<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-9C-3
QUARTERLY REPORT PURSUANT TO RULE 58
FOR THE QUARTER ENDED
SEPTEMBER 30, 1997
NEW ENGLAND ELECTRIC SYSTEM
25 Research Drive, Westborough, MA 01582
<PAGE>
<TABLE>
<CAPTION>
NEW ENGLAND ELECTRIC SYSTEM
For The Quarter Ended September 30, 1997
ITEM 1 - ORGANIZATION CHART
Percentage
Energy or State of voting
Name of Reporting Gas-Related Date of of Securities
Company Company Organization Organization Held Nature of Business
- ----------------- ----------- ------------ ------------ ----------- --------------------------------------
<S> <C> <C> <C> <C> <C>
New England Energy, Energy 11/20/72 MA 100 New England Energy, Inc. is engaged
Inc./New England in various activities relating to fuel
Electric System supply for the System. These
activities primarily include
participation (principally through a
partnership with a nonaffiliated oil
company) in domestic oil and gas
exploration, development, and production
and the sale to NEP of fuel purchased in
the open market.
Granite State Energy, Energy 04/22/96 NH 100 Granite State Energy provides a range
Inc./New England of energy and related services,
Electric System including but not limited to sales of
electric energy, audits, power quality,
fuel supply, repair, maintenance,
construction, design, engineering, and
consulting.
AllEnergy Marketing Energy 09/18/96 MA 50 AllEnergy's principal purpose is to sell
Co., L.L.C./NEES energy and provide a range of energy-
Energy, Inc./New related services, including but not
England Electric limited to, marketing, brokering and
System sales of energy, audits, fuel supply,
repair, maintenance, construction,
operation, design, engineering, and
consulting, to customers in the
competitive market in New England and
New York.
Texas Liquids, Energy 12/19/96 MA 44.5 Texas Liquids, L.L.C. engages in
L.L.C./All Energy purchasing, marketing, selling,
Marketing Co., L.L.C./ and distributing energy
NEES Energy, Inc./ commodities and related products
New England Electric and services.
System
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ENGLAND ELECTRIC SYSTEM
For The Quarter Ended September 30, 1997
ITEM 1 - ORGANIZATION CHART
Percentage
Energy or State of voting
Name of Reporting Gas-Related Date of of Securities
Company Company Organization Organization Held Nature of Business
- ----------------- ----------- ------------ ------------ ----------- --------------------------------------
<S> <C> <C> <C> <C> <C>
NeXus Energy Energy 05/19/97 MA 9.9 NeXus Energy Software's purpose is to
Software, Inc./ develop, implement, produce, market and
NEES Global sell software for application in the
Transmission, Inc./ energy conservation industry.
New England
Electric System (new)
WeatherWise USA LLC/ Energy 10/10/96 DE 20 WeatherWise USA LLC's purpose is to be
AllEnergy Marketing an energy related company to provide
Co., L.L.C./NEES energy management, demand side
Energy, Inc./ New management, and technical and utility
England Electric hedging services to reduce weather
System (new) related financial uncertainty of
utilities, energy users and others.
HydroServ Group, Energy 07/25/97 MA 50 HydroServ Group, L.L.C. engages in
L.L.C./NEES Global marketing and selling capabilities and
Transmission, Inc./ services relating to hydroelectric
New England Electric facilities and other similar facilities
Systen (new) nationwide.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ENGLAND ELECTRIC SYSTEM
For The Quarter Ended September 30, 1997
Item 2 - ISSUANCES AND RENEWALS OF SECURITIES AND CAPITAL CONTRIBUTIONS
Type of Principal Issue Cost Person to Collateral Consideration
Security Amount of or of Whom Security Given with Received for
Company Issuing Security Issued Security Renewal Capital Was Issued Security Each Security
- ------------------------ -------- --------- ------- ------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
NeXus Energy Series A $1.40/per Issue N/A NEES Global - $1.40/per
Software, Inc. preferred share Transmission, Inc. share
stock
WeatherWise USA LLC Voting $ .5* Issue N/A AllEnergy Marketing - $ .5*
rights Co., L.L.C.
HydroServ Group, L.L.C. Membership $ .1* Issue N/A NEES Global - $ .1*
interest Transmission, Inc.
<FN>
*Expressed in millions, rounded to hundred thousands of dollars
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ENGLAND ELECTRIC SYSTEM
For The Quarter Ended September 30, 1997 (cont'd.)
Item 2 - ISSUANCES AND RENEWALS OF SECURITIES AND CAPITAL CONTRIBUTIONS
(expressed in millions, rounded to hundred thousands of dollars)
Company Company Amount of
Contributing Receiving Capital
Capital Capital Contribution
------------ --------- ------------
<S> <C> <C> <C>
NEES Trust Granite State Energy *
NEES Energy, Inc. AllEnergy Marketing Co., LLC 3.5
NEES Global Transmission, Inc. HydroServ Group, L.L.C. .1
<FN>
* Amounts are less than $100,000
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ENGLAND ELECTRIC SYSTEM
For The Quarter Ended September 30, 1997
Item 3 - ASSOCIATE TRANSACTIONS (expressed in millions, rounded to hundred thousands of dollars)
Part I - Transactions performed by reporting companies on behalf of associate companies
Direct Indirect Total
Reporting Company Associate Company Types of Services Costs Costs Cost of Amount
Rendering Services Receiving Services Rendered Charged Charged Capital Billed
------------------ ------------------ ----------------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
N/A
Part II - Transactions performed by associate companies on behalf of reporting companies
Direct Indirect Total
Associate Company Reporting Company Types of Services Costs Costs Cost of Amount
Rendering Services Receiving Services Rendered Charged Charged Capital Billed
------------------ ------------------ ----------------- ------- ------- ------- ------
Massachusetts Electric Granite State Energy, Miscellaneous (4) (1) (1) (1)
Company Inc.
Massachusetts Electric All Energy Marketing Customer Service (1) (1) (1)
Company Co., LLC
New England Power Co. New England Energy, Inc. Miscellaneous (1) (1) (1)
New England Power Co. New England Energy, Inc. Fuel Purchase $5.6 $5.6
New England Power Co. AllEnergy Marketing Power purchase (1) (1) (1)
Co., LLC
New England Power Co. AllEnergy Marketing Miscellaneous (1) (1) (1)
Co., LLC
New England Power Co. Granite State Energy, Power purchase $0.2 (1) $0.2
Inc.
New England Power New England Energy, Inc. Info Services $0.1 (1) $0.1
Service Co.
New England Power New England Energy, Inc. Miscellaneous (2) (1) (1) $0.1
Service Co.
New England Power Granite State Energy, Miscellaneous (3) (1) (1) (1)
Service Co. Inc.
New England Power AllEnergy Marketing Sales Planning $0.1 (1) $0.1
Service Co. Co., LLC
New England Power AllEnergy Marketing
Service Co. Co., LLC Miscellaneous (5) $0.1 (1) $0.1
<FN>
(1) Amounts are below $100,000
(2) Represents 9 types of services with each type of service totaling less than $100,000.
(3) Represents 6 types of services with each type of service totaling less than $100,000.
(4) The customer service portion of the service agreement between Granite State Energy Company and New England Power
Service Company has been assigned to Massachusetts Electric Company, in accordance with its terms.
(5) Represents 9 types of services with each type of service totaling less than $100,000.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NEW ENGLAND ELECTRIC SYSTEM
At September 30, 1997
ITEM 4 - SUMMARY OF AGGREGATE INVESTMENT
(expressed in millions rounded to hundred thousands of dollars)
<S> <C> <C>
Investment in energy-related companies:
Total consolidated capitalization as of
September 30, 1997 (1) $3,561.8 line 1
Total capitalization multiplied by 15 percent 534.3 line 2
(line 1 multiplied by 0.15)
Greater of $50 million or line 2 534.3 line 3
Total current aggregate investment:
(categorized by major line of energy-
related business)
Power marketing and other 5.6
Energy software 1.4
-------
Total current aggregate investment 7.0 line 4
---
Difference between the greater of $50 million
or 15 percent of capitalization and the total
aggregate investment of the registered holding
company system
(lines 3 less line 4) $527.3 line 5
(1) Consolidated capitalization includes total common equity, cumulative
preferred stock, long-term debt (including long-term debt due within
one year), and short-term debt.
</TABLE>
<PAGE>
NEW ENGLAND ELECTRIC SYSTEM
For The Quarter Ended September 30, 1997
ITEM 5 - OTHER INVESTMENTS
Reason for
Major Line Other Other Difference
or Energy-Related Investment in Investment in Other
Business Last U-9C-3 Report in U-9C-3 Report Investment
- ----------------- ------------------ ---------------- ----------
N/A
<PAGE>
NEW ENGLAND ELECTRIC SYSTEM
For The Quarter Ended September 30, 1997
ITEM 6 - FINANCIAL STATEMENTS AND EXHIBITS
(A) Exhibits
10(f) Service contract between Massachusetts Electric Company and
AllEnergy Marketing Company, L.L.C. dated January 1, 1997.
10(g) Certificate stating that a copy of the report for the previous
quarter has been filed with interested state commissions.
(B) Financial Statements (1)
1-A New England Electric System Consolidated Income Statement for
the quarter and nine months ended September 30, 1997
1-B New England Electric System Consolidated Balance Sheet As of
September 30, 1997
2-A New England Energy, Inc. Income Statement for the quarter and
nine months ended September 30, 1997
2-B New England Energy, Inc. Balance Sheet as of September 30, 1997
3-A Granite State Energy, Inc. Income Statement for the quarter and
nine months ended September 30, 1997
3-B Granite State Energy, Inc. Balance Sheet as of September 30,
1997
4-A AllEnergy Marketing Company, LLC Consolidated Income Statement
for the quarter and nine months ended September 30, 1997
4-B AllEnergy Marketing Company, LLC Consolidated Balance Sheet as
of September 30, 1997
(1) Financial statements for NeXus Energy Software, Inc. and WeatherWise
USA LLC were not available as of the filing date.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned company has duly caused this report 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
November 21, 1997
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 No. Description Page
---------- -------------------------------------- --------------
10(f) Service contract between Massachusetts Filed Herewith
Electric Company and AllEnergy
Marketing Company, L.L.C. dated
January 1, 1997.
10(g) Certificate stating that a copy of the Filed Herewith
report for the previous quarter has
been filed with interested state
commissions.
Financial
Statement
No. Description Page
--------- ------------------------------------- --------------
1-A New England Electric System Filed Herewith
Consolidated Income Statement for the
quarter and nine months ended September
30, 1997
1-B New England Electric System Filed Herewith
Consolidated Balance Sheet As of
September 30, 1997
2-A New England Energy, Inc. Income Filed Herewith
Statement for the quarter and nine
months ended September 30, 1997
2-B New England Energy, Inc. Balance Filed Herewith
Sheet as of September 30, 1997
3-A Granite State Energy, Inc. Income Filed Herewith
Statement for the quarter and nine
months ended September 30, 1997
3-B Granite State Energy, Inc. Balance Filed Herewith
Sheet as of September 30, 1997
4-A AllEnergy Marketing Company, LLC Filed Herewith
Consolidated Income Statement for
the quarter and nine months ended
September 30, 1997
4-B AllEnergy Marketing Company, LLC Filed Herewith
Consolidated Balance Sheet as of
September 30, 1997
<PAGE>
SERVICE AGREEMENT
BY AND BETWEEN
MASSACHUSETTS ELECTRIC COMPANY
AND
AllEnergy MARKETING, LLC
This Agreement is made and entered into as of the 1st day of January,
1997 (this "Agreement") by and between AllEnergy Marketing Company, LLC,
("Client") having offices at Three University Office Park, 95 Sawyer Road,
Waltham, MA 02154 and MASSACHUSETTS ELECTRIC COMPANY ("MECO") having
offices at 55 Bearfoot Road, Northborough, Massachusetts 01532.
Section 1: Description of Services
MECO will provide Client with customer services described in Exhibit A
(the "Services"). The descriptions of the Services in Exhibit A are
incorporated herein and made a part hereof.
Section 2: Extent of Agreement
MECO shall exercise all reasonable skill, care and diligence in
carrying out the Services, shall carry out its duties in accordance with
recognized professional standards and shall provide everything reasonably
necessary to complete the Services in accordance with the requirements of
this Agreement.
Section 3: Term
This Agreement shall be in effect as of the date hereof and through the
final billing cycle for each Customer (as defined in Exhibit A) following
termination of the Mass. Electric Pilot (as defined in Exhibit A), unless
earlier terminated by the parties as provided herein. Either party may
terminate this Agreement by providing 90 days written notice.
Notwithstanding anything to the contrary herein, the obligation to pay the
other party money due under this Agreement shall survive expiration and
termination of this Agreement. Further, upon expiration or termination of
this Agreement the parties shall cooperate with each other in order to
complete all outstanding matters related to this Agreement in a timely and
orderly manner.
Section 4: Payment Terms
Payment terms are set forth in Exhibit B, attached hereto and made a
part hereof.
Section 5: Limitation of Liability
In no event shall either party be liable to the other party or to any
other third party for any indirect, reliance, multiple, incidental,
special, consequential, or punitive damages (including those which arise
under M.G.L. c. 93A) connected with or arising out of the Agreement,
including, but not limited to, from MECO's performance of any Services
hereunder, whether or not either party was advised of the possibility of
such damages. In no event shall MECO be liable in contract, tort, or
otherwise (including negligence, warranty, or strict liability) for amounts
in excess of the total of all amounts earned by MECO in connection with
this Agreement, whether or not MECO was advised of the possibility of such
damages.
Section 6: Warranties
MECO and its affiliates, successors and assigns make no WARRANTY OF
ANY KIND, EITHER EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE
with respect to the Services.
<PAGE>
Section 7: Indemnification
To the fullest extent permitted by law, Client shall indemnify and hold
harmless, and at MECO's option, defend MECO and its affiliates, and their
officers, directors, employees, agents, servants, and assigns
(collectively, "MECO Parties") from and against any and all claims and /or
liability for losses, expenses, damage to property, injury to or death of
any person, including, but not limited to, Client's employees, MECO's and
its affiliates' employees, subcontractors and subcontractors' employees,
or any other liability incurred by MECO or its affiliates, including
expenses, legal or otherwise, caused wholly or in part by any negligent,
grossly negligent or willful, act or omission of Client, its officers,
directors, employees, agents, servants, or assigns arising out of this
Agreement, except to the extent caused by any negligent, grossly negligent
or willful, act or omission of the MECO Parties.
Section 8: Assignment and Subcontracting
MECO shall not assign or subcontract the Services or any part thereof
without Client's written consent, which Client shall not unreasonably
withhold. Client may not assign its rights or obligations under this
Agreement except with the written consent of MECO.
Section 9: Independent Contractor
MECO is, and shall at all times remain, an independent contractor.
Section 10: Entire Agreement
This Agreement constitutes the entire Agreement between the parties
with respect to the Services and all previous representations, either
written or oral, are hereby annulled and superseded.
Section 11: No Third Party Beneficiaries
The work performed by MECO under this Agreement is for Client's use and
benefit only, and not for the use and benefit of any other person, party,
or entity. Any use of or reliance upon the work product provided under or
in connection with this Agreement by any party other than Client shall be
at the sole risk of such party. MECO shall have no liability under
contract, third party beneficiary theory, tort, strict liability, or
otherwise for any third party's use or reliance upon work performed
pursuant to this Agreement.
Section 12: Confidentiality
MECO agrees to take reasonable measures to hold in confidence all
pricing related information provided and specifically designated by Client
as Confidential Information, other than that of a clearly public nature or
that which Client has acquired from other sources and except as otherwise
required to be disclosed by law, regulation or judicial or administrative
order.
Section 13: Force Majeure
MECO shall not be considered in default under this Agreement or
responsible in tort, strict liability, contract or other legal theory to
Client for damages of any description for any interruption or failure of
service or deficiency in the quality or quantity of service, or any other
failure to perform if such failure is caused by factors beyond MECO's
reasonable control, including without limitation, storm, flood, lightning,
earthquake, fire, explosion, equipment failure, civil disturbance, labor
dispute, act of God or the public enemy, action of a court or public
authority, scheduled or unscheduled withdrawal of facilities from operation
for maintenance or repair, or any other cause beyond the reasonable control
of MECO; provided, however, that MECO shall use reasonable efforts to
remedy or correct any such failure or interruption as soon as reasonably
possible.
<PAGE>
Section 14: Amendments and Modifications
This Agreement may not be amended, modified, superseded, or waived, in
whole or in part, except by a written instrument signed by authorized
representatives of each of the parties hereto. A waiver in one or more
instances of any rights under this Agreement shall not constitute a waiver
of such rights for other or future instances.
Section 15: Enforceability
Should any portion of this Agreement be judicially declared invalid,
unenforceable, or void, such decision shall not have the effect of
invalidating or voiding the remainder of this Agreement, and the parties
hereto agree that the portion or portions of this Agreement so held to be
invalid, unenforceable, or void shall be deemed to have been stricken and
the remainder shall have the same force and effect as if said portions or
portions had never been included herein.
Section 16: Headings
Headings are provided herein for the convenience of the parties and
shall not be construed to explain or modify any part of this Agreement.
Section 17: Notices
Except as otherwise provided in this Agreement, any notices under this
Agreement shall be in writing and shall be sufficient if delivered by (I)
hand, (ii) U. S. Mail, first class postage pre-paid, or (iii) facsimile,
with confirmation of receipt to the parties as follows:
For MASSACHUSETTS ELECTRIC COMPANY:
Anthony C. Pini
Vice President
55 Bearfoot Road
Northborough, Massachusetts 01532
Phone: (508) 357- 4610
Facsimile: (508) 357- 4655
For ALLEnergy MARKETING COMPANY, LLC:
Marcy Reed
Vice President and Treasurer
Three University Office Park
95 Sawyer Road
Waltham, MA 02154
Phone: (617)642-9502
Fax: (617 642-9504
Section 18: Applicable Law
This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts without regard to the
principles of conflict of laws contained therein.
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by its duly authorized representative as of the day and the year
first set forth above.
AllEnergy MARKETING COMPANY, LLC
By: ___________________________________
Title: __________________________________
MASSACHUSETTS ELECTRIC COMPANY
By: ____________________________________
Title: ___________________________________
<PAGE>
EXHIBIT A
SERVICES
---------
Client has requested that MECO provide it with customer service support for
all of their customers participating in the Massachusetts Electric
Company's service territory under the Massachusetts Electric Company
Choice: New England Pilot Program ("Mass Electric Pilot"). Customer service
support which includes, but is not limited to, providing customer service
representatives to answer phone calls from the Clients customers will be
provided consistently with the pilot program design, its administrator's
rules, and the DPU approval dated April 3, 1996.
MECO will provide the Client with a unique toll free (888) phone number
that will be printed on the Client portion of the bill. Phones will be
answered using the Clients name, responding to a wide variety of call
types. Customer service and marketing support will be provided Monday -
Friday 8:00am-4:30pm. Calls received after 4:30 will be routed to a voice
message box giving the business hours and offering the customer an
opportunity to leave a message for a return phone call during normal
business hours.
Customer Service Support:
The MECO customer service staff will answer customer questions pertaining
to the Client portion of the bill and perform any research and analysis
work needed to resolve a customer's inquiry. The staff will be supplied
with bill and payment history for each customer. This history includes
total amount due, amount of payments made, and dates of account activity.
Sales and Marketing Support:
MECO will support sales and marketing programs for the Client. To ensure
that quality service is provided to the Client, MECO will develop and
deliver training to its customer services representatives and coaches to
support the marketing programs of the Client.
All sales and marketing materials mailed to prospective or existing
customers must be reviewed and signed off on by MECO ten days before
material is to be mailed.
Charges associated for providing sales and marketing support and training
needed to support such services are described in Exhibit B.
Reporting:
MECO has the ability to develop customized reports outlining pertinent
information such as: average speed of answer, number of calls received,
average length of call, etc., for all of Client's customers. Requests to
create a customized report will result in additional charges in accordance
with Exhibit B.
Notice of Modifications:
MECO will evaluate any request received and quote each on a time and
expense basis.
Client shall submit all requests for modification to services via certified
mail to the following:
Massachusetts Electric Customer Service & Operations Center
c/o Patrick J. Connelly
Director, Customer Service Center
55 Bearfoot Road
Northboro, MA 01532
<PAGE>
EXHIBIT B
PRICING
--------
Charges for Customer Service Support:
All services outlined under this contract will be provided on a time and
expense basis and be invoiced at cost to the Client.
Invoices/Payment Terms:
Client will receive a monthly invoice from MECO. Payment is due upon
receipt. Upon the expiration or termination of the parties' obligations
under this Agreement, any monies or other charges due to either party to
this Agreement shall be paid within 30 days; provided, however, any refund
that arises under Price Adjustment below shall be payable from MECO within
30 days from the date that it has the necessary information to calculate
the true up pricing. Bills not paid within the 30 days by either party
shall bear interest at the rate of 1 1/2% per month on any unpaid balance.
Reporting:
MECO will review any request to create a customized report and charge
Client on a time and expense basis at actual cost to develop such reports.
Training:
Any cost incurred as a result of developing, delivering or the actual
training of customer service representative and coaches will be tracked and
invoiced on a time and expense basis.
Voice and Data Communications:
MECO will provide Client with access to shared Local Exchange Carriers
(LEC) or Long Distance Carriers (LDC) facilities. Client will be invoiced
based on their prorated share of all usage and access charges.
1. At the Clients' option, MECO would establish facilities that are
exclusively provided by Local Exchange Carriers (LEC) or Long Distance
Carriers (LDC). Client would be invoiced for all toll charges and
monthly costs associated with this service.
Price Adjustment:
The charges for customer related services set forth herein will be adjusted
to reflect actual costs incurred by MECO based upon the Public Utility
Holding Company Act of 1935 and SEC regulations and orders. Said
adjustments will be calculated annually following the close of each
calendar year applicable to this Agreement.
<PAGE>
CERTIFICATE
-----------
A copy of the Form U-9C-3 report for the previous quarter (quarter
ended June 30, 1997) has been filed with the interested state commissions
in accordance with Rule 58 under the Public Utility Holding Company Act of
1935.
The names and addresses of such state commissions are as follows:
Mrs. Luly Massaro, Clerk
Rhode Island Public Utilities Commission
100 Orange Street
Providence, Rhode Island 02903
Mary L. Cottrell, Secretary
Massachusetts Department of Public Utilities
100 Cambridge Street
Boston, MA 02202
Mr. Thomas B. Getz
Executive Drirector and Secretary
New Hampshire Public Utilities Commisssion
8 Old Suncook Road
Concord, New Hampshire 03301
SIGNATURE:
NEW ENGLAND ELECTRIC SYSTEM
s/Michael E. Jesanis
By_______________________________
Name: Michael E. Jesanis
Title: Treasurer
Date: November 21, 1997
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>
<TABLE>
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Statements of Consolidated Income
Period Ended September 30, 1997
(expressed in millions, rounded to hundred thousands of dollars)
(Unaudited, subject to adjustment)
<CAPTION>
Quarter Nine Months
------- -----------
<S> <C> <C>
Operating revenue $628.6 $1,844.4
------ --------
Operating expenses:
Fuel for generation 85.9 271.0
Purchased electric energy 134.8 406.5
Other operation 128.3 393.3
Maintenance 33.0 103.5
Depreciation and amortization 63.1 188.2
Taxes, other than income taxes 36.9 112.9
Income taxes 42.1 102.9
------ --------
Total operating expenses 524.1 1,578.3
------ --------
Operating income 104.5 266.1
Other income:
Equity in income of generating companies 2.5 7.6
Other income (expense), net (4.5) (9.3)
------ --------
Operating and other income 102.5 264.4
------ --------
Interest:
Interest on long-term debt 26.1 80.4
Other interest 5.6 13.2
Allowance for borrowed funds used
during construction (.4) (1.4)
------ --------
Total interest 31.3 92.2
------ --------
Income after interest 71.2 172.2
Preferred dividends of subsidiaries 1.9 5.5
Minority interests 1.6 4.9
------ --------
Net income $ 67.7 $ 161.8
====== ========
</TABLE>
<PAGE>
<TABLE>
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES
Consolidated Balance Sheet
At September 30, 1997
(expressed in millions, rounded to hundred thousands of dollars)
(Unaudited, subject to adjustment)
<CAPTION>
ASSETS
------
<S> <C>
Utility plant, at original cost $5,821.6
Less accumulated provisions for depreciation and amortization 1,956.5
--------
3,865.1
Construction work in progress 51.0
--------
Net utility plant 3,916.1
--------
Oil and gas properties, at full cost 1,296.3
Less accumulated provision for amortization 1,129.9
--------
Net oil and gas properties 166.4
--------
Investments:
Nuclear power companies, at equity 50.3
Other subsidiaries, at equity 43.9
Other investments 109.2
--------
Total investments 203.4
--------
Current assets:
Cash 6.5
Accounts receivable, less reserves of $20,395,000 219.4
Unbilled revenues 61.8
Fuel, materials, and supplies, at average cost 73.0
Prepaid and other current assets 71.4
--------
Total current assets 432.1
--------
Deferred charges and other assets 572.1
--------
$5,290.1
========
CAPITALIZATION AND LIABILITIES
------------------------------
Capitalization:
Common share equity:
Common shares, par value $1 per share:
Authorized - 150,000,000 shares
Outstanding - 64,969,652 shares $ 65.0
Paid-in capital 736.8
Retained earnings 934.3
Treasury stock - 149,238 shares (8.7)
Unrealized gain on securities, net 3.8
--------
Total common share equity 1,731.2
Minority interests in consolidated subsidiaries 46.2
Cumulative preferred stock of subsidiaries 126.2
Long-term debt 1,481.9
--------
Total capitalization 3,385.5
--------
Current liabilities:
Long-term debt due within one year 82.9
Short-term debt 139.7
Accounts payable 133.0
Accrued taxes 25.1
Accrued interest 21.5
Dividends payable 37.0
Other current liabilities 135.3
--------
Total current liabilities 574.5
--------
Deferred federal and state income taxes 723.6
Unamortized investment tax credits 90.1
Other reserves and deferred credits 516.4
--------
$5,290.1
========
</TABLE>
<PAGE>
<TABLE>
NEW ENGLAND ENERGY INCORPORATED
Statements of Income
Period Ended September 30, 1997
(expressed in millions, rounded to hundred thousands of dollars)
(Unaudited, Subject to Adjustment)
<CAPTION>
Quarter Nine Months
------- ----------
<S> <C> <C>
Operating revenue:
Sales of fuel to an affiliate $ 5.7 $ 33.1
Loss passed on to an affiliate (2.4) (18.3)
Accrued loss to be passed on to an affiliate 7.1 21.1
Sales to nonaffiliates:
Oil 1.1 3.9
Gas 6.7 27.5
------ ------
Total operating revenue 18.2 67.3
------ ------
Operating expenses:
Purchases of fuel for an affiliate 3.2 14.7
Amortization of cost of fuel reserves 15.6 50.9
Production costs .8 3.2
------ ------
Total operating expenses 19.6 68.8
------ ------
Operating income/(loss) (1.4) (1.5)
Other income/(expense):
Interest expense (0.5) (1.7)
State taxes 0.5 (1.1)
------ ------
Operating and other income/(loss) (1.4) (4.3)
------ ------
Federal income taxes:
Current federal income taxes 0.5 10.0
Deferred federal income taxes (1.6) (13.2)
------ ------
Net federal income taxes (1.1) (3.2)
------ ------
Net income $ (0.3) $ (1.1)
====== ======
</TABLE>
<PAGE>
<TABLE>
NEW ENGLAND ENERGY INCORPORATED
Balance Sheet
At September 30, 1997
(expressed in millions, rounded to hundred thousands of dollars)
(Unaudited, Subject to Adjustment)
<CAPTION>
ASSETS
------
<S> <C>
Current assets:
Cash, including temporary cash investments
of $1,725,000 with affiliated companies $ 1.8
Accounts receivable:
From sales of coal 3.8
Accrued loss to be passed on to affiliate 21.5
Other 0.2
Prepaid expenses 0.3
---------
Total current assets 27.6
---------
Property at cost:
Cost of fuel reserves:
Exploration and development costs:
Samedan 754.6
Dorchester 67.4
Cost of capital 455.1
Other 39.3
---------
1,316.4
Less-accumulated amortization (1,129.9)
---------
Net cost of fuel reserves 186.5
Work in process - Samedan 3.6
---------
Total property 190.1
---------
$ 217.7
=========
LIABILITIES AND PARENT COMPANY'S INVESTMENT
-------------------------------------------
Current liabilities:
Accrued exploration and development costs $ 23.7
Accounts payable 4.5
Accrued interest 0.7
Accrued taxes 4.9
---------
Total current liabilities 33.8
---------
Deferred income taxes 59.8
---------
Deferred credit 2.0
---------
Notes payable to banks under credit agreement 125.0
---------
Parent company's investment:
Subordinated notes payable to parent 22.7
Common stock, par value $1 per share, and
other paid-in capital 0.2
Accumulated deficit (25.8)
---------
Total parent company's investment (2.9)
---------
$ 217.7
=========
Accrued exploration and development costs:
Total
(All Samedan)
-------------
Exploration $11.7
Development 12.3
Work in process (0.9)
Advance 0.6
------
$23.7
======
</TABLE>
<PAGE>
<TABLE>
GRANITE STATE ENERGY, INC.
Statements of Income
(expressed in millions, rounded to hundred thousands of dollars)
Period Ended September 30, 1997
(Unaudited, subject to adjustment)
<CAPTION>
Quarter Nine Months
------- -----------
<S> <C> <C>
Operating revenue $0.1 $ 0.4
---- -----
Operating expenses:
Purchased electric energy 0.1 0.4
Other operating expenses - 0.1
---- -----
Total operating expenses 0.1 0.5
---- -----
Net loss - $(0.1)
==== =====
</TABLE>
<PAGE>
<TABLE>
GRANITE STATE ENERGY, INC.
Balance Sheet
At September 30, 1997
(expressed in millions, rounded to hundred thousands of dollars)
(Unaudited, subject to adjustment)
<CAPTION>
ASSETS
------
<S> <C>
Current assets:
Cash $ 0.1
Customer accounts receivable and unbilled revenue 0.1
-----
Total assets $ 0.2
=====
LIABILITIES AND PARENT COMPANY'S INVESTMENT
-------------------------------------------
Parent company's investment:
Common stock, par value $1 per share, and
subordinated notes payable to parent $ 0.5
Accumulated deficit (0.3)
-----
Total liabilities and parent company's investment $ 0.2
=====
</TABLE>
<PAGE>
<TABLE>
ALLENERGY MARKETING COMPANY, LLC
Consolidated Income Statements
Period Ended September 30, 1997
(expressed in millions, rounded to hundred thousands of dollars)
(Unaudited, subject to adjustment)
<CAPTION>
Quarter Nine Months
------- ----------
<S> <C> <C>
Revenues $ 10.8 $41.3
----- -----
Operating expenses
Cost of sales 10.4 39.8
Selling, general and administrative 4.7 10.8
Consulting 0.4 1.1
Member service charges 0.1 0.4
----- -----
Total operating expenses 15.6 52.1
----- -----
Operating loss (4.8) (10.8)
Other income, net 0.2 0.4
----- -----
Net loss $(4.6) $(10.4)
===== =====
</TABLE>
<PAGE>
<TABLE>
ALLENERGY MARKETING COMPANY, LLC
Consolidated Balance Sheet
At September 30, 1997
(expressed in millions, rounded to hundred thousands of dollars)
(Unaudited, subject to adjustment)
<CAPTION>
Assets
------
<S> <C>
Cash $ 5.1
Accounts receivable 3.8
Unbilled revenue 1.3
Inventory 5.5
Prepaid expenses 0.4
Other current assets 2.0
-----
Total current assets 18.1
Investment in Weatherwise, U.S.A. 0.5
Fixed assets 0.8
Goodwill 0.3
Other assets 0.1
-----
Total assets $19.8
=====
Liabilities and Members' Equity
-------------------------------
Accounts payable $ 2.3
Accounts payable - members 0.2
Accrued expenses 3.5
Unearned revenue 2.4
Other current liabilities 0.2
-----
Total current liabilities 8.6
Capital lease obligation 0.2
-----
Total liabilities 8.8
Members' equity 11.0
-----
Total liabilities and members' equity $19.8
=====
</TABLE>
