<PAGE>
FORM U-13-60
Mutual and Subsidiary Service Companies
Revised February 7, 1980
ANNUAL REPORT
For the Period
Beginning January 1, 1998 and Ending December 31, 1998
To The
U.S. SECURITIES AND EXCHANGE COMMISSION
Of
NEW ENGLAND POWER SERVICE COMPANY
A Subsidiary Service Company
Date of Incorporation: September 5, 1935
State or Sovereign Power under which Incorporated or Organized:
The Commonwealth of Massachusetts
Location of Principal Executive Offices of Reporting Company:
25 Research Drive
Westborough, MA 01582
Name, title, and address of officer to whom correspondence concerning this
report should be addressed:
H. W. McDowell, Controller
25 Research Drive
Westborough, MA 01582
Name of Principal Holding Company Whose Subsidiaries are served by
Reporting Company:
New England Electric System
SEC 1926 (6-82)
<PAGE>
Page 2
INSTRUCTIONS FOR USE OF FORM U-13-60
1. Time of Filing Rule 94 provides that on or before the first day of
May in each calendar year, each mutual service company and each subsidiary
service company as to which the Commission shall have made a favorable
finding pursuant to Rule 88, and every service company whose application
for approval or declaration pursuant to Rule 88 is pending shall file with
the Commission an annual report on Form U-13-60 and in accordance with the
Instructions for that form.
2. Number of Copies Each annual report shall be filed in duplicate.
The company should prepare and retain at least one extra copy for itself in
case correspondence with reference to the report become necessary.
3. Period Covered by Report The first report filed by any company
shall cover the period from the date the Uniform System of Accounts was
required to be made effective as to that company under Rules 82 and 93 to
the end of that calendar year. Subsequent reports should cover a calendar
year.
4. Report Format Reports shall be submitted on the forms prepared by
the Commission. If the space provided on any sheet of such form is
inadequate, additional sheets may be inserted of the same size as a sheet
of the form or folded to such size.
5. Money Amounts Displayed All money amounts required to be shown in
financial statements may be expressed in whole dollars, in thousands of
dollars or in hundred thousands of dollars, as appropriate and subject to
provisions of Regulation S-X (Section 210.3-01(b)).
6. Deficits Displayed Deficits and other like entries shall be
indicated by the use of either brackets or a parenthesis with corresponding
reference in footnotes. (Regulation S-X, Section 210.3-01(c))
7. Major Amendments or Corrections Any company desiring to amend or
correct a major omission or error in a report after it has been filed with
the Commission shall submit an amended report including only those pages,
schedules, and entries that are to be amended or corrected. A cover letter
shall be submitted requesting the Commission to incorporate the amended
report changes and shall be signed by a duly authorized officer of the
company.
8. Definitions Definitions contained in Instruction 01-8 to the
Uniform System of Accounts for Mutual Service Companies and Subsidiary
Service Companies, Public Utility Holding Company Act of 1935, as amended
February 2, 1979 shall be applicable to words or terms used specifically
within this Form U-13-60.
9. Organization Chart The service company shall submit with each
annual report a copy of its current organization chart.
10. Methods of Allocation The service company shall submit with each
annual report a listing of the currently effective methods of allocation
being used by the service company and on file with the Securities and
Exchange Commission pursuant to the Public Utility Holding Company Act of
1935.
11. Annual Statement of Compensation for Use of Capital Billed The
service company shall submit with each annual report a copy of the annual
statement supplied to each associate company in support of the amount of
compensation for use of capital billed during the calendar year.
<PAGE>
<TABLE>
Page 3
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
<CAPTION>
Schedule or Page
Description of Schedules and Accounts Account No. Number
<S> <C> <C>
COMPARATIVE BALANCE SHEET Schedule I 4-5
Service company property Schedule II 6-7
Accumulated provision for depreciation
and amortization of service company
property Schedule III 8
Investments Schedule IV 9
Accounts receivable from associate
companies Schedule V 10
Fuel stock expenses undistributed Schedule VI 11
Stores expense undistributed Schedule VII 12
Miscellaneous current and accrued assets Schedule VIII 13
Miscellaneous deferred debits Schedule IX 14
Research, development, or demonstration
expenditures Schedule X 15
Proprietary capital Schedule XI 16
Long-term debt Schedule XII 17
Current and accrued liabilities Schedule XIII 18
Notes to financial statements Schedule XIV 19
COMPARATIVE INCOME STATEMENT Schedule XV 20
Analysis of billing - associate
companies Account 457 21
Analysis of billing - nonassociate
companies Account 458 22
Analysis of charges for service
- associate and nonassociate companies Schedule XVI 23
Schedule of expense by department or
service function Schedule XVII 24-26
Departmental analysis of salaries Account 920 27
Outside services employed Account 923 28-30
Employee pensions and benefits Account 926 31
General advertising expenses Account 930.1 32
Miscellaneous general expenses Account 930.2 33
Rents Account 931 34
Taxes other than income taxes Account 408 35
Donations Account 426.1 36
Other deductions Account 426.5 37
Notes to statement of income Schedule XVIII 38
LISTING OF INSTRUCTIONAL FILING REQUIREMENTS
Page
Description of Reports or Statements Number
ORGANIZATION CHART 39
METHODS OF ALLOCATION 40
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED 41
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
</TABLE>
<PAGE>
Page 4
<TABLE>
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE I
COMPARATIVE BALANCE SHEET
Give balance sheet of Company as of December 31 of the current and prior year
<CAPTION>
Account Assets and Other Debits As of December 31
Current Prior
<S> <C> <C> <C>
SERVICE COMPANY PROPERTY
101 Service company property (Schedule II) $1.8 $5.9
107 Construction work in progress (Schedule II)
------ ------
Total Property 1.8 5.9
------ ------
108 Less accumulated provision for depreciation
and amortization of service
company property (Schedule III)
------ ------
Net Service Company Property 1.8 5.9
------ ------
INVESTMENTS
123 Investments in associate companies (Schedule IV)
124 &
128 Other Investments (Schedule IV) 72.9 61.1
------ ------
Total Investments 72.9 61.1
------ ------
CURRENT AND ACCRUED ASSETS
131 Cash
134 Special deposits .1 .1
135 Working funds
136 Temporary cash investments (Schedule IV) 2.7 9.5
141 Notes receivable from associate companies
(Money Pool)
143 Accounts receivable .2 .2
144 Accumulated provision of uncollectible accounts
146 Accounts receivable from associate companies
(Schedule V) 37.6 6.6
152 Fuel stock expenses undistributed (Schedule VI)
154 Materials and supplies
163 Stores expense undistributed (Schedule VII)
165 Prepayments 4.1 7.4
174 Miscellaneous current and accrued assets
(Schedule VIII)
------ ------
Total Current and Accrued Assets 44.7 23.8
------ ------
DEFERRED DEBITS
181 Unamortized debt expense
184 Clearing accounts
186 Miscellaneous deferred debits (Schedule IX) 8.3 .6
188 Research, development, or demonstration
expenditures (Schedule X)
190 Accumulated deferred income taxes 15.3 12.8
------ ------
Total Deferred Debits 23.6 13.4
------ ------
TOTAL ASSETS AND OTHER DEBITS $143.0 $104.2
====== ======
</TABLE>
<PAGE>
Page 5
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE I
COMPARATIVE BALANCE SHEET
<CAPTION>
Account Liabilities and Proprietary Capital As of December 31
Current Prior
<S> <C> <C> <C>
PROPRIETARY CAPITAL
201 Common stock issued (Schedule XI)
211 Miscellaneous paid-in-capital (Schedule XI) $16.4 $16.4
215 Appropriated retained earnings (Schedule XI)
216 Unappropriated retained earnings (Schedule XI) 10.4 5.9
------ ------
Total Proprietary Capital 26.8 22.3
------ ------
LONG-TERM DEBT
223 Advances from associate companies (Schedule XII)
224 Other long-term debt (Schedule XII)
225 Unamortized premium on long-term debt
226 Unamortized discount on long-term debt - debit
------ ------
Total Long-Term Debt
------ ------
CURRENT AND ACCRUED LIABILITIES
231 Notes payable
232 Accounts payable 9.5 10.9
233 Notes payable to associate companies
(Schedule XIII)
234 Accounts payable to associate companies
(Schedule XIII) .5 .7
236 Taxes accrued .8
237 Interest accrued
238 Dividends declared
241 Tax collections payable .1
242 Miscellaneous current and accrued
liabilities (Schedule XIII) 8.3 17.1
------ ------
Total Current and Accrued Liabilities 18.4 29.5
------ ------
DEFERRED CREDITS
253 Other deferred credits 97.8 52.4
255 Accumulated deferred investment tax credits
------ ------
Total Deferred Credits 97.8 52.4
------ ------
282 ACCUMULATED DEFERRED INCOME TAXES
------ ------
TOTAL LIABILITIES AND PROPRIETARY CAPITAL $143.0 $104.2
====== ======
</TABLE>
<PAGE>
Page 6
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE II
SERVICE COMPANY PROPERTY
<CAPTION>
BALANCE AT RETIREMENTS BALANCE
BEGINNING OR OTHER (1) AT CLOSE
DESCRIPTION OF YEAR ADDITIONS SALES CHANGES OF YEAR
<S> <C> <C> <C> <C> <C>
Account
301 Organization
303 Miscellaneous
Intangible
Plant
304 Land and Land
Rights
305 Structures and
Improvements
306 Leasehold
Improvements
307 Equipment (2) $5.9 $(4.1) $1.8
308 Office
Furniture and
Equipment
309 Automobiles,
Other Vehicles
and Related
Garage
Equipment
310 Aircraft and
Airport
Equipment
311 Other Service
Company
Property (3)
------ ------ ------ ------ ------
SUB-TOTAL 5.9 (4.1) 1.8
------ ------ ------ ------ ------
107 Construction
Work in
Progress (4)
------ ------ ------ ------ ------
TOTAL $5.9 $(4.1) $1.8
====== ====== ====== ====== ======
</TABLE>
<PAGE>
Page 7
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE II - CONTINUED
(1) PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
None
(2) Subaccounts are required for each class of equipment owned. The service
company shall provide a listing by subaccount of equipment additions
during the year and the balance at the close of the year:
BALANCE
AT CLOSE
SUBACCOUNT DESCRIPTION ADDITIONS OF YEAR
Capitalized lease for computer
information system $(4.1)(A) $1.8
------ ------
TOTAL $(4.1) $1.8
====== ======
(A) Reflects amortization of capital lease.
(3) DESCRIBE OTHER SERVICE COMPANY PROPERTY:
None
(4) DESCRIBE CONSTRUCTION WORK IN PROGRESS:
None
<PAGE>
Page 8
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE III
ACCUMULATED PROVISION FOR DEPRECIATION AND
AMORTIZATION OF SERVICE COMPANY PROPERTY
<CAPTION>
ADDITIONS OTHER
BALANCE AT CHARGED CHANGES BALANCE
BEGINNING TO RETIRE- ADD AT CLOSE
DESCRIPTION OF YEAR ACCT 403 MENTS (DEDUCT)(1) OF YEAR
<S> <C> <C> <C> <C> <C>
Account
301 Organization
303 Miscellaneous
Intangible
Plant
304 Land and Land
Rights
305 Structures and
Improvements
306 Leasehold
Improvements
307 Equipment
308 Office
Furniture and
Equipment
309 Automobiles,
Other Vehicles
and Related
Garage
Equipment
310 Aircraft and
Airport
Equipment
311 Other Service
Company
Property
--- --- --- ---- ---
TOTAL
=== === === ==== ===
1) PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
None
</TABLE>
<PAGE>
Page 9
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE IV
INVESTMENTS
INSTRUCTIONS: Complete the following schedule concerning investments.
Under Account 124 "Other Investments," state each investment
separately, with description, including, the name of issuing
company, number of shares or principal amount, etc.
Under Account 136, "Temporary Cash Investments," list each
investment separately.
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
<S> <C> <C>
ACCOUNT 123 - INVESTMENT IN ASSOCIATE COMPANIES None None
------ ------
TOTAL None None
====== ======
ACCOUNT 124 & 128 - OTHER INVESTMENTS
Supplemental Retirement/Deferred
Compensation Plan Trust Fund $49.4 $59.1
General American Life Insurance Company -
Net Cash Surrender Value 5.0 5.5
Confederation Life Insurance Company -
Net Cash Surrender Value 2.9 3.2
Aurora National Life Insurance Company -
Net Cash Surrender Value 2.6 3.5
Metropolitan Life Insurance Company -
Net Cash Surrender Value 1.3 1.7
Pacific Mutual Life Insurance Company -
Deferred Compensation - Life Insurance
Investments & Net Cash Surrender Value (.1) (.1)
------ ------
TOTAL $61.1 $72.9
====== ======
ACCOUNT 136 - TEMPORARY CASH INVESTMENTS $ 9.5 $2.7
See Note A, Schedule XIV
------ ------
TOTAL $ 9.5 $2.7
====== ======
</TABLE>
<PAGE>
Page 10
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE V
ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
INSTRUCTIONS: Complete the following schedule listing accounts receivable
from each associate company. Where the service company has
provided accommodation or convenience payments for associate
companies, a separate listing of total payments for each
associate company by subaccount should be provided.
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING CLOSE
OF YEAR OF YEAR
<S> <C> <C>
DESCRIPTION
ACCOUNT 146 - ACCOUNTS RECEIVABLE FROM
ASSOCIATE COMPANIES
New England Electric System $ (.1) $ .3
Nantucket Electric Company .1
Massachusetts Electric Company 3.8 3.8
New England Hydro-Trans. Electric Co., Inc. .1
New England Hydro-Transmission Corp. .1 .2
New England Power Company 1.2 31.6
New England Electric Transmission Corp. .1
Granite State Electric Company .2 .2
The Narragansett Electric Company 1.2 1.1
NEES Global, Inc. (.1)
NEES Communications, Inc. .1
AllEnergy Marketing Company, L.L.C. .1 .1
------ ------
TOTAL $ 6.6 $37.5
====== ======
TOTAL
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS: PAYMENTS
New England Electric System $ .1
Nantucket Electric Company .1
Massachusetts Electric Company 3.7
New England Power Company 2.9
Yankee Atomic Electric Company .1
Granite State Electric Company .1
The Narragansett Electric Company 1.1
AllEnergy Marketing Company, L.L.C. .2
------
TOTAL PAYMENTS $ 8.3
======
</TABLE>
<PAGE>
Page 11
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE VI
FUEL STOCK EXPENSES UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect
to fuel stock expenses during the year and indicate amount
attributable to each associate company. Under the section
headed "Summary" listed below give an overall report of the
fuel functions performed by the service company.
<CAPTION>
DESCRIPTION LABOR EXPENSES TOTAL
<S> <C> <C> <C>
ACCOUNT 152 - FUEL STOCK EXPENSES
UNDISTRIBUTED None None None
---- ---- ----
TOTAL None None None
==== ==== ====
SUMMARY:
</TABLE>
<PAGE>
Page 12
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE VII
STORES EXPENSE UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with
respect to stores expense during the year and indicate
amount attributable to each associate company.
<CAPTION>
DESCRIPTION LABOR EXPENSES TOTAL
<S> <C> <C> <C>
ACCOUNT 163 - STORES EXPENSE
UNDISTRIBUTED None None None
---- ---- -----
TOTAL None None None
==== ==== ====
</TABLE>
<PAGE>
Page 13
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Thousands of Dollars)
SCHEDULE VIII
MISCELLANEOUS CURRENT AND ACCRUED ASSETS
INSTRUCTIONS: Provide detail of items in this account. Items less than
$10,000 may be grouped, showing the number of items in each
group.
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
<S> <C> <C>
ACCOUNT 174 - MISCELLANEOUS CURRENT AND
ACCRUED ASSETS None None
---- ----
TOTAL None None
==== ====
</TABLE>
<PAGE>
Page 14
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Thousands)
SCHEDULE IX
MISCELLANEOUS DEFERRED DEBITS
INSTRUCTIONS: Provide detail of items in this account. Items less than
$10,000 may be grouped by class, showing the number of
items in each class.
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
<S> <C> <C>
ACCOUNT 186 - MISCELLANEOUS DEFERRED DEBITS
Unbilled Computer Information Systems Costs $ 483 $8,190
Unbilled Building Leasehold Improvements 195 50
Unbilled Shared Microwave System Expenses (3) 6
Unbilled Dispatching Expenses (REMVEC) (169)
Unbilled Heavy Equipment Expenses 98 135
Unbilled Transportation (16) (68)
Miscellaneous Expenses (1 item) 1
------ ------
TOTAL $ 589 $8,313
====== ======
</TABLE>
<PAGE>
<TABLE>
Page 15
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE X
RESEARCH, DEVELOPMENT OR DEMONSTRATION EXPENDITURES
INSTRUCTIONS: Provide a description of each material research,
development, or demonstration project which incurred
costs by the service corporation during the year.
<CAPTION>
DESCRIPTION AMOUNT
<S> <C>
ACCOUNT 188 - RESEARCH, DEVELOPMENT, OR
DEMONSTRATION EXPENDITURES None
----
TOTAL None
====
</TABLE>
<PAGE>
Page 16
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(Expressed in Millions, Rounded to Hundred Thousands of Dollars,
except per Share Data)
SCHEDULE XI
PROPRIETARY CAPITAL
<CAPTION>
OUTSTANDING
NUMBER OF PAR OR STATED CLOSE OF PERIOD
ACCOUNT SHARES VALUE NO. OF TOTAL
NUMBER CLASS OF STOCK AUTHORIZED PER SHARE SHARES AMOUNT
<S> <C> <C> <C> <C> <C>
201 COMMON STOCK ISSUED 4,000 $25 3 $75
INSTRUCTIONS: Classify amounts in each account with a brief explanation,
disclosing the general nature of transactions which give rise
to the reported amounts.
DESCRIPTION AMOUNT
ACCOUNT 211 - MISCELLANEOUS PAID-IN CAPITAL
Capital contributions from New England
Electric System, the holding company,
authorized on:
December 21, 1979 (SEC Release Number 35-21354) $ 1.4
December 29, 1995 15.0
ACCOUNT 215 - APPROPRIATED RETAINED EARNINGS None
------
TOTAL $16.4
======
INSTRUCTIONS: Give particulars concerning net income or (loss) during the
year, distinguishing between compensation for the use of
capital owed or net loss remaining from servicing
non-associates per the General Instructions of the Uniform
Systems of Accounts. For dividends paid during the year in
cash or otherwise, provide rate percentage, amount of
dividend, date declared and date paid.
BALANCE AT NET INCOME BALANCE AT
BEGINNING OR DIVIDENDS CLOSE
DESCRIPTION OF YEAR (LOSS) PAID OF YEAR
ACCOUNT 216 -
UNAPPROPRIATED
RETAINED EARNINGS $1.8 $1.8 (A) $1.8 (C) $ 1.8
4.1 4.5 (B) 8.6
---- ---- --- ----
TOTAL $5.9 $6.3 $1.8 $10.4
==== === === ====
(A) Return on equity of 11.25% as authorized by SEC File #70-6353 amendment
No. 11 dated August 18, 1995.
(B) Represents unrealized appreciation on marketable securities. Generally
Accepted Accounting Principles require such amounts be recorded in
the Proprietary Capital without being included in reported net income.
Since the SEC chart of accounts does not provide for such a common equity
account, these amounts have been reflected in retained earnings in
addition to income reported in the income statement.
(C) DATE DATE NO. OF TOTAL
DECLARED PAID SHARES DIVIDEND
2/25/98 4/01/98 3 $1.8
</TABLE>
<PAGE>
Page 17
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE XII
LONG-TERM DEBT
INSTRUCTIONS: Advances from associate companies should be reported separately for advances on notes, and
advances on open account. Names of associate companies from which advances were received
shall be shown under the class and series of obligation column. For Account 224 - Other
long-term debt provide the name of creditor company or organization, terms of the obligation,
date of maturity, interest rate, and the amount authorized and outstanding.
<CAPTION>
TERMS OF OBLIG DATE BALANCE AT BALANCE AT
NAME OF CLASS & SERIES OF INTEREST AMOUNT BEGINNING DEDUCTIONS CLOSE
CREDITOR OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS (1) OF YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ACCOUNT 223 -
ADVANCES FROM
ASSOCIATE
COMPANIES: None None
ACCOUNT 224 -
OTHER LONG-TERM
DEBT: None None
---- ----
TOTAL None None
==== ====
(1) Give an explanation of deductions:
None
</TABLE>
<PAGE>
Page 18
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Thousands)
SCHEDULE XIII
CURRENT AND ACCRUED LIABILITIES
INSTRUCTIONS: Provide balance of notes and accounts payable to each associate
company. Give description and amount of miscellaneous current
and accrued liabilities. Items less than $10,000 may be
grouped, showing the number of items in each group.
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
<S> <C> <C>
ACCOUNT 233 - NOTES PAYABLE TO ASSOCIATE
COMPANIES $ - $ -
See Note A, Schedule XIV
------- -------
TOTAL $ - $ -
======= =======
ACCOUNT 234 - ACCOUNTS PAYABLE TO ASSOCIATE
COMPANIES
Nantucket Electric Company $ 1 $ -
Massachusetts Electric Company 520 455
New England Power Company 138 -
Granite State Electric Company 1 1
The Narragansett Electric Company 7 11
------- ------
TOTAL $ 667 $ 467
======= ======
ACCOUNT 242 - MISCELLANEOUS CURRENT AND
ACCRUED LIABILITIES
Group Insurance $ (46) $ 136
NEES Goals 2,795 2,736
Thrift Plan 1,280 881
Postemployment Benefits (See Note B, Schedule XIV) 4,831 -
Postretirement Benefits (See Note C, Schedule XIV) 1,633 -
Property Under Capital Lease 4,048 1,829
Healthcare Costs 4 56
Accrued Payroll and Benefit Costs 2,600 2,661
------- -------
TOTAL $17,145 $8,299
======= =======
</TABLE>
<PAGE>
Page 19
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
<TABLE>
INSTRUCTIONS: The space below is provided for important notes regarding
the financial statements or any account thereof. Furnish
particulars as to any significant contingent assets or
liabilities existing at the end of the year. Notes
relating to financial statements shown elsewhere in this
report may be indicated here by reference.
Note A
During 1981, certain subsidiaries of New England Electric System
established a money pool to more effectively utilize cash resources of
subsidiaries and to reduce outside short-term borrowings. The SEC authorized
the establishment of the money pool in Release No. 35-21987. In 1983, the
terms were amended in Release No. 35-22900 to allow New England Electric
System to invest in the money pool. In 1986, the terms were amended in
Release No. 35-24232 to allow New England Energy Incorporated and NEES Energy,
Incorporated to invest in the money pool and New England Electric Transmission
Corporation to invest in and borrow from the money pool. In 1988, the terms
were amended in Release No. 35-24733 to allow New England Hydro-Transmission
Electric Company Incorporated and New England Hydro-Transmission Corporation
to invest in the money pool. In 1992, the terms were amended in Release No.
35-25483 to remove NEES Energy, Incorporated from participation in the money
pool, to allow New England Hydro-Transmission Electric Company and New England
Hydro-Transmission Corporation to borrow from the money pool, to allow New
England Hydro Finance Company, Incorporated and Narragansett Energy Resources
Company to invest in the money pool and to divide the borrowing members of the
money pool into Group I and Group II, consisting of wholly owned subsidiaries
and non-wholly owned subsidiaries, respectively, with different borrowing
priorities. In 1995, the terms were amended in Release No. 35-26439 to allow
Nantucket Electric Company to invest in and borrow from the money pool.
Short-term borrowing needs of subsidiaries are met first with available
funds of other subsidiaries. Borrowing companies pay interest at a rate
designed to approximate the cost of outside short-term borrowings. Companies
who invest in the pool share the interest earned on a basis proportionate to
their average monthly investment in the money pool. Funds may be withdrawn
from or repaid to the pool at any time without prior notice.
New England Power Service Company was designated to administer the pool as
agent for the member companies. The Company has classified pool transactions
of the member companies on a net basis in the current and prior year balance
sheets.
[/CAPTION]
At December 31, 1998 the detail of this pool was as follows (in thousands):
Investments in the Pool:
<S> <C> <C>
New England Hydro-Trans. Electric Co., Inc. $ 2,775
New England Power Company 177,125
New England Energy Incorporated 625
Granite State Electric Company 2,900
New England Power Service Company 2,675 $186,100
-------- ========
Borrowings from the Pool:
Nantucket Electric Company $ 3,150
Massachusetts Electric Company 80,725
New England Hydro-Transmission Corp. 1,500
The Narragansett Electric Company 26,675
New England Electric Transmission Corp. 3,425
--------
$115,475
Investments outside the Pool 70,625 $186,100
-------- ========
Note B
The 1998 Postemployment Benefits liability of $4,611,000 is held in account
253.
Note C
The 1998 Postretirement Benefits liability of $24,261,000 is held in account
253.
Note D
Account 253 includes $15,314,000 for accrued pension costs.
</TABLE>
<PAGE>
Page 20
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE XV
STATEMENT OF INCOME
<CAPTION>
ACCOUNT DESCRIPTION CURRENT PRIOR
YEAR YEAR
<S> <C> <C> <C>
INCOME
457 Services rendered to associate companies $209.4 $204.2
458 Services rendered to nonassociate companies .7 1.9
421 Miscellaneous income or loss
------ ------
TOTAL INCOME $210.1 206.1
------ ------
EXPENSE
920 Salaries and wages 90.5 89.9
921 Office supplies and expenses 40.3 39.6
922 Administrative expense transferred - credit
923 Outside services employed 26.8 19.8
924 Property insurance .1 .1
925 Injuries and damages 1.5 2.2
926 Employee pensions and benefits 23.4 26.1
928 Regulatory commission expense .1 .1
930.1 General advertising expenses
930.2 Miscellaneous general expenses .6 .6
931 Rents 15.8 17.1
932 Maintenance of structures and equipment 1.8 1.9
403 Depreciation and amortization expense
408 Taxes other than income taxes 7.0 7.2
409 Income taxes 4.7 4.1
410 Provision for deferred income taxes
411 Provision for deferred income taxes - credit (4.9) (4.8)
411.5 Investment tax credit
419 Interest income from associate companies (.2) (.4)
426.1 Donations .3 .3
426.5 Other deductions
427 Interest on long-term debt
430 Interest on debt to associate companies .1
431 Other interest expense .4 .5
------ ------
TOTAL EXPENSE 208.3 204.3
------ ------
NET INCOME OR (LOSS) $ 1.8 $ 1.8
====== =======
</TABLE>
<PAGE>
Page 21
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
ANALYSIS OF BILLING
ASSOCIATE COMPANIES
ACCOUNT 457
<CAPTION>
DIRECT INDIRECT COMPENSATION TOTAL
COSTS COSTS FOR USE AMOUNT
NAME OF ASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL BILLED
457-1 457-2 457-3
<S> <C> <C> <C> <C>
New England Electric System $ 2.0 $ .4 $ 2.4
Nantucket Electric Company 1.2 .2 1.4
Massachusetts Electric Company 78.1 9.9 $ .6 88.6
New England Hydro-Transmission
Electric Co., Inc. 2.7 .6 .1 3.4
New England Hydro-Transmission Corp. .7 .1 .8
New England Power Company 57.4 16.5 .8 74.7
New England Electric Transmission
Corp. .7 .1 .8
Granite State Electric Company 3.4 .5 3.9
The Narragansett Electric Company 25.0 2.8 .2 28.0
New England Energy Incorporated .1 .1
NEES Global, Inc. 1.6 .3 1.9
NEES Communications, Inc. 1.5 .4 1.9
Granite State Energy, Inc
NEES Energy, Inc. .3 .1 .4
AllEnergy Marketing Company, L.L.C. .9 .2 1.1
------ ----- ---- ------
TOTAL $175.6 $32.1 $1.7 $209.4
====== ===== ==== ======
</TABLE>
<PAGE>
Page 22
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES
ACCOUNT 458
<CAPTION>
DIRECT INDIRECT COMPENSATION EXCESS TOTAL
COST COST FOR USE TOTAL OR AMOUNT
NAME OF NONASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL COST DEFICIENCY BILLED
458-1 458-2 458-3 458-4
<S> <C> <C> <C> <C> <C> <C>
1) REMVEC Billings $.4 - - $.4 - $.4
2) TeleCorp Communications, Inc. .1 - - .1 .1 .2
3) Other .1 - - .1 .1
----- ---- --- ----- --- -----
TOTAL $.6 - - $.6 $.1 $.7
===== ==== === ===== === =====
INSTRUCTION: Provide a brief description of the services rendered to each nonassociated company:
1) Centralized Eastern N.E. Dispatching System
2) Relocate microwave equipment
3) Billing related to use of NEES Training Center, Dielectric Testing of Rubber Goods, Massachusetts Pilot Program
Billing Services and other miscellaneous services.
</TABLE>
<PAGE>
Page 23
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE XVI
ANALYSIS OF CHARGES FOR SERVICE ASSOCIATE AND NONASSOCIATE COMPANIES
<CAPTION>
ASSOCIATE COMPANY CHARGESNONASSOCIATE COMPANY CHARGESTOTAL CHARGES FOR SERVICE
------------------------------------------------------------------------------
DIRECT INDIRECT DIRECT INDIRECT DIRECTINDIRECT
COST COST TOTAL COST COST TOTAL COST COST TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 Salaries and Wages $80.6 $9.9 $90.5 $80.6 $9.9 $90.5
921 Office Supplies and Expenses 29.6 10.1 39.7 $.6 $.6 30.2 10.1 40.3
922 Administrative Expense
Transferred-Credit
923 Outside Services Employed 25.2 1.6 26.8 25.2 1.6 26.8
924 Property Insurance .1 .1 .1 .1
925 Injuries and Damages 1.3 .2 1.5 1.3 .2 1.5
926 Employee Pensions and Benefits 20.8 2.6 23.4 20.8 2.6 23.4
928 Regulatory Commission Expense .1 .1 .1 .1
930.1 General Advertising Expenses
930.2 Miscellaneous General Expenses .6 .6 .6 .6
931 Rents 9.4 6.4 15.8 9.4 6.4 15.8
932 Maintenance of Structures and
Equipment 1.8 1.8 1.8 1.8
403 Depreciation and Amortization
Expense
408 Taxes Other Than Income Taxes 6.3 .7 7.0 6.3 .7 7.0
409 Income Taxes 4.4 4.4 $.3 .3 4.7 4.7
410 Provision for Deferred Income
Taxes
411 Provision for Deferred Income
Taxes-Credit (4.6) (4.6) (.3) (.3) (4.9) (4.9)
411.5 Investment Tax Credit
419 Interest Income from Associate
Companies (.2) (.2) (.2) (.2)
426.1 Donations .3 .3 .3 .3
426.5 Other Deductions
427 Interest on Long-Term Debt
431 Other Interest Expense 1.7 (1.3) .4 1.7 (1.3) .4
-------- ------- -------- ------ --- ------ -------- ---------------
TOTAL EXPENSES $175.6 $32.0 $207.6 $.6 $0 $.6 $176.2 $32.0 $208.2
======== ======= ======== ====== === ====== ======== ===============
Compensation for use of
Equity Capital 1.7 .1 1.8
------- ------ -------
430 Interest on Debt to
Associate Companies .1 - .1
-------- ------ --------
TOTAL COST OF SERVICE $209.4 $.7 $210.1
======== ====== ========
INSTRUCTION: Total cost of service will equal for associate and nonassociate companies the total amount billed under
their separate analysis of billing schedules.
</TABLE>
<PAGE>
Page 24
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION BY DEPARTMENT OR SERVICE FUNCTION
<CAPTION>
TOTAL
DESCRIPTION OF ITEMS AMOUNT OVERHEAD 01 02 03 04
------ -------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
920 Salaries and wages 90.5 3.4 .3 2.9 7.9
921 Office supplies and expenses 40.3 .2 2.9 1.6
922 Administrative expense transferred - credit
923 Outside services employed 26.8 .4 .4 .5
924 Property insurance .1
925 Injuries and damages 1.5
926 Employee pensions and benefits 23.4 .1
928 Regulatory commission expense .1
930.1 General advertising expenses
930.2 Miscellaneous general expense .6
931 Rents 15.8 .4 .9
932 Maintenance of structures and equipment 1.8
403 Depreciation and amortization expense
408 Taxes other than income taxes 7.0
409 Income taxes 4.7 4.7
410 Provision for deferred income taxes
411 Provision for deferred income taxes - credit (4.9) (4.9)
411.5 Investment tax credit
419 Interest income from associate companies (.2)
426.1 Donations .3
426.5 Other deductions
427 Interest on long-term debt
430 Interest on debt to associate companies .1
431 Other interest expense .4
------ ---- ---- ---- ---- -----
TOTAL EXPENSES $208.3 $(.2) $4.0 $.3 $6.6 $11.0
====== ==== ==== ==== ==== =====
INSTRUCTION: Indicate each department or service function. (see Instruction 01-3 General Structure of Accounting
System: Uniform System of Accounts)
</TABLE>
<PAGE>
Page 25
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE XVII - CONTINUED
<CAPTION>
ACCOUNT
NUMBER 05 06 07 08 09 10 11 12 13 14 15
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 2.6 1.8 4.7 11.3 3.1 .9 .6 26.5 2.2 .6 5.0
921 .1 .1 2.3 18.4 1.9 .1 .1 2.8 .6 .9
922
923 .9 20.7 .7 .2 .1 .1
924 .1
925 1.3 .2
926 .3 21.8 .1 .1 .2
928
930.1
930.2 .3
931 2.1 7.2 .3 .7
932 1.7
403
408 7.0
409
410
411
411.5
419 (.2)
426.1 .2 .1
426.5
427
430 .1
431 (1.5) 1.9
---- ---- ----- ----- ---- ---- ---- ----- ---- --- -----
$2.7 $2.2 $33.5 $57.7 $6.1 $1.2 $1.0 $30.1 $3.3 $.6 $14.9
==== ==== ===== ===== ==== ==== ==== ===== ==== === =====
</TABLE>
<PAGE>
Page 26
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
SCHEDULE XVII - CONTINUED
<CAPTION>
ACCOUNT
NUMBER 16 17 18 19 20
- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
920 .7 10.0 4.0 .7 1.3
921 .1 6.2 .8 1.0 .2
922
923 1.9 .7 .2
924
925
926 .2 .4 .2
928 .1
930.1
930.2 .1 .2
931 4.2
932 .1
403
408
409
410
411
411.5
426.1
426.5
427
430
431
--- ----- ---- ---- ---- ---- ---- ---- ---- ----
$.8 $22.6 $6.1 $2.3 $1.5
=== ===== ==== ==== ==== ==== ==== ==== ==== ====
</TABLE>
<PAGE>
Page 27
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
DEPARTMENTAL ANALYSIS OF SALARIES
ACCOUNT 920
<CAPTION>
DEPARTMENTAL SALARY EXPENSE
NAME OF DEPARTMENT INCLUDED IN AMOUNTS BILLED TO NUMBER
------------------------------- PERSONNEL
Indicate each dept. or TOTAL PARENT OTHER NON END OF
service function AMOUNT COMPANY ASSOCIATES ASSOCIATES YEAR
<S> <C> <C> <C> <C> <C>
01 Management $ 3.4 $ .4 $ 3.0 $ - 13
02 Research &
Development .3 - .3 - 0
03 Customer Service 2.9 - 2.9 - 47
04 Engineering 7.9 - 7.9 - 82
05 Supply Chain
Management 2.6 - 2.6 - 43
06 Transmission 1.8 - 1.8 - 24
07 Human Resources 4.7 .3 4.4 - 43
08 Information Services 11.3 - 11.3 - 162
09 Demand Side Management 3.1 - 3.1 37
10 Rates .9 - .9 - 10
11 Environmental .6 - .6 - 7
12 Construction 26.5 - 26.5 - 296
13 Treasury/Financial 2.2 .1 2.1 - 22
14 Financial Forecasting .6 - .6 - 6
15 Corporate Accounting 5.0 - 5.0 - 67
16 Internal Audit .7 - .7 - 10
17 Retail Operations 10.0 - 9.9 .1 159
18 Corporate Legal 4.0 .3 3.7 - 32
19 Corporate
Communications .7 - .7 - 10
20 New Business
Development 1.3 - 1.3 - 14
------ ------ ------ ------ ------
TOTAL $90.5 $1.1 $89.3 $.1 1,084
====== ====== ====== ====== ======
</TABLE>
<PAGE>
Page 28
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Thousands)
OUTSIDE SERVICES EMPLOYED
ACCOUNT 923
INSTRUCTIONS: Provide a breakdown by subaccount of outside services
employed. If the aggregate amounts paid to any one payee
and included within one subaccount is less than $100,000,
only the aggregate number and amount of all such payments
included within the subaccount need be shown. Provide a
subtotal for each type of service.
<CAPTION>
RELATIONSHIP
"A"- ASSOCIATE
FROM WHOM PURCHASED TYPE OF SERVICE"NA"- NON ASSOCIATE AMOUNT
<S> <C> <C> <C>
LEGAL SERVICES
Hale & Dorr Legal Services NA $334
Twenty-Three Vendors NA 420
(Each Under $100,000) ----
TOTAL LEGAL SERVICES 754
----
ENGINEERING SERVICES
Bluestone Energy
Services, Inc. Engineering Services NA 184
Parsons Main, Inc. Engineering Services NA 164
Haley & Aldrich Environmental Engineering
Services NA 130
Triad Engineering Corp. Engineering Services NA 137
Seven Vendors NA 90
(Each Under $100,000) ----
TOTAL ENGINEERING SERVICESS 705
----
MANAGEMENT CONSULTING SERVICES
Higher Ground Associates Management Consultants NA 282
Six Vendors NA 33
(Each Under $100,000) -----
TOTAL MANAGEMENT CONSULTING SERVICES 315
-----
OTHER SERVICES
ALI Technologies Information Systems
Professional Services NA 153
</TABLE>
<PAGE>
Page 29
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Thousands)
OUTSIDE SERVICES EMPLOYED - CONTINUED
ACCOUNT 923
<CAPTION>
RELATIONSHIP
"A"- ASSOCIATE
FROM WHOM PURCHASED TYPE OF SERVICE "NA"- NON ASSOCIATE AMOUNT
<S> <C> <C> <C>
Alpine Computer Information Systems
Systems, Inc. Professional Services NA $233
American Consulting Group Information Systems
Professional Services NA 166
America's Registry, Inc. Information Systems
Professional Services NA 277
Applied Marketing Science Demand Side Management
Consulting NA 174
Carty Mailloux Consulting Information Systems
Professional Services NA 131
Command Systems Information Systems
Professional Services NA 174
Computer Associates Information Systems
Professional Services NA 785
Digital Equipment Corp. Information Systems
Professional Services NA 128
EDP Contract Services Information Systems
Professional Services NA 148
Eliassen Group, Inc. Information Systems
Professional Services NA 129
Employee Communications Human Resources Management
Services Services NA 141
HEC, Inc. Demand Side Management
Consulting NA 111
IBM Information Systems
Professional Services NA 6,239
Keane, Inc. Information Systems
Professional Services NA 9,069
Kewill Logistics, Inc. Information Systems
Professional Services NA 238
Lighthouse Computer Information Systems
Services Professional Services NA 100
Maxima Consulting, Inc. Information Systems
Professional Services NA 194
Meta Group, Inc. Information Systems
Professional Services NA 184
</TABLE>
<PAGE>
Page 30
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Thousands)
OUTSIDE SERVICES EMPLOYED - CONTINUED
ACCOUNT 923
<CAPTION>
RELATIONSHIP
"A"- ASSOCIATE
FROM WHOM PURCHASED TYPE OF SERVICE "NA"- NON ASSOCIATE AMOUNT
<S> <C> <C> <C>
MODIS Information Systems
Professional Services NA $305
New Boston Systems Information Systems
Professional Services NA 741
Palmer Associates Information Systems
Professional Services NA 327
Regional Economic Professional Services NA 236
Research, Inc.
Reliance Systems Information Systems
Professional Services NA 685
Sullivan & Cogliano Information Systems
Professional Services NA 128
System 2000 Information Systems
Professional Services NA 141
Towers, Perrin Human Resources
Forster & Crosby Management Services NA 227
Waterfield Technology Information Systems
Group Professional Services NA 1,369
Fifty-Eight vendors Miscellaneous Services NA 2,059
(each under $100,000)
------
TOTAL OTHER SERVICES 24,992
------
GRAND TOTAL 26,766
======
</TABLE>
<PAGE>
Page 31
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Thousands)
EMPLOYEE PENSIONS AND BENEFITS
ACCOUNT 926
<CAPTION>
INSTRUCTIONS: Provide a listing of each pension plan and benefit
program provided by the service company. Such listing
should be limited to $25,000.
DESCRIPTION AMOUNT
<S> <C> <C>
Pensions $7,902
Postretirement Benefits Other than Pensions 6,203
Postemployment Benefits (220)
Group Insurance Premiums 1,062
Executive Life Insurance (1,430)
Medical Insurance Premiums 4,981
Employee Publications 87
Employee Health Program 453
Employee Educational Aid 365
Employee Thrift Plan 2,402
Employee Occupational Health Service 149
Employee Awards 356
Employee Benefits Administration 469
Employee Termination Costs 684
Miscellaneous (Each Under $25,000) (27)
-------
TOTAL $23,436
=======
</TABLE>
<PAGE>
Page 32
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Thousands)
GENERAL ADVERTISING EXPENSES
ACCOUNT 930.1
INSTRUCTIONS: Provide a listing of the amount included in Account
930.1, "General Advertising Expenses", classifying the
items according to the nature of the advertising and
as defined in the account definition. If a particular
class includes an amount in excess of $3,000 applicable
to a single payee, show separately the name of the payee
and the aggregate amount applicable thereto.
DESCRIPTION NAME OF PAYEE AMOUNT
None
----
TOTAL None
====
<PAGE>
Page 33
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Thousands)
MISCELLANEOUS GENERAL EXPENSES
ACCOUNT 930.2
INSTRUCTIONS: Provide a listing of the amount included in Account
930.2, "Miscellaneous General Expenses", classifying such
expenses according to their nature. Payments and expenses
permitted by Sections 321(b) (2) of the Federal Election
Campaign Act, as amended by Public Law 94-283 in 1976 (2 U.S.C.
Section 441 (b) (2)) shall be separately classified.
DESCRIPTION AMOUNT
Annual Report Costs $205
Annual Meeting Costs 270
Membership Dues - Company 145
----
TOTAL $620
====
<PAGE>
Page 34
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
RENTS
ACCOUNT 931
INSTRUCTIONS: Provide a listing of the amount included in Account
931, "Rents", classifying such expenses by major
groupings of property, as defined in the account
definition of the Uniform System of Accounts.
TYPE OF PROPERTY AMOUNT
Building Rents $ 4.5
Microwave and Telemetering Equipment 1.5
Computer Hardware and Software 2.4
Transportation Equipment 1.3
Capital Lease - Computer Information Systems 4.3
Office and Other Equipment 1.8
-----
TOTAL $15.8
=====
<PAGE>
Page 35
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
TAXES OTHER THAN INCOME TAXES
ACCOUNT 408
INSTRUCTIONS: Provide an analysis of Account 408, "Taxes Other Than
Income Taxes". Separate the analysis into two groups:
(1) other than U.S. Government taxes, and (2) U.S.
Government taxes. Specify each of the various kinds
of taxes and show the amounts thereof. Provide a subtotal
for each class of tax.
<CAPTION>
KIND OF TAX AMOUNT
<S> <C> <C>
1) OTHER THAN U.S. GOVERNMENT TAXES
State Unemployment $.7
------
SUBTOTAL .7
------
2) U.S. GOVERNMENT TAXES
Federal Unemployment .1
Federal Insurance Contribution Act - Company 6.2
------
SUBTOTAL 6.3
------
TOTAL $7.0
======
</TABLE>
<PAGE>
Page 36
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
DONATIONS
ACCOUNT 426.1
INSTRUCTIONS: Provide a listing of the amount included in Account 426.1,
"Donations", classifying such expenses by its purpose. The
aggregate number and amount of all items of less than $3,000
may be shown in lieu of details.
<CAPTION>
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
<S> <C> <C>
United Way Matching Gifts Program $ 96
Dana-Farber Cancer Institute Matching Gifts Program 11
Bishop's Fund Matching Gifts Program 8
W.G.B.H. Matching Gifts Program 8
American Heart Assoc. Mass Matching Gifts Program 6
St. John's Seminary Matching Gifts Program 6
American Cancer Society Matching Gifts Program 5
Town of Westborough Matching Gifts Program 5
Belmont Hill School Matching Gifts Program 4
Crohn's & Colitis
Foundation Matching Gifts Program 4
Massachusetts Institute
of Technology Matching Gifts Program 4
My One Wish, Inc. Matching Gifts Program 4
Nichols College Matching Gifts Program 4
West Point Fund Matching Gifts Program 4
Worcester Polytechnic
Institute Matching Gifts Program 4
Harpsichord Unlimited Matching Gifts Program 3
Susan G. Komen Breast Cancer
Foundation Matching Gifts Program 3
Miscellaneous (520 Items) Matching Gifts Program for
(Each Vendor Under $3,000) educational institutions and
other charitable organizations 118
-----
TOTAL $297
=====
</TABLE>
<PAGE>
Page 37
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
OTHER DEDUCTIONS
ACCOUNT 426.5
INSTRUCTIONS: Provide a listing of the amount included in Account
426.5, "Other Deductions", classifying such expenses
according to their nature.
DESCRIPTION NAME OF PAYEE AMOUNT
None
----
TOTAL None
====
<PAGE>
Page 38
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
SCHEDULE XVIII
NOTES TO STATEMENT OF INCOME
INSTRUCTIONS: The space below is provided for important notes
regarding the statement of income or any account thereof.
Furnish particulars as to any significant increase in
services rendered or expenses incurred during the year.
Notes relating to financial statements shown elsewhere in
this report may be indicated here by reference.
No Significant Notes
<PAGE>
Page 39
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
ORGANIZATION CHART
For the Year Ended December 31, 1998
<CAPTION> Chairman NEES
(01)
!
!
President & Chief Executive
Officer NEES
(01)
!
!
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
! ! ! ! ! !
President & Vice President Sr.Vice President Sr.Vice President Treasurer President
CEO of NEES NEES NEES NEES NEPCo
Distribution ! ! ! ! !
Subsidiaries ! ! ! ! !
(01) (01) (01) (01) (01) (01)
! ! ! ! ! !
! ! ! ! ! !
Customer Service Supply Chain Environmental Rates New Business Transmission
(03) Management (11) (10) Development (06)
! (05) ! ! (20)
! ! ! !
Engineering Human Resources Corporate Legal Treasury/Financial
(04) (07) (18) (13)
! ! ! !
! ! ! !
Demand Side Information Corporate Financial Forecasting
Management Services Communications (14)
(09) (08) (19) !
! !
Environmental Corporate Accounting
(11) (15)
! !
Construction Internal Audit
(12) (16)
!
Retail Operations
(17)
</TABLE>
The numbers that appear with Department are a cross reference to Page 27.
Note - Function 02 Research and Development ceased to exist as of October 1998.
<PAGE>
Page 40
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
METHODS OF ALLOCATION
Inventory, less fuel
Microwave air line circuit miles
Number of employees
Number of customers
Number of meters in service
Transmission and distribution operation and maintenance expenses,
excluding transmission of electricity by others, customers accounts,
customer service and information, and sales expenses.
Number of purchase orders
Archive space occupied
Budgeted transmission/distribution
operation and maintenance expenditures
Budgeted transmission/distribution
capital expenditures
Number of aerial devices
Average of number of purchase orders issued,
number of checks processed and inventory balances
Total billings to associated companies for services
rendered (excluding convenience payments)
Materials and supplies issues
<PAGE>
Page 41
<TABLE>
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
(In Millions, Rounded to Hundred Thousands of Dollars)
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
As authorized by Commission's File No. 70-6353 and amendment No. 11 dated
August 18, 1995, New England Power Service Company included in its service
charge to customers for the year 1998 the amount of $1.8 million dollars. The
following is a schedule indicating a breakdown of this billing:
<CAPTION>
Associated Non-Associated
Companies Companies Total
------------ ---------------- ---------
<S> <C> <C> <C>
Total Compensation $1.8 - $1.8
Excess of Revenues Billed
Over Costs Incurred to
Non-Associated Companies (.1) .1 -
---- --- ----
Compensation for Use of
Equity Capital Billed $1.7 $.1 $1.8
==== === ====
The Company is authorized by this order and amendment thereto to use a rate
of return on Common Equity of New England Power Company as authorized in FERC
proceedings. The calculation of the authorized amount is as follows:
Common Equity:
Capital Contributions from NEES $16.4
Common Shares
-----
$16.4
-----
Amount of Equity return
January - December @ 11.25% $1.8
=====
</TABLE>
<PAGE>
Page 42
ANNUAL REPORT OF NEW ENGLAND POWER SERVICE COMPANY
For the Year Ended December 31, 1998
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935 and the rules and regulations of the Securities and Exchange
Commission issued thereunder, the undersigned company has duly caused this
report to be signed on its behalf by the undersigned officer thereunto duly
authorized.
New England Power Service Company
---------------------------------
(Name of Reporting Company)
By: s/H.W. McDowell
-------------------------------
(Signature of Signing Officer)
H. W. McDowell, Controller
-------------------------------------------
(Printed Name and Title of Signing Officer)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
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27 Financial Data Schedule Filed herewith
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> OPUR2
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AND RELATED STATEMENTS OF
INCOME, RETAINED EARNINGS AND CASH FLOWS OF NEW ENGLAND
POWER SERVICE COMPANY, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<PERIOD-TYPE> 12-MOS
<BOOK-VALUE> PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 1.8
<TOTAL-INVESTMENTS> 72.9
<TOTAL-CURRENT-ASSETS> 44.7
<TOTAL-DEFERRED-DEBITS> 23.6
<OTHER-ASSETS-AND-DEBITS> 0
<TOTAL-ASSETS-AND-DEBITS> 143.0
<TOTAL-PROPRIETARY-CAPITAL> 26.8
<TOTAL-LONG-TERM-DEBT> 0
<NOTES-PAYABLE> 0
<NOTES-PAYABLE-ASSOCIATE-COMP> 0
<OTHER-CURR-AND-ACCRUED-LIAB> 18.4
<TOTAL-DEFERRED-CREDITS> 97.8
<DEFERRED-INCOME-TAX> 0
<TOTAL-LIABIL-AND-PROPRIET-CAP> 143.0
<SERVICES-ASSOCIATE-COMPANIES> 209.4
<SERVICES-NON-ASSOCIATE-COMP> .7
<MISC-INCOME-OR-LOSS> 0
<TOTAL-INCOME> 210.1
<SALARIES-AND-WAGES> 90.5
<EMPLOYEE-PENSION-AND-BENEFIT> 23.4
<OTHER-EXPENSES> 94.4
<TOTAL-EXPENSES> 208.3
<NET-INCOME> 1.8
<TOTAL-EXPENSES-DIRECT-COST> 176.2
<TOTAL-EXPENSES-INDIRECT-COST> 32.0
<TOTAL-EXP-DIRECT-AND-INDIRECT> 208.2
<PERSONNEL-END-OF-YEAR> 1,084
