<PAGE>
File No. 70-8819
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, DC 20549
AMENDMENT NO. 1
TO
FORM U-1
APPLICATION/DECLARATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NEW ENGLAND ELECTRIC SYSTEM
(Name of company 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 of applicant)
Michael E. Jesanis Kirk L. Ramsauer
Treasurer Associate General Counsel
25 Research Drive 25 Research Drive
Westborough, MA 01582 Westborough, MA 01582
(Names and address of agents for service)
<PAGE>
Item 1, Description of Proposed Transactions, is hereby
amended and restated in its entirety as follows:
"A. NEES Transmission Services, Inc.: Purpose and Activities
------------------------------------------------------------
In response to the Federal Energy Regulatory Commission
("FERC") Notice of Proposed Rulemaking in Docket NO. RM95-8-000
("NOPR"), on March 13, 1996, NEES, on behalf of its proposed new
subsidiary to be formed and named NEES Transmission Services, Inc.
("NEES Trans"), and NEP submitted to FERC wholesale transmission
tariffs and related agreements. (See Exhibit D.) By this FERC
filing and the Transmission and Distribution Support Agreement
(Exhibit J hereto) which relates to the FERC jurisdictional
tariff, NEP and the Retail Companies proposed to turn operational
control of their transmission facilities over to NEES Trans. On
April 24, 1996, FERC issued its Order No. 888 Final Rule in Docket
Nos. RM95-8-000 and RM94-7-001 ("Order 888") setting forth its
requirements for open and comparable transmission access.
In the NOPR and Order 888, the FERC stresses several
principles that will govern the availability of transmission
services in the future. First, the services must be open to all
providers of electric power. Second, the treatment of all parties
who will seek to take transmission service must be comparable and
non-discriminatory. Third, the transmission portion of the
business must be functionally unbundled from the generation
business, such that all energy suppliers receive transmission
service on the terms and conditions comparable to those upon which
a supplier affiliated with the transmitting company receives
service for new transactions. While the FERC does not order the
corporate unbundling of an integrated company, it acknowledges
that such a move would further the principles enumerated above.
Finally, the transmission provider must make available on a
comparable basis (either through its control area operator or
through its own operations) FERC-specified ancillary services
necessary to maintain system reliability and integrity.
In response to the NOPR and Order 888, NEP proposes to
contractually grant NEES Trans authority and operational control
over the use of NEP's transmission facilities and entitlements in
transmission facilities owned by NEP or subject to NEP's
contractual control. NEP will continue to hold title to and
maintain the transmission facilities, but the scheduling and
performance of maintenance will be at the direction of NEES Trans.
NEES Trans will furthermore serve as the interface between
wholesale electric customers and the transmission system as the
transmission service provider. The contractual rights granted to
NEES Trans would, however, be subject to the rights of NEP's
mortgage holders under its General and Refunding Mortgage
Indenture and Deed of Trust . The transmission facilities to
which NEP is granting rights to NEES Trans include NEP's
contractual rights to use certain transmission
<PAGE>
facilities owned by others. NEES Trans intends to conform its use
to the rights provided under each contract; in other words,
contractual limitations on facilities now used by NEP will be
observed by NEES Trans. To the extent that such rights and
obligations are contained in contracts with other rights and
obligations (e.g. NEP's power purchases from an interconnecting
party), NEP is assigning to NEES Trans only the transmission
rights and obligations of those contracts. NEP will seek any
necessary consents to such assignments. The Transmission and
Distribution Support Agreement also grants NEES Trans use of the
distribution systems of Mass. Electric, Narragansett and Granite
State as they may be needed to support wholesale transactions.
Under the terms of the Transmission and Distribution Support
Agreement, NEES Trans agrees to reimburse each retail affiliate
for the use of its facilities at its cost of service. It is not
proposed at this time to transfer ownership of transmission assets
to NEES Trans. If the decision were made in the future to transfer
transmission assets, such transfer would be the subject of
separate filings with the Commission and other state and federal
regulatory bodies.
NEES Trans will have the responsibility of planning the
expansion of the transmission system and will notify NEP of the
need for additions to the system. NEES Trans will have the
obligation to expand transmission capacity as needed, to arrange
for its affiliates to license, engineer and construct the
necessary additions, and to provide operational services necessary
to maintain transmission system reliability and integrity. These
operational services are bundled with transmission and, therefore,
are not prohibited by Section 13 of the Act.
The net effect of the Transmission and Distribution Support
Agreement is that NEP transfers all authority and operational
control over the use, operation, maintenance and expansion of the
transmission system to NEES Trans. The three retail affiliates,
all parties as well, transfer to NEES Trans certain limited
authority and control over their systems to the extent they are
used for FERC jurisdictional wholesale transactions. NEP and the
three retails will become NEES Trans customers and receive
transmission service under the same terms and conditions as any
other customer, whether affiliated or not. The Transmission and
Distribution Support Agreement provides for a one-year notice of
termination by any party thereto.
By turning over operational control of transmission
facilities to NEES Trans as set forth above and committing to take
service over those facilities under NEES Trans' tariffs, NEP and
NEES, through its formation of NEES Trans, propose to implement
the FERC's comparability objectives for open access wholesale
transmission. Although the NOPR does not require corporate
unbundling, NEES and NEP intend to take this step as part of an
overall approach to ensuring the provision of wholesale
<PAGE>
transmission service on comparable terms to all users of the
transmission system, including NEES Trans' affiliates, and to
promote ease of transmission access. Establishing NEES Trans as a
separate transmission subsidiary of NEES and using the
Transmission and Distribution Support Agreement to provide the
operational unbundling of the transmission system should advance
the ultimate goals of the NOPR. NEES Trans' control over NEP's
transmission facilities formalizes the unbundling of the
transmission and generation functions and provides the marketplace
with assurance that NEP will not be favored in its access to the
transmission facilities. NEES believes that turning over
operational control of transmission facilities to NEES Trans and
committing to take service over these facilities under the
proposed tariffs will assure the provision of wholesale
transmission services on comparable terms to all users of the
transmission system. The unbundling of wholesale transmission and
generation services that the proposed FERC tariffs implement is
also a critical underpinning for Choice: New England, the NEES
companies' plan to allow all customers of electric utilities in
Massachusetts, Rhode Island, and New Hampshire to choose their
power supplier beginning in 1998. Choice: New England is subject
to approval by state and federal regulators and the timetable for
their consideration is uncertain. NEES has filed an
Application/Declaration (File No. 70-8803) requesting authority to
form and finance one or more marketing companies as a step toward
implementation of Choice: New England; this filing also requests
authorization for marketing affiliates to participate in retail
access pilot programs in New Hampshire and Massachusetts. In
light of the foregoing, NEES believes that the requirements of
Section 10 of the Act are met. In particular, given the announced
objectives of FERC and impending deregulation in its operating
subsidiaries' service territories, NEES believes that the
formation of NEES Trans as set forth herein represents an economic
and efficient means of developing the NEES integrated public
utility system consistent with the evolving regulatory regime and
the public interest (see Section 10(c)(2) of the Act). Further,
the formation and activities of NEES Trans as outlined herein
represent a necessary and appropriate means of modifying the
corporate structure of the NEES system to address FERC
requirements and the competitive marketplace in compliance with
the requirements of Sections 10(c)(1) and 11 of the Act.
The NEP transmission assets over which NEES Trans will exert
operational control are subject to the jurisdiction of FERC,
exclusive of any state jurisdiction. NEES Trans would have
operational control only of NEP transmission assets covered by
NEP's approved FERC tariffs. FERC has determined that it has
exclusive jurisdiction over unbundled retail transmission in
interstate commerce by public utilities, up to the point of local
distribution (see Order 888, page 401). In some instances,
facilities may be used for both FERC- and state-jurisdictional
transactions. NEES Trans will have operational control of those
<PAGE>
assets only to the extent necessary to accomplish a FERC
jurisdictional transmission transaction. Therefore, operation by
NEES Trans of these assets would not be subject to state
jurisdiction. States affected by the NOPR and Order 888 have the
opportunity to intervene, and in some cases have intervened, in
these proceedings at the FERC level to protect their interests
with respect to operational and FERC ratemaking concerns. It is
the position of NEP and NEES that the SEC may defer to the FERC
findings in the NOPR and Order 888. In the FERC filing, NEES and
NEP requested that the effective date of the FERC tariffs be as of
the first day of the calendar month following the later of (i) 60
days from the date of the FERC filing or (ii) five business days
following SEC approval of forming and financing NEES Trans.
NEES Trans will serve both associate and non-associate
companies. A non-associate company will pay the same tariff as an
associate company In the event that NEES Trans offers a discount
to an associate company, it must offer the same discount to all
non-associate companies which it serves. NEES Trans will supply
transmission services to generators of electricity and to
suppliers of electricity, but will not make retail sales of
electricity.
B. Formation and Financing of NEES Trans
----------------------------------------
NEES proposes to form NEES Trans for the limited purpose of
providing transmission and related services. When formed, NEES
Trans would be a public utility within the meaning of Section
2(a)(3) of the Act. NEES proposes to provide initial financing for
NEES Trans by the purchase of one thousand shares of common stock,
par value $1.00 per share, for a total purchase price of $1,000.
NEES then proposes to make subsequent capital contributions and/or
loans to NEES Trans from time to time, provided that such NEES
financing shall not be in excess of $10 million in the aggregate
outstanding at any one time. Any such loans will be in the form of
non-interest bearing subordinated notes payable in twenty years or
less from the date of issue (see Exhibit B hereto). NEES Trans may
prepay any or all of the outstanding notes hereunder, in whole or
in part, at any time and from time to time without premium or
penalty. NEES shall only make such loans provided: (a) there
shall be in full force and effect appropriate orders of all
regulatory authorities having jurisdiction in the premises; (b)
the making of such loan shall not contravene any provision of law
or any provision of the certificate of incorporation or by-laws of
NEES Trans or any agreement binding upon NEES Trans; and (c) the
making of such loan shall not contravene any provision of law or
any provision of the Agreement and Declaration of Trust of NEES.
Subsequent capital contributions or open account advances without
interest, loans, or extensions of credit, from NEES to NEES Trans
in accordance with the terms of Rule 45 of the Act, are exempt from
the requirement of authorization by the Commission. It is proposed
<PAGE>
that the above investments be authorized through December 31,
1999.
C. Personnel of NEES Trans
---------------------------
Staffing is expected to begin with a small group of employees
for NEES Trans. Technical and support staff needed for a
particular project could be assigned for the duration of that
project from NEP, NEPSCO, and the Retail Companies, and the
assigned employees would continue to be employees of NEP, NEPSCO,
and the Retail Companies, not to exceed in any one year 2% of the
total employees of NEP, NEPSCO, and the Retail Companies. All
costs associated with such staff (including compensation,
overheads, and benefits) would be fully reimbursed by NEES Trans
in accordance with Rules 90 and 91 of the Act. Reimbursements for
these costs will be on a thirty-day cycle basis.
D. Money Pool and Short-term Borrowing
--------------------------------------
NEES Trans seeks short-term borrowing authority through
October 31, 1997, including the authority to borrow and lend money
in the NEES Money Pool (approved by the Commission in its File No.
70- 7765). NEES Trans seeks $15,000,000 of borrowing authority,
such authority to be inclusive of borrowings from both the NEES
Money Pool and third parties.
The proceeds from the proposed borrowings are to be used (i)
to pay then outstanding notes initially issued to banks and/or
borrowings from the Money Pool, and (ii) for other corporate
purposes relating to ordinary business operations, including
working capital and funds to cover timing differences in payments
received and payments due. As NEES Trans is a new corporation, it
is not possible to provide a meaningful analysis of the source and
application of funds through October 31, 1997.
1. Borrowings from the Money Pool
NEES Trans proposes to reduce its need for outside borrowing
authority through the use of the Money Pool. Under the Money Pool,
surplus funds that may be available from day to day in the
treasuries of NEES and its participating subsidiaries (File No.
70-8679) are used to make loans to borrowing companies within the
NEES system in need of short-term funds. The rate will be 1.08
times the monthly average of the rate for high grade 30-day
commercial paper sold through dealers by major corporations as
published in the "Wall Street Journal." Although there are no
stated maturities, the loans made by the Money Pool are payable on
demand, and may be prepaid by the borrower without penalty.
Borrowings may, but need not be, evidenced by notes. Borrowings
will be available first to the wholly owned subsidiaries of NEES
<PAGE>
(the Group I Borrowers). Thereafter, if the Money Pool still has
additional funds, those will be available to the non-wholly owned
subsidiaries of NEES (the Group II Borrowers) before external
investments are made. All funds borrowed by the Group II
Borrowers will be used for their own internal financing and will
not be loaned to stockholders. Each member determines each day,
on the basis of cash flow projections, the amount of surplus funds
it has available for contribution to the Money Pool. The surplus
funds are transferred to an account of NEPSCO, which administers
and maintains as agent the Money Pool for the member companies.
The proposed amended terms of the Money Pool, reflecting the
addition of NEES Trans, are shown in Exhibit K.
2. Borrowings from Banks
The proposed borrowings from banks will be evidenced by notes
maturing in less than one year from the date of issuance. NEES
Trans will negotiate with the banks the interest costs of such
borrowings. NEES Trans will pay fees to the banks in lieu of
compensating balance arrangements. The effective interest cost of
borrowings from a bank will not exceed the greater of the bank's
base or prime lending rate, or the rate published in the "Wall
Street Journal," as the high federal funds rate, plus, in either
case, one percent. Based on the current base lending rate of 8.75%
and an equivalent or lower high federal funds rate, the effective
interest costs of such a borrowing today would not exceed 9.75%
per annum.
Certain of such borrowings may be without prepayment
privileges. Payment of any short-term promissory notes prior to
maturity will be made on the basis most favorable to NEES Trans,
taking into account fixed maturities, interest rates, and any
other relevant financial considerations.
3. Filing of Certificates of Notification
Within 45 days after the end of each calendar quarter, NEES
Trans will file a Certificate of Notification covering the
transactions effected pursuant to the authority requested herein
during such quarter. Such certificate will show the dates and
amounts of all new money borrowings, the names of the lenders, the
maximum concurrent amount of notes outstanding to the banks, the
Money Pool, the aggregate total outstanding at any one time, and
the aggregate total outstanding at the end of such quarter. Each
certificate will include a statement of whether any of the funds
borrowed were paid by a subsidiary company to NEES through
dividends for the purpose of NEES acquiring an interest in an
exempt wholesale generator or foreign utility company. The amount
of such dividend payment must be given. The final certificate of
notification will be accompanied by the required past-tense
opinion of counsel. If the same lines were maintained over the
period of the requested authority, the total of the above fees
would be approximately $50,000.
<PAGE>
E. Compliance with Rule 53
--------------------------
Neither NEES nor any subsidiary currently has an ownership
interest in an exempt wholesale generator ("EWG") as defined in
Section 32 of the Act or a foreign utility company ("FUCO") as
defined in Section 33 of the Act. Additionally, neither NEES nor
any subsidiary is a party to, or has any rights under, a service,
sales, or construction agreement with an EWG or FUCO. By its Order
dated April 15, 1996 (HCAR 35-26504), the Commission has
authorized EWG and FUCO acquisitions and financings by NEES and/or
NEERI as set forth in their Application/Declaration in File No.
70-8783. In the event that the total amount of authority
requested in the above-referenced Application/Declaration (File
No. 70-8783) is invested in connection with EWGs and FUCOs, NEES'
'aggregate investment' (determined in accordance with Rule
53(a)(1)(i)) in EWGs and FUCOs would not exceed 50% of NEES'
'consolidated retained earnings' (as defined in Rule 53(a)(1)(ii))
in compliance with the provisions set forth in Rule 53 under the
Act. NEES and its subsidiaries shall comply with the requirements
of Rules 53 and 54 of the Act in connection with EWG and FUCO
acquisitions and financings. No funds or borrowings requested in
this filing will be used by NEES, NEERI, NEES Trans, or any
associated company to invest in EWGs and/or FUCOs."
Item 3, Applicable Statutory Provisions, is hereby amended and
restated in its entirety as follows:
"The sections of the Act and rules or exemptions thereunder
that are believed to be applicable to the transactions are:
Sections 6(a), 7, 9(a), 10, 11, 12, and 13, and Rules 45, 52, 90
and 91 all relating to the authority for NEES to undertake the
transactions proposed herein.
The proposed Money Pool and Short-term Borrowing
authorization is subject to the following provisions:
(1) The issuance of notes by NEES Trans to banks: Sections
6(a) and 7 of the Act.
(2) Borrowings from the Money Pool: Sections 6(a), 7, 9(a),
10, and 12 of the Act and Rules 43 and 45.
(3) Loans to the Money Pool: Section 9(a), 10, and 12 of the
Act; and exempted from Rule 45(a) by subparagraph
(b)(1) thereof.
(4) Investments by the Money Pool: Section 9(a), 10, and 12
of the Act.
(5) The payment of indebtedness is exempted from Sections
9(a) and 12 and Rule 42(a) by subparagraph (b) (2) of
the Rule."
<PAGE>
Item 6 is hereby amended by supplying the following exhibits and
financial statements:
(a) Exhibits
G-1 Financial Data Schedule for NEES (Parent Company
Only)
G-2 Financial Data Schedule for NEES (Consolidated)
(b) Financial Statements
1-A Balance Sheet of NEES at March 31, 1996, Actual
(Parent Company Only) (Pro Forma not included
since formation of new company)
1-B Statement of Income and Retained Earnings for
NEES for twelve months ended March 31, 1996,
Actual (Parent Company Only) (Pro Forma not
included since formation of new company)
2-A Consolidated Balance Sheet of NEES at March 31,
1996, Actual (Pro Forma not included since
formation of new company)
2-B Statement of Consolidated Income and
Consolidated Retained Earnings for NEES for
twelve months ended March 31, 1996, Actual (Pro
Forma not included since formation of new
company)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
Amendment No. 1 to its Application/Declaration on Form U-1 to be
signed on its behalf, as indicated by the undersigned officer
thereunto duly authorized.
NEW ENGLAND ELECTRIC SYSTEM
s/Michael E. Jesanis
_______________________________
Michael E. Jesanis, Treasurer
Dated: May 21, 1996
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 of Massachusetts. 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 assumes
or shall be held to any liability therefore.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
G-1 Financial Data Schedule for Filed
NEES (Parent Company only) herewith
G-2 Financial Data Schedule Filed
for NEES (Consolidated) herewith
Financial
Statement No. Description Page
- ------------- ----------- ----
1-A Balance Sheet of NEES at March 31, Filed
1996, Actual (Parent Company only) herewith
(Pro Forma not included since
formation of new company)
1-B Statement of Income and Retained Filed
Earnings for NEES for twelve months herewith
ended March 31, 1996, Actual
(Parent Company only) (Pro Forma
not included since formation of
new company)
2-A Consolidated Balance Sheet of NEES Filed
at March 31, 1996, Actual (Pro herewith
Forma not included since formation
of new company)
2-B Statement of Consolidated Income Filed
and Consolidated Retained Earnings herewith
for NEES for twelve months ended
March 31, 1996, Actual (Pro
Forma not included since formation
of new company)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> OPUR1
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE BALANCE SHEET AND RELATED STATEMENTS OF INCOME, RETAINED
EARNINGS AND CASH FLOWS OF NEW ENGLAND ELECTRIC SYSTEM (PARENT
COMPANY), AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<PERIOD-TYPE> 12-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 1,655,119
<TOTAL-CURRENT-ASSETS> 42,316
<TOTAL-DEFERRED-CHARGES> 3,042
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,700,477
<COMMON> 64,970
<CAPITAL-SURPLUS-PAID-IN> 736,567
<RETAINED-EARNINGS> 854,720
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,656,257
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 44,220
<TOT-CAPITALIZATION-AND-LIAB> 1,700,477
<GROSS-OPERATING-REVENUE> 0
<INCOME-TAX-EXPENSE> (364)
<OTHER-OPERATING-EXPENSES> 4,225
<TOTAL-OPERATING-EXPENSES> 3,861
<OPERATING-INCOME-LOSS> (3,861)
<OTHER-INCOME-NET> 222,894
<INCOME-BEFORE-INTEREST-EXPEN> 219,033
<TOTAL-INTEREST-EXPENSE> 334
<NET-INCOME> 218,699
0
<EARNINGS-AVAILABLE-FOR-COMM> 218,699
<COMMON-STOCK-DIVIDENDS> 153,329
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<TABLE> <S> <C>
<PAGE>
<ARTICLE> OPUR1
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED
STATEMENTS OF INCOME, RETAINED EARNINGS AND CASH FLOWS OF NEW
ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES, AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<PERIOD-TYPE> 12-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,878,680
<OTHER-PROPERTY-AND-INVEST> 395,306
<TOTAL-CURRENT-ASSETS> 494,776
<TOTAL-DEFERRED-CHARGES> 406,299 <F1>
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 5,175,061
<COMMON> 64,970
<CAPITAL-SURPLUS-PAID-IN> 736,823
<RETAINED-EARNINGS> 854,720
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,654,112 <F4>
0
147,016 <F2>
<LONG-TERM-DEBT-NET> 1,658,291
<SHORT-TERM-NOTES> 164,711 <F3>
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 17,085
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,533,846
<TOT-CAPITALIZATION-AND-LIAB> 5,175,061
<GROSS-OPERATING-REVENUE> 2,299,616
<INCOME-TAX-EXPENSE> 137,555
<OTHER-OPERATING-EXPENSES> 1,817,063
<TOTAL-OPERATING-EXPENSES> 1,954,618
<OPERATING-INCOME-LOSS> 344,998
<OTHER-INCOME-NET> 8,517
<INCOME-BEFORE-INTEREST-EXPEN> 353,515
<TOTAL-INTEREST-EXPENSE> 118,437
<NET-INCOME> 218,591
8,690 <F2>
<EARNINGS-AVAILABLE-FOR-COMM> 218,591
<COMMON-STOCK-DIVIDENDS> 153,221
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 499,802
<EPS-PRIMARY> $3.37
<EPS-DILUTED> $3.37
<FN>
<F1> Total deferred charges includes other assets and accrued Yankee Atomic
costs.
<F2> Preferred stock reflects preferred stock of subsidiaries. Preferred
stock dividends reflect prefrred stock dividends of subsidiaries.
<F3> Short-term notes includes commercial paper obligations.
<F4> Total common stockholders equity is reflected net of treasury stock at
cost.
</FN>
<PAGE>
Financial Statement 1-A
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
Balance Sheet
At March 31, 1996
(Unaudited)
ASSETS
------
(In Thousands)
Investments:
Common stocks of subsidiaries, at equity $1,627,264
Notes of subsidiaries 24,229
Other investments 3,626
----------
Total investments 1,655,119
----------
Current assets:
Cash 193
Temporary cash investments - subsidiary companies 26,075
Interest and dividends receivable of subsidiaries 15,991
Other current assets 57
----------
Total current assets 42,316
----------
Deferred federal income taxes 3,042
----------
$1,700,477
==========
CAPITALIZATION AND LIABILITIES
------------------------------
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Outstanding - 64,899,369 shares $ 64,970
Paid-in capital 736,567
Retained earnings (including $619,025,000 of
undistributed subsidiary earnings) 854,720
----------
Total common share equity 1,656,257
----------
Current liabilities:
Accounts payable (including $403,000 to subsidiaries) 1,291
Other accrued expenses 1,626
Dividends payable 34,247
----------
Total current liabilities 37,164
----------
Deferred credits 7,056
----------
$1,700,477
==========
<PAGE>
Financial Statement 1-B
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
Statement of Income
Twelve Months Ended March 31, 1996
(Unaudited)
(In Thousands)
Equity in earnings of subsidiaries $ 222,187
Interest income - subsidiaries 589
---------
Total income from subsidiaries 222,776
Other income 118
---------
Total income 222,894
Corporate and fiscal expenses (includes $558,000
for cost of services billed by an affiliated company) 4,225
Federal income taxes (364)
---------
Income before interest 219,033
Interest 334
---------
Net income $ 218,699
=========
Statement of Retained Earnings
Retained earnings at beginning of period $ 789,350
Net income 218,699
Dividends declared on common shares (153,329)
---------
Retained earnings at end of period $ 854,720
=========
<PAGE>
Financial Statement 2-A
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Consolidated Balance Sheet
At March 31, 1996
(Unaudited)
ASSETS
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(In Thousands)
Utility plant, at original cost $5,534,437
Less accumulated provisions for depreciation
and amortization 1,753,950
----------
3,780,487
Net investment in Seabrook 1 under rate settlement 11,408
Construction work in progress 86,785
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Net utility plant 3,878,680
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Oil and gas properties, at full cost 1,268,686
Less accumulated provision for amortization 1,048,516
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Net oil and gas properties 220,170
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Investments:
Nuclear power companies, at equity 47,302
Other subsidiaries, at equity 38,802
Other investments 89,032
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Total investments 175,136
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Current assets:
Cash 4,399
Accounts receivable, less reserves of $19,909,000 277,378
Unbilled revenues 53,781
Fuel, materials, and supplies, at average cost 78,465
Prepaid and other current assets 80,753
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Total current assets 494,776
----------
Deferred charges and other assets 406,299
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$5,175,061
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CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Outstanding - 64,899,369 shares $ 64,970
Paid-in capital 736,823
Retained earnings 854,720
Treasury stock - 70,283 shares (2,401)
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Total common share equity 1,654,112
Minority interests in consolidated subsidiaries 47,947
Cumulative preferred stock of subsidiaries 147,016
Long-term debt 1,658,291
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Total capitalization 3,507,366
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Current liabilities:
Long-term debt due within one year 17,085
Short-term debt 164,711
Accounts payable 123,049
Accrued taxes 72,802
Accrued interest 21,947
Dividends payable 38,197
Other current liabilities 100,486
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Total current liabilities 538,277
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Deferred federal and state income taxes 762,765
Unamortized investment tax credits 93,097
Other reserves and deferred credits 273,556
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$5,175,061
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Financial Statement 2-B
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Statement of Consolidated Income
Twelve Months Ended March 31, 1996
(Unaudited)
(In Thousands)
Operating revenue $2,299,616
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Operating expenses:
Fuel for generation 262,831
Purchased electric energy 528,565
Other operation 504,165
Maintenance 127,212
Depreciation and amortization 258,349
Taxes, other than income taxes 135,941
Income taxes 137,555
----------
Total operating expenses 1,954,618
----------
Operating income 344,998
Other income:
Allowance for equity funds used during
construction 5,238
Equity in income of generating companies 10,668
Other income (expense), net (7,389)
----------
Operating and other income 353,515
----------
Interest:
Interest on long-term debt 110,130
Other interest 19,507
Allowance for borrowed funds used during
construction (11,200)
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Total interest 118,437
----------
Income after interest 235,078
Preferred dividends of subsidiaries 8,690
Minority interests 7,797
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Net income $ 218,591
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Common shares 64,921,367
Net income per common share $3.37
Dividends declared per share $2.36
Statement of Consolidated Retained Earnings
Retained earnings at beginning of period $ 789,350
Net income 218,591
Dividends declared on common shares (153,221)
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Retained earnings at end of period $ 854,720
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