<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 June 30, 1998
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 June 30, 1998.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Statements of Income
Periods Ended June 30
(Unaudited)
<CAPTION>
Quarter Six Months
-------- ----------
1998 1997 1998 1997
---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C>
Operating revenue $117,295 $119,894 $237,271 $251,360
-------- -------- -------- --------
Operating expenses:
Fuel for generation and purchased electric
energy (principally from New England
Power Company, an affiliate) 60,776 72,271 122,247 149,444
Other operation 26,427 17,477 46,127 35,303
Maintenance 3,055 3,032 5,951 5,747
Depreciation 5,962 5,599 11,923 11,703
Taxes, other than federal income taxes 10,143 9,205 20,402 19,473
Federal income taxes 2,167 2,491 7,051 6,468
-------- -------- -------- --------
Total operating expenses 108,530 110,075 213,701 228,138
-------- -------- -------- --------
Operating income 8,765 9,819 23,570 23,222
Other income:
Other income (expense), net 255 (127) (734) (1,183)
-------- -------- -------- --------
Operating and other income 9,020 9,692 22,836 22,039
-------- -------- -------- --------
Interest:
Interest on long-term debt 3,780 4,190 7,611 8,495
Other interest 933 431 1,551 824
Allowance for borrowed funds used during
construction - credit (28) (14) (60) (58)
-------- -------- -------- --------
Total interest 4,685 4,607 9,102 9,261
-------- -------- -------- --------
Net income $ 4,335 $ 5,085 $ 13,734 $ 12,778
======== ======== ======== ========
Statements of Retained Earnings
Retained earnings at beginning of period $109,897 $123,738 $129,567 $119,978
Net income 4,335 5,085 13,734 12,778
Dividends declared on cumulative
preferred stock (189) (536) (379) (1,072)
Dividends declared on common stock (8,493) (5,663) (37,372) (9,060)
-------- -------- -------- --------
Retained earnings at end of period $105,550 $122,624 $105,550 $122,624
======== ======== ======== ========
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 June 30
(Unaudited)
<CAPTION>
1998 1997
---- ----
(In Thousands)
<S> <C> <C>
Operating revenue $505,949 $511,190
-------- --------
Operating expenses:
Fuel for generation and purchased electric
energy (principally from New England
Power Company, an affiliate) 282,233 304,036
Other operation 85,199 71,669
Maintenance 12,651 11,802
Depreciation 23,177 25,245
Taxes, other than federal income taxes 40,295 37,950
Federal income taxes 14,830 14,286
-------- --------
Total operating expenses 458,385 464,988
-------- --------
Operating income 47,564 46,202
Other income:
Other income (expense), net (301) (681)
-------- --------
Operating and other income 47,263 45,521
-------- --------
Interest:
Interest on long-term debt 15,295 17,104
Other interest 3,202 2,193
Allowance for borrowed funds used during
construction - credit (122) (101)
-------- --------
Total interest 18,375 19,196
-------- --------
Net income $ 28,888 $ 26,325
======== ========
Statements of Retained Earnings
Retained earnings at beginning of period $122,624 $111,183
Net income 28,888 26,325
Dividends declared on cumulative preferred stock (1,262) (2,143)
Dividends declared on common stock (43,034) (12,741)
Premium on redemption of preferred stock (1,666) -
-------- --------
Retained earnings at end of period $105,550 $122,624
======== ========
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>
June 30, December 31,
ASSETS 1998 1997
------ ---- ----
(In Thousands)
<S> <C> <C>
Utility plant, at original cost $771,044 $760,923
Less accumulated provisions for depreciation 206,466 198,551
-------- --------
564,578 562,372
Construction work in progress 1,627 5,739
-------- --------
Net utility plant 566,205 568,111
-------- --------
Current assets:
Cash 2,659 3,122
Accounts receivable:
From sales and deliveries of electric energy 49,691 54,109
Other (including $2,286,000 and $1,112,000
from affiliates) 4,281 2,571
Less reserves for doubtful accounts 5,144 4,707
-------- --------
48,828 51,973
Unbilled revenues 18,387 15,997
Fuel, materials and supplies, at average cost 4,604 4,165
Prepaid and other current assets 12,449 14,202
-------- --------
Total current assets 86,927 89,459
-------- --------
Deferred charges and other assets 55,099 55,285
-------- --------
$708,231 $712,855
======== ========
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 36 36
Other paid-in capital 105,680 105,500
Retained earnings 105,550 129,567
Unrealized gain on securities, net 181 112
-------- --------
Total common equity 268,071 291,839
Cumulative preferred stock 12,774 12,800
Long-term debt 180,587 183,545
-------- --------
Total capitalization 461,432 488,184
-------- --------
Current liabilities:
Long-term debt due in one year 3,000 5,000
Short-term debt (including $11,950,000 and
$4,425,000 to affiliates) 39,000 16,350
Accounts payable (including $49,553,000 and
$50,751,000 to affiliates) 55,630 56,048
Accrued liabilities:
Taxes 1,321 4,314
Interest 4,703 4,810
Other accrued expenses 17,286 21,519
Customer deposits 6,113 5,982
Dividends payable 8,683 3,587
-------- --------
Total current liabilities 135,736 117,610
-------- --------
Deferred federal income taxes 87,028 82,871
Unamortized investment tax credits 6,778 7,023
Other reserves and deferred credits 17,257 17,167
-------- --------
$708,231 $712,855
======== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Statements of Cash Flows
Six Months Ended June 30
(Unaudited)
<CAPTION>
1998 1997
---- ----
(In Thousands)
<S> <C> <C>
Operating Activities:
Net income $ 13,734 $ 12,778
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 11,923 11,703
Deferred federal income taxes and
investment tax credits, net 3,672 (1,259)
Allowance for funds used during construction (60) (58)
Decrease (increase) in accounts receivable, net
and unbilled revenues 755 4,641
Decrease (increase) in fuel, materials, and supplies (439) 92
Decrease (increase) in prepaid and other current assets 1,753 (632)
Increase (decrease) in accounts payable (418) 6,508
Increase (decrease) in other current liabilities (7,202) 6,870
Other, net 683 260
-------- --------
Net cash provided by operating activities $ 24,401 $ 40,903
-------- --------
Investing Activities:
Plant expenditures, excluding allowance for
funds used during construction $(10,013) $(15,239)
Other investing activities - (146)
-------- --------
Net cash used in investing activities $(10,013) $(15,385)
-------- --------
Financing Activities:
Capital contributions from parent $ 180 $ -
Dividends paid on common stock (32,276) (5,663)
Dividends paid on preferred stock (379) (1,072)
Long-term debt - retirements (5,000) (25,000)
Changes in short-term debt 22,650 5,875
Preferred stock - redemptions (26) -
-------- --------
Net cash used in financing activities $(14,851) $(25,860)
-------- --------
Net decrease in cash and cash equivalents $ (463) $ (342)
Cash and cash equivalents at beginning of period 3,122 1,727
-------- --------
Cash and cash equivalents at end of period $ 2,659 $ 1,385
======== ========
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.
The electric utility industry typically utilizes and/or
generates in its operations a range of potentially hazardous
products and by-products. The Narragansett 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
three sites (two of which are located in Massachusetts) at which
hazardous waste is alleged to have been disposed. 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.
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 New England
Electric System (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 $11 million. An informal survey of other
utilities conducted on behalf of NEES and its subsidiaries
indicated costs in a similar range. The NEES companies have
<PAGE>
recovered amounts from certain insurers and other third parties,
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. The Company
believes that hazardous waste liabilities for all sites of which it
is aware 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). FAS 130 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 and six month periods ended June 30, 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 will adopt FAS 132 in its financial
statements for the year ending December 31, 1998.
The adoption of FAS 131 and FAS 132 will have no impact on the
Company's operating results, financial position, or cash flows.
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities (FAS 133), which establishes accounting and
reporting standards for such items. FAS 133 is effective for
<PAGE>
fiscal years beginning after June 15, 1999. Currently, the Company
has no such derivative holdings.
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 The
Narragansett 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 increased $1.0 million during the first six months
of 1998 compared to the corresponding period in 1997 due to a
retail rate increase going into effect in January 1998. Net income
decreased $0.7 million for the second quarter due to increased
operation and maintenance expense and an underrecovery of
transmission wheeling expenses, which more than offset the January
rate increase.
This report contains statements that may be considered forward
looking under the securities laws. Actual results may differ
materially for reasons discussed in the "Industry Restructuring"
section of the Company's Form 10-K for 1997 and the Company's 1997
Annual Report.
Industry Restructuring
- ----------------------
For a full discussion of industry restructuring activities in
Massachusetts, Rhode Island, and New Hampshire, stranded cost
recovery, the Company and New England Power Company's (NEP)
proposed divestiture of their nonnuclear generating business,
accounting implications of industry restructuring and divestiture,
workforce reductions, and 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.
Divestiture of Generating Business
The Company and NEP have received all state and federal
regulatory approvals required for the sale of their nonnuclear
generating business to USGen New England, Inc. (USGen). The
Company's portion of the proceeds from the sale will equal the net
book value of the Company's 10 percent investment in the Manchester
Street power plant. USGen is awaiting final Federal Energy
<PAGE>
Regulatory Commission approval of exempt wholesale generator status
for the facilities it is purchasing. The proposed sale is more
fully described in the Company's Form 10-K for 1997 and the
Company's 1997 Annual Report. Closing of the sale is expected in
the third quarter of 1998.
Risk Factors
While the Company believes that the Rhode Island Settlement and
the sale agreement with 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 Rhode
Island Settlement will not be implemented in the manner anticipated
by the Company, (ii) the possibility of federal legislation that
would increase the risk to investors above those contained in the
Rhode Island Settlement and statute, and (iii) the failure to
complete the sale of the nonnuclear generating business to USGen.
The major risk 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.
<PAGE>
Operating Revenue
- -----------------
The following table summarizes the changes in operating
revenue: Increase (Decrease) in Operating Revenue
Second Quarter Six Months
-------------- ------------
1998 vs 1997 1998 vs 1997
-------------- ------------
(In Millions)
Industry restructuring-related
rate changes:
Purchased power and transmission-
related $(7) $(18)
Distribution-related 2 4
PBOP rate decrease (1) (2)
Deliveries to ultimate
customers and other 3 2
--- ----
$(3) $(14)
=== ====
Historically, the Company purchased all of its electrical
requirements from NEP, under the provisions of an all-requirements
contract. In connection with an amendment to this contract, in
January 1998 all of the Company's customers gained the right to
choose their power supplier. NEP continues to supply power to the
Company, at new lower rates, for customers who choose to continue
to take power from the Company. All customers pay rates that
include contract termination charges due NEP for its generation-
related stranded costs. In connection with these changes, the
revenues that the Company is billing to its customers related to
NEP's purchased power costs are subject to true-up mechanisms.
However, transmission-related costs billed by both NEP and the New
England Power Pool are not subject to a true-up mechanism until
1999, and the Company incurred an underrecovery of such costs in
the second quarter of 1998. Prior to January 1998, the Company had
a purchased power cost adjustment mechanism and a fuel clause
mechanism, which allowed NEP's billings to be passed on to
customers.
In accordance with the Rhode Island Restructuring Act of 1996,
a $7 million increase in distribution rates was implemented for the
<PAGE>
Company, effective January 1, 1998. The Company also implemented
a rate decrease related to a lower level of postretirement benefits
other than pensions (PBOPs) expenses being incurred and also made
refunds in January 1998 of past overrecoveries of PBOP costs, for
which reserves had previously been established.
Kilowatthour deliveries to ultimate customers increased 2.9
percent and 1.9 percent for the second quarter and first six months
of 1998, respectively, as compared to the corresponding periods in
1997.
Operating Expenses
- ------------------
The following table summarizes the changes in operating expenses:
Increase (Decrease) in Operating Expenses
Second Quarter Six Months
-------------- ------------
1998 vs 1997 1998 vs 1997
-------------- ------------
(In Millions)
Fuel, purchased power and
operation and maintenance:
Fuel, purchased power, generation
and transmission-related $(5) $(17)
PBOP expense (1) (2)
Other 4 3
Taxes 1 2
--- ----
$(1) $(14)
=== ====
As noted above, effective January 1, 1998, NEP's billings to
the Company were significantly changed in connection with the
restructuring of the electric utility industry in Rhode Island.
Not only were NEP's rates reduced, but the transmission portion of
NEP's costs are now billed separately and recorded in operation and
maintenance expense instead of as a component of purchased power
expense.
The increase in other operation and maintenance expense in the
second quarter represents increased distribution expenses, which
reflect accounting write-offs of approximately $2 million of
certain previously capitalized plant items. On a year-to-date
<PAGE>
basis, this increase was offset by a reduction in the cost of
PBOPs, for which refunds and a rate decrease were put into effect
in the first quarter.
Utility Plant Expenditures and Financings
- -----------------------------------------
Plant expenditures for the first six months of 1998 amounted to
$10 million. The funds necessary for utility plant expenditures
were provided by net cash from operating activities, after the
payment of dividends.
In the first six months of 1998, the Company retired $5 million
of mortgage bonds and increased its short-term debt outstanding by
$23 million. The Company plans to issue an additional $15 million
of long-term debt by the end of 1998 to refinance maturing bonds
and to fund capital expenditures.
At June 30, 1998, the Company had $39 million of short-term
debt outstanding, including $27 million of 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 June 30, 1998.
For the twelve-month period ending June 30, 1998, the ratio of
earnings to fixed charges was 3.34.
<PAGE>
PART II. OTHER INFORMATION
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. 33-61131.
12 Statement re computation of ratios
The Company is filing Financial Data Schedules.
<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 June 30, 1998 to be signed on its behalf by the
undersigned thereunto duly authorized.
THE NARRAGANSETT ELECTRIC COMPANY
s/John G. Cochrane
John G. Cochrane
Treasurer, Authorized Officer, and
Principal Financial Officer
Date: August 7, 1998
<PAGE>
Exhibit Index
-------------
Exhibit Description Page
- ------- ----------- ----
12 Statement re computation of Filed herewith
ratios
27 Financial Data Schedule Filed herewith
<PAGE>
<TABLE>
THE NARRAGANSETT ELECTRIC COMPANY
Computation of Ratio of Earnings to Fixed Charges
(SEC Coverage)
(Unaudited)
<CAPTION>
12 Months
Ended
June 30, 1998 Years Ended December 31,
Actual -------------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
-------------- ---- ---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Net Income $28,888 $27,932 $22,954 $23,910 $14,589 $14,274
- ----------
Add income taxes and fixed charges
- ----------------------------------
Current federal income taxes 9,828 14,185 6,918 7,212 1,020 2,183
Deferred federal income taxes 5,008 79 4,675 3,512 3,930 2,199
Investment tax credits - net (493) (495) (498) (503) (508) (508)
Interest on long-term debt 15,295 16,179 17,205 16,627 14,334 12,715
Interest on short-term debt and other 3,202 2,475 2,883 3,663 2,897 2,074
------- ------- ------- ------- ------- -------
Net earnings available for fixed charges $61,728 $60,355 $54,137 $54,421 $36,262 $32,937
------- ------- ------- ------- ------- -------
Fixed charges:
Interest on long-term debt $15,295 $16,179 $17,205 $16,627 $14,334 $12,715
Interest on short-term debt and other 3,202 2,475 2,883 3,663 2,897 2,074
------- ------- ------- ------- ------- -------
Total fixed charges $18,497 $18,654 $20,088 $20,290 $17,231 $14,789
======= ======= ======= ======= ======= =======
Ratio of earnings to fixed charges 3.34 3.24 2.69 2.68 2.10 2.23
- ----------------------------------
</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.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<PERIOD-TYPE> 6-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 566,205
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 86,927
<TOTAL-DEFERRED-CHARGES> 55,099 <F1>
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 708,231
<COMMON> 56,624
<CAPITAL-SURPLUS-PAID-IN> 105,716
<RETAINED-EARNINGS> 105,550
<TOTAL-COMMON-STOCKHOLDERS-EQ> 268,071 <F3>
0
12,774
<LONG-TERM-DEBT-NET> 180,587
<SHORT-TERM-NOTES> 11,950
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 27,050
<LONG-TERM-DEBT-CURRENT-PORT> 3,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 204,799
<TOT-CAPITALIZATION-AND-LIAB> 708,231
<GROSS-OPERATING-REVENUE> 237,271
<INCOME-TAX-EXPENSE> 7,051
<OTHER-OPERATING-EXPENSES> 206,650
<TOTAL-OPERATING-EXPENSES> 213,701
<OPERATING-INCOME-LOSS> 23,570
<OTHER-INCOME-NET> (734)
<INCOME-BEFORE-INTEREST-EXPEN> 22,836
<TOTAL-INTEREST-EXPENSE> 9,102
<NET-INCOME> 13,734
379
<EARNINGS-AVAILABLE-FOR-COMM> 13,355
<COMMON-STOCK-DIVIDENDS> 37,372
<TOTAL-INTEREST-ON-BONDS> 7,611
<CASH-FLOW-OPERATIONS> 24,401
<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>
