, Westborough, Massachusetts 01582
(Address of principal executive offices)
(508) 389-2000
(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
- --------------------------------------------------------------
(c) Exhibits
Massachusetts Electric Company (the Company) is hereby
incorporating the following revised language under the heading
"Operating Expenses" in the financial review section of its 1998
Annual Report to Shareholders which is Exhibit 13 to the
Company's Form 10-K for the year ended December 31, 1998.
"Operating Expenses
Operating expenses for 1998 decreased $120 million
compared with 1997 primarily due to reduced purchased electric
energy expenses, partially offset by CTC billings, increased
operation and maintenance costs, increased depreciation expense,
and increased property tax expense. The decrease in purchased
electric energy is principally due to reduced rates billed to the
Company by suppliers. 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 continued to supply power to the Company, at lower rates, for
customers that continued to take power from the Company, until
September 1, 1998, when USGen and TCPM became the Company's
principal wholesale power suppliers. The increase in other
operation and maintenance expenses is primarily due to increased
transmission costs of approximately $76 million which, as of
March 1, 1998 are billed separately and recorded as operation and
maintenance expense instead of as a component of purchased power
expense. The increase in operation and maintenance expenses is
also due to costs associated with year 2000 (Y2K) computer
readiness. These increases were offset by decreased DSM spending
and the effects of workforce reductions. The increase in
depreciation expense in 1998 primarily reflects a portion of the
$11 million increase in annual depreciation expense provided for
in the Massachusetts Settlement, and depreciation expense on new
utility plant expenditures. The increase in taxes, other than
income taxes, is related to additional property tax payments made
during the third quarter of 1998 to certain municipalities to
reflect corrections identified by the Company related to plant
valuation amounts used in the calculation of property taxes by
those municipalities. These revised valuation amounts are
expected to have a continuing impact on the property taxes paid
by the Company.
<PAGE>
Operating expenses of 1997 increased $56 million
compared with 1996 primarily due to increased purchased power
expenses, increased other operation and maintenance expenses and
increased income taxes. The increase in purchased electric
energy expenses was due to increased replacement power fuel
purchases by NEP due to the reduced generation from partially
owned nuclear units. These costs were passed on to the Company
through NEP's fuel clause. The increase in other operation and
maintenance expenses was primarily due to increased distribution-
system related costs, including increased tree-trimming expenses,
as well as increased transmission wheeling charges from NEP
related to the use of NEP's transmission network for the
Company's 1997 retail wheeling pilot programs."
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this Current Report
on Form 8-K to be signed on its behalf by the undersigned
thereunto duly authorized.
MASSACHUSETTS ELECTRIC COMPANY
s/John G. Cochrane
By _________________________
John G. Cochrane
Treasurer
Date: April 7, 1999
