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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
second 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 June 30, 1998 NEES had purchased 1,000 shares of NEES
Energy common stock and made subordinated loans totaling
$42,292,000 to NEES Energy.
3. As of June 30, 1998 NEES Energy had no permanent personnel
and during the second quarter of 1998 there were no
individuals assigned on a substantially full-time basis.
4. During the second 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
second quarter of 1998 was $15,147,000.
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 June 30, 1998, consolidated income statements and
statements of cash flows for the quarter and twelve months
ended June 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.
By: s/John G. Cochrane
___________________________
John G. Cochrane
Treasurer
Date: August 31, 1998
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EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
A Consolidated Balance Sheet at Filed
June 30, 1998 herewith
(Unaudited, subject to adjustment)
B1 Consolidated Statement of Income and Filed
Accumulated Deficit For the Quarter herewith
ended June 30, 1998
(Unaudited, Subject to Adjustment)
C1 Consolidated Statement of Cash Flows Filed
For the Quarter Ended June 30, 1998 herewith
(Unaudited, Subject to Adjustment)
B2 Consolidated Statement of Income and Filed
Accumulated Deficit For the Twelve herewith
Months ended June 30, 1998
(Unaudited, Subject to Adjustment)
C2 Consolidated Statement of Cash Flows Filed
For the Twelve Months June 30, 1998 herewith
(Unaudited, Subject to Adjustment)
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Exhibit A
NEES Energy, Inc.
Consolidated Balance Sheet
(Thousands of Dollars)
As of June 30, 1998
(Unaudited, Subject to Adjustment)
ASSETS
- ------
Current assets:
Cash $ 11,806
Accounts receivable and unbilled revenue 13,896
Inventory 5,634
Prepaid and other current assets 4,522
-------
Total current assets 35,858
-------
Fixed assets 3,128
Less accumulated depreciation (625)
--------
Net fixed assets 2,503
--------
Other investments 829
Goodwill 2,300
Deferred federal and state income taxes 725
Other assets 502
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$42,717
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LIABILITIES AND CAPITALIZATION
- ------------------------------
Current liabilities:
Accounts payable $ 4,649
Accrued liabilities 11,132
Capital lease - current portion 68
-------
Total current liabilities 15,849
Other long-term liabilities 329
Capital lease obligation 63
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Total liabilities 16,241
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Parent company's investment:
Common stock, par value $1 per share 1
Subordinated notes payable to parent 42,292
Accumulated deficit (16,107)
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26,186
Minority interest 290
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$42,717
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Exhibit B1
NEES ENERGY, INC.
Consolidated Statement of Income and Accumulated Deficit
(Thousands of Dollars)
For the Quarter Ended June 30, 1998
(Unaudited, Subject to Adjustment)
INCOME
Revenue (1) $21,780
--------
Total income 21,780
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EXPENSES
Operating expenses
Cost of sales 18,561
Depreciation 71
Selling, general and administrative expenses 6,180
Income tax (1,013)
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Total operating expenses 23,799
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Other income (expense), net 371
--------
Net income/(loss) (1,648)
Accumulated deficit at beginning of period (14,459)
--------
Accumulated deficit at end of period $(16,107)
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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, 1998
(Unaudited, Subject to Adjustment)
Operating activities:
Net income/(loss) $(1,648)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation and amortization 71
(Increase) decrease in accounts receivable and
Unbilled revenue (3,833)
Increase (decrease) in inventory (3,363)
(Increase) decrease in prepaid and other
current assets 404
Increase (decrease) in accounts payable 917
Increase (decrease) in accrued liabilities 5,270
Other, net (314)
--------
Net cash provided by (used in) operating activities (2,496)
--------
Investing activities:
Investment in Weatherwise (200)
Acquisition of Northeastern Fuels fixed assets (3,350)
--------
Net cash used in investing activities (3,550)
--------
Financing activities:
Subordinated notes payable to parent-issues 12,629
--------
Net increase (decrease) in cash and cash equivalents 6,583
Cash and cash equivalents at beginning of period 5,223
--------
Cash and cash equivalents at end of period $11,806
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Exhibit B2
NEES ENERGY, INC.
Consolidated Statement of Income and Accumulated Deficit
(Thousands of Dollars)
For the Twelve Months Ended June 30, 1998
(Unaudited, Subject to Adjustment)
INCOME
Equity in income/(loss) of AllEnergy
Marketing Co., L.L.C. $(4,420)
Revenue (1) 68,538
--------
Total income 64,118
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EXPENSES
Operating expenses
Cost of sales 67,522
Depreciation 390
Selling, general and administrative expenses 13,985
Income tax (6,352)
--------
Total operating expenses 75,545
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Other income (expense), net (1,160)
--------
Net income/(loss) (12,587)
Accumulated deficit at beginning of period (3,520)
--------
Accumulated deficit at end of period $(16,107)
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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 June 30, 1998
(Unaudited, Subject to Adjustment)
Operating activities:
Net income/(loss) ($12,587)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation and amortization 390
Deferred federal and state income taxes (725)
Undistributed loss in subsidiary 4,420
(Increase) decrease in accounts receivable and
Unbilled revenue (2,429)
(Increase) decrease in inventory (2,539)
(Increase) decrease in prepaid and other
current assets 102
Increase (decrease) in accounts payable 1,635
Increase (decrease) in accrued liabilities 322
Other, net 2,601
--------
Net cash provided by (used in) operating activities (8,810)
--------
Investing activities:
Fixed asset expenditures (176)
Investment in Weatherwise (440)
Investment in AllEnergy Marketing Co.,L.L.C. (8,208)
Acquisition of Northeastern Fuels fixed assets (3,350)
--------
Net cash used in investing activities (12,174)
--------
Financing Activities:
Subordinated notes payable to parent-issues 33,762
Decrease in short-term debt (1,000)
--------
Net cash provided by financing activities 32,762
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Net increase (decrease) in cash and cash equivalents 11,778
Cash and cash equivalents at beginning of period 28
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Cash and cash equivalents at end of period $ 11,806
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