<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, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-898
(LOGO) THE NARRAGANSETT ELECTRIC COMPANY
(Exact name of registrant as specified in charter)
Rhode Island 05-0187805
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
280 Melrose Street, Providence, R.I. 02901
(Address of principal executive offices)
Registrant's telephone number, including area code
(401-941-1400)
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 $50 per share, authorized and
outstanding: 1,132,487 shares at March 31, 1994.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Statements of Income
Periods Ended March 31
(Unaudited)
<CAPTION>
Three Months Twelve Months
------------ -------------
1994 1993 1994 1993
---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C>
Operating revenue $125,461 $124,147 $484,343 $469,552
-------- -------- -------- --------
Operating expenses:
Fuel for generation 106 49 248 889
Purchased electric energy, principally from
New England Power Company, an affiliate78,207 76,242 312,860 291,213
Other operation 15,867 20,334 69,067 70,843
Maintenance 3,399 3,627 11,952 12,385
Depreciation 4,675 4,423 17,896 18,434
Taxes, other than federal income 9,909 9,686 36,068 35,419
Federal income taxes 2,891 1,566 5,500 7,341
-------- -------- -------- --------
Total operating expenses 115,054 115,927 453,591 436,524
-------- -------- -------- --------
Operating income 10,407 8,220 30,752 33,028
Other income:
Allowance for equity funds used
during construction 278 66 755 75
Other income (expense) - net (787) (904) (517) (837)
-------- -------- -------- --------
Operating and other income 9,898 7,382 30,990 32,266
-------- -------- -------- --------
Interest:
Interest on long-term debt 3,325 3,106 12,934 13,173
Other interest 554 562 2,066 1,499
Allowance for borrowed funds used during
construction - credit (295) (86) (798) (326)
-------- -------- -------- --------
Total interest 3,584 3,582 14,202 14,346
-------- -------- -------- --------
Net income $ 6,314 $ 3,800 $ 16,788 $ 17,920
======== ======== ======== ========
Statements of Retained Earnings
Retained earnings at beginning of period$ 81,659 $ 74,207 $ 75,354 $ 64,649
Net income 6,314 3,800 16,788 17,920
Dividends declared on cumulative
preferred stock (536) (388) (2,079) (1,553)
Dividends declared on common stock (566) (2,265) (2,831) (5,662)
Premium on redemption of preferred stock (361)
-------- -------- -------- --------
Retained earnings at end of period $ 86,871 $ 75,354 $ 86,871 $ 75,354
======== ======== ======== ========
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>
THE NARRAGANSETT ELECTRIC COMPANY
Balance Sheets
(Unaudited)
<CAPTION>
March 31, December 31,
ASSETS 1994 1993
------ ---- ----
(In Thousands)
<S> <C> <C>
Utility plant, at original cost $541,401 $534,569
Less accumulated provisions for depreciation 157,811 156,652
-------- --------
383,590 377,917
Construction work in progress 51,515 43,660
-------- --------
Net utility plant 435,105 421,577
-------- --------
Current assets:
Cash 1,203 838
Accounts receivable:
From sales of electric energy 57,105 55,795
Other (including $1,101,000 and $1,087,000 from affiliates)10,12011,701
Less reserves for doubtful accounts 3,947 3,800
-------- --------
63,278 63,696
Fuel, materials and supplies, at average cost 6,000 4,572
Prepaid and other current assets 10,669 11,515
-------- --------
Total current assets 81,150 80,621
-------- --------
Deferred charges and other assets 53,505 53,709
-------- --------
$569,760 $555,907
======== ========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common stock, par value $50 per share,
authorized and outstanding 1,132,487 shares $ 56,624 $ 56,624
Premiums on preferred stocks 170 170
Other paid-in capital 45,000 45,000
Retained earnings 86,871 81,659
-------- --------
Total common equity 188,665 183,453
Cumulative preferred stock 36,500 36,500
Long-term debt 160,961 155,972
-------- --------
Total capitalization 386,126 375,925
-------- --------
Current liabilities:
Short-term debt to affiliates 26,025 19,725
Accounts payable (including $38,158,000 and $43,468,000
to affiliates) 43,614 51,005
Accrued liabilities:
Taxes 5,096 1,712
Interest 2,984 4,921
Other accrued expenses 14,378 11,798
Customer deposits 5,518 5,622
Dividends payable 1,102 1,102
-------- --------
Total current liabilities 98,717 95,885
-------- --------
Deferred federal income taxes 64,478 63,494
Unamortized investment tax credits 8,899 9,026
Other reserves and deferred credits 11,540 11,577
-------- --------
$569,760 $555,907
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Statements of Cash Flows
Quarters Ended March 31
(Unaudited)
<CAPTION>
1994 1993
---- ----
(In Thousands)
<S> <C> <C>
Operating activities:
Net income $ 6,314 $ 3,800
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 4,675 4,423
Deferred federal income taxes and investment tax credit - net232 (541)
Allowance for funds used during construction (573) (152)
Early retirement program (814)
Decrease (increase) in accounts receivable 418 2,705
Decrease (increase) in fuel, materials and supplies(1,428) 119
Increase (decrease) in accounts payable (7,391) (7,432)
Increase (decrease) in other current liabilities 3,923 3,968
Other, net 1,633 (635)
-------- --------
Net cash provided by operating activities $ 7,803 $ 5,441
-------- --------
Investing activities:
Plant expenditures, excluding allowance for
funds used during construction $(17,636) $(11,763)
-------- --------
Net cash used in investing activities $(17,636) $(11,763)
-------- --------
Financing activities:
Dividends paid on common stock $ (566) $ (1,699)
Dividends paid on preferred stock (536) (388)
Long-term debt - issues 5,000 7,500
Long-term debt - retirements (7,500)
Premium on reacquisition of long-term debt (78)
Changes in short-term debt 6,300 8,150
-------- --------
Net cash provided by financing activities $ 10,198 $ 5,985
-------- --------
Net increase in cash and cash equivalents $ 365 $ (337)
Cash and cash equivalents at beginning of period 838 830
-------- --------
Cash and cash equivalents at end of period $ 1,203 $ 493
======== ========
Supplementary information:
Interest paid less amounts capitalized $ 5,284 $ 4,861
-------- --------
Federal income taxes paid $ (949) $ 928
-------- --------
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Note A
- ------
A 1986 Rhode Island Supreme Court decision held that the Rhode
Island Public Utilities Commission's (RIPUC) rate-making powers
include the authority to order refunds of amounts earned in excess
of an allowed return. As a result, the RIPUC monitors the
Company's earnings on a continuous basis.
Note B
- ------
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.
Parties liable include past and present site owners and operators,
transporters that brought wastes to the site, and entities that
generated or arranged for disposal or treatment of wastes
ultimately disposed of at the site.
The electric utility industry typically utilizes and/or
generates in its operations a range of potentially hazardous
products and by-products. These products or by-products may not
have previously been considered hazardous, and may not currently be
considered hazardous, but may be identified as such by federal,
state, or local authorities in the future. The New England
Electric System (NEES) subsidiaries currently have in place an
environmental audit program intended to enhance compliance with
existing federal, state, and local requirements regarding the
handling of potentially hazardous products and by-products.
Federal and state environmental agencies have contacted the
Company regarding liability for cleanup of sites alleged to contain
hazardous waste or substances. The Company has been named as a
potentially responsible party (PRP) by either the U.S.
Environmental Protection Agency or the Massachusetts Department of
Environmental Protection at two sites (one of which is located in
Massachusetts) at which hazardous waste is alleged to have been
disposed. In addition, the Company is also aware of other sites
for which it may be held responsible for remediating and it is
likely that, in the future, the Company will become involved in
additional proceedings demanding contribution for the cost of
remediating additional hazardous waste sites.
Gas was manufactured from coal in Rhode Island in the past.
The Company is aware of five sites on which gas was manufactured or
manufactured gas was stored that were owned either by the Company
<PAGE>
Note B - Continued
- ------
or by its predecessor companies. It is not known to what extent
the Company would be held liable for hazardous wastes, if any,
leftat these manufactured gas locations.
There are significant uncertainties as to the potential costs
to investigate and, when necessary, remediate any given hazardous
waste site. Factors such as the evolving nature of remediation
technology and regulatory requirements and the particular
characteristics of each site, including, for example, the size of
the site, the nature and amount of waste disposed at the site, and
the surrounding geography and land use, make precise estimates
difficult. A preliminary review by a consultant hired by the NEES
companies of the potential cost of investigating and, if necessary,
remediating Rhode Island manufactured gas sites resulted in costs
per site ranging from less than $1 million to $8 million. An
informal survey of other utilities conducted on behalf of NEES and
its subsidiaries indicated costs in a similar range.
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 Company believes that hazardous waste liabilities for all
sites of which it is aware will not be material (10 percent of
common equity) to its financial position. Where appropriate, the
Company intends to seek recovery from its insurers and from other
PRPs, but it is uncertain whether, and to what extent, such efforts
would be successful.
Note C
- ------
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 1993 Annual
Report.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
---------------------------------------------------------
Condition and Results of Operations
-----------------------------------
Earnings
- --------
Net income for the first quarter of 1994 increased by $3
million as compared to the same period last year. Earnings in the
first quarter of 1993 included a one-time charge of $3 million
after tax ($5 million before tax) associated with an early
retirement offer and special severance program. Excluding the
effect of this 1993 charge, 1994 first quarter earnings remained
approximately the same as in the corresponding prior period.
Rate Activity
- -------------
In April 1994, the Company filed a rate agreement with the
Rhode Island Public Utilities Commission (RIPUC). The agreement
between the Company and the Rhode Island Division of Public
Utilities and Carriers would provide for a five percent base rate
discount, excluding fuel costs in base rates, for the Company's
large commercial and industrial customers who agree to give a five
year notice to the Company before they purchase power from another
supplier or generate any additional power themselves. The notice
provision may be reduced from five to three years under certain
conditions. The amount of the proposed discount, if all eligible
customers sign agreements, is estimated at $4 million per year.
The agreement would also provide for the Company to begin
<PAGE>
recognizing unbilled revenues for accounting purposes. Unbilled
revenues at December 31, 1993, of approximately $14 million would
be amortized to income over the twenty-one month period April 1994
through December 1995. The agreement, which is being opposed by
certain parties, is subject to review and approval by the RIPUC.
Effective March 1993, the RIPUC approved a new purchased power
cost adjustment mechanism (PPCA) for the recovery of all of the
Company's purchased power costs, excluding fuel and oil
conservation adjustment charges which continue to be recovered
through separate adjustment mechanisms. Under the new mechanism
any over or under-collections of purchased power expense will
ultimately be passed on to customers including the effects of peak-
demand billing fluctuations. The Company accrued the effects of
this new mechanism on its books in the current period.
In addition, effective January 1993, the RIPUC approved a $1.5
million increase in rates for the Company, representing the first
step of a three year phase-in of the Company's recovery of costs
associated with postretirement benefits other than pensions. A
second $1.5 million increase took effect January 1994.
A 1986 Rhode Island Supreme Court decision held that the
RIPUC's rate-making powers include the authority to order refunds
of amounts earned in excess of an allowed return. As a result, the
RIPUC monitors the Company's earnings on a continuous basis.
<PAGE>
Demand-Side Management
- ----------------------
The Company files its conservation and load management
program, also referred to in the industry as demand-side management
(DSM) program, regularly with the RIPUC and has received approval
to recover in rates estimated DSM expenditures on a current basis.
The rates provide for reconciling estimated expenditures to actual
DSM expenditures, with interest. Expenditures subject to the
reconciliation mechanism were $1.3 million in the first three
months of 1994 and $12 million for the full year 1993. Since 1990,
the Company has been allowed to earn incentives based on the
results of its DSM program. The Company must be able to
demonstrate to the RIPUC the electricity savings produced by its
DSM program before incentives are recorded. The Company recorded
$0.5 million of before-tax incentives in 1993. The Company has
received approval from the RIPUC that will give it the opportunity
to continue to earn incentives based on 1994 DSM program results.
Operating Revenue
- -----------------
Operating revenue for the three months ended March 31, 1994
increased by $1 million from the corresponding period in 1993.
Kilowatthour (KWH) sales increased by 1.1 percent in the first
three months of 1994 as compared to the corresponding prior period.
This increase in KWH sales reflects the colder weather conditions
<PAGE>
in the first quarter of 1994 and an improving economy partially
offset by the reduction of one billing day due to meter reading
schedules. KWH sales in 1994 are expected to increase less than
one percent as compared to 1993.
The following table summarizes the changes in operating revenue:
Increase (Decrease) in Operating Revenue
First Quarter
-------------
1994 vs 1993
-------------
(In Millions)
Fuel recovery $ 1
Demand-side management program recovery (1)
Sales increase and other 1
---
$ 1
===
The Company's rates contain a fuel clause and a PPCA
provision. The PPCA is designed to allow the Company to pass on to
its customers changes in purchased energy costs (excluding fuel)
resulting from rate increases or decreases by New England Power
Company (NEP), the Company's affiliated wholesale power supplier.
In March 1993, the PPCA mechanism was revised. Under the new
mechanism, any over or under collection of purchased power expense
including the effects of peak-demand billing fluctuations will
ultimately be passed on to customers (see Rate Activity section).
<PAGE>
Operating Expenses
- ------------------
The following table summarizes the changes in total operating
expenses discussed below:
Increase (Decrease) in Operating Expenses
First Quarter
-------------
1994 vs 1993
-------------
(In Millions)
Purchased electric energy:
Fuel costs $ 1
Purchases and demand charges
from NEP 1
Other operation and maintenance:
Demand-side management
program expenses (1)
Other (3)
Taxes, primarily income taxes 1
---
$(1)
===
The decrease in other operation and maintenance expense in the
first quarter of 1994 is primarily due to the recording in the
first quarter of 1993 of a one-time charge of $5 million associated
with an early retirement offer and special severance program
implemented in 1993.
<PAGE>
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.
Parties liable include past and present site owners and operators,
transporters that brought wastes to the site, and entities that
generated or arranged for disposal or treatment of wastes
ultimately disposed of at the site.
The electric utility industry typically utilizes and/or
generates in its operations a range of potentially hazardous
products and by-products. These products or by-products may not
have previously been considered hazardous, and may not currently be
considered hazardous, but may be identified as such by federal,
state, or local authorities in the future. The New England
Electric System (NEES) subsidiaries currently have in place an
environmental audit program intended to enhance compliance with
existing federal, state, and local requirements regarding the
handling of potentially hazardous products and by-products.
Federal and state environmental agencies have contacted the
Company regarding liability for cleanup of sites alleged to contain
hazardous waste or substances. The Company has been named as a
potentially responsible party (PRP) by either the U.S.
Environmental Protection Agency (EPA) or the Massachusetts
<PAGE>
Department of Environmental Protection at two sites (one of which
is located in Massachusetts) at which hazardous waste is alleged to
have been disposed. In addition, the Company is also aware of
other sites for which it may be held responsible for remediating
and it is likely that, in the future, the Company will become
involved in additional proceedings demanding contribution for the
cost of remediating additional hazardous waste sites.
Gas was manufactured from coal in Rhode Island in the past.
The Company is aware of five sites on which gas was manufactured or
manufactured gas was stored that were owned either by the Company
or by its predecessor companies. It is not known to what extent
the Company would be held liable for hazardous wastes, if any, left
at these manufactured gas locations.
There are significant uncertainties as to the potential costs
to investigate and, when necessary, remediate any given hazardous
waste site. Factors such as the evolving nature of remediation
technology and regulatory requirements and the particular
characteristics of each site, including, for example, the size of
the site, the nature and amount of waste disposed at the site, and
the surrounding geography and land use, make precise estimates
difficult. A preliminary review by a consultant hired by the NEES
companies of the potential cost of investigating and, if necessary,
remediating Rhode Island manufactured gas sites resulted in costs
per site ranging from less than $1 million to $8 million. An
<PAGE>
informal survey of other utilities conducted on behalf of NEES and
its subsidiaries indicated costs in a similar range.
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 Company believes that hazardous waste liabilities for all
sites of which it is aware will not be material (10 percent of
common equity) to its financial position. Where appropriate, the
Company intends to seek recovery from its insurers and from other
PRPs, but it is uncertain whether, and to what extent, such efforts
would be successful.
Electric and Magnetic Fields (EMF)
- ---------------------------------
In recent years, concerns have been raised about whether EMF,
which occur near transmission and distribution lines as well as
near household wiring and appliances, cause or contribute to
adverse health effects. Numerous studies on the effects of these
fields, some of them sponsored by electric utilities (including
NEES companies), have been conducted and are continuing. Some of
the studies have suggested associations between certain EMF and
various types of cancer, while other studies have not substantiated
such associations. In February 1993, the EPA called for
significant additional research on EMF. It is impossible to
predict the ultimate impact on the Company and the electric utility
<PAGE>
industry if further investigations were to demonstrate that the
present electricity delivery system is contributing to increased
risk of cancer or other health problems.
Several state courts have recognized a cause of action for
damage to property values in transmission line condemnation cases
based on the fear that power lines cause cancer. It is difficult
to predict what impact there would be on the Company if this cause
of action is recognized in Rhode Island and in contexts other than
condemnation cases.
A lawsuit concerning the proposed expansion of a transmission
line was filed on April 28, 1994 against the Company, NEES, and an
affiliate, New England Power Service Company, in the Superior Court
of Rhode Island. The plaintiffs are residents of property which
borders existing transmission lines in East Greenwich, Rhode
Island. The Company has a proposal before the Rhode Island Energy
Facilities Siting Board (EFSB) to upgrade one of the lines and
relocate the lines on the existing right of way. The plaintiffs
allege that fear of health risks from exposure to high voltage
power lines has devalued their property and ask for unspecified
damages. The plaintiffs have also asked for an injunction to halt
the proposed changes to the transmission lines and an order to
remove the existing power lines. After preliminary review of the
complaint, the Company does not expect that the plaintiffs will
prevail. The EFSB is currently conducting hearings on the
<PAGE>
Company's proposal to upgrade and relocate the transmission lines.
Bills have been introduced in the Rhode Island legislature to
require that transmission lines be placed underground. In July
1993, two bills passed by the legislature restricting the
construction of overhead transmission lines were vetoed by the
governor.
Competitive Conditions
- ----------------------
The electric utility business is being subjected to increasing
competitive pressures, stemming from a combination of increasing
electric rates, improved technologies, and new regulations and
legislation intended to foster competition. Currently, the most
prominent form of competition in the electric utility industry is
in the bulk power market in which non-utility generating sources
have noticeably increased their market share. This change
indirectly affects the Company as it purchases all of its energy
requirements from NEP. Electric utilities are also facing
increased competition in the retail market primarily from
alternative fuel suppliers (principally natural gas companies) for
heating and cooling, customer-owned generation to displace
purchases from electric utilities, and direct competition among
electric utilities to attract major new manufacturing facilities to
their service territories. In the future, the potential exists for
electric utilities and non-utility generators to sell electricity
<PAGE>
to retail customers of other electric utilities. For example, the
California Public Utilities Commission recently announced a
proposal that would give certain large retail customers in that
state, by the year 1996, and all other retail customers by the year
2002, the option of selecting their electricity provider. Power
purchased from another provider would still be delivered over the
local utility's transmission network which, under the proposal,
would be subject to broader access. Other states, including Rhode
Island have considered or are in the process of considering options
to foster increased competition.
The NEES companies are responding to current and anticipated
competitive pressures in a variety of ways including cost control
and a corporate reorganization into separate retail and wholesale
business units. The retail business unit, which includes the
Company, is responding to competition through the development of
value-added services for customers and the offering of economic
development rates to encourage businesses to locate in the
Company's service territory. In its recent rate agreement filed
with the RIPUC, the Company is seeking to begin offering a discount
from base rates in return for a contract requiring the customer to
provide five years written notice before purchasing electricity
from others or generating any additional electricity for the
customer's own use. The discount will be available to customers
with average monthly peak demands over 200 kilowatts. Approval of
this rate agreement is pending before the RIPUC.
<PAGE>
Since a large part of the Company's costs represent the cost
of power purchased from NEP, its competitive position is affected
by NEP's ability to control costs. NEP is controlling costs and
positioning itself for increased competition through such means as
terminating certain purchased power contracts, past and future
shutdowns of uneconomic generating stations, and rapid amortization
of certain plant assets.
Electric utility rates are generally based on a utility's
costs. Therefore, electric utilities are subject to certain
accounting standards that are not applicable to other business
enterprises in general. These accounting rules allow regulated
entities, in appropriate circumstances, to establish regulatory
assets and to defer the income statement impact of certain costs
that are expected to be recovered in future rates. The effects of
competition could ultimately cause the operations of the Company,
or a portion thereof, to cease meeting the criteria for application
of these accounting rules. While the Company does not expect to
cease meeting these criteria in the near future, if this were to
occur, accounting standards of enterprises in general would apply
and immediate recognition of any previously deferred costs would be
necessary in the year in which these criteria were no longer
applicable.
<PAGE>
Utility Plant Expenditures and Financing
- ----------------------------------------
Cash expenditures for utility plant totaled $18 million in the
first three months of 1994, including $8 million related to the
Manchester Street Station Repowering Project. The funds necessary
for utility plant expenditures were primarily provided by net cash
from operating activities, after the payment of dividends and the
proceeds of short-term and long-term debt issues.
The Company issued $5 million of bonds during the first three
months of 1994, bearing an interest rate of 7.05 percent. In May
1994, the Company issued an additional $8 million of new long-term
debt bearing interest rates ranging from 6.91 to 8.08 percent. The
Company plans to issue an additional $27 million of long-term debt
by the end of 1994.
At March 31, 1994, the Company had $26 million of short-term
debt outstanding to affiliates. The Company currently has lines
of credit with banks totaling $41 million. There were no
borrowings under these lines of credit at March 31, 1994.
For the twelve-month period ending March 31, 1994, the ratio
of earnings to fixed charges was 2.47.
Repowering of Manchester Street Station
- ---------------------------------------
The Company's major construction project is the repowering of
Manchester Street Station, a 140 megawatt electric generating
<PAGE>
station in Providence, Rhode Island which is jointly owned by the
Company (10 percent) and NEP (90 percent). Repowering will more
than triple the power generation capacity of Manchester Street
Station and substantially increase the plant's thermal efficiency.
The total cost for the generating station, scheduled for completion
in late 1995, is estimated to be approximately $525 million,
including allowance for funds used during construction (AFDC). In
addition, related transmission work, which is principally the
responsibility of the Company, is estimated to cost approximately
$75 million and is scheduled for completion in late 1994. At March
31, 1994, $217 million, including AFDC, had been incurred on the
project ($41 million by the Company). Substantial commitments have
been made relative to future planned expenditures for this project.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Information concerning the rate agreement filed by the
Company with the Rhode Island Public Utilities Commission,
discussed in Part I of this report in Management's Discussion and
Analysis of Financial Condition and Results of Operations, is
incorporated herein by reference and made a part hereof.
Information concerning the Company's rate filings for
demand-side management programs, discussed in Part I of this
report in Management's Discussion and Analysis of Financial
Condition and Results of Operations, is incorporated herein by
reference and made a part hereof.
Information concerning a lawsuit filed against the Company
in the Superior Court of Rhode Island regarding the proposed
expansion of a transmission line, discussed in Part I of this
report in Management's Discussion and Analysis of Financial
Condition and Results of Operations, is incorporated herein by
reference and made a part hereof.
Item 4. Submission of Matters to a Vote of Security-Holders
- ------------------------------------------------------------
On March 15, 1994, the Annual Meeting of Stockholders was
held. The following actions were taken by the unanimous vote of
the 1,132,487 shares having general voting rights represented at
the meeting:
The number of directors for the ensuing year was fixed at
nine.
The following were elected as directors:
Joan T. Bok
Stephen A. Cardi
Frances H. Gammell
Joseph J. Kirby
Robert L. McCabe
John W. Rowe
Richard P. Sergel
William E. Trueheart
John A. Wilson
Coopers & Lybrand was appointed as auditor for 1994.
<PAGE>
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. 33-50015.
12 Statement re computation of ratios
<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, 1994 to be signed on its behalf
by the undersigned thereunto duly authorized.
THE NARRAGANSETT ELECTRIC COMPANY
s/ Howard W. McDowell
Howard W. McDowell
Controller, Authorized Officer, and
Principal Accounting Officer
Date: May 11, 1994
Exhibit Index
<PAGE>
Exhibit Index
-------------
Exhibit Description Page
- ------- ----------- ----
12 Statement re computation of Filed herewith
ratios
Exhibit 12
<PAGE>
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Computation of Ratio of Earnings to Fixed Charges
(SEC Coverage)
(Unaudited)
<CAPTION>
12 Months
Ended
March 31, 1994 Years Ended December 31,
Actual -------------------------------------------------------------
(Unaudited) 1993 1992 1991 1990 1989
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(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net Income $16,788 $14,274 $21,052 $16,820 $17,599 $10,582
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Add income taxes and fixed charges
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Current federal income taxes 2,166 2,183 4,608 1,558 7,624 4,690
Deferred federal income taxes 3,553 2,199 4,560 5,528 351 (2,509)
Investment tax credits - net (508) (508) (507) (500) (504) (536)
Interest on long-term debt 12,934 12,715 13,290 12,581 11,016 11,016
Interest on short-term debt and other2,066 2,074 1,277 2,500 2,968 2,117
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Net earnings available for fixed charges$36,999$32,937 $44,280 $38,487 $39,054 $25,360
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Fixed charges:
Interest on long-term debt $12,934 $12,715 $13,290 $12,581 $11,016 $11,016
Interest on short-term debt and other2,066 2,074 1,277 2,500 2,968 2,117
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Total fixed charges $15,000 $14,789 $14,567 $15,081 $13,984 $13,133
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Ratio of earnings to fixed charges 2.47 2.23 3.04 2.55 2.79 1.93
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