<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 ELECTRIC SYSTEM
25 Research Drive
Westborough, Massachusetts 01582
(Name of company filing this statement and
address of principal executive office)
NEW ENGLAND ELECTRIC SYSTEM
(Name of top registered holding company parent of applicant)
Michael E. Jesanis Robert King Wulff
Treasurer Corporation Counsel
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
- --------------------------------------------
New England Electric System (NEES) is a voluntary
association created in Massachusetts by an Agreement and
Declaration of Trust dated January 2, 1926, as amended, and is a
registered holding company under the Public Utility Holding
Company Act of 1935
(the Act).
Pursuant to Commission's order in File No. 70-8453, NEES is
authorized to issue and sell short-term promissory notes to banks
up to a maximum aggregate principal amount outstanding at any
time not exceeding $100 million. This borrowing authority
expires October 31, 1996.
By this Application/Declaration, NEES proposes that it be
granted authority to issue and sell short-term promissory notes
to banks from time to time between November 1, 1996, and October
31, 2001. The maximum aggregate principal amount of such notes
to be outstanding will not at any one time exceed $100 million.
NEES currently does not expect to incur short-term
borrowings during the applicable period. Nevertheless, NEES
believes the requested $100 million short-term borrowing
authority is necessary in order for it to act quickly in response
to an emergency affecting it, or one or more of its subsidiaries.
For example, if NEES subsidiaries were restricted from paying
quarterly dividends, then NEES would need to borrow to pay its
common dividend. A short-term debt authority of $100 million
would allow NEES to continue its current dividend level for two
quarters absent cash dividends from its subsidiaries. This
should give the subsidiaries adequate time to resolve the
dividend payment restriction. Further, given the current
uncertainty in the electric utility industry, there is always the
possibility that a subsidiary of NEES would be unable to access
capital markets. If any subsidiary of NEES was denied access to
the capital markets, their only emergency source of cash is NEES.
NEES access to $100 million of short-term funds would give the
subsidiaries time to satisfactorily function while the emergency
situation is resolved.
NEES does not currently have 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, NEES is not a party to, nor does it
have 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 New England Electric
Resources Inc., 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
<PAGE>
earnings' (as defined in Rule 53(a)(1)(ii)) in compliance with
the provisions set forth in Rule 53 under the Act. NEES shall
comply with the requirements of Rules 53 and 54 of the Act in
connection with EWG and FUCO acquisitions and financings.
Borrowings from Banks
---------------------
The proposed borrowings from banks by NEES will be evidenced
by notes payable maturing in less than one year from the date of
issuance.
NEES will negotiate with banks the interest costs of such
borrowings. NEES pays 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. Certain of such borrowings may be without prepayment
privileges. Based on the current base lending rate of 8.25% and
an equivalent or lower high federal funds rate, the effective
interest costs of such borrowing would not exceed 9.25% per
annum.
Payment of any short-term promissory notes prior to maturity
will be made on the basis most favorable to NEES, taking into
account fixed maturities, interest rates, and any other relevant
financial consideration.
Filing of Certificates of Notification
--------------------------------------
Within 45 days after the end of each calendar quarter, NEES
will file a certificate of notification covering the transactions
effective pursuant to the authority requested hereby during such
quarter. Such certificates will show the dates and amounts of
all new money borrowings, the names of the lenders, the maximum
amount of notes outstanding at any one time during the quarter,
and the total amount of notes outstanding at the end of such
quarter. The final certificate of notification will be
accompanied by the required past tense opinion of counsel.
Item 2. Fees, Commissions and Expenses
- ---------------------------------------
No underwriters' fees or commissions are to be paid with
respect to the proposed transactions. Certain services are to be
performed at the actual cost by New England Power Service
Company, (NEPSCO) an affiliated service company, operating
pursuant to the provisions of Section 13 of the Act and the
Commission's rules thereunder. The services of NEPSCO will
consist principally of services performed by the Executive and
Administrative Department, the Corporate Department (including
attorneys), the Treasury Department (including accountants and
financial analysts), and the Office Service Department, and are
<PAGE>
estimated not to exceed $1,000. The only other expense to be
borne by NEES will be the fee for filing under the Act of $2,000.
Total estimated expenses in connection with the proposed
transactions are $3,000.
Item 3. Applicable Statutory Provisions
- ----------------------------------------
Sections 6(a) and 7 of the Act are applicable to the issue
and sale of notes by NEES to banks. The payment of indebtedness
from the proceeds of the proposed borrowings is exempted from
Sections 9(a) and 12 of the Act by Rule 42.
Item 4. Regulatory Approval
- ----------------------------
No state commission and no Federal commission (other than
the Securities and Exchange Commission) has jurisdiction over the
issue and sale of the notes by NEES.
Item 5. Procedure
- ------------------
It is requested that the Commission take action with respect
to this Application/Declaration without a hearing being held and
that an order be issued allowing this Application/Declaration to
become effective on or before October 15, 1996 or as soon as
practicable.
NEES (i) does not request a recommended decision by a
hearing officer, (ii) does not request a recommended decision by
any other responsible officer of the Commission, (iii) hereby
specifies that the Division of Corporate Regulation may assist in
the preparation of the Commission's decision, and (iv) hereby
requests 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
- ------------------------------------------
(a) Exhibits
*F Opinion of Counsel
G Proposed Form of Notice
*To be supplied by amendment.
(b) Financial Statements
1 Balance Sheets of NEES and of NEES and
Subsidiaries Consolidated, as of June 30, 1996, on
an actual basis. (1)
<PAGE>
2 Statements of Income and Retained Earnings of NEES
and of NEES and Subsidiaries Consolidated for the
twelve months ended June 30, 1996.
3 Pro Forma to the Capital Structure of NEES
(1) The proposed transactions will have no material effect
on the Balance Sheets of NEES or of NEES and
Subsidiaries Consolidated; therefore, pro forma
statements, except as provided in 3, are omitted.
Since the date of the balance sheets, there have been no
material changes which were not in the ordinary course of
business.
A Financial Data Schedule is also provided.
Item 7. Information as to Environmental Effects
- ------------------------------------------------
The proposed transaction does 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 company has duly caused this
statement to be signed on its behalf by the undersigned officer
thereunto duly authorized.
NEW ENGLAND ELECTRIC SYSTEM
s/Michael E. Jesanis
___________________________
Michael E. Jesanis
Treasurer
Date: August 22, 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 therefor.
<PAGE>
Exhibit Index
-------------
Exhibit Description Page
- ------- ----------- ----
F Opinion of Counsel To be filed
by amendment
G Proposed Form of Notice Filed herewith
Financial
Statement No. Description Page
- ------------- ----------- ----
1A Balance Sheet of NEES as Filed herewith
of June 30, 1996,
on an actual basis
1B Balance Sheet of NEES and Filed herewith
Subsidiaries Consolidated,
as of June 30, 1996, on an
actual basis
2A Statement of Income and Filed herewith
Retained Earnings of NEES
for the twelve months
ended June 30, 1996
2B Statement of Income and Filed herewith
Retained Earnings of NEES
and Subsidiaries
Consolidated for the twelve
months ended June 30, 1996
3 Pro Forma of NEES Capital Filed herewith
Structure
27 Financial Data Schedules for Filed herewith
NEES and for NEES and
Subsidiaries
<PAGE>
EXHIBIT G
Proposed Form of Notice
-----------------------
New England Electric System ("NEES"), 25 Research Drive,
Westborough, Massachusetts 01582, a registered holding company,
has filed an application/declaration with this Commission
pursuant to Sections 6(a) and 7 of the Public Utility Holding
Company Act of 1935 ("Act").
NEES proposes to issue and sell up to a maximum aggregate
outstanding principal amount of $100,000,000 of short-term notes
to banks from time to time through October 31, 2001. The notes
will mature in less than one year from the date of issuance.
NEES will negotiate with banks the interest costs of such
borrowings. The effective interest cost of borrowings will not
exceed the effective interest cost of borrowings at the greater
of the bank's base or prime lending rate, or the rate published
by the Wall Street Journal as the high federal funds rate plus,
in either case, 1%. NEES pays fees to the banks in lieu of
compensating balance arrangements. Certain of such borrowings
may be without prepayment privileges. Based upon the current
base lending rate of 8.25% and an equivalent or lower federal
funds rate, the effective interest cost would not exceed 9.25%
per annum.
<PAGE>
Financial Statement 1A
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
Balance Sheet
At June 30, 1996
(Unaudited)
ASSETS
------
(In Thousands)
Investments:
Common stocks of subsidiaries, at equity $1,619,806
Notes of subsidiaries 25,784
Other investments 3,652
----------
Total investments 1,649,242
----------
Current assets:
Cash 113
Temporary cash investments - subsidiary companies 1,225
Accounts receivable 2
Interest and dividends receivable of subsidiaries 43,047
Other current assets 44
----------
Total current assets 44,431
----------
Deferred federal income taxes 2,845
----------
$1,696,518
==========
CAPITALIZATION AND LIABILITIES
------------------------------
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Issued - 64,969,652 shares
Outstanding - 64,898,262 shares $ 64,970
Paid-in capital 736,566
Retained earnings (including $611,566,000 of
undistributed subsidiary earnings) 851,389
----------
Total common share equity 1,652,925
----------
Current liabilities:
Accounts payable 895
Other accrued expenses 1,439
Dividends payable 34,194
----------
Total current liabilities 36,528
----------
Deferred credits 7,065
----------
$1,696,518
==========
<PAGE>
<TABLE>
Financial Statement 1B
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Consolidated Balance Sheet
At June 30, 1996
(Unaudited)
<CAPTION>
ASSETS
------
(In Thousands)
<S> <C>
Utility plant, at original cost $5,581,144
Less accumulated provisions for depreciation and amortization 1,783,968
----------
3,797,176
Net investment in Seabrook 1 under rate settlement 7,605
Construction work in progress 84,323
----------
Net utility plant 3,889,104
----------
Oil and gas properties, at full cost 1,272,417
Less accumulated provision for amortization 1,063,471
----------
Net oil and gas properties 208,946
----------
Investments:
Nuclear power companies, at equity 47,524
Other subsidiaries, at equity 38,322
Other investments 90,134
----------
Total investments 175,980
----------
Current assets:
Cash 2,759
Accounts receivable, less reserves of $20,226,000 255,710
Unbilled revenues 60,139
Fuel, materials, and supplies, at average cost 83,385
Prepaid and other current assets 81,014
----------
Total current assets 483,007
----------
Deferred charges and other assets 389,639
----------
$5,146,676
==========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Issued - 64,969,652 shares
Outstanding - 64,898,262 shares $ 64,970
Paid-in capital 736,814
Retained earnings 850,939
Treasury stock - 71,390 shares (2,501)
----------
Total common share equity 1,650,222
Minority interests in consolidated subsidiaries 47,697
Cumulative preferred stock of subsidiaries 132,016
Long-term debt 1,609,179
----------
Total capitalization 3,439,114
----------
Current liabilities:
Long-term debt due within one year 52,585
Short-term debt 195,902
Accounts payable 132,163
Accrued taxes 31,289
Accrued interest 26,857
Dividends payable 37,626
Other current liabilities 113,743
----------
Total current liabilities 590,165
----------
Deferred federal and state income taxes 755,666
Unamortized investment tax credits 92,575
Other reserves and deferred credits 269,156
----------
$5,146,676
==========
</TABLE>
<PAGE>
Financial Statement 2A
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
Statement of Income
Twelve Months Ended June 30, 1996
(Unaudited)
(In Thousands)
Equity in earnings of subsidiaries $ 223,691
Interest income - subsidiaries 470
---------
Total income from subsidiaries 224,161
Other income 110
---------
Total income 224,271
Corporate and fiscal expenses (includes $1,798,000
for cost of services billed by an affiliated company) 4,303
Federal income taxes (533)
---------
Income before interest 220,501
Interest 333
---------
Net income $ 220,168
=========
Statement of Retained Earnings
Retained earnings at beginning of period $ 784,549
Net income 220,168
Dividends declared on common shares (153,328)
---------
Retained earnings at end of period $ 851,389
=========
<PAGE>
Financial Statement 2B
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Statement of Consolidated Income
Twelve Months Ended June 30, 1996
(Unaudited)
(In Thousands)
Operating revenue $2,317,179
----------
Operating expenses:
Fuel for generation 276,803
Purchased electric energy 513,168
Other operation 511,184
Maintenance 127,853
Depreciation and amortization 254,747
Taxes, other than income taxes 139,693
Income taxes 139,481
----------
Total operating expenses 1,962,929
----------
Operating income 354,250
Other income:
Allowance for equity funds used during
construction 2,471
Equity in income of generating companies 10,710
Other income (expense), net (7,290)
----------
Operating and other income 360,141
----------
Interest:
Interest on long-term debt 110,343
Other interest 22,048
Allowance for borrowed funds used during
construction (8,378)
----------
Total interest 124,013
----------
Income after interest 236,128
Preferred dividends of subsidiaries 8,510
Minority interests 7,557
----------
Net income $ 220,061
==========
Average common shares 64,906,229
Net income per average common share $ 3.39
Dividends declared per share $2.360
Statement of Consolidated Retained Earnings
Retained earnings at beginning of period $ 784,549
Net income 220,061
Dividends declared on common shares (153,221)
Premium on redemption of preferred stock (450)
----------
Retained earnings at end of period $ 850,939
==========
<PAGE>
Financial Statement 3
NEW ENGLAND ELECTRIC SYSTEM
(Parent Company Only)
Capital Structure Proformed to Include
$100 Million of Short-Term Debt
At June 30, 1996
(Unaudited)
(In Thousands)
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Issued - 64,969,652 shares
Outstanding - 64,898,262 shares $ 64,970
Paid-in capital 736,566
Retained earnings (including $611,566,000 of
undistributed subsidiary earnings) 851,389
----------
Total common share equity 1,652,925
----------
Short-term debt 100,000
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE BALANCE SHEET AND RELATED STATEMENTS OF INCOME, AND
RETAINED EARNINGS 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> JUN-30-1996
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> 12-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 1,649,242
<TOTAL-CURRENT-ASSETS> 44,431
<TOTAL-DEFERRED-CHARGES> 2,845
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,696,518
<COMMON> 64,970
<CAPITAL-SURPLUS-PAID-IN> 736,566
<RETAINED-EARNINGS> 851,389
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,652,925
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> 43,593
<TOT-CAPITALIZATION-AND-LIAB> 1,696,518
<GROSS-OPERATING-REVENUE> 0
<INCOME-TAX-EXPENSE> (533)
<OTHER-OPERATING-EXPENSES> 4,303
<TOTAL-OPERATING-EXPENSES> 3,770
<OPERATING-INCOME-LOSS> (3,770)
<OTHER-INCOME-NET> 224,271
<INCOME-BEFORE-INTEREST-EXPEN> 220,501
<TOTAL-INTEREST-EXPENSE> 333
<NET-INCOME> 220,168
0
<EARNINGS-AVAILABLE-FOR-COMM> 220,168
<COMMON-STOCK-DIVIDENDS> 153,328
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<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> JUN-30-1996
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> 12-MOS
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 3,889,104
<OTHER-PROPERTY-AND-INVEST> 384,926
<TOTAL-CURRENT-ASSETS> 483,007
<TOTAL-DEFERRED-CHARGES> 389,639 <F1>
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 5,146,676
<COMMON> 64,970
<CAPITAL-SURPLUS-PAID-IN> 736,814
<RETAINED-EARNINGS> 850,939
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,650,222 <F3>
0
132,016 <F2>
<LONG-TERM-DEBT-NET> 1,609,179
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 195,902
<LONG-TERM-DEBT-CURRENT-PORT> 52,585
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,506,772
<TOT-CAPITALIZATION-AND-LIAB> 5,146,676
<GROSS-OPERATING-REVENUE> 2,317,179
<INCOME-TAX-EXPENSE> 139,481
<OTHER-OPERATING-EXPENSES> 1,823,448
<TOTAL-OPERATING-EXPENSES> 1,962,929
<OPERATING-INCOME-LOSS> 354,250
<OTHER-INCOME-NET> 5,891
<INCOME-BEFORE-INTEREST-EXPEN> 360,141
<TOTAL-INTEREST-EXPENSE> 124,013
<NET-INCOME> 220,061
8,510 <F2>
<EARNINGS-AVAILABLE-FOR-COMM> 220,061
<COMMON-STOCK-DIVIDENDS> 153,221
<TOTAL-INTEREST-ON-BONDS> 110,343
<CASH-FLOW-OPERATIONS> 538,698
<EPS-PRIMARY> $3.39
<EPS-DILUTED> $3.39
<FN>
<F1> Total deferred charges includes other assets.
<F2> Preferred stock reflects preferred stock of subsidiaries. Preferred
stock dividends reflect preferred stock dividends of subsidiaries.
<F3> Total common stockholders equity is reflected net of treasury stock at
cost.
</FN>
