<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 September 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-7471
(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
(401-784-7000)
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 September 30, 1995.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
<TABLE> THE NARRAGANSETT ELECTRIC COMPANY
Statements of Income
Periods Ended September 30
(Unaudited)
<CAPTION>
Quarter Nine Months
------- -----------
1995 1994 1995 1994
---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C>
Operating revenue $139,217 $137,014 $380,663 $366,275
-------- -------- -------- --------
Operating expenses:
Purchased electric energy, principally from
New England Power Company, an affiliate 82,973 84,859 227,488 228,436
Other operation 19,695 19,126 53,613 52,454
Maintenance 2,638 3,112 7,690 9,339
Depreciation 8,049 6,650 23,062 19,980
Taxes, other than federal income taxes 9,044 8,975 27,930 27,414
Federal income taxes 4,119 3,355 8,235 4,594
-------- -------- -------- --------
Total operating expenses 126,518 126,077 348,018 342,217
-------- -------- -------- --------
Operating income 12,699 10,937 32,645 24,058
Other income:
Allowance for equity funds used
during construction (175) 343 253 961
Other income (expense) - net (94) (194) (560) (1,246)
-------- -------- -------- --------
Operating and other income 12,430 11,086 32,338 23,773
-------- -------- -------- --------
Interest:
Interest on long-term debt 4,242 3,675 12,312 10,489
Other interest 1,023 685 2,685 1,913
Allowance for borrowed funds used during
construction - credit (774) (504) (1,422) (1,160)
-------- -------- -------- --------
Total interest 4,491 3,856 13,575 11,242
-------- -------- -------- --------
Net income $ 7,939 $ 7,230 $ 18,763 $ 12,531
======== ======== ======== ========
Statements of Retained Earnings
Retained earnings at beginning of period $ 97,345 $ 84,755 $ 91,556 $ 81,659
Net income 7,939 7,230 18,763 12,531
Dividends declared on cumulative
preferred stock (535) (535) (1,607) (1,607)
Dividends declared on common stock (567) (1,132) (4,530) (2,265)
-------- -------- -------- --------
Retained earnings at end of period $104,182 $ 90,318 $104,182 $ 90,318
======== ======== ======== ========
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
Statements of Income
Twelve Months Ended September 30
(Unaudited)
<CAPTION>
1995 1994
---- ----
(In Thousands)
<S> <C> <C>
Operating revenue $496,057 $481,453
-------- --------
Operating expenses:
Purchased electric energy, principally from
New England Power Company, an affiliate 299,730 301,952
Other operation 74,241 72,537
Maintenance 10,632 12,088
Depreciation 27,895 23,898
Taxes, other than federal income taxes 36,334 35,808
Federal income taxes 8,524 4,465
-------- --------
Total operating expenses 457,356 450,748
-------- --------
Operating income 38,701 30,705
Other income:
Allowance for equity funds used
during construction 320 1,210
Other income (expense) - net (170) (863)
-------- --------
Operating and other income 38,851 31,052
-------- --------
Interest:
Interest on long-term debt 16,157 13,751
Other interest 3,669 2,623
Allowance for borrowed funds used during
construction - credit (1,796) (1,399)
-------- --------
Total interest 18,030 14,975
-------- --------
Net income $ 20,821 $ 16,077
======== ========
Statements of Retained Earnings
Retained earnings at beginning of period $ 90,318 $ 79,215
Net income 20,821 16,077
Dividends declared on cumulative
preferred stock (2,143) (2,143)
Dividends declared on common stock (4,814) (2,831)
-------- --------
Retained earnings at end of period $104,182 $ 90,318
======== ========
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>
September 30, December 31,
ASSETS 1995 1994
------ ---- ----
(In Thousands)
<S> <C> <C>
Utility plant, at original cost $669,096 $617,498
Less accumulated provisions for depreciation 172,883 161,557
-------- --------
496,213 455,941
Construction work in progress 27,776 35,974
-------- --------
Net utility plant 523,989 491,915
-------- --------
Current assets:
Cash 1,417 713
Accounts receivable:
From sales of electric energy 59,073 51,278
Other (including $1,196,000 and $9,306,000 from affiliates) 18,635 17,953
Less reserves for doubtful accounts 6,410 4,472
-------- --------
71,298 64,759
Unbilled revenues 11,900 13,100
Fuel, materials and supplies, at average cost 5,811 5,170
Prepaid and other current assets 15,915 13,993
-------- --------
Total current assets 106,341 97,735
-------- --------
Deferred charges and other assets 56,804 57,727
-------- --------
$687,134 $647,377
======== ========
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 70,000 60,000
Retained earnings 104,182 91,556
-------- --------
Total common equity 230,976 208,350
Cumulative preferred stock 36,500 36,500
Long-term debt 203,857 188,862
-------- --------
Total capitalization 471,333 433,712
-------- --------
Current liabilities:
Short-term debt (including $5,650,000 to affiliates in 1995) 31,050 29,800
Accounts payable (including $46,175,000 and $47,900,000
to affiliates) 51,097 56,139
Accrued liabilities:
Taxes 357 143
Interest 3,228 5,615
Other accrued expenses 22,612 25,346
Customer deposits 5,464 5,261
Dividends payable 1,102 819
-------- --------
Total current liabilities 114,910 123,123
-------- --------
Deferred federal income taxes 76,754 70,253
Unamortized investment tax credits 8,141 8,518
Other reserves and deferred credits 15,996 11,771
-------- --------
$687,134 $647,377
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Statements of Cash Flows
Nine Months Ended September 30
(Unaudited)
<CAPTION>
1995 1994
---- ----
(In Thousands)
<S> <C> <C>
Operating Activities:
Net income $ 18,763 $ 12,531
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 23,062 19,980
Deferred federal income taxes and investment
tax credit - net 4,635 1,198
Allowance for funds used during construction (1,675) (2,121)
Amortization of unbilled revenues (6,156) 4,105
Decrease (increase) in accounts receivable,
net, and unbilled revenues (5,339) (18,113)
Decrease (increase) in fuel, materials, and supplies (641) (1,759)
Decrease (increase) in prepaid and other current assets (1,922) (717)
Increase (decrease) in accounts payable (5,042) 4,703
Increase (decrease) in other current liabilities 1,452 11,999
Other, net 6,632 1,715
-------- --------
Net cash provided by operating activities $ 33,769 $ 33,521
-------- --------
Investing Activities:
Plant expenditures, excluding allowance for
funds used during construction $(53,461) $(66,725)
Other investing activities (900)
-------- --------
Net cash used in investing activities $(53,461) $(67,625)
-------- --------
Financing Activities:
Capital contributions from parent $ 10,000
Dividends paid on common stock (4,247) $ (1,699)
Dividends paid on preferred stock (1,607) (1,607)
Long-term debt - issues 15,000 23,000
Changes in short-term debt 1,250 13,900
-------- --------
Net cash provided by financing activities $ 20,396 $ 33,594
-------- --------
Net increase (decrease) in cash and cash equivalents $ 704 $ (510)
Cash and cash equivalents at beginning of period 713 838
-------- --------
Cash and cash equivalents at end of period $ 1,417 $ 328
======== ========
Supplementary Information:
Interest paid less amounts capitalized $ 15,112 $ 12,286
-------- --------
Federal income taxes paid $ 584 $ 703
-------- --------
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 regular basis.
Note B - 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.
The electric utility industry typically utilizes and/or
generates in its operations a range of potentially hazardous
products and by-products. New England Electric System (NEES)
subsidiaries currently have 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 U.S. Environmental Protection Agency or the
Massachusetts Department of Environmental Protection for two sites
(one of which is located in Massachusetts) at which hazardous waste
is alleged to have been disposed. The Company is currently aware
of other sites, and may in the future become aware of additional
sites, that it may be held responsible for remediating.
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.
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. A
preliminary review by a consultant hired by the NEES companies of
the potential cost of investigating and, if necessary, remediating
<PAGE>
Note B - Hazardous Waste - Continued
- ------------------------
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. 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. The Company believes that
hazardous waste liabilities for all sites of which it is aware will
not be material to its financial position.
Note C - New Accounting Standard
- --------------------------------
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of (FAS 121), effective for fiscal year 1996. This
standard clarifies when and how to recognize an impairment of
long-lived assets. In addition, FAS 121 requires that all
regulatory assets, which must have a high probability of recovery
to be initially established, must continue to meet that high
probability standard to avoid being written off. However, if
written off, a regulatory asset can be restored if it again has a
high probability of recovery. The impact of this standard will be
driven by the facts and circumstances that exist when the standard
is adopted and thereafter.
Note D - Power Surge
- --------------------
In July 1995, a power surge occurred in a section of the
Company's service territory. Residents have claimed the surge
caused damage to their appliances and other equipment. On November
8, 1995, the Rhode Island Division of Public Utilities and Carriers
dtermined that, for this surge, the Company is not entitled to
protection under the limitation of liability provisions of its
Terms and Conditions of Service. The Company will reimburse
affected customers for all documented damage. These costs are
estimated to range from $0.4 million to $1.2 million.
<PAGE>
Note E
- ------
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 1994 Annual
Report.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
---------------------------------------------------------
Condition and Results of Operations
-----------------------------------
This section contains management's assessment of The
Narragansett Electric Company's 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 1994 Annual Report on
Form 10-K.
Earnings
- --------
Net income for the third quarter and first nine months of 1995
increased $1 million and $6 million, respectively, from the
corresponding periods in 1994. These increases in income reflect
the recovery that commenced in 1995 of the Company's investment in
new transmission facilities which went into service in September
1994. The increase in earnings for the first nine months of 1995
also reflects the recognition of unbilled revenues over a 21 month
period ending December 31, 1995, in accordance with a 1994 rate
agreement. These increases were partially offset by decreased
sales to ultimate customers.
Regulatory Activity
- -------------------
On October 17, 1995, the Rhode Island Public Utilities
Commission (RIPUC) approved a settlement between the Company, the
<PAGE>
Rhode Island Division of Public Utilities and Carriers, and a group
of large commercial and industrial customers that provides for a
base rate increase of $15 million effective in December 1, 1995.
The RIPUC also approved $3 million of new discounts for
manufacturing customers, the costs of which are not being recovered
from other customers.
In June 1995, the RIPUC opened a proceeding to reassess
whether fuel adjustment and purchased power cost adjustment (PPCA)
mechanisms should be continued after 1995 or whether such costs
should be included in base rates. These adjustment mechanisms
currently allow the Company to pass through the costs of fuel and
purchased power and do not require the Company to take significant
risk regarding recovery of such costs. The RIPUC has not yet
scheduled hearings in this proceeding.
In February 1995, the Federal Energy Regulatory Commission
(FERC) approved a rate agreement, effective in January 1995, for
the Company's affiliated power supplier, New England Power Company
(NEP). This rate agreement, among other things, increased the
credits the Company receives from NEP for the costs of owning and
operating its generation and transmission facilities by $14 million
on an annual basis. The Company supplies all of the output of its
generating facilities to NEP. The increase in the credits reflects
the Company's 10 percent investment in the Manchester Street
generating station, which is expected to enter commercial operation
<PAGE>
during the fourth quarter of 1995, and the transmission facilities
associated with the station, which were placed in service in
September 1994.
Power Surge
- -----------
In July 1995, a power surge occurred in a section of the
Company's service territory. Residents have claimed the surge
caused damage to their appliances and other equipment. On November
8, 1995, the Rhode Island Division of Public Utilities and Carriers
determined that, for this surge, the Company is not entitled to
protection under the limitation of liability provisions of its
Terms and Conditions of Service. The Company will reimburse
affected customers for all documented damage. These costs are
estimated to range from $0.4 million to $1.2 million.
<PAGE>
Operating Revenue
- -----------------
The following table summarizes the changes in operating
revenue:
<TABLE>
Increase (Decrease) in Operating Revenue
<CAPTION>
Third Quarter Nine Months
------------- ------------
1995 vs 1994 1995 vs 1994
------------- ------------
(In Millions)
<S> <C> <C>
Sales to ultimate customers $ 1 $(2)
Fuel recovery 1 9
Purchased Power Cost Adjustment
(PPCA) Mechanism 1 3
Unbilled revenues recognized
under rate agreement (2) 2
Other 1 2
--- ---
$ 2 $14
=== ===
</TABLE>
Sales to ultimate customers decreased by approximately 1
percent for the nine months ending September 30, 1995.
The amount shown for unbilled revenues recognized under rate
agreement reflects the recognition of $14 million over a 21 month
period that will end December 31, 1995 in accordance with the
Company's 1994 rate agreement. The amount applicable to the second
quarter of 1994 was not recorded until the third quarter of 1994
when the rate agreement was approved.
<PAGE>
The Company's rates contain a fuel clause and a PPCA
provision. These mechanisms are designed to allow the Company to
pass on to its customers changes in purchased energy costs.
For a discussion of fuel recovery see the fuel costs
discussion in the Operating Expenses section.
Operating Expenses
- ------------------
The following table summarizes the changes in operating
expenses discussed below:
<TABLE>
Increase (Decrease) in Operating Expenses
<CAPTION>
Third Quarter Nine Months
------------- ------------
1995 vs 1994 1995 vs 1994
------------- ------------
(In Millions)
<S> <C> <C>
Purchased electric energy:
Fuel costs $ 1 $ 9
Integrated facilities
credits from NEP (4) (11)
Other 1 1
Depreciation 1 3
Taxes 1 4
--- ----
$ - $ 6
=== ====
</TABLE>
The increase in fuel costs from NEP in the nine months reflects
increased short-term purchases which flow through NEP's fuel
clause. This increase was the result of decreased generation from
<PAGE>
NEP's nuclear power suppliers, decreased hydro production due to
low water levels, and overhauls of NEP's thermal generating
facilities.
The Company owns a 10 percent share of the Manchester Street
Station and also owns the entire seven mile underground
transmission line associated with the facility as well as other
transmission facilities in Rhode Island. The Company's share of
the electricity generated by this plant is made available to NEP
which owns the remaining 90 percent of the station. The Company
receives a credit on its purchased power bill from NEP reflecting
rate recovery of its investment in the station and the transmission
line, and for its fuel costs and other generation and transmission
costs. The increase in the integrated facilities credits from NEP
shown in the table above is primarily due to the recovery of the
Company's investment in this new transmission line which was placed
in service in September 1994, as well as increased credits for
dismantlement costs being incurred on the Company's previously
retired South Street generating station.
The increase in depreciation expense is primarily due to
increased dismantlement costs for the previously retired South
Street generating station and depreciation of new plant
expenditures.
The increase in taxes in the first nine months of the year is
primarily due to increased income.
<PAGE>
Interest Expense
- ----------------
The increase in interest expense is due to increased long-term
and short-term debt balances and higher interest rates.
Competitive Conditions
- ----------------------
The electric utility business is being subjected to rapidly
increasing competitive pressures, stemming from a combination of
trends, including surplus generating capacity, increasing electric
rates, improved technologies, increasing demand for customer
choice, and new regulations and legislation intended to foster
competition. See the Company's Annual Report on Form 10-K for the
year ended December 31, 1994.
Rhode Island has been considering various proposals for allowing
electric customers greater choice over their electricity supplier.
The Company proposed to the RIPUC a set of interdependent
principles for industry restructuring which was agreed to by groups
representing environmental protection advocates, governmental
agencies, non-utility generators, investor-owned utilities, and
large and small customer interests. These principles included,
among others, provisions for increased customer choice while
allowing utilities the opportunity to recover the cost of their
past commitments (stranded costs). In August 1995, the RIPUC
adopted the principles proposed by the Company, except for one
<PAGE>
regarding temporary support for renewable fuel technologies. The
RIPUC ordered the Company to file a report no later than February
1, 1996 on its progress in negotiating a specific plan consistent
with the principles.
In July 1995, the Governor of Rhode Island vetoed two bills
that would have allowed certain industrial customers to buy power
from alternative suppliers, rather than through the local electric
utility. The Company urged the Governor to exercise his veto,
because the Company believed the proposed legislation would result
in piecemeal deregulation that would not be fair to customers or
shareholders and would circumvent the comprehensive proceedings
mentioned above. The Company committed that, if the measures were
not enacted into law, it would provide a two year rate discount to
manufacturing customers (see Rate Activity section). In addition,
the Company committed that if the measures were not enacted, it
would submit by July 1, 1996, a specific and detailed proposal to
the RIPUC addressing the issues associated with providing open
access to the Company's distribution system for its large
commercial and industrial customers. Among other issues, that
filing would address the proper means for recovering past costs
incurred to serve exiting customers through a compensatory access
charge. If the charges were approved by the RIPUC, the appropriate
access tariffs would then be filed with the FERC. The Rhode Island
Legislature may still override the vetoes.
<PAGE>
In October 1995, the Company began discussions with interested
parties regarding the plan to be filed with the RIPUC. That plan,
to be called "Choice: New England", will propose that all electric
utility customers in Rhode Island, have the ability to choose their
power supplier beginning in 1998. Under the plan, NEP's generation
assets would become competitive, while the Company's transmission
and distribution assets would remain regulated. Among other
provisions, the plan would also propose a uniform access charge so
that all utilities in the state will have an opportunity to recover
the cost of commitments made under the current regulated system.
NEES believes that its "Choice: New England" proposal meets the
principles for industry restructuring adopted by the MDPU and RIPUC
for increased customer choice while providing utilities with an
opportunity to recover costs which may be stranded by such customer
choice. However, there can be no assurance that a final plan will
include an access charge which would recover all stranded costs.
In March 1995, the FERC issued a notice of proposed rule-making
in which it stated that recovery in rates of legitimate and
verifiable stranded costs from departing customers is the
appropriate method for recovery of costs stranded as the result of
wholesale competition. Under the FERC policy proposal, costs
stranded as a result of retail competition would be subject to
state commission review if the state commission has the necessary
statutory authority, and subject to FERC review if the state
<PAGE>
commission does not have such authority. A final decision is
expected in 1996.
Electric utility rates have historically been based on a
utility's costs. As a result, electric utilities are subject to
certain accounting standards that are not applicable to other
business enterprises in general. Financial Accounting Standard No.
71, Accounting for the Effects of Certain Types of Regulation (FAS
71), requires regulated entities, in appropriate circumstances, to
establish regulatory assets and liabilities, and thereby defer the
income statement impact of certain costs that are expected to be
recovered in future rates. The Company believes that its
operations currently meet the criteria established in FAS 71.
However, the effects of regulatory and/or legislative initiatives,
or its own initiatives, such as "Choice: New England", could, in the
near future, cause all or a portion of the Company's operations to
cease meeting the criteria of FAS 71. In that event, the
application of FAS 71 to such operations would be discontinued and
a non-cash write-off of previously established regulatory assets
and liabilities related to such operations would be required. At
September 30, 1995, the Company had pre-tax regulatory assets (net
of regulatory liabilities) of approximately $50 million. In
addition, if competitive or regulatory change should cause the
Company's revenues to be insufficient to recover its costs, a
write-down of plant assets could be required pursuant to Financial
<PAGE>
Accounting Standard No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (FAS
121). This standard, effective for fiscal year 1996, clarifies
when and how to recognize an impairment of long-lived assets. For
further discussion of FAS 121 see Note C.
Utility Plant Expenditures and Financings
- -----------------------------------------
Cash expenditures for utility plant totaled $53 million in the
first nine months of 1995, including $11 million related to the
Company's 10 percent share of the Manchester Street Station
repowering project in Providence, Rhode Island. In September 1995,
the first of three generating units began commercial operation at
the power plant. The remaining units are scheduled to commence
commercial operation during the fourth quarter of this year. The
first of the three units is now in commercial operation. The
approximately 500 megawatt repowering project is estimated to cost
approximately $455 million, excluding transmission facilities. The
Company's share of the costs amounts to approximately $45 million.
The funds necessary for utility plant expenditures were primarily
provided by net cash from operating activities, after the payment
of dividends, and from proceeds of long-term debt issues and a
capital contribution from the parent.
During the first nine months of 1995 the Company issued $15
million of bonds at interest rates ranging from 7.75 to 7.81
<PAGE>
percent. In October 1995, the Company issued $7 million of
long-term debt at a rate of 7.50 percent. The Company is planning
to issue $16 million of first mortgage bonds during the fourth
quarter of 1995, bearing an interest rate of 7.30 percent, to
refinance outstanding first mortgage bonds.
At September 30, 1995, the Company had $31 million of
short-term, debt outstanding of which $25 million represents
commercial paper borrowings. The Company currently has lines of
credit with banks totaling $41 million. There were no outstanding
borrowings under these lines of credit at September 30, 1995.
For the twelve-month period ending September 30, 1995, the
ratio of earnings to fixed charges was 2.46.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
Information concerning the Company's $14.9 million rate order
from 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 liability for a power
surge, discussed in Note D of Notes to Unaudited Financial
Statements, is incorporated herein by reference and made a part
hereof.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
The Company is filing the following revised exhibit for
incorporation by reference into its registration statements on Form
S-3, Commission file Nos. 33-49455, 33-50015, and 33-61131.
12 Statement re computation of ratios
The Company is filing Financial Data Schedules.
The Company filed reports on Form 8-K dated July 3, 1995,
August 16, 1995, and September 8, 1995, each 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 September 30, 1995 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: November 13, 1995
Exhibit Index
<PAGE>
Exhibit Index
-------------
Exhibit Description Page
- ------- ----------- ----
12 Statement re computation of Filed herewith
ratios
27 Financial Data Schedule Filed herewith
Exhibit 12
<PAGE>
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Computation of Ratio of Earnings to Fixed Charges
(SEC Coverage)
(Unaudited)
<CAPTION>
12 Months
Ended
September 30, 1995 Years Ended December 31,
Actual -------------------------------------------------------------
(Unaudited) 1994 1993 1992 1991 1990
-------------- ---- ---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net Income $20,821 $14,589 $14,274 $21,052 $16,820 $17,599
- ----------
Add income taxes and fixed charges
- ----------------------------------
Current federal income taxes 1,241 1,020 2,183 4,608 1,558 7,624
Deferred federal income taxes 7,363 3,930 2,199 4,560 5,528 351
Investment tax credits - net (504) (508) (508) (507) (500) (504)
Interest on long-term debt 16,157 14,334 12,715 13,290 12,581 11,016
Interest on short-term debt and other3,669 2,897 2,074 1,277 2,500 2,968
------- ------- ------- ------- ------- -------
Net earnings available for fixed charges $48,747 $36,262 $32,937 $44,280 $38,487 $39,054
------- ------- ------- ------- ------- -------
Fixed charges:
Interest on long-term debt $16,157 $14,334 $12,715 $13,290 $12,581 $11,016
Interest on short-term debt and other3,669 2,897 2,074 1,277 2,500 2,968
------- ------- ------- ------- ------- -------
Total fixed charges $19,826 $17,231 $14,789 $14,567 $15,081 $13,984
======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 2.46 2.10 2.23 3.04 2.55 2.79
- ----------------------------------
</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 THE NARRAGANSETT ELECTRIC COMPANY, AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994 DEC-31-1995 DEC-31-1994
<PERIOD-END> SEP-30-1995 SEP-30-1994 SEP-30-1995 SEP-30-1994
<PERIOD-TYPE> 9-MOS 9-MOS 3-MOS 3-MOS
<BOOK-VALUE> PER-BOOK PER-BOOK PER-BOOK PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 523,989 0 0 0
<OTHER-PROPERTY-AND-INVEST> 0 0 0 0
<TOTAL-CURRENT-ASSETS> 106,341 0 0 0
<TOTAL-DEFERRED-CHARGES> 56,804 <F1> 0 0 0
<OTHER-ASSETS> 0 0 0 0
<TOTAL-ASSETS> 687,134 0 0 0
<COMMON> 56,624 0 0 0
<CAPITAL-SURPLUS-PAID-IN> 70,170 0 0 0
<RETAINED-EARNINGS> 104,182 0 0 0
<TOTAL-COMMON-STOCKHOLDERS-EQ> 230,976 0 0 0
0 0 0 0
36,500 0 0 0
<LONG-TERM-DEBT-NET> 203,857 0 0 0
<SHORT-TERM-NOTES> 31,050 <F2> 0 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0 0 0
0 0 0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0 0 0
<LEASES-CURRENT> 0 0 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 184,751 0 0 0
<TOT-CAPITALIZATION-AND-LIAB> 687,134 0 0 0
<GROSS-OPERATING-REVENUE> 380,663 366,275 139,217 137,014
<INCOME-TAX-EXPENSE> 8,235 4,594 4,119 3,355
<OTHER-OPERATING-EXPENSES> 339,783 337,623 122,399 122,722
<TOTAL-OPERATING-EXPENSES> 348,018 342,217 126,518 126,077
<OPERATING-INCOME-LOSS> 32,645 24,058 12,699 10,937
<OTHER-INCOME-NET> (307) (285) (269) 149
<INCOME-BEFORE-INTEREST-EXPEN> 32,338 23,773 12,430 11,086
<TOTAL-INTEREST-EXPENSE> 13,575 11,242 4,491 3,856
<NET-INCOME> 18,763 12,531 7,939 7,230
1,607 1,607 535 535
<EARNINGS-AVAILABLE-FOR-COMM> 17,156 10,924 7,404 6,695
<COMMON-STOCK-DIVIDENDS> 4,530 2,265 567 1,132
<TOTAL-INTEREST-ON-BONDS> 12,312 10,489 4,242 3,675
<PAGE>
<CASH-FLOW-OPERATIONS> 34,065 33,521 5,932 4,375
<EPS-PRIMARY> 0 <F3> 0 <F3> 0 <F3> 0 <F3>
<EPS-DILUTED> 0 <F3> 0 <F3> 0 <F3> 0 <F3>
<FN>
<F1> Total deferred charges includes other assets.
<F2> Short-term notes includes notes payable to banks and short-term debt to affiliates.
<F3> Per share data is not relevant because the Company's common stock is wholly-owned by New England Electric System.
</FN>
