<PAGE>
File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NEW ENGLAND ENERGY INCORPORATED
NEW ENGLAND ELECTRIC SYSTEM
NEW ENGLAND POWER COMPANY
(Name of companies filing this statement)
25 Research Drive, Westborough, Massachusetts 01582
(Address of principal executive offices)
NEW ENGLAND ELECTRIC SYSTEM
(Name of top registered holding company parent in system)
John G. Cochrane Robert King Wulff
Treasurer Corporation Counsel
New England Energy Incorporated 25 Research Drive
25 Research Drive Westborough, Massachusetts 01582
Westborough, Massachusetts 01582
(Names and addresses of agents for service)
<PAGE>
Item 1. Description of Proposed Transaction
- --------------------------------------------
By this Application/Declaration, Applicants seek Commission
authorization for New England Energy Incorporated (NEEI) to refinance its
existing bank debt by entering into financing arrangements with a syndicate of
participating banks (the Banks) led by Credit Suisse, as Agent, (the New
Credit Agreement) pursuant to which NEEI may borrow up to $225 million. In
connection therewith, Applicants also propose to amend and extend the term of
the Fuel Purchase Contract between NEEI and New England Power Company (NEP)
(the Fuel Purchase Contract), the Capital Funds Agreement and the Loan
Agreement and the Capital Maintenance Agreement between NEEI and New England
Electric System (NEES), all of which have previously been approved by the
Commission. The authority requested in this filing shall have no effect on
NEEI's existing authorization to enter into interest rate swap agreements,
which authorization was most recently extended by the Commission in its Order
dated December 1, 1993 (HCAR 25935, File No. 70-6971).
A. Background
- ----------------
NEEI is a subsidiary of NEES, a registered holding company under the
Public Utility Holding Company Act of 1935 (the Act), engaged in various
activities relating to fuel supply for the NEES system as authorized by the
Commission. These activities presently include participation in ventures for
exploration, development and production of oil and gas, the sale of such
production to nonaffiliates, and the sale of fuel oil to NEP. NEEI is also
authorized to engage in fuel procurement and inventory transactions, and
transportation of fuel for NEP. NEP is the generation and transmission
subsidiary of the NEES system and sells power at wholesale to the retail
operating companies within the NEES system.
NEEI has participated in most of its oil and gas exploration and
development through its partnership with Samedan Oil Corporation, a subsidiary
of Noble Affiliates, Inc. Since its inception in October, 1974, the
relationship between NEEI and Samedan has been thoroughly documented in File
Nos. 70-5543, 70-6823 and 70-7055. In 1980 NEEI entered into a similar
arrangement with Dorchester Exploration, Inc., as described in Commission File
No. 70-6513. This partnership was terminated on December 29, 1981.
As of January 1, 1987, NEEI no longer participates in new prospects initiated
by Samedan, but Samedan continues to manage the exploration, development and
production of Partnership Prospects initiated prior to that date.
By its order dated July 19, 1978, the Commission set forth a policy (the
Pricing Policy) authorizing the methods by which NEEI accounts for the costs
of its oil and gas program and determines the prices at which it sells fuel to
NEP. The Pricing Policy authorized the sale by NEEI to NEP of fuel derived
from its oil and gas program pursuant to a Fuel Purchase Contract dated as of
July 19, 1978, as amended (Exhibit B-5). Under this contract, NEP was
required to purchase all fuel meeting its requirements offered to it by NEEI,
at a price determined in accordance with the Pricing Policy. This Fuel
Purchase Contract has been assigned to the participating banks and provides a
portion of the credit behind the Existing Credit Agreement (defined below).
By Order dated October 22 1985 (File No. 70-6958), the Pricing Policy
was modified such that the Fuel Purchase Contract does not apply to oil and
gas prospects recorded on NEEI's books after December 31, 1983, and will
eventually terminate as to all prospects. See File No. 70-6958 for further
details. Prospects to which the Fuel Purchase Contract applies are those
recorded on NEEI's books through December 31, 1983 (Old Program). Prospects
recorded on NEEI's books in the period January 1, 1984 through December 31,
1986, and all costs and expenses related thereto, are accounted for, financed,
<PAGE>
and operated by NEEI outside the Pricing Policy and the Fuel Purchase
Contract, solely for the account of NEEI and NEES and comprise the New
Program.
Reference is made to the quarterly reports filed by NEEI under Rule 24
(File Nos. 70-5543, 70-6513, 70-6823) providing detailed information through
September 30, 1994, regarding its oil and gas exploration and development
activities. These reports provide detailed information with respect to NEEI's
costs, including capital costs, incurred in production of oil and gas, and the
use of these costs in the pricing of fuel oil sold by NEEI to NEP pursuant to
the Pricing Policy.
B. NEEI Financing
- --------------------
1. Bank Debt
---------
Since 1979, NEEI has financed its exploration and development program in
part by bank loans approved by the Commission. By Order dated April 8, 1985
(HCAR 23658; File No. 70-7064), the Commission authorized NEEI to enter into
an Amended and Restated Credit Agreement with Bank of Montreal, New York
Branch, as agent and others (the Montreal Credit Agreement). The terms of the
Montreal Credit Agreement provided for borrowings by NEEI up to a total of
$500 million through four "tranches".
By Order dated March 29, 1989 (HCAR 24847; File No 70-7613), the
Commission authorized NEEI to refinance the Montreal Credit Agreement by
entering into a Credit Agreement with Citibank, N.A., as agent and others (the
Existing Credit Agreement).
Interest Margins under the Existing Credit Agreement are as follows:
YEAR LIBOR CD BASE RATE
---- ----- ---- ---------
1-3 1/4% 3/8% 0%
4-5 3/8% 1/2% 1/8%
6-7 5/8% 3/4% 3/8%
8-10 7/8% 1% 5/8%
The amount of the facility available under the Existing Credit Agreement
is currently $250,000,000 and reduces incrementally according to a set
schedule (Existing Revolving Facility Availability) with termination of the
facility December 31, 1998.
Under the Existing Credit Agreement, a facility fee of 1/8% per year is
payable on the Existing Revolving Facility Availability; and a commitment fee
of 1/16% per year is payable on the unused balance of the Existing Revolving
Facility Availability.
As security for the borrowings under the Existing Credit Agreement, NEEI
assigned to the participating banks its rights under the Fuel Purchase
Contract with NEP, and the Capital Funds Agreement and Loan Agreement with
NEES to secure Old Program borrowings; and its rights under the Capital
Maintenance Agreement with NEES to secure New Program borrowings.
2. NEES Equity and Deferred Taxes
------------------------------
In addition to the Existing Credit Agreement, NEEI has financed its
exploration and development program through (i) investments by NEES and (ii)
deferred Federal income taxes.
<PAGE>
(i) NEES Investment
---------------
NEES has authority to invest up to $45 million, plus an amount
equal to the portion of NEEI's after tax net loss attributable to
the expensing of interest on $37.2 million of Old Program
borrowings, in NEEI's Old Program prospects through capital
contributions, acquisition of common stock and subordinated notes
under the terms of a Capital Funds Agreement dated November 1,
1974, as amended (Capital Funds Agreement) and the associated Loan
Agreement dated July 19, 1978, as amended (the Loan Agreement)
pursuant to authority given by the Commission in its order of
August 8, 1990 (HCAR 25129; File No. 70-7613). See Exhibits B-3
and B-4. As of September 30, 1994, the total outstanding common
stock and subordinated notes issued to NEES under the Capital
Funds Agreement was $2.3 million.
By its order of March 28, 1989 (HCAR No. 24847) issued in File No.
70-7613, the Commission authorized investment by NEES of up to
$75 million in NEEI, to be used, inter alia, to fund New Program
activities or to make investments in NEEI in lieu of those
required under a Capital Maintenance Agreement described below
(the Capital Maintenance Agreement). As of September 30, 1994,
NEES had invested approximately $16 million in NEEI pursuant to
this authority.
The Capital Maintenance Agreement (approved in HCAR No. 23873)
requires NEES to purchase NEEI capital stock, or to make capital
contributions or non-interest bearing subordinated loans to NEEI
equal to any after tax net loss which NEEI may incur from
activities on New Program prospects. The Capital Maintenance
Agreement obligates NEES to make a payment, to the extent that
NEEI has not done so, to the agent for the account of lending
banks on each amortization date occurring under the Existing
Credit Facility, in an amount equal to the aggregate principal
amount of outstanding advances in excess of the availability under
the Existing Credit Facility on such date (after giving effect to
any reduction of availability on such date).
(ii) Deferred Taxes
--------------
Pursuant to a Tax Allocation Agreement adopted and filed pursuant
to Rule 45(c), NEEI is credited with and receives the cash
equivalent of reductions in consolidated tax liabilities arising
from the inclusion of its tax losses in the consolidated tax
return of the NEES system. These payments are accounted for by
NEEI as deferred federal income taxes. NEEI expects to have a net
tax liability for the foreseeable future.
3. Future Financing Needs
----------------------
Exhibit G-1 shows NEEI's estimated sources and uses of funds through
2002. Exhibit G-2 shows NEEI's estimated Old Program production by year
through 2004 and the total remaining reserves to be produced after 1994.
Together, these exhibits clearly show that NEEI's oil and gas program is
winding down. Since NEEI decided to cease participating in new prospects as
of December 31, 1986, the level of expenditures since that date for
exploration and development of existing properties has and will continue to
decline.
<PAGE>
Exhibit G-1 also shows bank borrowings continuing to decline. Bank
borrowings are expected to be retired in their entirety in 2002. Based on
these cash flow projections and bank debt retirements, and in order to reduce
its borrowing costs, NEEI has held discussions with a number of banks seeking
proposals for refinancing the Existing Credit Agreement on the most favorable
terms available. On the basis of these discussions, NEEI has arranged to
refinance the Existing Credit Agreement with a new credit facility described
below.
C. The New Credit Agreement
------------------------
NEEI proposes to enter into the New Credit Agreement described herein
with Credit Suisse as Agent for the Banks. Credit Suisse is in the process of
putting together the bank syndication. As stated above, NEEI believes the New
Credit Agreement will permit it to refinance its Existing Credit Agreement and
lower its costs of financing. A draft of the New Credit Agreement, Exhibit B-
2 to this filing, will be filed by amendment. Exhibit B-1, the Summary of
Terms and Conditions, provides a detailed outline of the principal terms of
the New Credit Agreement.
The terms of the New Credit Agreement would provide for borrowings by
NEEI up to a total outstanding of $225 million. The New Credit Agreement
provides for a revolving facility of $225 million which reduces incrementally
on each anniversary of the transaction closing date. The New Credit
Agreement's term will be for seven years with an option to extend the term for
an additional eighth year if all the Banks agree to such extension. NEEI
would have the following interest rate options during the term of the New
Credit Agreement:
(1) LIBOR Borrowings - NEEI may borrow at a periodic fixed Eurodollar
rate with maturities of 1, 2, 3, 6 or 9 months or, subject to
availability, 12 months at the then applicable LIBOR for such
maturities plus (as specified in the Pricing Grid below) a margin
over LIBOR (the LIBOR Margin), payable at the end of each interest
period or quarterly for interest periods longer than 3 months.
The LIBOR Margin varies according to the lowest debt rating
assigned to NEP's senior secured long-term debt by Standard &
Poors and Moody's Investor Service, respectively, as shown in the
Pricing Grid. If the Fuel Purchase Contract has been terminated
then, in accordance with the New Credit Agreement, the LIBOR
Margin varies according to the lowest debt rating assigned to
NEES' senior secured long-term debt by Standard & Poors and
Moody's Investor Service, respectively, as shown in the Pricing
Grid, provided, however, that if NEES has no such debt
outstanding, the LIBOR Margin will continue to vary according to
the lowest debt rating assigned to NEP's senior secured long-term
debt as set forth above.
(2) Base Rate Borrowings - NEEI may borrow at Credit Suisse's base
rate. Such base rate borrowings will be payable quarterly in
arrears and will be calculated on the basis of a 365/366 day year.
(3) Competitive Bid Borrowings - NEEI may be able to borrow at the
rate obtained through Competitive Bids. NEEI may request
competitive bids in amounts of $10,000,000 or more. Banks may, at
the request of NEEI, but without obligation, bid competitively to
make loans at rates determined by each Bank and with maturities
requested by NEEI. The Banks' bids will be accepted by NEEI in
order of effective cost, starting with the bid at the lowest rate.
<PAGE>
The proposed Pricing Grid to the banks is as follows:
(in basis AA+/Aa1 AA/Aa2 A/A2 BBB/Baa2 BBB-/Baa3
points) or Better or Better or Better or Better or below
Facility
Fee 7.0 8.0 9.0 11.5 17.5
LIBOR
Margin 13.0 17.0 23.5 28.5 37.5
The amount of the facility available under the New Credit Agreement
reduces incrementally according to a set schedule (Revolving Facility
Availability). In addition, NEEI has the right, upon 30 days' notice, to
further reduce the unused portion of Revolving Facility Availability.
Under the New Credit Agreement, a facility fee will be payable on the
percentage amount of each Bank's obligation to make advances to NEEI under the
New Credit Agreement in accordance with the above Pricing Grid (the Facility
Fee). The Facility Fee is payable upon each Bank's commitment, irrespective
of usage, and will be calculated on the basis of the actual number of days
elapsed in a year of 360 days. The Facility Fee is payable by NEEI quarterly
in arrears.
A one-time arrangement fee of $40,000 will be payable to the Agent upon
closing of the facility.
The administration of the New Credit Agreement will be conducted by the
Agent for an annual fee of $20,000, payable upon closing of the facility and
on each anniversary thereafter. An additional charge of $750 will be payable
to the Agent for each NEEI request for a competitive bid, whether or not bids
are accepted by NEEI.
As security for the borrowings under the New Credit Agreement, NEEI
proposes to assign to the Banks its rights under the Fuel Purchase Contract
with NEP, and the Capital Funds Agreement and Loan Agreement with NEES. Upon
termination of the Fuel Purchase Contract, all borrowings will be secured by
NEEI's rights under the Capital Maintenance Agreement with NEES. As part of
the collateral assignment, appropriate amendments to these agreements will be
made (see Exhibits B-3A, B-4A, B-5A, and B-6A hereto).
D. Cost of Funds
-------------
The effective cost of funds over the life of the New Credit Agreement
will be approximately 32.5 basis points over LIBOR, based upon current NEP
senior secured long term debt ratings and excluding expenses. Under the
Existing Credit Agreement, the current effective spread over LIBOR is 5/8%,
increasing to 7/8% in the period 1996 through 1998. This clearly demonstrates
that the New Credit Agreement provides NEEI significant savings over the
Existing Credit Agreement.
Item 2. Fees, Commission and Expenses
- --------------------------------------
In addition to the fees described in Item 1, NEEI will also pay the fees
and expenses of the Agent's counsel, Messrs. King & Spalding, of New York. An
estimate of such fees will be supplied by amendment.
<PAGE>
Services incidental to the transactions described herein will be
performed by New England Power Service Company at the actual cost thereof.
New England Power Service Company is an affiliated service company operating
pursuant to Section 13 of the Act and the Commission's rules thereunder. An
estimate of such costs will be supplied by amendment.
Item 3. Applicable Statutory Provisions
- ----------------------------------------
The proposed transactions are believed to require approval of the
Commission under sections 6, 7, 9(a) and 10 of the Act.
Item 4. Regulatory Approval
- ----------------------------
With respect to the proposed transactions for which authorization is
requested, no federal or state commission or regulatory body, other than the
Commission, has jurisdiction.
Item 5. Procedure
- ------------------
It is requested that the Commission's Order with respect to this
Application/Declaration be issued on or before March 30, 1995, or as soon
thereafter as practicable.
Applicants (i) do not request a recommended decision by a hearing
officer, (ii) do not request a recommended decision by any other responsible
officer of the Commission, (iii) hereby specify that the Office of Public
Utility Regulation may assist in the preparation of the Commission's decision,
and (iv) hereby request that there be no 30-day waiting period between the
date of issuance of the Commission's Order and the date on which it is to
become effective.
Item 6. Exhibits and Financial Statements
- ------------------------------------------
Exhibits
B-1 Summary of Terms and Conditions
*B-2 Form of Revolving Credit Agreement
B-3 Capital Funds Agreement, as previously amended
*B-3A Form of Amendment to Capital Funds Agreement
B-4 Loan Agreement, as previously amended
*B-4A Form of Amendment to Loan Agreement
B-5 Fuel Purchase Contract, as previously amended
*B-5A Form of Amendment to Fuel Purchase Contract
B-6 Capital Maintenance Agreement, as previously amended
*B-6A Form of Amendment to Capital Maintenance Agreement
*F-1 Opinion of Counsel
G-1 NEEI Projected 1995 - 2002 Cash Flow
<PAGE>
G-2 NEEI Estimated Production Cycle
*H-1 Fees and Expenses of Issue
N-1 Proposed Form of Notice
Financial Statements
1-a NEEI Balance Sheet at September 30, 1994
1-b NEEI Statement of Income and Retained Earnings for twelve
months ended September 30, 1994
2-a Consolidated Balance Sheet of NEES and Subsidiaries at
September 30, 1994
2-b Statements of Consolidated Income & Retained Earnings of NEES
and Subsidiaries for twelve months ended September 30, 1994
3-a NEP Balance Sheet at September 30, 1994
3-b NEP Statement of Income for Twelve Months Ended September 30,
1994
* to be supplied by amendment.
** The proposed transaction will have no material immediate effect
on the Balance Sheet and Income Statement of NEEI; pro forma
statements are, therefore, omitted. Pro forma financial
statements for NEES have been omitted because they are not
considered necessary for the proper disposition of the proposed
transaction.
Item 7. Information as to Environmental Effects
- ------------------------------------------------
The transactions proposed by this Application/Declaration do not involve
a major Federal action significantly affecting the quality of the human
environment.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned companies have duly caused this Form U-1
Application/Declaration to be signed on their behalf, as indicated by the
undersigned officers thereunto duly authorized by such companies.
NEW ENGLAND ENERGY INCORPORATED
s/ John G. Cochrane
By:
John G. Cochrane, Treasurer
NEW ENGLAND POWER COMPANY
s/ John G. Cochrane
By:
John G. Cochrane, Assistant Treasurer
NEW ENGLAND ELECTRIC SYSTEM
s/ Michael E. Jesanis
By:
Michael E. Jesanis, Treasurer
Date: February 14, 1995
The name "New England Electric System" means the trustee or trustees for the
time being (as trustee or trustees but not personally) under an agreement and
declaration of trust dated January 2, 1926, as amended, which is hereby
referred to, and a copy of which as amended has been filed with the Secretary
of the Commonwealth. Any agreement, obligation or liability made, entered
into or incurred by or on behalf of New England Electric System binds only its
trust estate, and no shareholder, director, trustee, officer or agent thereof
assumed or shall be held to any liability therefore.
<PAGE>
EXHIBIT AND FINANCIAL STATEMENT
INDEX
EXHIBIT NO. DESCRIPTION PAGE
- ----------- ----------- ----
B-1 Summary of Terms and Conditions Filed under cover
of Form SE
B-2 Form of Revolving Credit Agreement To be filed by
amendment
B-3 Capital Funds Agreement, as Filed under cover
previously amended of Form SE
B-3A Form of Amendment to Capital Funds To be filed by
Agreement amendment
B-4 Loan Agreement, as previously Filed under cover
amended of Form SE
B-4A Form of Amendment to Loan Agreement To be filed by
amendment
B-5 Fuel Purchase Contract, as Filed under cover
previously amended of Form SE
B-5A Form of Amendment to Fuel Purchase To be filed by
Contract amendment
B-6 Capital Maintenance Agreement, Filed under cover
as previously amended of Form SE
B-6A Form of Amendment to Capital To be filed by
Maintenance Agreement amendment
F-1 Opinion of Counsel To be filed by
amendment
G-1 NEEI Projected 1995 - 2002 Cash Flow Filed herewith
G-2 NEEI Estimated Production Cycle Filed herewith
H-1 Fees and Expenses of Issue To be filed by
amendment
N-1 Proposed Form of Notice Filed herewith
<PAGE>
EXHIBIT AND FINANCIAL STATEMENT
INDEX
FINANCIAL
STATEMENT NO. DESCRIPTION PAGE
- ------------- ----------- ----
1-a NEEI Balance Sheet at September 30, Filed herewith
1994
1-b NEEI Statement of Income and Retained Filed herewith
Earnings for twelve months ended
September 30, 1994
2-a Consolidated Balance Sheet of NEES Filed herewith
and Subsidiaries at September 30, 1994
2-b Statements of Consolidated Income and Filed herewith
Retained Earnings of NEES and
Subsidiaries for twelve months ended
September 30, 1994
3-a NEP Balance Sheet at September 30, 1994 Filed herewith
3-b NEP Statement of Income for twelve Filed herewith
months ended September 30, 1994
<PAGE>
<TABLE>
Exhibit G-1
TOTAL NEEI ESTIMATED CASH FLOW
($ in millions)
<CAPTION>
SOURCES 1995 1996 1997 1998 1999 2000 2001 2002* Total
---- ---- ---- ---- ---- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Revenues $ 32 $ 34 $ 26 $ 24 $ 21 $17 $13 $ 3 $170
2 NEP Payments (Prior YR Loss) 40 42 35 22 18 17 16 13 203
3 NEES Equity 2 2 2 2 2 2 2 29** 43
---- ---- ---- ---- ---- --- --- --- ----
Total $ 74 $ 78 $ 63 $ 48 $ 41 $36 $31 $45 $416
USES
4 Exploration & Development $ 6 $ 6 $ 3 $ 5 $ 5 $ 4 $ 1 $ 1 $ 31
5 Taxes Payable 16 18 15 9 7 7 7 2 81
6 Management Fee / G&A 3 3 3 3 3 3 2 0 20
7 Bank Interest 13 10 8 5 5 3 3 1 48
8 Production Expense 4 4 3 3 2 2 1 1 20
---- ---- ---- ---- ---- --- --- --- ----
Total $ 42 $ 41 $ 32 $ 25 $ 22 $19 $14 $ 5 $200
9 Available for Debt Payment $ 32 $ 37 $ 31 $ 23 $ 19 $17 $17 $40 $216
10 Bank Debt at Year-End $184 $147 $116 $ 93 $ 74 $57 $40 $ 0
11 Year-End Commitment Level $225 $195 $165 $135 $105 $75 $45 $ 0
____________________
<FN>
* Adjusted to maturity date 4/30/02.
**$29 million of NEES equity contributed to NEEI by 4/30/02.
</TABLE>
<PAGE>
Exhibit G-2
NEEI PRODUCTION ESTIMATE
(1995 through 2004)
------------------------
GAS GAS OIL TOTAL
YEAR MCF MOBE MBBL MBOE
- ---- --- ---- ---- -----
1995 17,112 2,852 298 3,150
1996 16,674 2,779 273 3,052
1997 12,198 2,033 211 2,244
1998 10,284 1,714 172 1,886
1999 8,514 1,419 138 1,557
2000 6,618 1,103 102 1,205
2001 5,028 838 73 911
2002 3,660 610 68 678
2003 2,682 447 0 447
2004 1,848 308 0 308
------ ------ ----- ------
Total 84,618 14,103 1,335 15,438
<PAGE>
Exhibit N-1
PROPOSED FORM OF NOTICE
New England Electric System (NEES), a registered holding
company, its fuel subsidiary, New England Energy Incorporated
(NEEI) and its generation and transmission subsidiary New England
Power Company (NEP), 25 Research Drive, Westborough, MA 01582,
have filed an application pursuant to Sections 6, 7, 9(a), and 10
of the Act.
NEEI proposes to refinance its existing bank debt by
entering into financing arrangements with a syndicate of banks
led by Credit Suisse, as Agent (New Credit Agreement). The New
Credit Agreement would provide for a revolving facility of $225
million which would reduce incrementally on each anniversary of
the transaction closing date. The New Credit Agreement's term
will be seven years with an option for a one year extension
beyond that term.
The security for the borrowings would be an assignment by
NEEI to the banks of its rights under the Fuel Purchase Contract,
the Capital Funds Agreement, the Loan Agreement, and the Capital
Maintenance Agreement. In connection with the New Credit
Agreement, Applicants also propose to amend these contracts. All
of these contracts have previously been approved by the
Commission.
<PAGE>
Financial Statement 1-a
NEW ENGLAND ENERGY INCORPORATED
Balance Sheet
At September 30, 1994
(Unaudited)
ASSETS
------
(In Thousands)
Current assets:
Cash $ 33
Temporary cash investments - affiliated companies 4,075
Accounts receivable from affiliates 48,726
Other current assets 2,105
----------
Total current assets 54,939
----------
Proved oil and gas properties, at full cost 1,240,098
Unproved properties 1,464
----------
1,241,562
Less accumulated provision for amortization 951,872
----------
Net oil and gas properties 289,690
----------
$ 344,629
==========
LIABILITIES AND PARENT COMPANY'S INVESTMENT
--------------------------------------------
Current liabilities:
Accounts payable (including $108,000 to affiliates) $ 2,321
Other current liabilities 1,148
----------
Total current liabilities 3,469
----------
Deferred income taxes 107,927
Deferred credits 6,631
Notes payable to banks under credit agreement 230,000
Parent company's investment:
Common stock, par value $1 per share (authorized
250,000 shares; outstanding 2,500 shares) 2
Paid-in capital 248
Accumulated deficit (21,377)
Subordinated notes payable to parent 17,729
----------
Total parent company's investment (3,398)
----------
$ 344,629
==========
<PAGE>
Financial Statement 1-b
NEW ENGLAND ENERGY INCORPORATED
Statement of Loss and Accumulated Deficit
Twelve Months Ended September 30, 1994
(Unaudited)
(In Thousands)
Operating revenue:
Sales to non-affiliates:
Oil $ 5,922
Gas 37,071
Accrued revenue due from an affiliate 45,607
----------
Total operating revenue 88,600
Operating expenses:
Amortization 85,682
Production costs 5,177
General and administrative expense 7
----------
Total operating expenses 90,866
----------
Operating loss (2,266)
Other income (expense):
Interest income 16
Interest expense (1,637)
----------
Loss before income taxes (3,887)
Income tax benefit 2,790
----------
Net loss (1,097)
Accumulated deficit at beginning of year (20,280)
----------
Accumulated deficit at end of year $ (21,377)
==========
<PAGE>
Financial Statement 2-a
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Consolidated Balance Sheet
At Sepember 30, 1994
(Unaudited)
ASSETS
------
(In Thousands)
Utility plant, at original cost $4,846,064
Less accumulated provisions for depreciation and amortization 1,595,413
----------
3,250,651
Net investment in Seabrook 1 under rate settlement 55,206
Construction work in progress 348,988
----------
Net utility plant 3,654,845
----------
Oil and gas properties, at full cost 1,241,562
Less accumulated provision for amortization 951,872
----------
Net oil and gas properties 289,690
----------
Investments:
Nuclear power companies, at equity 47,041
Other subsidiaries, at equity 42,354
Other investments, at cost 48,602
----------
Total investments 137,997
----------
Current assets:
Cash 4,033
Accounts receivable, less reserves of $17,354,000 265,879
Unbilled revenues 48,875
Fuel, materials and supplies, at average cost 86,447
Prepaid and other current assets 64,961
----------
Total current assets 470,195
----------
Accrued Yankee Atomic costs 132,920
Deferred charges and other assets 298,981
----------
$4,984,628
==========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Outstanding - 64,969,652 shares $ 64,970
Paid-in capital 736,823
Retained earnings 778,685
----------
Total common share equity 1,580,478
Minority interests in consolidated subsidiaries 55,254
Cumulative preferred stock of subsidiaries 147,016
Long-term debt 1,512,499
----------
Total capitalization 3,295,247
----------
Current liabilities:
Long-term debt due within one year 47,920
Short-term debt 147,475
Accounts payable 137,392
Accrued taxes 24,428
Accrued interest 19,920
Dividends payable 35,172
Other current liabilities 133,214
----------
Total current liabilities 545,521
----------
Deferred federal and state income taxes 716,723
Unamortized investment tax credits 97,415
Accrued Yankee Atomic costs 132,920
Other reserves and deferred credits 196,802
----------
$4,984,628
==========
<PAGE>
Financial Statement 2-b
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Statement of Consolidated Income
Twelve Months Ended September 30, 1994
(Unaudited)
(In Thousands)
Operating revenue $2,245,325
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Operating expenses:
Fuel for generation 232,616
Purchased electric energy 503,013
Other operation 466,638
Maintenance 145,946
Depreciation and amortization 303,663
Taxes, other than income taxes 126,298
Income taxes 139,551
----------
Total operating expenses 1,917,725
----------
Operating income 327,600
Other income:
Allowance for equity funds used during construction 8,597
Equity in income of generating companies 10,925
Other income (expense) - net (5,063)
----------
Operating and other income 342,059
----------
Interest:
Interest on long-term debt 93,193
Other interest 15,052
Allowance for borrowed funds used during
construction (6,198)
----------
Total interest 102,047
----------
Income after interest 240,012
Preferred dividends of subsidiaries 8,819
Minority interests 7,525
----------
Net income $ 223,668
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Statement of Consolidated Retained Earnings
Retained earnings at beginning of period $ 703,314
Net income 223,668
Dividends declared on common shares (147,481)
Premium on redemption of preferred stock of subsidiaries (816)
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Retained earnings at end of period $ 778,685
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Financial Statement 3-a
NEW ENGLAND POWER COMPANY
Balance Sheet
At September 30, 1994
(Unaudited)
ASSETS
------
(In Thousands)
Utility plant, at original cost $2,503,384
Less accumulated provisions for depreciation
and amortization 992,656
----------
1,510,728
Net investment in Seabrook 1 under rate settlement 55,206
Construction work in progress 285,727
----------
Net utility plant 1,851,661
----------
Investments:
Nuclear power companies, at equity 47,041
Nonutility property and other investments, at cost 20,245
----------
Total investments 67,286
----------
Current assets:
Cash 1,227
Accounts receivable, principally from sales of
electric energy:
Affiliated companies 206,052
Others 67,610
Fuel, materials and supplies, at average cost 63,055
Prepaid and other current assets 27,400
----------
Total current assets 365,344
----------
Accrued Yankee Atomic costs 132,920
Deferred charges and other assets 165,966
----------
$2,583,177
==========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common stock, par value $20 per share,
authorized and outstanding 6,449,896 shares $ 128,998
Premiums on capital stocks 86,829
Other paid-in capital 288,000
Retained earnings 383,299
----------
Total common equity 887,126
Cumulative preferred stock, par value $100 per share 60,516
Long-term debt 672,541
----------
Total capitalization 1,620,183
----------
Current liabilities:
Short-term debt (including $2,500,000 to affiliates) 92,405
Accounts payable (including $66,613,000 to affiliates) 156,326
Accrued liabilities:
Taxes 25,283
Interest 8,541
Other accrued expenses 12,021
Dividends payable 40,312
----------
Total current liabilities 334,888
----------
Deferred federal and state income taxes 349,452
Unamortized investment tax credits 61,192
Accrued Yankee Atomic costs 132,920
Other reserves and deferred credits 84,542
----------
$2,583,177
==========
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Financial Statement 3-b
NEW ENGLAND POWER COMPANY
Statement of Income
Twelve Months Ended September 30, 1994
(Unaudited)
(In Thousands)
Operating revenue, principally from affiliates $1,550,523
----------
Operating expenses:
Fuel for generation 277,986
Purchased electric energy 502,452
Other operation 191,765
Maintenance 106,386
Depreciation and amortization 135,733
Taxes, other than income taxes 54,553
Income taxes 98,961
----------
Total operating expenses 1,367,836
----------
Operating income 182,687
Other income:
Allowance for equity funds used during construction 7,387
Equity in income of nuclear power companies 5,899
Other income (expense) - net (2,868)
----------
Operating and other income 193,105
----------
Interest:
Interest on long-term debt 38,937
Other interest 6,077
Allowance for borrowed funds used during
construction - credit (4,459)
----------
Total interest 40,555
----------
Net income $ 152,550
==========
Statement of Retained Earnings
Retained earnings at beginning of period $ 334,170
Net income 152,550
Dividends declared on cumulative preferred stock (3,448)
Dividends declared on common stock (99,973)
----------
Retained earnings at end of period $ 383,299
==========
