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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 third
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 September 30, 1998 NEES had purchased 1,000 shares of
NEES Energy common stock and made subordinated loans and
other paid-in capital contributions to NEES Energy totaling
$61,342,000 and $10,805,000, respectively.
3. As of September 30, 1998 NEES Energy had no permanent
personnel and during the third quarter of 1998 there were no
individuals assigned on a substantially full-time basis.
4. During the third 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, Inc, an affiliated
company. NEES Energy's investment in AllEnergy during the
third quarter of 1998 was $20,806,250.
6. During the second quarter, a new energy related company was
formed in Delaware and is 100% owned by NEES Energy; this
company is also named AllEnergy Marketing Co., L.L.C.
(AllEnergy DE). It is presently planned to merge the
Massachusetts AllEnergy Marketing Co., L.L.C. with and into
AllEnergy DE. Following such a merger, AllEnergy DE would be
the surviving entity.
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7. Attached in Exhibits A through C are a consolidated balance
sheet as of September 30, 1998, consolidated income
statements and statements of cash flows for the quarter and
twelve months ended September 30, 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.
NEES ENERGY, INC.
By: s/Gregory A. Hale
___________________________
Gregory A. Hale
Clerk
Date: November 30, 1998
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
A Consolidated Balance Sheet at Filed
September 30, 1998 herewith
(Unaudited, subject to adjustment)
B1 Consolidated Statement of Income and Filed
Accumulated Deficit For the Quarter herewith
ended September 30, 1998
(Unaudited, Subject to Adjustment)
C1 Consolidated Statement of Cash Flows Filed
For the Quarter Ended September 30, 1998 herewith
(Unaudited, Subject to Adjustment)
B2 Consolidated Statement of Income and Filed
Accumulated Deficit For the Twelve herewith
Months ended September 30, 1998
(Unaudited, Subject to Adjustment)
C2 Consolidated Statement of Cash Flows Filed
For the Twelve Months September 30, 1998 herewith
(Unaudited, Subject to Adjustment)
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Exhibit A
NEES Energy, Inc.
Consolidated Balance Sheet
(Thousands of Dollars)
As of September 30, 1998
(Unaudited, Subject to Adjustment)
ASSETS
- ------
Current assets:
Cash $ 6,504
Accounts receivable and unbilled revenue 22,483
Inventory 17,088
Prepaid and other current assets 5,199
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Total current assets 51,274
-------
Fixed assets 6,397
Less accumulated depreciation (876)
--------
Net fixed assets 5,521
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Other investments 794
Goodwill 12,586
Deferred federal and state income taxes 725
Other assets 5,149
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$76,049
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LIABILITIES AND CAPITALIZATION
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Current liabilities:
Accounts payable $ 10,640
Accrued liabilities 11,152
Capital lease - current portion 63
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Total current liabilities 21,855
Other long-term liabilities 945
Capital lease obligation 90
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Total liabilities 22,890
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Parent company's investment:
Common stock, par value $1 per share 1
Subordinated notes payable to parent 61,342
Other paid-in capital 10,805
Accumulated deficit (19,428)
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52,720
Minority interest 439
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$76,049
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Exhibit B1
NEES ENERGY, INC.
Consolidated Statement of Income and Accumulated Deficit
(Thousands of Dollars)
For the Quarter Ended September 30, 1998
(Unaudited, Subject to Adjustment)
INCOME
Revenue (1) $45,009
--------
Total income 45,009
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EXPENSES
Operating expenses
Cost of sales 44,022
Depreciation 466
Selling, general and administrative expenses 5,652
Income tax (1,812)
--------
Total operating expenses 48,328
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Other income (expense), net (2)
--------
Net income/(loss) (3,321)
Accumulated deficit at beginning of period (16,107)
--------
Accumulated deficit at end of period $(19,428)
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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 September 30, 1998
(Unaudited, Subject to Adjustment)
Operating activities:
Net income/(loss) $(3,321)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation and amortization 466
(Increase) decrease in accounts receivable and
Unbilled revenue (206)
Increase (decrease) in inventory (10,256)
(Increase) decrease in prepaid and other
current assets 620
Increase (decrease) in accounts payable (99)
Increase (decrease) in accrued liabilities (3,060)
Other, net (4,175)
--------
Net cash provided by (used in) operating activities (20,031)
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Investing activities:
Fixed asset expenditures (1,321)
Investment in Weatherwise (160)
Investment in PAL Energy (13,645)
--------
Net cash used in investing activities (15,126)
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Financing activities:
Subordinated notes payable to parent-issues 19,050
Capital contribution from parent 10,805
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Net cash provided by investing activities 29,855
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Net increase (decrease) in cash and cash equivalents (5,302)
Cash and cash equivalents at beginning of period 11,806
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Cash and cash equivalents at end of period $6,504
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Exhibit B2
NEES ENERGY, INC.
Consolidated Statement of Income and Accumulated Deficit
(Thousands of Dollars)
For the Twelve Months Ended September 30, 1998
(Unaudited, Subject to Adjustment)
INCOME
Equity in income/(loss) of AllEnergy
Marketing Co., L.L.C. $(2,145)
Revenue (1) 113,547
--------
Total income 111,402
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EXPENSES
Operating expenses
Cost of sales 111,544
Depreciation 856
Selling, general and administrative expenses 19,586
Income tax (7,350)
--------
Total operating expenses 124,636
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Other income (expense), net (1,162)
--------
Net income/(loss) (14,396)
Accumulated deficit at beginning of period (5,032)
--------
Accumulated deficit at end of period $(19,428)
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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 September 30, 1998
(Unaudited, Subject to Adjustment)
Operating activities:
Net income/(loss) ($14,396)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation and amortization 856
Deferred federal and state income taxes (725)
Undistributed loss in subsidiary 2,145
(Increase) decrease in accounts receivable and
Unbilled revenue (2,635)
(Increase) decrease in inventory (12,795)
(Increase) decrease in prepaid and other
current assets 171
Increase (decrease) in accounts payable 1,549
Increase (decrease) in accrued liabilities (2,738)
Other, net (1,574)
--------
Net cash provided by (used in) operating activities (30,142)
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Investing activities:
Fixed asset expenditures (1,497)
Investment in Weatherwise (600)
Investment in AllEnergy Marketing Co.,L.L.C. (4,708)
Acquisition of Northeastern Fuels fixed assets (3,350)
Investment in PAL Energy (13,645)
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Net cash used in investing activities (23,800)
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Financing Activities:
Subordinated notes payable to parent-issues 50,562
Capital contribution from parent 10,805
Decrease in short-term debt (1,000)
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Net cash provided by financing activities 60,367
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Net increase (decrease) in cash and cash equivalents 6,425
Cash and cash equivalents at beginning of period 79
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Cash and cash equivalents at end of period $ 6,504
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