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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 first
quarter of 1998:
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 March 31, 1998 NEES had purchased 1,000 shares of NEES
Energy common stock and made subordinated loans totaling
$29,662,500 to NEES Energy.
3. As of March 31, 1998 NEES Energy had no permanent personnel
and during the first quarter of 1998 there were no
individuals assigned on a substantially full-time basis.
4. During the first quarter of 1998 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
first quarter of 1998 was $7,895,000.
6. Attached in Exhibits A through C are a consolidated balance
sheet as of March 31, 1998, consolidated income statements
and statements of cash flows for the quarter and twelve
months ended March 31, 1998.
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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: June 1, 1998
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
A Consolidated Balance Sheet at Filed
March 31, 1998 herewith
(Unaudited, subject to adjustment)
B1 Consolidated Statement of Income and Filed
Accumulated Deficit For the Quarter herewith
ended March 31, 1998
(Unaudited, Subject to Adjustment)
C1 Consolidated Statement of Cash Flows Filed
For the Quarter Ended March 31, 1998 herewith
(Unaudited, Subject to Adjustment)
B2 Consolidated Statement of Income and Filed
Accumulated Deficit For the Twelve herewith
Months ended March 31, 1998
(Unaudited, Subject to Adjustment)
C2 Consolidated Statement of Cash Flows Filed
For the Twelve Months March 31, 1998 herewith
(Unaudited, Subject to Adjustment)
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Exhibit A
NEES Energy, Inc.
Consolidated Balance Sheet
(Thousands of Dollars)
As of March 31, 1998
(Unaudited, Subject to Adjustment)
ASSETS
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Current assets:
Cash $ 5,223
Accounts receivable and unbilled revenue 10,062
Inventory 2,238
Prepaid and other current assets 4,926
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Total current assets 22,449
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Fixed assets $ 1,901
Less accumulated depreciation (584)
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Net fixed assets 1,317
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Other investments 743
Goodwill 284
Deferred federal and state income taxes 725
Other assets 172
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$25,690
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LIABILITIES AND CAPITALIZATION
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Current liabilities:
Accounts payable $ 3,688
Accounts payable to affiliates 44
Accrued liabilities 5,930
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Total current liabilities 9,662
Other long-term liabilities 353
Capital lease obligation 100
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Total liabilities 10,115
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Parent company's investment:
Common stock, par value $1 per share 1
Subordinated notes payable to parent 29,663
Accumulated deficit (14,459)
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15,205
Minority interest 370
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$25,690
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Exhibit B1
NEES ENERGY, INC.
Consolidated Statement of Income and Accumulated Deficit
(Thousands of Dollars)
For the Quarter Ended March 31, 1998
(Unaudited, Subject to Adjustment)
INCOME
Revenue (1) $35,849
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Total income 35,849
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EXPENSES
Operating expenses
Cost of sales 37,094
Depreciation 272
Selling, general and administrative expenses 5,932
Income tax (2,639)
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Total operating expenses 40,659
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Other income (expense), net (165)
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Net income/(loss) (4,975)
Accumulated deficit at beginning of period (9,484)
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Accumulated deficit at end of period $(14,459)
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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 March 31, 1998
(Unaudited, Subject to Adjustment)
Operating activities:
Net income/(loss) $(4,975)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation and amortization 272
(Increase) decrease in accounts receivable and
Unbilled revenue 4,595
Increase (decrease) in inventory 654
(Increase) decrease in prepaid and other
current assets (2,946)
Increase (decrease) in accounts payable 992
Increase (decrease) in accrued liabilities (6,252)
Other, net 4,741
--------
Net cash provided by (used in) operating activities (2,919)
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Investing activities:
Investment in Weatherwise (240)
Fixed asset expenditures (173)
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Net cash used in investing activities (413)
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Financing activities:
Subordinated notes payable to parent-issues 6,946
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Net increase (decrease) in cash and cash equivalents 3,614
Cash and cash equivalents at beginning of period 1,609
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Cash and cash equivalents at end of period $ 5,223
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Exhibit B2
NEES ENERGY, INC.
Consolidated Statement of Income and Accumulated Deficit
(Thousands of Dollars)
For the Twelve Months Ended March 31, 1998
(Unaudited, Subject to Adjustment)
INCOME
Equity in income/(loss) of AllEnergy
Marketing Co., L.L.C. $(6,165)
Revenue (1) 46,758
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Total income 40,593
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EXPENSES
Operating expenses
Cost of sales 48,961
Depreciation 319
Selling, general and administrative expenses 7,769
Income tax (5,964)
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Total operating expenses 51,085
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Other income (expense), net (1,610)
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Net income/(loss) (12,102)
Accumulated deficit at beginning of period (2,357)
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Accumulated deficit at end of period $(14,459)
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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 March 31, 1997
(Unaudited, Subject to Adjustment)
Operating activities:
Net income/(loss) ($12,102)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation and amortization 319
Deferred federal and state income taxes (725)
Undistributed loss in subsidiary 6,165
(Increase) decrease in accounts receivable and
Unbilled revenue 1,404
(Increase) decrease in inventory 824
(Increase) decrease in prepaid and other
current assets (328)
Increase (decrease) in accounts payable 647
Increase (decrease) in accrued liabilities (4,948)
Other, net 3,088
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Net cash provided by (used in) operating activities (5,656)
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Investing activities:
Fixed asset expenditures (349)
Investment in Weatherwise (240)
Investment in AllEnergy Marketing Co.,L.L.C. (10,208)
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Net cash used in investing activities (10,797)
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Financing Activities:
Subordinated notes payable to parent-issues 22,608
Decrease in short-term debt (1,000)
--------
Net cash provided by financing activities 21,608
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Net increase (decrease) in cash and cash equivalents 5,155
Cash and cash equivalents at beginning of period 68
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Cash and cash equivalents at end of period $ 5,223
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