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File Nos. 70-7950/70-8555
CERTIFICATE OF NOTIFICATION
(Rule 24)
SECURITIES AND EXCHANGE COMMISSION
BY
NEW ENGLAND ELECTRIC RESOURCES, INC. (NEERI)
In accordance with the order of the Securities and Exchange
Commission dated September 4, 1992, the following is a report for
the fourth quarter of 1996:
1. NEERI is a Massachusetts corporation which was formed
in January 1992. NEERI was not capitalized until
October 13, 1992 when one thousand shares of NEERI
common stock were issued to New England Electric System
(NEES).
To assist Nantucket Electric Company (NEC) in meeting
its short-term needs for reliable energy, NEERI
provided materials, delivery, installation,
interconnection and start-up testing services for a
fully automated two unit diesel driven electric
generating plant at the existing NEC Airport Generating
Station. The agreement provides for billing over a
three year period at $25,070 per month. As of December
31, 1996, $125,350 had not yet been billed in
accordance with a letter agreement and is included in
Accounts Receivable.
NEERI entered into an agreement with a company located
in Pennsylvania to provide ongoing work as a
subcontractor for electric meter retrofit services.
The work took place in Massachusetts. $51,407 was
recognized in the fourth quarter.
NEERI entered into ten agreements to provide
construction related services at job sites in Rhode
Island, Massachusetts, New York, West Virginia,
Minnesota, Pennsylvania, New Hampshire and Vermont. A
total of $790,467 was recognized under these contracts
in the fourth quarter of 1996. Seven of these
contracts expired in the fourth quarter of 1996, two
will expire in the first quarter of 1997, and one has
an indefinite expiration.
NEERI also entered into an agreement to provide
consulting services for the government of Thailand, for
which $93,700 was recognized in the fourth quarter of
1996. This agreement will expire in the first quarter
of 1997.
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2. As of December 31, 1996, NEES had purchased 1,000
shares of NEERI common stock and made subordinated
loans totaling $8,448,999 to NEERI.
3. As of December 31, 1996, NEERI employed no permanent
personnel.
4. As of December 31, 1996, NEERI had not purchased or
received from associated companies of NEES any
intellectual property.
5. In July, 1996 NEERI International, a wholly-owned
subsidiary of NEERI, was formed under the laws of the
Cayman Islands. NEERI owns two shares of NEERI
International, which will serve as a Project Parent for
prospective EWG/FUCO investments under File No.
70-8783. NEERI International has no employees, and had
no significant activity in the quarter ending December
31, 1996.
6. Attached in Exhibits A through C are the consolidated
financial statements of NEERI and NEERI International.
These statements include a balance sheet, twelve months
ending income statement, and statement of cash flow.
All significant intercompany transactions have been
eliminated.
In May, 1995 NEERI invested $999,999 in Separation
Technologies, Inc. (STI). This investment is in the
form of 153,846 shares of 6% cumulative convertible
preferred stock. NEERI also provides maintenance
services for STI equipment on an as needed basis, for
which $6,510 was recognized in the fourth quarter of
1996.
In July, 1996 NEERI invested $475,001 in Monitoring
Technologies, Inc. This investment is in the form of
271,429 shares of Series E convertible preferred stock.
NEERI has expended $54,906 during the fourth quarter in
research and development activities relating to an
environmental technology.
NEERI expended approximately $1,483,172 during the
fourth quarter in connection with preliminary research
and development activities relating to potential
investments in exempt wholesale generators and foreign
utility companies. $196,038 was spent for potential
generation investments and $1,287,134 for potential
transmission investments.
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SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned company has duly caused this
certificate of notification (Commission's File Nos. 70-7950 and
70-8555) to be signed on its behalf by the undersigned officer
thereunto duly authorized.
NEW ENGLAND ELECTRIC RESOURCES, INC.
s/John G. Cochrane
By: _________________________________
John G. Cochrane
Treasurer
Date: February 25, 1997
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
A Balance Sheet at December 31, 1996 Filed
(Unaudited, subject to adjustment) herewith
B Statement of Income and Accumulated Filed
Deficit for twelve months ended herewith
December 31, 1996 (Unaudited,
subject to adjustment)
C Statement of Cash Flows for twelve Filed
months ended December 31, 1996 herewith
(Unaudited, subject to adjustment)
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Exhibit A
NEW ENGLAND ELECTRIC RESOURCES, INC.
Balance Sheet
December 31, 1996
(Unaudited, Subject to Adjustment)
ASSETS
- ------
Current assets:
Cash $ 180,836
Accounts receivable 1,359,932
Accounts receivable from associated companies 2,746
Tax benefit receivable 866,287
-----------
Total current assets 2,409,801
-----------
Investment in Separation Technologies, Inc.,
at cost 999,999
Investment in Monitoring Technologies, Inc.,
at cost 475,001
-----------
Total other assets 1,475,000
-----------
Total assets $ 3,884,801
===========
LIABILITIES AND PARENT COMPANY'S INVESTMENT
- -------------------------------------------
Current liabilities:
Accounts payable to associated companies $ 465,891
Accounts payable 238,342
Tax collections payable 382
-----------
Total current liabilities 704,615
Accumulated deferred income taxes 51,600
-----------
Total liabilities 756,215
Parent company's investment:
Common stock, par value $1 per share 1,000
Subordinated notes payable to parent 8,448,999
Retained deficit (5,321,413)
-----------
Total parent company's investment 3,128,586
-----------
Total liabilities and parent company's
investment $ 3,884,801
===========
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Exhibit B
NEW ENGLAND ELECTRIC RESOURCES, INC.
Statement of Income and Retained Deficit
For the Twelve Months Ended December 31, 1996
(Unaudited, Subject to Adjustment)
INCOME
- ------
Services rendered to nonassociated companies $ 1,379,230
-----------
Total Income $ 1,379,230
-----------
EXPENSE
- -------
Administrative and General Expenses $ 7,339,530
Income taxes (2,352,400)
-----------
Total Expenses 4,987,130
-----------
Net Income/(Loss) $(3,607,900)
===========
Retained earnings/(deficit) at beginning of period (1,713,513)
-----------
Retained earnings/(deficit) at end of period $(5,321,413)
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Exhibit C
NEW ENGLAND ELECTRIC RESOURCES, INC.
Statement of Cash Flows
For the Twelve Months Ended December 31, 1996
(Unaudited, Subject to Adjustment)
Operating Activities:
Net income/(loss) $(3,607,900)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Deferred income taxes (123,900)
(Increase)/decrease in tax benefit receivable (364,687)
(Increase)/decrease in accounts receivable (1,043,121)
Increase/(decrease) in accounts payable 550,125
Increase/(decrease) in accrued taxes 382
(Increase)/decrease in deferred charges and
other assets 125,350
-----------
Net cash used in operating activities $(4,463,751)
===========
Investing Activities:
Investment in Monitoring Technologies, Inc., $ (475,001)
at cost -----------
Net cash used in investing activities $ (475,001)
===========
Financing Activities:
Subordinated notes payable to parent-issues $ 5,050,000
-----------
Net cash provided by financing activities $ 5,050,000
===========
Net increase/(decrease) in cash and cash
equivalents $ 111,248
Cash and cash equivalents at beginning of period 69,588
-----------
Cash and cash equivalents at end of period $ 180,836
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