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File No. 70-8803
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)
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The eighth paragraph of Item 1, Part B is hereby amended and
restated in its entirety:
"Previously, the State of New Hampshire enacted legislation in
June 1995 that instructed the NHPUC to establish a retail
competition pilot program open to all classes of customers. The
NHPUC guidelines provide that each New Hampshire utility allow
customers representing three percent of their peak loads (four
megawatts for Granite State) to have access to alternative
suppliers of electricity for two years, starting May 1, 1996.
In the NHPUC's order establishing final guidelines dated
February 28, 1996, the NHPUC requires that:
'It shall be the responsibility of Pilot customers to negotiate
with competing suppliers and other service providers. A
franchised utility shall not interfere with the negotiations
between Pilot customers and competing suppliers, but it shall be
permitted to compete in the Pilot on the condition that it
establish an affiliate company for that purpose. Although this
requirement will ensure that appropriate inter-affiliate pricing
arrangements are instituted for the sale of goods and services by
jurisdictional utilities, we [NHPUC] recognize that it does
nothing to curb possible anti-competitive abuses by non-
jurisdictional utilities. We anticipate that other regulators,
both state and federal, will exercise their authority to prevent
market abuses. That limitation notwithstanding, the requirement
is consistent with our [NHPUC's] position that franchised
utilities must aggressively mitigate their stranded costs since
revenues received from the sale of utility goods and services can
be applied against such costs.'
The total amount of load of all New Hampshire electric utilities
allocated to the Pilot is about 50.74 MW of which Granite State has
3.75 MW.
In January 1996, Granite State reached an agreement with the
NHPUC staff on terms for its participation in the 'Pilot Program.'
Under the agreement, participating customers would be responsible
for paying access charges that are on average more than 90 percent
of the charges proposed under Choice: New England. The agreement
has been conditionally approved by the NHPUC."
Item 1, Part C is hereby amended and restated in its entirety as
follows:
"C. Formation of Marketing Companies
_____________________________________
As a step toward implementation of Choice: New England, NEES
proposes to form one or more marketing companies in each New
England state, New York, New Jersey, Pennsylvania, Maryland, and
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Delaware (the "Marketing Companies"). Marketing Companies would be
established in Massachusetts, Rhode Island, and New Hampshire to
provide standard offer services to existing customers of the
Retail Company (each such Marketing Company, a "Standard Offer
Marketing Company"). A Standard Offer Marketing Company would
therefore be limited to providing services only to customers of
the Retail Companies. However, Marketing Companies may also be
established in each of these states and the other states
referenced above to market electricity to retail and wholesale
customers of the Retail Companies that elect not to take advantage
of the standard offer and of other non-affiliated electric
utilities. (each such Marketing Company, a "General Marketing
Company"). This General Marketing Company will have limited
ability under the Pilot Program to contract with customers of non-
affiliated electric utilities within New Hampshire. The General
Marketing Company to be established in New Hampshire to meet the
requirements of the Pilot Program may need to be formed and
operating by May 28, 1996, in accordance with the current schedule
of the NHPUC.
The Marketing Companies also propose to provide a broad range of
energy and related services to customers. These services include
but are not limited to, audits, power quality, fuel supply,
repair, maintenance, construction, design, engineering and
consulting."
Item 1, Part D is hereby amended and restated in its entirety as
follows:
"D. Personnel of Marketing Companies
____________________________________
Staffing is expected to begin with a small group of employees
for the Marketing Companies, primarily sales staff. Technical and
support staff needed for a particular project could be assigned
for the duration of that project from NEPSCO, NEP, and the Retail
Companies, and the assigned employees would continue to be
employees of NEPSCO, NEP, and the Retail Companies, not to exceed
in any one year 1% of the total employees of NEPSCO, NEP, and the
Retail Companies. All costs associated with such staff (including
compensation, overheads, and benefits) would be fully reimbursed
by the Marketing Company to which they were assigned in accordance
with Rules 90 and 91 of the Act. Reimbursements for these costs
will be on a thirty-day cycle basis in accordance with service
contracts to be entered into with the Marketing Company (see
Exhibit J hereto)."
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Item 1, Part F is hereby amended and restated in its entirety as
follows:
"F. Financing
_____________
NEES proposes to provide initial financing for each Marketing
Company by the purchase of one thousand shares of the common
stock, par value $1.00 per share, for a total purchase price of
$1,000. NEES then proposes to make capital contributions and/or
loans to the Marketing Company from time to time, provided that
such NEES financing for all Marketing Companies shall not be in
excess of $15 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). The Marketing Company 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 the Marketing Company
or any agreement binding upon the Marketing Company; 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.
To the extent that these loans require state commission approval,
Rule 52 of the Act would apply, but, at this time, it is uncertain
as to which state jurisdictions would assert jurisdiction over any
such loan. It is proposed that the above investments be
authorized through December 31, 1999."
Item 3 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, 12, and 13, and Rules 45, 52, 90, and 91 all
relating to the authority for NEES to undertake the transactions
proposed herein."
Item 6 (a) is hereby amended by adding the following exhibit:
*J Form of Service Contract
* To be filed by amendment
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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
Amendment No. 1 to its Application/Declaration on Form U-1
(Commission's File No. 70-8803) 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: March 8, 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. 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.
