<PAGE>
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 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 December 31, 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
$68,597,000 and $10,805,000, respectively.
3. As of December 31, 1998 NEES Energy had no permanent
personnel and during the fourth quarter of 1998 there were no
individuals assigned on a substantially full-time basis.
4. During the fourth 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.
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.
<PAGE>
7. Attached in Exhibits A through C are a consolidated balance
sheet as of December 31, 1998, consolidated income statements
and statements of cash flows for the quarter and twelve
months ended December 31, 1998.
<PAGE>
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 1, 1999
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
A Consolidated Balance Sheet at Filed
December 31, 1998 herewith
(Unaudited, subject to adjustment)
B1 Consolidated Statement of Income and Filed
Accumulated Deficit For the Quarter herewith
ended December 31, 1998
(Unaudited, Subject to Adjustment)
C1 Consolidated Statement of Cash Flows Filed
For the Quarter Ended December 31, 1998 herewith
(Unaudited, Subject to Adjustment)
B2 Consolidated Statement of Income and Filed
Accumulated Deficit For the Twelve herewith
Months ended December 31, 1998
(Unaudited, Subject to Adjustment)
C2 Consolidated Statement of Cash Flows Filed
For the Twelve Months December 31, 1998 herewith
(Unaudited, Subject to Adjustment)
<PAGE>
Exhibit A
NEES Energy, Inc.
Consolidated Balance Sheet
(Thousands of Dollars)
As of December 31, 1998
(Unaudited, Subject to Adjustment)
ASSETS
- ------
Current assets:
Cash $ 4,193
Accounts receivable and unbilled revenue, less
reserves of $1,032 32,192
Inventory 14,018
Prepaid and other current assets 14,671
-------
Total current assets 65,074
-------
Fixed assets 7,180
Less accumulated depreciation (1,150)
-------
Net fixed assets 6,030
-------
Other investments 777
Goodwill 13,681
Deferred federal and state income taxes 823
Other assets 946
-------
$87,331
=======
LIABILITIES AND CAPITALIZATION
- ------------------------------
Current liabilities:
Long term debt due in one year $ 307
Accounts payable (including $28 to affiliates) 9,655
Accrued liabilities 18,321
Capital lease - current portion 35
-------
Total current liabilities 28,318
Long term debt 828
Capital lease obligation 95
Other long-term liabilities 704
-------
Total liabilities 29,945
-------
Parent company's investment:
Common stock, par value $1 per share 1
Subordinated notes payable to parent 68,597
Other paid-in capital 10,805
Accumulated deficit (22,473)
-------
56,930
Minority interest 456
-------
$87,331
=======
<PAGE>
Exhibit B1
NEES ENERGY, INC.
Consolidated Statement of Income and Accumulated Deficit
(Thousands of Dollars)
For the Quarter Ended December 31, 1998
(Unaudited, Subject to Adjustment)
INCOME
Revenue (1) $ 68,795
--------
Total income 68,795
--------
EXPENSES
Operating expenses
Cost of sales 64,523
Depreciation 552
Selling, general and administrative expenses 8,407
Income tax (1,525)
--------
Total operating expenses 71,957
--------
Other income (expense), net 117
--------
Net income/(loss) (3,045)
Accumulated deficit at beginning of period (19,428)
--------
Accumulated deficit at end of period $(22,473)
========
(1) Represents revenue of subsidiary (AllEnergy Marketing Co., L.L.C.)
<PAGE>
Exhibit C1
NEES Energy, Inc.
Consolidated Statement of Cash Flows
(Thousands of Dollars)
For the Quarter Ended December 31, 1998
(Unaudited, Subject to Adjustment)
Operating activities:
Net income/(loss) $ (3,045)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation and amortization 552
(Increase) decrease in deferred taxes (166)
(Increase) decrease in accounts receivable and
unbilled revenue (8,919)
Increase (decrease) in inventory 3,070
(Increase) decrease in prepaid and other
current assets (10,263)
Increase (decrease) in accounts payable (407)
Increase (decrease) in other current liabilities 8,642
Other, net 1,222
--------
Net cash provided by (used in) operating activities $ (9,314)
--------
Investing activities:
Fixed asset expenditures $ (738)
--------
Net cash used in investing activities $ (738)
--------
Financing activities:
Subordinated notes payable to parent-issues $ 7,255
Increase (decrease) in long-term debt 486
--------
Net cash provided by financing activities $ 7,741
--------
Net increase (decrease) in cash and cash equivalents $ (2,311)
Cash and cash equivalents at beginning of period 6,504
--------
Cash and cash equivalents at end of period $ 4,193
========
<PAGE>
Exhibit B2
NEES ENERGY, INC.
Consolidated Statement of Income and Accumulated Deficit
(Thousands of Dollars)
For the Twelve Months Ended December 31, 1998
(Unaudited, Subject to Adjustment)
INCOME
Revenue (1) $171,433
--------
Total income 171,433
--------
EXPENSES
Operating expenses
Cost of sales 162,329
Depreciation 1,361
Selling, general and administrative expenses 28,042
Income tax (6,989)
--------
Total operating expenses 184,743
--------
Other income (expense), net 321
--------
Net income/(loss) (12,989)
Accumulated deficit at beginning of period (9,484)
--------
Accumulated deficit at end of period $(22,473)
========
(1) Represents revenue of subsidiary (AllEnergy Marketing Co., L.L.C.)
<PAGE>
Exhibit C2
NEES ENERGY, INC.
Statement of Cash Flows
(Thousands of Dollars)
For the Twelve Months Ended December 31, 1998
(Unaudited, Subject to Adjustment)
Operating activities:
Net income/(loss) $(12,989)
Adjustments to reconcile net income/(loss) to
net cash provided by operating activities:
Depreciation and amortization 1,361
Deferred federal and state income taxes (166)
(Increase) decrease in accounts receivable and
unbilled revenue (8,363)
(Increase) decrease in inventory (9,895)
(Increase) decrease in prepaid and other
current assets (12,185)
Increase (decrease) in accounts payable 1,403
Increase (decrease) in other current liabilities 4,600
Other, net 1,474
--------
Net cash provided by (used in) operating activities $(34,760)
--------
Investing activities:
Fixed asset expenditures $ (2,232)
Investment in Weatherwise (600)
Acquisition of Northeastern Fuels fixed assets (3,350)
Investment in PAL Energy (13,645)
--------
Net cash used in investing activities $(19,827)
--------
Financing Activities:
Subordinated notes payable to parent-issues $ 45,880
Capital contribution from parent 10,805
Increase in long-term debt 486
--------
Net cash provided by financing activities $ 57,171
--------
Net increase (decrease) in cash and cash equivalents $ 2,584
Cash and cash equivalents at beginning of period 1,609
--------
Cash and cash equivalents at end of period $ 4,193
========
