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File No. 70-8803
CERTIFICATE OF NOTIFICATION
(Rule 24)
SECURITIES AND EXCHANGE COMMISSION
BY
NEES Energy, Inc.
In accordance with the order of the Securities and Exchange
Commission dated May 23, 1996, the following is a report for the
fourth quarter of 1997:
1. NEES Energy, Inc. (NEES Energy), a Massachusetts
Corporation,was formed on June 14, 1996. The corporation was
capitalized on August 9, 1996 when one thousand shares of NEES
Energy common stock were issued and sold to New England
Electric System (NEES).
2. As of December 31, 1997 NEES had purchased 1,000 shares of NEES
Energy common stock and made subordinated loans totaling
$22,717,000 to NEES Energy.
3. As of December 31, 1997 NEES Energy had no permanent personnel
and during the fourth quarter of 1997 there were no individuals
assigned on a substantially full-time basis.
4. During the fourth quarter of 1997 NEES Energy had no kilowatt
hours sold or marketed.
5. In December 1996, following SEC approval of a joint venture
with a subsidiary of Eastern Enterprises (HCAR No. 35-26633),
NEES Energy invested in AllEnergy Marketing Company,
L.L.C.(AllEnergy), a limited liability corporation. AllEnergy
is engaged in the business of marketing and selling energy
commodities and energy related services. In December of 1997,
NEES Energy increased its ownership share to 99%. The
remaining 1% is owned by NEES Global Transmission, Inc, an
affiliated company. NEES Energy will invest, from time to time
amounts not to exceed fifty million dollars in AllEnergy. The
investment during the fourth quarter of 1997 was $7,772,230.
6. Attached in Exhibits A through C are a consolidated balance
sheet as of December 31, 1997, consolidated income statements
and statements of cash flow for the quarter and twelve months
ended December 31, 1997.
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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 No. 70-8803) to be signed on its
behalf by the undersigned officer thereunto duly authorized.
By: s/John G. Cochrane
___________________________
John G. Cochrane
Treasurer
Date: March 2, 1998
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
A Consolidated Balance Sheet at Filed
December 31, 1997 herewith
(Unaudited, subject to adjustment)
B1 Consolidated Statement of Income and Filed
Accumulated Deficit For the Quarter herewith
ended December 31, 1997
(Unaudited, Subject to Adjustment)
C1 Consolidated Statement of Cash Flows Filed
For the Quarter Ended December 31, 1997 herewith
(Unaudited, Subject to Adjustment)
B2 Consolidated Statement of Income and Filed
Accumulated Deficit For the Twelve herewith
Months ended December 31, 1997
(Unaudited, Subject to Adjustment)
C2 Consolidated Statement of Cash Flows Filed
For the Twelve Months December 31, 1997 herewith
(Unaudited, Subject to Adjustment)
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Exhibit A
NEES Energy, Inc.
Consolidated Balance Sheet (Thousands of Dollars)
As of December 31, 1997
(Unaudited, Subject to Adjustment)
ASSETS
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Current assets:
Cash $ 1,609
Accounts receivable 9,540
Inventory 2,892
Unbilled revenue 5,117
Prepaid and other current assets 1,980
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Total current assets 21,138
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Fixed assets $ 1,728
Less accumulated depreciation (324)
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Net fixed assets 1,404
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Other investments 580
Goodwill 297
Deferred federal and state income taxes 725
Other assets 4,622
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$28,766
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LIABILITIES AND CAPITALIZATION
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Current liabilities:
Accounts payable $ 2,382
Accounts payable to affiliates 358
Accrued liabilities 12,182
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Total current liabilities 14,922
Other long-term liabilities 319
Capital lease obligation 100
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Total liabilities 15,341
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Parent company's investment:
Common stock, par value $1 per share 1
Subordinated notes payable to parent 22,717
Accumulated deficit (9,484)
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13,234
Minority interest 191
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$28,766
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Exhibit B1
NEES ENERGY, INC.
Consolidated Statement of Income and Accumulated Deficit (Thousands of Dollars)
For the Quarter Ended December 31, 1997
(Unaudited, Subject to Adjustment)
INCOME
Equity in income/(loss) of AllEnergy
Marketing Co., L.L.C. $(2,145)
Revenue (1) 10,909
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Total income 8,764
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EXPENSES
Operating expenses
Cost of sales 11,867
Depreciation 47
Selling, general and administrative expenses 1,822
Income tax (1,886)
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Total operating expenses 11,850
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Other income (expense), net (1,366)
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Net income/(loss) (4,452)
Retained earnings at beginning of period (5,032)
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Accumulated deficit at end of period $(9,484)
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(1) Represents revenue of subsidiary (AllEnergy Marketing Co., L.L.C.)
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Exhibit C1
NEES Energy, Inc.
Consolidated Statement of Cash Flows (Thousands of Dollars)
For the Quarter Ended June 30, 1997
(Unaudited, Subject to Adjustment)
Operating activities:
Net income/(loss) $(4,452)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation 47
Deferred federal and state income taxes (725)
Undistributed loss in subsidiary 2,145
(Increase) decrease in accounts receivable (2,064)
Increase (decrease) in unbilled revenue (1,127)
Increase (decrease) in inventory 170
(Increase) decrease in prepaid and other
current assets 2,093
Increase (decrease) in accounts payable (261)
Increase (decrease) in accrued liabilities 1,304
Other, net (1,653)
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Net cash provided by (used in) operating activities (4,523)
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Investing activities:
Fixed asset expenditures (176)
Investment in AllEnergy Marketing Co., L.L.C. (4,708)
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Net cash used in investing activities (4,884)
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Financing activities:
Subordinated notes payable to parent-issues 11,937
Decrease in short-term debt (1,000)
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Net cash provided by financing activities 10,937
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Net increase (decrease) in cash and cash equivalents 1,530
Cash and cash equivalents at beginning of period 79
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Cash and cash equivalents at end of period $ 1,609
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Exhibit B2
NEES ENERGY, INC.
Consolidated Statement of Income and Accumulated Deficit (Thousands of Dollars)
For the Twelve Months Ended December 31, 1997
(Unaudited, Subject to Adjustment)
INCOME
Equity in income/(loss) of AllEnergy
Marketing Co., L.L.C. $(7,357)
Revenue (1) 10,909
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Total income 3,552
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EXPENSES
Operating expenses
Cost of sales 11,867
Depreciation 47
Selling, general and administrative expenses 1,950
Income tax (3,782)
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Total operating expenses 10,082
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Other income (expense), net (1,445)
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Net income/(loss) (7,975)
Retained earnings at beginning of period (1,509)
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Accumulated deficit at end of period $(9,484)
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(1) Represents revenue of subsidiary (AllEnergy Marketing Co., L.L.C.)
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Exhibit C2
NEES Energy, INC.
Statement of Cash Flows (Thousands of Dollars)
For the Twelve Months Ended December 31, 1997
(Unaudited, Subject to Adjustment)
Operating activities:
Net income/(loss) ($7,975)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation 47
Deferred federal and state income taxes (725)
Undistributed loss in subsidiary 7,357
(Increase) decrease in accounts receivable (2,062)
(Increase) decrease in unbilled revenue (1,127)
(Increase) decrease in inventory 170
(Increase) decrease in prepaid and other
current assets 2,935
Increase (decrease) in accounts payable (282)
Increase (decrease) in accrued liabilities 1,304
Other, net (1,653)
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Net cash provided by (used in) operating activities (2,011)
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Investing activities:
Fixed asset expenditures (176)
Investment in AllEnergy Marketing Co.,L.L.C. (13,708)
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Net cash used in investing activities (13,884)
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Financing Activities:
Subordinated notes payable to parent-issues 18,212
Decrease in short-term debt (1,000)
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Net cash provided by financing activities 17,212
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Net increase (decrease) in cash and cash equivalents 1,317
Cash and cash equivalents at beginning of period 292
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Cash and cash equivalents at end of period $ 1,609
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