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File No.: 70-7950
CERTIFICATE OF NOTIFICATION
(Rule 24)
SECURITIES AND EXCHANGE COMMISSION
BY
NEW ENGLAND ELECTRIC RESOURCES, INC. (NEERI)
In accordance with the order of the Securities and Exchange
Commission dated September 4, 1992, the following is a report
for the third quarter of 1995:
1. NEERI is a Massachusetts corporation which was formed
in January 1992. NEERI was not capitalized until
October 13, 1992 when one thousand shares of NEERI
common stock were issued to New England Electric
System (NEES).
To assist Nantucket Electric Company (NEC) in meeting
its short-term needs for reliable energy, NEERI
provided materials, delivery, installation,
interconnection and start-up testing services for a
fully automated two unit diesel driven electric
generating plant at the existing NEC Airport
Generating Station. The work took place at NEC and
New England Electric facilities pursuant to a letter
agreement and has been completed. The total
compensation under the agreement was recognized during
the third quarter of 1994. The agreement provides for
billing over a three year period at $25,070 per month
effective the month immediately following the notice
to proceed by NEC. As of September 30, 1995, $501,400
had not yet been billed in accordance with the
agreement ($275,770 included in Accounts Receivable
and $225,630 included in Deferred Charges and Other
Assets).
In addition, NEERI has entered into a consulting
services agreement with NEC to evaluate and refine
their Demand Side Management Program. The consulting
took place at NEES and NEC facilities. $1,125.00 was
recognized during the third quarter.
NEERI undertook consulting activities for the
Hungarian Electricity Board pursuant to Agreements
with the Hungarian Electricity Board and the United
States Energy Association. The consulting activities
took place at New England Electric facilities and in
Hungary. $4,048.14 was recognized during the third
quarter.
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NEERI entered into a consulting services agreement
with REBIS, Inc. to provide consulting services in
Walnut Creek, California and at New England Electric
facilities. The agreement, which shall be in effect
until the end of 1995, provides for monthly billing.
No compensation was recognized during the third
quarter.
NEERI entered into a consulting engineering services
agreement with International Resources Group Ltd. to
write a technical paper on independent transmission
projects. The consulting took place at New England
Electric facilities. The agreement, which expired in
April, 1995, provided for payment upon completion of
the work. $7,000.00 was recognized during the third
quarter.
NEERI entered into a consulting services agreement
with an entity in the eastern part of the U.S. to
gather information on a multi-terminal transmission
interconnection in the northeastern part of the U.S.
The consulting took place at New England Electric
facilities. The agreement, which shall be in effect
until December 31, 1995, provides for monthly billing.
No compensation was recognized during the third
quarter.
NEERI entered into a consulting services agreement
with a non-affiliated electric utility in the Pacific
Rim to review a management plan and to perform a
study. The consulting took place in the Pacific Rim
and at New England Electric facilities. The agreement
provides for monthly billing. No compensation was
recognized during the third quarter.
NEERI entered into a consulting arrangement pursuant
to a letter agreement with a company in western Europe
to assist on a feasibility study for a transmission
interconnection for a non-affiliated electric utility
in western Europe. The consulting is taking place in
western Europe and at New England Electric facilities.
The arrangement, which shall be in effect until the
work is completed (completion expected in the fourth
quarter of 1995), provides for payment upon completion
of the work. No compensation was recognized during
the third quarter.
NEERI entered into a consulting services agreement
with Hagler Bailly Consulting, Inc. to host an all-day
meeting on design and implementation of utility Demand
Side Management Programs in the U.S. This agreement
expired in September, 1995. $3,000.00 was recognized
during the third quarter.
NEERI entered into a consulting services agreement
with Technology Assessment Group, Inc. (TAG) to
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provide consulting services in connection with testing
and analysis of hydraulic turbine/generators at
locations requested by TAG. The agreement, which
shall be in effect through December 31, 1996, provides
for monthly billing. $4,500.24 was recognized during
the third quarter.
2. As of September 30, 1995, NEES had purchased 1,000
shares of NEERI common stock and made subordinated
loans totaling $2,973,999 to NEERI.
3. As of September 30, 1995, NEERI employed no permanent
personnel.
4. As of September 30, 1995, NEERI had not purchased or
received from associate companies of NEES any
intellectual property.
5. Attached in Exhibits A through C are a balance sheet,
twelve months ending income statement, and statement
of cash flow for NEERI.
On May 23, 1995, NEERI invested $999,999 in Separation
Technologies, Inc. (STI). This investment is in the
form of 153,846 shares of 6% cumulative convertible
preferred stock.
NEERI has expended $13,335 during the third quarter in
research and development activities relating to an
environmental technology.
NEERI has expended approximately $230,499 during the
third quarter in connection with preliminary research
and development activities relating to potential
investments in exempt wholesale generators and foreign
utility companies. $89,186 was spent for potential
generation investments and $141,313 for potential
transmission investments.
NEERI had invested $250,000 in Quality Power Systems,
Inc. (QPS). The investment is in the form of a
debenture due June 1, 2004, which may, at NEERI's
option, be converted into common stock of QPS. The
debenture provides for quarterly interest payments
after June 1, 1994, with the first payment due
September 1, 1994. At the time of this filing no
payment had been received. Due to the uncertainty
involved in the payment of interest and repayment of
principal, NEERI had written off the investment in the
fourth quarter of 1994. QPS is seeking additional
financing to bring its product to market. Although
NEERI has authority to invest up to an additional
$100,000 in QPS, NEERI has decided not to make an
additional investment at this time.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused
this certificate of notification (Commission's File No. 70-7950)
to be signed on its behalf by the undersigned officer thereunto
duly authorized.
NEW ENGLAND ELECTRIC RESOURCES, INC.
s/ John G. Cochrane
By: _________________________________
John G. Cochrane
Treasurer
Date: November 13, 1995
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
A Balance Sheet at September 30, 1995 Filed
(Unaudited, subject to adjustment) herewith
B Statement of Income and Retained Filed
Deficit for twelve months ended herewith
September 30, 1995 (Unaudited,
subject to adjustment)
C Statement of Cash Flows for twelve Filed
months ended September 30, 1995 herewith
(Unaudited, subject to adjustment)
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Exhibit A
NEW ENGLAND ELECTRIC RESOURCES, INC.
Balance Sheet
September 30, 1995
(Unaudited, Subject to Adjustment)
ASSETS
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Current assets:
Cash $ 170,615
Accounts receivable 299,521
Tax benefit receivable 358,452
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Total current assets $ 828,588
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Investment in Separation Technologies, Inc., at cost 999,999
Deferred charges and other assets 225,630
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Total other assets $ 1,225,629
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Total assets $ 2,054,217
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LIABILITIES AND PARENT COMPANY'S INVESTMENT
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Current liabilities:
Accounts payable to associated companies $ 35,841
Accounts payable 14,753
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Total current liabilities $ 50,594
Accumulated Deferred Income Taxes 299,400
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Total liabilities $ 349,994
Parent company's investment:
Common stock, par value $1 per share 1,000
Subordinated notes payable to parent 2,973,999
Paid-in capital 0
Retained deficit parent (1,270,776)
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Total parent company's investment $ 1,704,223
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Total liabilities and parent company's investment $ 2,054,217
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Exhibit B
NEW ENGLAND ELECTRIC RESOURCES, INC.
Statement of Income and Retained Deficit
For the Twelve Months Ended September 30, 1995
(Unaudited, Subject to Adjustment)
INCOME
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Services rendered to nonassociated companies $ 110,235
Miscellaneous income or loss (250,000)
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TOTAL INCOME $ (139,765)
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EXPENSE
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Outside services employed $ 1,559,227
Income taxes (673,659)
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TOTAL EXPENSE $ 885,568
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NET INCOME OR (LOSS) $(1,025,333)
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Retained earnings/(deficit) at beginning of period $ (245,443)
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Retained earnings/(deficit) at end of period $(1,270,776)
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Exhibit C
NEW ENGLAND ELECTRIC RESOURCES, INC.
Statement of Cash Flows
For the Twelve Months Ended September 30, 1995
(Unaudited, Subject to Adjustment)
Operating Activities:
Net income/(loss) $(1,025,333)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Write-off of investment in
Quality Power Systems, Inc. 250,000
Deferred income taxes 299,400
(Increase)/decrease in tax benefit receivable (335,417)
(Increase)/decrease in accounts receivable 47,718
Increase/(decrease) in accounts payable (121,243)
Increase/(decrease) in accrued taxes (3,157)
(Increase)/decrease in deferred charges and
other assets 300,840
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Net cash provided by operating activities $ (587,192)
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Investing Activities:
Investment in Separation Technologies, Inc.,
at cost $ (999,999)
Financing Activities:
Subordinated notes payable to parent-issues $ 1,724,999
Proceeds from common stock issued 0
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Net cash used in financing activities $ 1,724,999
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Net increase/(decrease) in cash and cash
equivalents 137,808
Cash and cash equivalents at beginning of period 32,807
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Cash and cash equivalents at end of period $ 170,615
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