File No. 70-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________
FORM U-1
APPLICATION AND DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
____________________________________________________
NORTHEAST UTILITIES
174 Brush Hill Avenue
West Springfield, Massachusetts 01089
CHARTER OAK ENERGY, INC.
COE DEVELOPMENT CORPORATION
107 Selden Street
Berlin, CT 06037-1616
_____________________________________________________
(Name of company filing this statement and
address of principal executive offices)
NORTHEAST UTILITIES
_____________________________________
(Name of top registered holding
company parent of each applicant or declarant)
Jeffrey C. Miller, Esq.
Assistant General Counsel
NORTHEAST UTILITIES SERVICE COMPANY
P.O. Box 270
Hartford, Connecticut 06141-0270
________________________________________
(Name and address of agent for service)
The Commission is requested to mail copies of
all orders, notices and communications to:
Mark Malaspina, Esq. William S. Lamb, Esq.
Charter Oak Energy, Inc. LeBoeuf, Lamb, Greene & MacRae
34 Hopmeadow Street L.L.P.
P.O. Box 576 125 W. 55th Street
Simsbury, CT 06070-0576 New York, New York 10019-4513
Northeast Utilities ("NU"), West Springfield,
Massachusetts, a registered holding company, and its wholly owned
subsidiaries, Charter Oak Energy, Inc. ("Charter Oak") and COE
Development Corporation ("COE Development"), both located in
Berlin, Connecticut, (collectively, the "Applicants") hereby file
this Application and Declaration on Form U-1 under Sections 6(a),
7, 9(a), 10, 12(b) and 33 of the Public Utility Holding Company
Act of 1935 (the "Act") and Rules 45 and 53 thereunder, for the
purpose of obtaining a two year extension, and modification, of
authority for Charter Oak and COE Development to continue to
engage in the power development activities authorized in the
Securities and Exchange Commission's (the "Commission") order
dated December 30, 1992 (HCAR. 25726; File No. 70-8062) (the
"December 1992 Order"), as amended on January 24, 1994 (HCAR.
25977; File No. 70-8062) (the "January 1994 Order"), September 2,
1994 (HCAR. 26116; File No. 70-8062) (the "September 2, 1994
Order"), and September 30, 1994 (HCAR 26134; File No. 70-8062)
(the "September 30, 1994 Order"). The Applicants seek to modify
this authority to set the aggregate amount that NU is authorized
to invest in Charter Oak, Charter Oak is authorized to invest in
COE Development and Charter Oak and COE Development are
authorized to spend on authorized power development activities,
at $200 million for the period from January 1, 1995 through
December 31, 1996. The Applicants also request authority (1) for
Intermediate Companies (as defined below) to acquire interests
in, finance the acquisition and hold the securities of exempt
wholesale generators, as defined by Section 32 of the Act
("EWGs"), and foreign utility companies, as defined by Section 33
of the Act ("FUCOs"), through the issuance of equity securities
and debt securities to third parties; (2) for Intermediate
Companies to make partial sales of Exempt Projects (as defined
below), and for the Applicants to participate in joint ventures
engaged exclusively in Exempt Project activities and to dissolve
Intermediate Companies under specified circumstances; and (3) for
Charter Oak's employees and employees of other NU service
companies to provide a de minimis amount of services to
affiliated EWGs (both foreign and domestic) and FUCOs.
Item 1. DESCRIPTION OF PROPOSED TRANSACTIONS
A. Description of Charter Oak
Charter Oak was organized by NU pursuant to the
Commission's order dated May 17, 1989 (HCAR. 24893; File No. 70-
8062) to invest and participate in qualifying cogeneration and
small power production facilities as defined in the Public
Utility Regulatory Policies Act of 1978 ("QFs") for the four year
period through December 31, 1992. By order dated January 28,
1992 (HCAR. 7545; File No. 70-8062), the Commission expanded
Charter Oak's authorized activities to include preliminary
development and pre-investment activities related to independent
power production facilities. Pursuant to the December 1992 Order
as amended by the January 1994 Order, the September 2, 1994 Order
and the September 30, 1994 Order, as well as an order issued on
December 29, 1992 (HCAR. 25721; File No. 70-8064), Charter Oak
and COE Development are presently authorized to pursue
preliminary development activities with regard to investment and
participation in QFs throughout the United States, EWGs, FUCOs
and independent power production facilities that would constitute
a part of NU's "integrated public utility system" within the
meaning of Section 2(a)(29)(A) of the Act ("Qualified IPPs") and
to provide consulting services to such projects. Charter Oak and
COE Development may invest in QFs and Qualified IPPs after
obtaining Commission approval and may invest in, and finance the
acquisition of, EWGs and FUCOs without prior Commission approval
subject to certain limitations ("Exempt Projects"). In addition,
the Applicants also have authority to issue guarantees and assume
the liabilities of subsidiary companies for pre-development
activities, and contingent liabilities subsequent to operation
with regard to Exempt Projects.
The Applicants also have been authorized to acquire
interests in, and finance the acquisition, and hold the
securities of, one or more companies ("Intermediate Companies")
engaged directly or indirectly and exclusively in the business of
holding the securities of one or more EWGs and/or FUCOs without
filing specific project applications with the Commission, and to
issue guarantees and assume liabilities subsequent to operation
with regard to those projects.
The current authorization permits NU to invest, and
Charter Oak to spend, up to an aggregate amount of $100 million
through December 31, 1994 to finance these activities, subject to
certain restrictions. Specifically, NU's investment in Charter
Oak, and Charter Oak's investment in COE Development, Exempt
Projects or Intermediate Companies may take the form of
acquisitions of common stock, capital contributions, open account
advances, and/or subordinated loans (collectively,
"Investments"). Open account advances or subordinated loans bear
interest at a rate based on NU's cost of funds in effect on the
date of issue, but in no case in excess of the prime rate at a
bank designated by NU.
Charter Oak may also obtain debt financing from
unaffiliated third parties, anticipated to be banks, insurance
companies, and other institutional investors ("Debt Financing"),
as long as the total of all Investments together with any Debt
Financing does not exceed the total funding authorization of
Charter Oak. The Debt Financing may not exceed a term of 15
years or bear a floating interest rate in excess of 125% of the
prime rate in effect at the time of issuance or a fixed interest
rate more than 350 basis points above that borne by U.S. Treasury
securities of comparable maturities.
The Debt Financing may require a guarantee by
NU.<F1> Any Debt Financing backed by NU's guarantee is
____________________
<F1> Since the Debt Financing is included within the total
funding authorization for Charter Oak, any guarantee by NU is not
counted towards the total funding authorization limitation.
limited to a term of 15 years and is at an interest rate not in
excess of the prime rate in effect on the date of the issue at a
bank designated by NU from among the major lenders to the
companies in the NU system. Charter Oak may also pay commitment
and other fees not to exceed 25 basis point per annum on the
total amount of the Debt Financing.
The Applicants' authority with regard to the issuance
of guarantees and assumptions of liability is also subject to
limitations. Guarantees and assumptions of liability made for
projects requiring prior Commission approval are presently
limited to preliminary development activities and, absent
additional Commission approval, may not involve guarantees
relating to construction financing or permanent financing. The
total value of such guarantees and assumptions of liability
issued pursuant to existing authority and outstanding at any time
may not presently exceed $20 million. The term of any such
guarantee or assumption of liability may not exceed five years.
Until such time as there is no possibility of a claim against
Charter Oak or NU, the full contingent amount of any guarantees
or assumptions of liabilities count as part of the authorized
development activities limit.
The full contingent amount of guarantees and
assumptions of liability made for preliminary development
activities as well as development activities for Exempt Projects
also count as part of the authorized development activities limit
requested herein.
B. Charter Oak's Preliminary Investment and Development
Activities
As authorized by the December 1990 Order, the January
1994 Order, the September 2, 1994 Order and the September 30,
1994 Order, Charter Oak's preliminary development activities with
regard to QF, Qualified IPP and Exempt Project projects
(collectively, "Authorized Power Projects") have included
investigation of sites, preliminary engineering and licensing
activities, acquiring options and rights, contract drafting and
negotiating, preparation of proposals, forming subsidiaries to
acquire interests in authorized or exempt projects and other
necessary activities to identify and analyze feasible investment
opportunities and to initiate commercialization of a project.
Authorized administrative activities have included ongoing
personnel, accounting, engineering, legal, financial and other
support activities necessary for Charter Oak to manage its
development activities relating to Authorized Power Projects.
Pursuant to Commission authorization in the December
1992 Order, the January 1994 Order, the September 2, 1994 Order
and the September 30, 1994 Order, Charter Oak has undertaken
preliminary development activities relating to Authorized Power
Projects on its own and in conjunction with third parties
unaffiliated with Charter Oak and its affiliates.
1. Independent Activities
Charter Oak has analyzed and evaluated a variety of
potential Authorized Power Projects using its own personnel and
resources. One example of the independent activities undertaken
by Charter Oak is its investment, made through a special purpose
subsidiary Charter Oak (Paris) Inc., in a 220MW gas-fired
cogeneration facility in Paris, Texas. Charter Oak's investment
in this project was authorized by the Commission in an order
dated May 17, 1989 (HCAR. 24839) To date, the Paris, Texas
project is Charter Oak's only independently-pursued project which
has commenced commercial operations. However, Charter Oak is
involved in several project development opportunities in various
stages of development and anticipates that during the next two
years it may make equity investments, and where necessary seek
Commission authorization for such investments, in one or more of
such projects.
2. Cooperative Efforts
In addition to its own independent development efforts,
Charter Oak participates in several informal and unincorporated
consortia that attempt to identify, analyze and make available
for development by participants who so elect, development
opportunities in the independent power business. Typical
consortia include as principal potential investors one or more
affiliated IPP development subsidiaries of investor-owned
electric utilities, such as Charter Oak, and as the initiator and
lead participant one or more consultants or developers with
skills and experience in one or more niches in the independent
power business. The consultants or developers are typically
selected for specific development skills or experience, such as
knowledge of a particular fuel source, possession of advantageous
relationships in a particular geographic region or specialized
skills in a particular phase of development (such as "greenfield"
developers or operator developers), or a particular power
generation technology. By its participation in these informal
and unincorporated consortia, Charter Oak intends to diversify
its risk, access skills and relationships that it cannot expect
to have on its own, and access more of a diversity of projects
than it could if it concentrated on developing projects by
itself.
Typically, the utility affiliates that participate in
these consortia commit a specified level of funds to support the
exploratory and preliminary development activities of the active
developer(s) participating in the consortium. Their
participation entitles (but does not obligate) the utility
affiliates to participate further in additional development
activities for development opportunities that are identified by
the active developer and evaluated as favorable by the utility
affiliates like Charter Oak. While these rights and obligations
are exclusive within the scope specified in the contracts for
each consortium, the utility affiliates and the developers retain
the right to independently pursue other development opportunities
outside the consortium's scope.
While the active developer generally has the lead
responsibility for identifying and analyzing potential
development opportunities, each such developer also looks to the
utility affiliates, such as Charter Oak, for their talent and
expertise in certain aspects of the development process.
Consequently, the expectation is that each participant will be
actively involved in development activities, particularly once
specific attractive development opportunities have been
identified and a utility affiliate has elected to participate in
the further development of that opportunity.
To date, the consortia in which Charter Oak
participates have identified several development opportunities in
which Charter Oak has elected to participate further in the
preliminary development phase and NU and Charter Oak have made
further investments in one such project. Pursuant to the
Commission's order dated September 24, 1993 (HCAR 25891; File No.
70-8084), Charter Oak has purchased an interest in two non-
utility subsidiaries that own an interest in a foreign utility
company (Encoe Partners) in the United Kingdom. The remaining
interests in Encoe Partners are held by subsidiaries of Enron
Europe Limited.
3. COE Development Corporation
Pursuant to the Commission's order dated October 16,
1992 (HCAR. 25655; File No. 70-7966), Charter Oak formed COE
Development Corporation and assigned its interests in all then-
pending preliminary development work associated with QF and
Qualified IPP projects to COE Development. Since that time, most
of the new preliminary development work that Charter Oak has
undertaken has been through COE Development. As some of the
Authorized Power Project preliminary development activities
funded by COE Development result in Authorized Power Projects
that merit further active development, Charter Oak and COE
Development may form and finance, and to the extent necessary
request Commission authorization to so form and finance, new
first tier subsidiaries of Charter Oak to participate in
subsequent stages of development and ownership of such Authorized
Power Projects. Following the formation of such a subsidiary,
COE Development will transfer its interests in the maturing
Authorized Power Project to the new first tier subsidiary of
Charter Oak, which would carry forward the development of such
maturing Authorized Power Project. NU and Charter Oak do not
currently contemplate that COE Development would have any
subsidiaries of its own.
C. Request for Extension of Authority
NU and Charter Oak request that the Commission extend
the authority for the activities of Charter Oak for a period of
two years from the expiration of its present authorization in the
December 1992 Order, as amended. Accordingly, NU and Charter Oak
seek authorization for Charter Oak and its subsidiaries to
continue operating from January 1, 1995 to December 31, 1996.
NU and Charter Oak are seeking this extension to
preserve the value that is inherent in the preliminary
development work that has been undertaken by Charter Oak and its
subsidiaries over the past six years. In order to preserve that
value, Charter Oak must preserve its rights to make equity
investments in the projects it currently has under development
when the opportunities arise. It can preserve those rights only
by continuing to participate in the funding of the preliminary
development budgets for the Authorized Power Projects in which it
is now involved.
The two year authorization request is based on the
assessment by NU and Charter Oak that a number of projects
presently under preliminary development are likely to come to
fruition in the next two years. The prospect that several
Authorized Power Projects now under preliminary development are
likely to proceed to full-scale development on such investments
by Charter Oak, have brought Charter Oak and NU to the conclusion
that the continued operation of Charter Oak, and continued
funding by NU, are likely to produce a satisfactory financial
return in the power development business with a diversified group
of power generation investments.
D. Request for Authorization Regarding Investments
and Expenditures
NU and Charter Oak would like the Commission to modify
the present financing structure between NU and Charter Oak to
increase Charter Oak's funding authorization to $200 million for
the two year period from January 1, 1995 through December 31,
1996. By utilizing up to $200 million in funding over the next
two years, NU and Charter Oak will be able to maintain their
present level of involvement in preliminary development,
development and administrative activities and make the necessary
equity investments. NU and Charter Oak are seeking to increase
the investment and spending limit to $200 million, based on
Charter Oak's projection that its 1995-96 administrative, pre-
development, development and equity investment expenses will be
approximately $92 million. The remainder may be used for
financial guarantees as authorized. (A statement of estimated
expenditures for 1995-96 is attached as Exhibit H-1.)
Accordingly, NU and Charter Oak request authorization to increase
the limitation on NU's investment in Charter Oak and Charter
Oak's authorized investment in COE Development, and Charter Oak's
and COE Development's expenditures over the two year period, to
$200 million from the $100 million presently authorized. The
Debt Financing which Charter Oak may obtain pursuant to this
authorization may not exceed a term of 15 years or bear a
floating interest rate in excess of 6.5% over the then applicable
prime rate (the "Applicable Prime Rate") at a U.S. money center
bank to be designated by NU. Similarly, any Debt Financing
backed by NU's guarantee<F2> will be limited to a term of 15
____________________
<F2> Since the Debt Financing is included within the total
funding authorization for Charter Oak, any guarantee by NU is not
counted towards the total funding authorization limitation.
years and will be at an interest rate not to exceed 6.5% over the
Applicable Prime Rate.
Charter Oak also requests authority for itself and its
subsidiaries to make loans (on either a recourse or non-recourse
basis) to unaffiliated developers of Authorized Power Projects as
part of its financing of the acquisition of interests in
Authorized Power Projects. The developer of an Authorized Power
Project frequently receives an interest in the Authorized Power
Project at issue as part of its compensation. Charter Oak
believes it will benefit from the opportunity to become involved
in Authorized Power Projects through loans to such developers
which are used to purchase the developer's interest in the
Authorized Power Project. If Charter Oak (or its subsidiaries)
makes any loan to such a developer, the full outstanding amount
of such loans shall count against the overall $200 million
funding authorization for Charter Oak.
At June 30, 1994, the NU system's consolidated total
capitalization, stockholders' equity and retained earnings were
$6,809,531,000, $2,280,170,000 and $927,032,000, respectively.
The funding authorization sought herein is for up to $200 million
total authorization for the two years, which as a percentage of
the NU system's consolidated total capitalization, stockholders'
equity and retained earnings at June 30, 1994 would be 2.9%, 8.8%
and 21.6%, respectively. NU has invested approximately $25
million in Charter Oak to date and expects to invest
approximately an additional $5 million by year end. Charter Oak
currently has $2.3 million invested in one qualifying
cogeneration facility in Texas and approximately $6.6 million
invested in a foreign utility company in the United Kingdom. The
balance of NU's investment is largely represented by capitalized
or written down development costs. Accordingly, the Applicants
have adequate assets to make the potential investment and
expenditures without endangering the financial health of the
registered holding company system or the system's operating
public utility companies. Furthermore, only investments in and
financings related to Exempt Projects and Intermediate Companies
would be made pursuant to the requested general authority and all
other investments and financings would be submitted to the
Commission for prior approval.
E. Request for Authorization for Financing by Intermediate
Companies
Approval is also requested for any Intermediate Company
to issue equity securities and debt securities, with or without
recourse to the Applicants, to persons other than the Applicants
including banks, insurance companies, and other financial
institutions, exclusively for the purpose of financing (including
any refinancing of) investments in Exempt Projects. The
Intermediate Companies' investments in Exempt Projects may take
the form of acquisitions of common stock, capital contributions,
open account advances, and/or subordinated loans, provided that
such open account advances or subordinated loans will bear
interest at a rate based on NU's cost of funds in effect on the
date of issue, but in no case in excess of the prime rate at bank
designated by NU. Securities issued by Intermediate Companies
pursuant to an order resulting from this request may be issued in
one or more transactions from time to time through December 31,
1996. It is proposed that the aggregate principal amount of
recourse debt securities issued by Intermediate Companies to
persons other than the Applicants will not exceed $150 million at
any one time outstanding, provided that no more than $100 million
principal amount of such debt securities at any time outstanding
may be denominated in (i.e., evidence borrowings in) currencies
other than U.S. dollars, and the respective limitations for non-
recourse debt securities will be not more than $600 million
outstanding at any one time and not more than $400 million
denominated in currencies other than U.S. dollars. The recourse
to the Applicants will be in the form of the guarantees and
assumptions of liability and will be included within the
Applicants overall investment authorization limit. In any case
in which the Applicants directly or indirectly own less than all
of the equity interests of an Intermediate Company, only that
portion of the recourse or non-recourse indebtedness of such
Intermediate Company equal to the Applicants' equity ownership
percentage shall be included for purposes of the foregoing
limitations.
Equity securities issued by any Intermediate Company to
a person other than the Applicants may include capital shares,
partnership interests, trust certificates, or the equivalent of
any of the foregoing under applicable foreign law. Debt
securities issued to persons other than the Applicants may
include secured and unsecured promissory notes, subordinated
notes, bonds, or other evidence of indebtedness. Securities
issued by Intermediate Companies may be denominated in either
U.S. dollars or foreign currencies.
The Applicants state that the amount and type of such
securities, and the terms thereof, including (in the case of any
indebtedness) interest rate, maturity, prepayment or redemption
privileges, and the forms of any collateral security granted with
respect thereto, would be negotiated on a case by case basis,
taking into account differences from project to project in
optimum debt-equity ratios, projections of earnings and cash
flow, depreciation lives, and other similar financial and
performance characteristics of each project. Accordingly, the
Applicants propose that they have the flexibility to negotiate
the terms and conditions of such securities without further
approval by the Commission.
Notwithstanding the foregoing, the Applicants state
that no equity security having a stated par value would be issued
or sold by an Intermediate Company for a consideration that is
less than such par value; and that any note, bond or other
evidence of indebtedness issued or sold by any Intermediate
Company will mature not later than 30 years from the date of
issuance thereof, and will bear interest at a rate not to exceed
the following: (i) if such note, bond or other indebtedness is
U.S. dollar denominated, at a fixed rate not to exceed 6.5% over
the yield to maturity on an activity traded, non-callable, U.S.
Treasury note having a maturity equal to the average life of such
note, bond or other indebtedness (the "Applicable Treasury
Rate"),<F3> or at a floating rate not to exceed 6.5% over the
____________________
<F3> If there is no actively traded Treasury note with a maturity
equal to the average life of such note, bond or other
evidence of indebtedness, then the Applicable Treasury Rate
would be determined by interpolating linearly with reference
to the yields to maturity on actively traded, non-callable,
Treasury notes having maturities near (i.e., both shorter
and longer than) such average life.
Applicable Prime Rate; and (ii) if such note, bond or other
indebtedness is denominated in the currency of a country other
than the United States, at a fixed or floating rate which, when
adjusted (i.e., reduced) for the excess, if any, of the
prevailing rate of inflation in such country over the then
prevailing rate of inflation in the United States, as reported in
official indices published by such country and the U.S.
government, would be equivalent to a rate on a U.S. dollar
denominated borrowing of identical average life that does not
exceed 10% over the Applicable Treasury Rate (interpolated if
necessary) or Applicable Prime Rate, as the case may be.
In connection with the issuance of any debt securities
by any Intermediate Company, it is anticipated that such
Intermediate Company may grant security in its assets. Such
security interest may take the form of a pledge of the shares or
other equity securities of an Exempt Project that it owns,
including a security interest in any distributions from any such
Exempt Project, and/or a collateral assignment of its rights
under and interests in other property, including rights under
contracts. It is also anticipated that fees in the form of
placement or commitment fees, or other similar fees, would be
paid to lenders, placement agents, or others in connection with
the issuance of any such debt securities. The Applicants request
authority for any Intermediate Company to agree in any case to
pay placement or commitment fees and other similar fees, in
connection with any borrowing, provided that the effective annual
interest charge on any indebtedness evidencing such borrowing is
not greater than 115% of the stated interest rate thereon.
In connection with investments in Exempt Projects, it
is typical that a portion of the capital requirements of any such
Exempt Project would be obtained through recourse or non-recourse
financing involving borrowings from banks and other financial
institutions.<F4> In some cases, however, it may be
____________________
<F4> Such Exempt Project recourse financings would take the form
of assumptions of liability and guarantees which the
Applicants currently have authority to issue.
necessary or desirable to structure an investment in an Exempt
Project such that the obligations created are not those of the
Exempt Project, but instead those of its parent companies. For
example, in a consortium of non-affiliated companies bidding to
purchase the securities or assets of an EWG or FUCO, each of the
consortium members would be obligated to fund its respective
share of the proposed purchase price. If external sources of
funds are needed for this purpose, a participant in the
consortium may choose to engage in recourse or non-recourse
financing through one or more single-purpose subsidiaries that
would then utilize the proceeds of the financing to acquire an
ownership interest in the Exempt Project.
The Applicants believe that external financing by any
Intermediate Company involves the same issues that are involved
when the financing is carried out by an Exempt Project, in terms
of the potential adverse impacts upon the financial integrity of
a registered holding company system. Accordingly, where the
proceeds of any such financing (including any refinancing) are
utilized to make an investment in any Exempt Project, and there
is either no recourse directly or indirectly to the Applicants
with respect to the securities issued or sold, or the amount for
which there is recourse constitutes a part of the Applicants
overall investment authorization limit as would a guarantee
issued in connection with financings carried out directly by an
Exempt Project, there is no basis for any adverse findings under
Section 6, 7 and 12 of the Act, provided that, at the time of the
issuance thereof, the Applicants are in compliance with Rule 53.
F. Request Regarding Activities Related to Intermediate
Companies
In order to maintain flexibility with regard to
Intermediate Company and Exempt Project activities, the
Applicants request authorization for Intermediate Companies to
effect adjustments in the respective ownership interests in any
Exempt Project held by the Applicants and unaffiliated co-
investors and to facilitate a partial sale of an interest in any
such Exempt Project. The Applicants also request authority to
participate directly or through Intermediate Companies in joint
ventures with non-associates which joint ventures are in the
business of researching investment opportunities in, and owning
and developing Exempt Projects. The Applicants may acquire
interests in Intermediate Companies prior to such Intermediate
Companies acquiring their interests in Exempt Projects as long as
such Intermediate Companies engage and will engage in the
business of holding the securities of Exempt Projects.
In addition, the Applicants request authority to
liquidate, dissolve or sell any Intermediate Company within 45
days after the Applicants determine that the purpose for owning
such Intermediate Company no longer exists unless the Applicants
determine that such Intermediate Company may be used in
connection with a proposal or plan to develop or acquire an
interest in a different Exempt Project.
G. Request for Authorization for the Provisions of
Services
The Applicants request authorization for Charter Oak
employees (who are employees of Northeast Utilities Service
Company) or other NU Service Company employees (collectively,
"Service Company Employees") to provide a de minimis amount of
services to affiliated Intermediate Companies and EWGs (both
foreign and domestic) as well as FUCOs, subject to the
limitations set forth herein. The Applicants are not requesting
approval for the use of system operating company employees for
the rendering of services to affiliated Intermediate Companies,
EWGs and FUCOs, and no such use of employees will occur without
prior Commission approval unless expressly permitted under the
Act. Moreover, there will be no diversion of NU system personnel
or resources that would adversely affect any operating company's
domestic ratepayers or NU's shareholders.
The services to be rendered to affiliated Intermediate
Companies, EWGs and FUCOs by Service Company Employees pursuant
to this request include: management, administrative, legal, tax,
and financing advice, accounting, engineering consulting,
software development and language skills. The provision of these
services are desirable because the Applicants believe that the
provision of such necessary services by Service Company Employees
is a more practical and economically efficient alternative to
having Charter Oak and COE Development retain the required
expertise on a full-time basis. It is also an opportunity for
Service Company Employees to increase and expand their expertise
for the benefit of all system companies.
Unless otherwise authorized by the Commission or
expressly permitted under the Act, the total number of Service
Company Employees engaged in rendering such services will not
exceed, in the aggregate, 0.5% of the total NU holding company
system's employees and no more than 1% of the total of Service
Company Employees at any one time. In addition, unless otherwise
authorized by the Commission or expressly permitted under the
Act, the provision of services to affiliated domestic EWGs and
Intermediate Companies will be made on an at cost basis pursuant
to the requirements of Section 13(b) and Rules 90 and 91 of the
Act.
The Applicants hereby request authority in accordance
with Section 13 and Rule 83 of the Act to provide such services
at market rates to affiliated foreign EWGs, Foreign Intermediate
Companies and FUCOs, which are companies that do not derive,
directly or indirectly, any material part of their income from
sources within the United States and are not public utility
companies operating in the United States.
Charter Oak will include information on the type, cost
and income earned in connection with any services authorized by
an order pursuant to this request in the annual report it
currently files with the Commission.
H. Retained Earnings Tests of Rule 53(a)(1) and 53(b)(2)
As described above, this Application requests approval
for up to $200 million in investments by the NU system in
Intermediate Companies, Exempt Projects and certain other
independent power projects. Pursuant to the request the maximum
aggregate investment in EWGs, FUCOs and Intermediate Companies by
the NU system, would be no more than $230 million, which is well
below fifty percent of the NU system's consolidated retained
earnings as of June 30, 1994. Accordingly, this level of
investment does not present a risk of substantial adverse impact
as described in Sections 32 and 33 of the Act and Rule 53(a)(1).
In addition, because the Applicants' total authorized investment
in EWGs, FUCOs, Intermediate Companies and other power projects
does not exceed more than two percent of the total capital
invested in utility operations, there cannot be an exclusion
under Rule 53(b)(2) from the safe harbor.
I. Bankruptcy Exclusion of Rule 53(b)(1)
Neither the Applicants nor any other members of the NU
registered holding company system have been the subject of a
bankruptcy or similar proceeding while a part of the NU system.
Public Service Company of New Hampshire entered into bankruptcy
proceedings before it was acquired by Northeast Utilities in
June, 1992. Public Service Company of New Hampshire's plan of
reorganization was confirmed by the bankruptcy court on April 20,
1990.
J. Operating Loss Limitations of Rule 53(b)(3)
The companies in the U.K. in which Charter Oak invested
do not have any losses attributable to operations. The
applicants presently do not have any other EWGs, FUCOs or
Intermediate Companies. The Paris, Texas qualifying cogeneration
facility, in which Charter Oak has an interest, did not report
losses attributable to operations during 1993. Accordingly, the
present investments of the Applicants in EWGs, FUCOs and
Intermediate Companies as well as other power projects do not
present a risk of substantial adverse impact as described in
Sections 32 and 33 of the Act and Rule 53.
K. Compliance with Safe Harbor Provisions
The Applicants will acquire an interest in, finance the
acquisition and hold the securities of an EWG, FUCO or an
Intermediate Company as authorized by an order pursuant to this
request only if the following two conditions are met: (i) the
investment is within the $200 million authorization, and (ii) the
investment satisfies the criteria in Rule 53(a)(1)-(4) and
(b)(1)-(3) or any rules promulgated under Section 33 of the Act
concerning the acquisition of interests in FUCOs.
L. Maintenance of Books and Records
Charter Oak will continue to comply with Rule 53(a)(2)
and any future rules concerning the acquisition of interests in
FUCOs with regard to the maintenance of books and records in
connection with investments in EWGs, FUCOs or Intermediate
Companies authorized by this Application.
M. Reporting of Activities
Charter Oak will continue to file a report with the
Commission within sixty days of the end of each calendar quarter.
Each report will include (i) a balance sheet as of the quarterly
reporting date; (ii) an income statement for the quarterly
reporting period; and (iii) a general description of the
activities of Charter Oak for the quarterly reporting period and
of the projects in which Charter Oak or its subsidiaries have an
interest. In addition, Charter Oak will continue to file with
the Commission, on or before May 1 of each year, an annual report
of its activities for the preceding calendar year in
substantially the form of Form U-13-60.
Item 2. FEES, COMMISSIONS AND EXPENSES
The fees, commissions and expenses of NU and Charter
Oak expected to be paid or incurred, directly or indirectly, in
connection with this Amendment are estimated as follows:
Commission filing fee
relating to Application
on Form U-1 . . . . . . . . . . . . $ 2,000
Legal fees and expenses . . . . . . . *
Miscellaneous related expenses
(such as telephone, courier and
travel) . . . . . . . . . . . . *
Total . . . . . . . . . . . . *
*To be filed by amendment
Item 3. APPLICABLE STATUTORY PROVISIONS
Sections 6(a), 7, 9(a), 10, 12(b) and 33 and Rules 45
and 53 are applicable to the extension of authorized activities
and to the financing request and additional activities request
for Intermediate Companies. Section 12(b) and Rule 45 apply to
the financial arrangements between NU and Charter Oak and between
Charter Oak and COE Development. Section 13(b) and Rules 87(b),
90 and 91 are applicable to the request regarding services.
Item 4. REGULATORY APPROVAL
No commission, other than this Commission, has
jurisdiction over any of the proposed transactions described in
this Application. Pursuant to Rule 53(a)(4), the Applicants will
file this Application with the Connecticut Department of Public
Utility Control, the Massachusetts Department of Public Utilities
and the New Hampshire Public Utilities Commission.
Item 5. PROCEDURE
It is requested that the Commission issue and publish
no later than October 31, 1994 the requisite notice under Rule 23
with respect to the filing of this Application, such notice to
specify a date not later than November 25, 1994, as the date
after which an order granting and permitting this Application to
become effective may be entered by the Commission and that the
Commission enter not later than November 29, 1994 an appropriate
order granting and permitting this Amendment to become effective.
Applicants respectfully request that appropriate and
timely action be taken by the Commission in this matter.
Applicants hereby waive any recommended decision by a hearing
officer or by any other responsible officer of the Commission and
waive the 30-day waiting period between issuance of the
Commission's order and the date on which it is to become
effective, since it is desired that the Commission's order, when
issued, become effective forthwith. Applicants hereby consent
that the Office of Public Utility Regulation within the Division
of Investment Management may assist in the preparation of the
Commission's decision and/or order unless the Office opposes the
transactions covered by this Application.
Item 6. EXHIBITS AND FINANCIAL STATEMENTS
a) Exhibits
A-1 Copy of Certificate of Charter Oak (previously
filed)<F5>
A-2 Copy of By-laws of Charter Oak (previously filed)5
A-3 Form of Certificate of shares of common stock of
Charter Oak (previously filed)5
F-1 Opinion of Counsel (to be filed by amendment)
G-1 Proposed Form of Notice
H-1 Charter Oak Energy, Inc. 1995-96 Estimated
Expenditures
b) Financial Statements
1.1 Balance Sheet Per Book and Pro-Forma - NU
(Parent), as of June 30, 1994
1.2 Statement of Income and Capital Structure Per Book
and Pro-Forma - NU (Parent), as of June 30, 1994
2.1 Balance Sheet Per Book and Pro-Forma - Charter Oak
Energy and Subsidiaries (Consolidated), as of June
30, 1994
2.2 Statement of Income and Capital Structure Per Book
and Pro-Forma - Charter Oak Energy and
Subsidiaries (Consolidated), as of June 30, 1994
3.1 Balance Sheet Per Book and Pro-Forma - COE
Development, as of June 30, 1994
3.2 Statement of Income and Capital Structure Per Book
and Pro-Forma - COE Development, as of
June 30, 1994
4.1 Balance Sheet Per Book and Pro-Forma - NU
(Consolidated), as of June 30, 1994
4.2 Statement of Income and Capital Structure Per Book
and Pro-Forma - NU (Consolidated), as of June 30,
1994
____________________
<F5> Pursuant to Rule 22(b), this Application/Declaration
incorporates by reference certain exhibits previously filed in a
1988 Form U-1 Application/Declaration (File No. 70-7545).
Item 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
None of the matters that are the subject of this
Application involve a "major federal action" nor do they
"significantly affect the quality of the human environment" as
those terms are used in section 102(2)(C) of the National
Environmental Policy Act. None of the transactions that are the
subject of this Application will result in changes in the
operation of the Applicants that will have an impact on the
environment. The Applicants are not aware of any federal agency
which has prepared or is preparing an environmental impact
statement with respect to the transactions which are the subject
of this Application.
SIGNATURE
Pursuant to the requirements of the Public Utility
Holding Company Act of 1935, the undersigned companies have duly
caused this Amendment to be signed on their behalf by the
undersigned thereunto duly authorized.
NORTHEAST UTILITIES
CHARTER OAK ENERGY, INC.
COE DEVELOPMENT CORPORATION
By: /s/
___________________________________
William S. Lamb
LeBoeuf, Lamb, Greene & MacRae, LLP
A Limited Liability Partnership
Including Professional Corporations
125 W. 55th Street
New York, NY 10019-4513
Attorney for Northeast Utilities,
Charter Oak Energy, Inc. and COE
Development Corporation
Date: October 27, 1994
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filing Under the Public Utility Holding Company Act of 1935
______________, 1994
Northeast Utilities, Charter Oak Energy, Inc. and COE Development
Corporation (70- )
Northeast Utilities ("NU"), 174 Brush Hill Avenue, West
Springfield, Massachusetts 01089, a registered holding company,
and its wholly owned subsidiaries, Charter Oak Energy, Inc.
("Charter Oak") and COE Development Corporation ("COE
Development"), both located at 107 Seldon Street, Berlin,
Connecticut 06037, (collectively, the "Applicants") have filed an
Application and Declaration on Form U-1 under Sections 6(a), 7,
9(a), 10, 12(b) and 33 of the Public Utility Holding Company Act
of 1935 (the "Act") and Rules 45 and 53 thereunder, for the
purpose of obtaining a two year extension, and modification, of
authority for Charter Oak and COE Development to continue to
engage in the power development activities authorized in the
Securities and Exchange Commission's (the "Commission") order
dated December 30, 1992 (HCAR. 25726; File No. 70-8062) (the
"December 1992 Order"), as amended on January 24, 1994 (HCAR.
25977; File No. 70-8062) (the "January 1994 Order"), September 2,
1994 (HCAR. 26116; File No. 70-8062) (the "September 2, 1994
Order"), and September 30, 1994 (HCAR 26134; File No. 70-8062)
(the "September 30, 1994 Order"). The Applicants are seeking to
modify this authority to set the aggregate amount that NU is
authorized to invest in Charter Oak, Charter Oak is authorized to
invest in COE Development and Charter Oak and COE Development are
authorized to spend on authorized power development activities,
at $200 million for the period from January 1, 1995 through
December 31, 1996 and to obtain authority to make loans to
unaffiliated developers of QFs, Exempt projects and Qualified
IPPS. The Applicants are also requesting authority (1) for
Intermediate Companies (defined below) to acquire an interest in,
finance the acquisition and hold the securities of exempt
wholesale generators, as defined by Section 32 of the Act
("EWGs"), and foreign utility companies, as defined by Section 33
of the Act ("FUCOs"), through the issuance of equity securities
and debt securities to third parties; (2) for Intermediate
Companies to make partial sales of Exempt Projects (defined
below), for the Applicants directly or through Intermediate
Companies to participate in joint ventures with non-associates in
connection with Exempt Projects and for the Applicants to
dissolve Intermediate Companies under specified circumstances;
and (3) for Charter Oak's employees and employees of other NU
service companies to provide a de minimis amount of services to
affiliated Intermediate Companies, EWGs (both foreign and
domestic) and FUCOs.
Pursuant to the December 1992 Order as amended by the
January 1994 Order, the September 2, 1994 Order and the
September 30, 1994 Order, as well as an order issued on
December 29, 1992 (HCAR. 25721; File No. 70-8064), Charter Oak
and COE Development are presently authorized to pursue
preliminary development activities with regard to investment and
participation in QFs throughout the United States and independent
power production facilities that would constitute a part of NU's
"integrated public utility system" within the meaning of
Section 2(a)(29)(A) of the Act ("Qualified IPPs") and to provide
consulting services to such projects. Charter Oak and COE
Development may invest in QFs and Qualified IPPs after obtaining
Commission approval and may invest in, and finance the
acquisition of, EWGs and FUCOs subject to certain limitations
("Exempt Projects"). In addition, the Applicants have authority
to issue guarantees and assume the liabilities of subsidiary
companies for pre-development activities, and for both pre-
development and contingent liabilities subsequent to operation
with regard to Exempt Projects.
The Applicants also have been authorized to acquire
interests in, finance the acquisition, and hold the securities,
of one or more companies ("Intermediate Companies") engaged
directly or indirectly and exclusively in the business of holding
the securities of one or more EWGs and/or FUCOs without filing
specific project applications with the Commission, and to issue
guarantees and assume liabilities subsequent to operation with
regard to those projects.
The current authorization permits NU to invest, and
Charter Oak to spend, up to an aggregate amount of $100 million
through December 31, 1994 to finance these activities, subject to
certain restrictions.
Charter Oak's and COE Development's preliminary
development activities with regard to QF, Exempt Project and
Qualified IPP projects have included investigation of sites,
preliminary engineering and licensing activities, acquiring
options and rights, contract drafting and negotiating,
preparation of proposals, forming subsidiaries to acquire
interests in authorized or exempt projects and other necessary
activities to identify and analyze feasible investment
opportunities and to initiate commercialization of a project.
Authorized administrative activities have included ongoing
personnel, accounting, engineering, legal, financial and other
support activities necessary for Charter Oak and COE Development
to manage its development activities relating to QFs, Exempt
Projects and Qualified IPPs Projects. Charter Oak and COE
Development have undertaken preliminary development activities
relating to QFs, Exempt Projects and Qualified IPPs on its own
and in conjunction with third parties unaffiliated with Charter
Oak and its affiliates.
The Applicants are seeking this extension to preserve
the value that is inherent in the preliminary development work
that has been undertaken by Charter Oak and its subsidiaries over
the past six years. Accordingly, Charter Oak seeks to preserve
its rights to make equity investments in the projects it
currently has under development when the opportunities arise.
The two year authorization request is based on the assessment by
the Applicants that a number of projects presently under
preliminary development are likely to come to fruition in the
next two years.
The Applicants are requesting authorization to increase
the limitation on NU's investment in Charter Oak and Charter
Oak's authorized investment in COE Development, and Charter Oak's
and COE Developments expenditures to $200 million over the two-
year period from January 1, 1995 through December 31, 1996. By
utilizing up to $200 million in funding over the next two years,
the Applicants state that they will be able to maintain their
present level of involvement in preliminary development,
development and administrative activities and make the necessary
equity investments. The Applicants are seeking to increase the
investment and spending limit to $200 million based on Charter
Oak's projection that its 1995-96 administrative, pre-development
and development expenses alone (excluding guarantees) will be
approximately $92 million. Both the debt financing and the
guarantee by NU of such debt financing authorized by an order
pursuant to this request will not exceed a term of 15 years or
bear an interest rate in excess of 6.5% over the then applicable
prime rate at a U.S. money center bank designated by NU. Charter
Oak is also requesting authority for itself and its subsidiaries
to make loans (on either a recourse or non-recourse basis) to
unaffiliated developers of QFs, Exempt Projects or Qualified IPPs
as part of its financing of the acquisition of interests in such
projects.
The Applicants are requesting authority for
Intermediate Companies to acquire an interest in, finance the
acquisition and hold the securities of Exempt Projects through
the issuance of equity and debt securities to third parties. It
is proposed that the aggregate principal amount of recourse debt
securities issued by Intermediate Companies to persons other than
the Applicants will not exceed $150 million at any one time
outstanding, provided that no more than $100 million principal
amount of such debt securities at any time outstanding may be
denominated in (i.e., evidence borrowings in) currencies other
than U.S. dollars, and the respective limitations for non-
recourse debt securities will be not more than $600 million
outstanding at any one time and not more than $400 million
denominated in currencies other than U.S. dollars. Recourse debt
securities will be included in the Applicants overall investment
authorization limit.
In any case in which the Applicants directly or
indirectly own less than all of the equity interests of an
Intermediate Company, only that portion of the recourse or non-
recourse indebtedness of such Intermediate Company equal to the
Applicants' equity ownership percentage shall be included for
purposes of the foregoing limitations.
Equity securities issued by any Intermediate Company to
a person other than the Applicants may include capital shares,
partnership interests, trust certificates, or the equivalent of
any of the foregoing under applicable foreign law. Debt
securities issued to persons other than the Applicants may
include secured and unsecured promissory notes, subordinated
notes, bonds, or other evidence of indebtedness. Securities
issued by Intermediate Companies may be denominated in either
U.S. dollars or foreign currencies.
The Applicants state that the amount and type of such
securities, and the terms thereof, including (in the case of any
indebtedness) interest rate, maturity, prepayment or redemption
privileges, and the forms of any collateral security granted with
respect thereto, would be negotiated on a case by case basis,
taking into account differences from project to project in
optimum debt-equity ratios, projections of earnings and cash
flow, depreciation lives, and other similar financial and
performance characteristics of each project. Accordingly, the
Applicants state that they have the flexibility to negotiate the
terms and conditions of such securities without further approval
by the Commission.
Notwithstanding the foregoing, the Applicants state
that no equity security having a stated par value would be issued
or sold by an Intermediate Company for a consideration that is
less than such par value; and that any note, bond or other
evidence of indebtedness issued or sold by any Intermediate
Company will mature not later than 30 years from the date of
issuance thereof, and will bear interest at a rate not to exceed
the following: (i) if such note, bond or other indebtedness is
U.S. dollar denominated, at a fixed rate not to exceed 6.5% over
the yield to maturity on an activity traded, non-callable, U.S.
Treasury note having a maturity equal to the average life of such
note, bond or other indebtedness (the "Applicable Treasury
Rate"), or at a floating rate not to exceed 6.5% over the
Applicable Prime Rate; and (ii) if such note, bond or other
indebtedness is denominated in the currency of a country other
than the United States, at a fixed or floating rate which, when
adjusted (i.e., reduced) for the prevailing rate of inflation in
such country, as reported in official indices published by such
country, would be equivalent to a rate on a U.S. dollar
denominated borrowing of identical average life that does not
exceed 10% over the Applicable Treasury Rate (interpolated if
necessary) or Applicable Prime Rate, as the case may be.
The Applicants believe that external financing by any
Intermediate Company involves the same issues that are involved
when the financing is carried out by an Exempt Project, in terms
of the potential adverse impacts upon the financial integrity of
a registered holding company system. Accordingly, where the
proceeds of any such financing (including any refinancing) are
utilized to make an investment in any Exempt Project, and there
is either no recourse directly or indirectly to the Applicants
with respect to the securities issued or sold, or the amount for
which there is recourse constitutes a part of the Applicants
overall investment authorization limit as would a similar
recourse financing carried out directly by an Exempt Project,
there is no basis for any adverse findings under Section 6, 7 and
12 of the Act, provided that, at the time of the issuance
thereof, the Applicants are in compliance with Rule 53.
The Applicants are also requesting authorization for
Intermediate Companies to effect adjustments in the respective
ownership interests in any Exempt Project held by the Applicants
and unaffiliated co-investors and to facilitate a partial sale of
an interest in any such Exempt Project. In addition, the
Applicants are requesting authority to directly, or through
Intermediate Companies, participate in joint ventures with non-
associates which joint ventures are in the business of
researching investment opportunities in owning and developing
Exempt Projects. The Applicants also request authority to
liquidate, dissolve or sell any Intermediate Company within 45
days after the Applicants determine that the purpose for owning
such Intermediate Company no longer exists unless the Applicants
determine that such Intermediate Company may be used in
connection with a proposal or plan to develop or acquire an
interest in a different Exempt Project.
The Applicants are requesting authorization for Charter
Oak employees (who are employees of Northeast Utilities Service
Company) or other NU Service Company employees (collectively,
"Service Company Employees") to provide a de minimis amount of
services to affiliated EWGs (both foreign and domestic) and
FUCOs, subject to certain limitations. The Applicants are not
requesting approval for the use of system operating company
employees for the rendering of services to affiliated EWGs and
FUCOs, and state that no such use of employees will occur without
prior Commission approval unless expressly permitted under the
Act.
The services to be rendered to affiliated EWGs and
FUCOs by Service Company Employees pursuant to this request
include: management, administrative, legal, tax, and financing
advice, accounting, engineering consulting, software development
and language skills. Unless otherwise authorized by the
Commission or expressly permitted under the Act, the total number
of Service Company Employees engaged in rendering such services
will not exceed, in the aggregate, 0.5% of the total NU holding
company system's employees and no more than 1% of the total of
Service Company Employees at any one time. In addition, unless
otherwise authorized by the Commission or expressly permitted
under the Act, the provision of services to affiliated domestic
EWGs will be made on as at cost basis pursuant to the
requirements of Section 13(b) and Rule 90 and 91 of the Act.
The Applicants are requesting authority in accordance
with Section 13 and Rule 83 of the Act to provide such services
at market rates to affiliated foreign EWGs and FUCOs, which are
companies that do not derive, directly or indirectly, any
material part of their income from sources within the United
States and are not public utility companies operating in the
United States.
For the Commission, by the Division of Investment
Management, pursuant to delegated authority.
Estimate of Expenditures for Charter Oak Energy
and Subsidiaries for 1995 and 1996
in ($000)
Development Cost Equity Total
1995 17,000 27,000 44,000
1996 16,000 32,000 48,000
Total $33,000 $59,000 $92,000
Amount Available for Guarantees = $108,000
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 1.1
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS TRANSACTION
ASSETS
OTHER PROPERTY AND INVESTMENTS:
INVESTMENTS IN SUBSIDIARY COMPANIES,
AT EQUITY $2,583,268 $2,583,268
INVESTMENTS IN TRANSMISSION
COMPANIES, AT EQUITY 26,057 26,057
OTHER, AT COST 678 678
TOTAL OTHER PROPERTY & INVESTMENTS 2,610,003 0 2,610,003
CURRENT ASSETS:
CASH AND SPECIAL DEPOSITS 48 200,000(a) 200,048
NOTES RECEIVABLE FROM AFFILIATED CO'S 5,525 5,525
NOTES AND ACCOUNTS RECEIVABLES 1 1
ACCOUNTS RECEIVABLE FROM AFFILIATED CO 691 691
PREPAYMENTS 306 306
---------- ---------- ----------
TOTAL CURRENT ASSETS 6,571 200,000 206,571
---------- ---------- ----------
DEFERRED CHARGES:
ACCUMULATED DEFERRED INCOME TAXES 6,729 6,729
UNAMORTIZED DEBT EXPENSE 43 43
OTHER 33 33
---------- ---------- ----------
TOTAL DEFERRED CHARGES 6,805 0 6,805
---------- ---------- ----------
TOTAL ASSETS $2,623,379 $200,000 $2,823,379
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $671,048 $671,048
CAPITAL SURPLUS, PAID IN 903,137 903,137
DEFERRED BENEFIT PLAN - ESOP (221,047) (221,047)
RETAINED EARNINGS 927,032 (10,075) 916,957
---------- ---------- ----------
TOTAL COMMON STOCKHOLDER'S EQUITY 2,280,170 (10,075) 2,270,095
---------- ---------- ----------
LONG-TERM DEBT, NET 230,000 230,000
---------- ---------- ----------
TOTAL CAPITALIZATION 2,510,170 (10,075) 2,500,095
CURRENT LIABILITIES:
NOTES PAYABLE TO BANK 81,000 200,000 (a) 281,000
ACCOUNTS PAYABLE 5,204 5,204
ACCOUNTS PAYABLE TO AFFILIATED COMPANI 11,761 11,761
CURRENT PORTION OF LONG-TERM DEBT 9,000 9,000
ACCRUED TAXES 2,439 (5,425)(c) (2,986)
ACCRUED INTEREST 3,171 15,500 (b) 18,671
OTHER 17 17
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 112,592 210,075 322,667
DEFERRED CREDITS:
OTHER 617 617
---------- ---------- ----------
TOTAL DEFERRED CREDITS 617 0 617
---------- ---------- ----------
TOTAL CAPITALIZATION AND
LIABILITIES $2,623,379 $200,000 $2,823,379
---------- ---------- ----------
DEBIT CREDIT
(a) CASH $200,000
NOTES PAYABLE $200,000
To record the additional proposed borrowing up to the full $200 million
requested.
This is illustative only since new short term debt authoritation would only
allow borowing of $69 million.
(b) OTHER INTEREST EXPENSE 15,500
ACCRUED INTEREST 15,500
To record the interest expense on the additional proposed borrowing at Prime:
$200,000 x 7.75% = 15,500
(c) ACCRUED TAXES 5,425
FEDERAL AND STATE INCOME TAX EXPENSE 5,425
To record the reduction in Federal and State income taxes due to the higher
interest and fee expenses:
$15,500 x 35.00% = 5,425
NORTHEAST UTILITIES (PARENT)
INCOME STATEMENT
FOR 12 MONTHS ENDED JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 1.2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS TRANSACTION
OPERATING REVENUE $0 $0 $0
----------- ---------- ----------
OPERATING EXPENSES:
OPERATION EXPENSE 8,195 8,195
FEDERAL AND STATE INCOME TAXES (8,200) (5,425)(a) (13,625)
TAXES OTHER THAN INCOME TAXES 11 11
----------- ---------- ----------
TOTAL OPERATING EXPENSES 6 (5,425) (5,419)
----------- ---------- ----------
OPERATING INCOME (6) 5,425 5,419
----------- ---------- ----------
OTHER INCOME:
EQUITY IN EARNINGS OF SUBSIDIARIES 298,795 298,795
EQUITY IN EARNINGS OF TRANSMISSION
COMPANIES 3,609 3,609
OTHER, NET 1,250 1,250
----------- ---------- ----------
OTHER INCOME, NET 303,654 0 303,654
----------- ---------- ----------
INCOME BEFORE INTEREST CHARGES 303,648 5,425 309,073
----------- ---------- ----------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 20,740 20,740
OTHER INTEREST 3,128 15,500 (b) 18,628
----------- ---------- ----------
TOTAL INTEREST CHARGES 23,868 15,500 39,368
----------- ---------- ----------
NET INCOME 279,780 (10,075) 269,705
----------- ---------- ----------
EARNINGS FOR COMMON SHARES 279,780 (10,075) 269,705
EARNINGS PER COMMON SHARE 2.25 2.17
COMMON SHARES OUTSTANDING (AVERAGE) 124,329,564 124,329,564
NORTHEAST UTILITIES (PARENT)
CAPITAL STRUCTURE AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 1.2
PER BOOK
ADJUSTED TO
PRO FORMA REFLECT
% PER BOOK ADJUSTMENT PRO FORMA %
DEBT:
LONG-TERM DEBT, NET $239,000 $239,000
TOTAL DEBT 9.5% 239,000 0 239,000 9.5%
COMMON EQUITY:
COMMON SHARES 671,048 671,048
CAPITAL SURPLUS, PAID IN 903,137 903,137
DEFERRED BENEFIT PLAN - ESOP (221,047) (221,047)
RETAINED EARNINGS 927,032 (10,075) 916,957
TOTAL COMMON STOCKHOLDER'S
EQUITY 90.5% 2,280,170 (10,075) 2,270,095 90.5%
TOTAL CAPITAL 100.0% $2,519,170 (10,075) $2,509,095 100.0%
DEBIT CREDIT
(a) ACCRUED TAXES 5,425
FEDERAL AND STATE INCOME TAX EXPENSE 5,425
To record the reduction in Federal and State income taxes due to the higher
interest and fee expenses:
$15,500 x 35.00% = 5,425
(b) OTHER INTEREST EXPENSE 15,500
ACCRUED INTEREST 15,500
To record the interest expense on the additional proposed borrowing at Prime:
$200,000 x 7.75% = 15,500
CHARTER OAK ENERGY, INC AND SUBSIDIARIES
BALANCE SHEET
AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 2.1
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS TRANSACTION
ASSETS
UTILITY PLANT, AT
ORIGINAL COST:
ELECTRIC $52 $52
OTHER 0 0
----------- ----------- -----------
52 0 52
LESS: ACCUMULATED
PROVISION FOR DEPRECIATION 44 44
----------- ----------- -----------
8 0 8
CONSTRUCTION WORK
IN PROGRESS 0 0
----------- ----------- -----------
TOTAL NET UTILITY PLANT 8 0 8
OTHER INVESTMENTS, AT COST 6,322 6,322
CURRENT ASSETS:
CASH 4,450 200,000 (a) 204,450
TAX RECEIVABLES 1,950 1,950
RECEIVABLES FROM AFFILIATES 0 0
MATERIALS & SUPPLIES,
AT AVERAGE COST 0 0
PREPAYMENTS AND OTHER 0 0
----------- ----------- -----------
TOTAL CURRENT ASSETS 6,400 200,000 206,400
----------- ----------- -----------
DEFERRED CHARGES 3,812 3,812
----------- ----------- -----------
TOTAL ASSETS $16,542 $200,000 216,542
CAPITALIZATION AND
LIABILITIES
CAPITALIZATION:
COMMMON SHARES $0 $0
CAPITAL SURPLUS, PAID IN 25,149 200,000 (a) 225,149
RETAINED EARNINGS (9,123) (9,123)
----------- ----------- -----------
TOTAL COMMON STOCKHOLDER'S
EQUITY 16,026 200,000 216,026
DEBT, NET 0 0
----------- ----------- -----------
TOTAL CAPITALIZATION 16,026 200,000 216,026
MINORITY INTEREST IN
COMMON EQUITY
OF SUBSIDIARIES 48 48
CURRENT LIABILITIES:
NOTES PAYABLE TO AFFILIATED
COMPANY 0 0 0
ACCOUNTS PAYABLE 259 259
ACCOUNTS PAYABLE TO
AFFILIATES 108 108
ACCRUED TAXES 73 73
ACCRUED INTEREST 0 0
OTHER 28 28
----------- ----------- -----------
TOTAL CURRENT LIABILITIES 468 0 468
----------- ----------- -----------
ACCUMULATED DEFERRED INCOME
TAXES 0 0
----------- ----------- -----------
TOTAL CAPITALIZATION AND
LIABILITIES $16,542 $200,000 216,542
DEBITS CREDITS
(a) CASH $200,000
CAPITAL SURPLUS, PAID IN $200,000
To reflect a $200 million investment by NU (parent)
in Charter Oak Energy in 1995 and 1996.
CHARTER OAK ENERGY, INC AND SUBSIDIARIES
INCOME STATEMENT
FOR 12 MONTHS ENDED JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 2.2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS TRANSACTION
OPERATING REVENUE $0 $0 $0
----------- ----------- -----------
OPERATING EXPENSES:
OPERATION AND MAINTENANCE 7,475 7,475
DEPRECIATION 489 489
FEDERAL AND STATE
INCOME TAXES (3,331) (3,331)
TAXES OTHER THAN
INCOME TAXES 21 21
----------- ----------- -----------
TOTAL OPERATING EXPENSES 4,654 0 4,654
----------- ----------- -----------
OPERATING INCOME: (4,654) 0 (4,654)
------------ ----------- -----------
OTHER INCOME:
INVESTMENT INCOME 1,346 1,346
OTHER INCOME, NET 37 37
INCOME TAXES - CREDIT 0 0
----------- ----------- -----------
OTHER INCOME, NET 1,383 0 1,383
----------- ----------- -----------
INCOME BEFORE INTEREST
CHARGES (3,271) 0 (3,271)
----------- ----------- -----------
INTEREST CHARGES:
OTHER INTEREST, NET 5 5
----------- ----------- -----------
TOTAL INTEREST CHARGES 5 0 5
----------- ----------- -----------
MINORITY INTEREST IN
EARNINGS IN SUBSIDIARIES (13) (13)
NET INCOME (3,263) 0 (3,263)
CHARTER OAK ENERGY, INC AND SUBSIDIARIES
CAPITAL STRUCTURE ON JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 2.2
PER BOOK
ADJUSTED TO
PRO FORMA REFLECT
% PER BOOK ADJUSTMENT PRO FORMA %
LONG-TERM DEBT 0.0% $0 $0 0.0%
COMMON SHARES 0 0
CAPITAL SURPLUS,
PAID IN 25,149 200,000 225,149
RETAINED EARNINGS (9,123) 0 (9,123)
--------- --------- ---------
TOTAL COMMON
STOCKHOLDER
EQUITY 100.0% 16,026 200,000 216,026 100.0%
--------- --------- ---------
TOTAL CAPITAL 100.0% 16,026 200,000 216,026 100.0%
COE DEVELOPMENT CORPORATION
BALANCE SHEET
AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 3.1
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS TRANSACTION
ASSETS
UTILITY PLANT, AT ORIGINAL COST:
ELECTRIC $11 $11
OTHER 0 0
----------- ----------- -----------
11 0 11
LESS: ACCUMULATED PROVISION
FOR DEPRECIATION 3 3
----------- ----------- -----------
8 0 8
CONSTRUCTION WORK IN PROGRESS 0 0
----------- ----------- -----------
TOTAL NET UTILITY PLANT 8 0 8
OTHER INVESTMENTS, AT COST 0 0
CURRENT ASSETS:
CASH 1,630 200,000 (a) 201,630
TAX RECEIVABLES 1,510 1,510
RECEIVABLES FROM AFFILIATES 1,773 1,773
MATERIALS & SUPPLIES,
AT AVERAGE COST 0 0
PREPAYMENTS AND OTHER 0 0
----------- ----------- -----------
TOTAL CURRENT ASSETS 4,913 200,000 204,913
----------- ----------- -----------
DEFERRED CHARGES 958 958
----------- ----------- -----------
TOTAL ASSETS $5,879 $200,000 205,879
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMMON SHARES $0 $0
CAPITAL SURPLUS, PAID IN 10,760 200,000 (a) 210,760
RETAINED EARNINGS (4,972) (4,972)
----------- ---------- -----------
TOTAL COMMON STOCKHOLDER'S
EQUITY 5,788 200,000 205,788
DEBT, NET 0 0
----------- ---------- -----------
TOTAL CAPITALIZATION 5,788 200,000 205,788
MINORITY INTEREST IN
COMMON EQUITY OF
SUBSIDIARIES 0 0
CURRENT LIABILITIES:
NOTES PAYABLE TO
AFFILIATED COMPANY 83 0 83
ACCOUNTS PAYABLE 0 0
ACCOUNTS PAYABLE TO AFFILIATES 0 0
ACCRUED TAXES 0 0
ACCRUED INTEREST 0 0
OTHER 8 8
----------- ---------- -----------
TOTAL CURRENT LIABILITIES 91 0 91
----------- ---------- -----------
ACCUMULATED DEFERRED INCOME
TAXES 0 0
----------- ---------- -----------
TOTAL CAPITALIZATION AND
LIABILITIES $5,879 $200,000 205,879
DEBITS CREDITS
(a) CASH $200,000
CAPITAL SURPLUS, PAID IN $200,000
To reflect a $200 million investment by Charter Oak Energy
in COE Development Corporation in 1995 and 1996.
COE DEVELOPMENT CORPORATION
INCOME STATEMENT
FOR 12 MONTHS ENDED JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 3.2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS TRANSACTION
OPERATING REVENUE $0 $0 $0
----------- ---------- -----------
OPERATING EXPENSES:
OPERATION AND MAINTENANCE 6,413 6,413
DEPRECIATION 2 2
FEDERAL AND STATE
INCOME TAXES (2,743) (2,743)
TAXES OTHER THAN
INCOME TAXES 0 0
----------- ---------- -----------
TOTAL OPERATING EXPENSES 3,672 0 3,672
----------- ---------- -----------
OPERATING INCOME: (3,672) 0 (3,672)
----------- ---------- -----------
OTHER INCOME:
INVESTMENT INCOME 0 0
OTHER INCOME, NET 0 0
INCOME TAXES - CREDIT 0 0
----------- ---------- -----------
OTHER INCOME, NET 0 0 0
----------- ---------- -----------
INCOME BEFORE INTEREST
CHARGES (3,672) 0 (3,672)
----------- ---------- -----------
INTEREST CHARGES:
OTHER INTEREST, NET 0 0
----------- ---------- -----------
TOTAL INTEREST CHARGES 0 0 0
----------- ---------- -----------
MINORITY INTEREST IN
EARNINGS IN SUBSIDIARIES 0 0
NET INCOME (3,672) 0 (3,672)
COE DEVELOPMENT CORPORATION
CAPITAL STRUCTURE ON JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 3.2
PER BOOK
ADJUSTED TO
PRO FORMA REFLECT
% PER BOOK ADJUSTMENT PRO FORMA %
LONG-TERM DEBT 0.0% $0 $0 0.0%
COMMON SHARES 0 0
CAPITAL SURPLUS,
PAID IN 10,760 200,000 210,760
RETAINED EARNINGS (4,972) 0 (4,972)
--------- -------- ---------
TOTAL COMMON STOCKHOLDER
EQUITY 100.0% 5,788 200,000 205,788 100.0%
--------- -------- ---------
TOTAL CAPITAL 100.0% 5,788 200,000 205,788 100.0%
NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 4.1
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS TRANSACTION
ASSETS
UTILITY PLANT, AT
ORIGINAL COST:
ELECTRIC & OTHER $9,392,696 $9,392,696
LESS: ACCUMULATED
PROVISION FOR
DEPRECIATION 3,163,003 3,163,003
--------- ----------- ----------
6,229,693 0 6,229,693
CONSTRUCTION WORK IN PROGRESS 180,211 180,211
NUCLEAR FUEL, NET 222,705 222,705
--------- ----------- ----------
TOTAL NET UTILITY PLANT 6,632,609 0 6,632,609
--------- ----------- ----------
OTHER PROPERTY AND INVESTMENTS:
NUCLEAR DECOMMISSIONING TRUST,
AT MARKET 229,307 229,307
INVESTMENTS IN REGIONAL NUCLEAR
GENERATING COMPANIES,
AT EQUITY 81,856 81,856
INVESTMENTS IN TRANSMISSION
COMPANIES, AT EQUITY 26,057 26,057
OTHER, AT COST 35,164 35,164
--------- ----------- ----------
372,384 0 372,384
--------- ----------- ----------
CURRENT ASSETS:
CASH AND SPECIAL DEPOSITS 30,456 200,000 (a) 230,456
RECEIVABLES, NET 348,894 348,894
RECEIVABLES FROM AFFILIATED
COMPANIES 0 0
ACCRUED UTILITY REVENUES 134,462 134,462
FUEL, MATERIAL AND SUPPLIES, AT
AVERAGE COST 200,216 200,216
RECOVERABLE ENERGY COSTS,
NET-CURRENT POSITION 21,041 21,041
PREPAYMENTS AND OTHER 44,802 44,802
--------- ----------- ----------
TOTAL CURRENT ASSETS 779,871 200,000 979,871
--------- ----------- ----------
DEFERRED CHARGES:
REGULATORY ASSET-INCOME
TAXES, NET 1,160,810 1,160,810
REGULATORY ASSET-PSNH 724,453 724,453
UNAMORTIZED DEBT EXPENSE 35,581 35,581
RECOVERABLE ENERGY COSTS, NET 166,048 166,048
DEFERRED CONSERVATION AND
LOAD-MANAGEMENT COSTS 107,755 107,755
DEFERRED DOE ASSESSMENT 50,433 50,433
DEFERRED COSTS - NUCLEAR PLANTS 271,099 271,099
AMORTIZABLE PROPERTY
INVESTMENT - 27,383 27,383
UNRECOVERED CONTRACT
OBLIGATION-YAEC 119,882 119,882
OTHER 129,408 129,408
--------- ----------- ----------
TOTAL DEFERRED CHARGES 2,792,852 0 2,792,852
--------- ----------- ----------
TOTAL ASSETS $10,577,716 $200,000 $10,777,716
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $671,048 $671,048
CAPITAL SURPLUS, PAID IN 903,137 903,137
DEFERRED BENEFIT PLAN-EMPLOYEE
STOCK OWNERSHIP PLAN (221,047) (221,047)
RETAINED EARNINGS 927,032 (10,075) 916,957
--------- ----------- ----------
TOTAL COMMON STOCKHOLDER'S
EQUITY 2,280,170 (10,075) 2,270,095
PREFERRED STOCK NOT SUBJECT TO
MANDATORY REDEMPTION 239,700 239,700
PREFERRED STOCK SUBJECT TO
MANDATORY REDEMPTION 379,000 379,000
LONG-TERM DEBT, NET 3,910,661 3,910,661
--------- ----------- ----------
TOTAL CAPITALIZATION 6,809,531 (10,075) 6,799,456
OBLIGATIONS UNDER CAPITAL LEASES 179,224 179,224
CURRENT LIABILITIES:
NOTES PAYABLE TO BANKS 233,000 200,000 (a) 433,000
COMMERCIAL PAPER 69,500 69,500
LONG-TERM DEBT AND PREFERRED
STOCK - CURRENT PORTION 284,027 284,027
OBLIGATIONS UNDER CAPITAL
LEASES - CURRENT PORTION 72,388 72,388
ACCOUNTS PAYABLE 205,445 205,445
ACCOUNTS PAYABLE TO AFFILIATED
COMPANIES 0 0
ACCRUED TAXES 57,696 (5,425) (c) 52,271
ACCRUED INTEREST 68,435 15,500 (b) 83,935
ACCRUED PENSION BENEFITS 83,586 83,586
OTHER 80,458 80,458
--------- ----------- ----------
TOTAL CURRENT LIABILITIES 1,154,535 210,075 1,364,610
DEFERRED CREDITS:
ACCUMULATED DEFERRED INCOME
TAXES 1,939,156 1,939,156
ACCUMULATED DEFERRED
INVESTMENT TAX CREDITS 196,967 196,967
DEFERRED CONTRACT
OBLIGATION-YAEC 119,882 119,882
DEFERRED DOE OBLIGATION 39,530 39,530
OTHER 138,891 138,891
--------- ----------- ----------
TOTAL DEFERRED CREDITS 2,434,426 0 2,434,426
--------- ----------- ----------
TOTAL CAPITALIZATION AND
LIABILITIES $10,577,716 $200,000 $10,777,716
DEBIT CREDIT
(a) CASH $200,000
NOTES PAYABLE $200,000
To record the additional proposed borrowing up
to the full $200 million requested
(b) OTHER INTEREST EXPENSE 15,500
ACCRUED INTEREST 15,500
To record the interest expense on the additional
proposed borrowing at Prime:
$200,000 x 7.75% = 15,500
(c) ACCRUED TAXES 5,425
FEDERAL AND STATE INCOME TAX EXPENSE 5,425
To record the reduction in Federal and State income
taxes due to the higher interest and fee expenses:
$15,500 x 35.00% = 5,425
NOTE: The prime rate and tax rate reflected above
represent the current rates in effect as of the filing date.
NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
FOR 12 MONTHS ENDED JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 4.2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS TRANSACTION
OPERATING REVENUE $3,637,933 $0 $3,637,933
---------- ---------- ----------
OPERATING EXPENSES:
OPERATION -
FUEL PURCHASED AND
INTERCHANGE POWER 827,682 827,682
OTHER 959,082 959,082
MAINTENANCE 282,628 282,628
DEPRECIATION 324,509 324,509
AMORTIZATION/DEFERRALS OF
REGULATORY ASSETS, NET 196,437 196,437
FEDERAL AND STATE INCOME TAXES 286,791 (5,425) (a) 281,366
TAXES OTHER THAN INCOME TAXES 240,594 240,594
---------- ---------- ----------
TOTAL OPERATING EXPENSES 3,117,723 (5,425) 3,112,298
---------- ---------- ----------
OPERATING INCOME: 520,210 5,425 525,635
---------- ---------- ----------
OTHER INCOME:
ALLOWANCE FOR OTHER FUNDS USED
DURING CONSTRUCTION 938 938
DEFERRED NUCLEAR PLANTS
RETURN-OTHER FUNDS 31,489 31,489
EQUITY IN EARNINGS OF REGIONAL
NUCLEAR GENERATING
COMPANIES 14,005 14,005
WRITE OFF OF PLANT COSTS 0 0
OTHER, NET 17,879 17,879
INCOME TAXES - CREDIT 19,750 19,750
---------- ---------- ----------
OTHER INCOME, NET 84,061 0 84,061
---------- ---------- ----------
INCOME BEFORE INTEREST CHARGES 604,271 5,425 609,696
---------- ---------- ----------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 321,066 321,066
OTHER INTEREST 11,380 15,500 (b) 26,880
ALLOWANCE FOR BORROWED FUNDS
USED DURING CONSTRUCTION (3,216) (3,216)
DEFERRED NUCLEAR PLANTS
RETURN - BORROWED FUNDS,
NET OF INCOME TAX (49,657) (49,657)
---------- ---------- ----------
TOTAL INTEREST CHARGES 279,573 15,500 295,073
---------- ---------- ----------
INCOME BEFORE PREFERRED
DIVIDENDS 324,698 (10,075) 314,623
PREFERRED DIVIDENDS OF
SUBSIDIARIES 44,918 44,918
---------- ----------- ---------
NET INCOME 279,780 (10,075) 269,705
EARNINGS FOR COMMON SHARE 279,780 (10,075) 269,705
EARNINGS PER COMMON SHARE 2.25 2.17
COMMON SHARES OUTSTANDING
(AVERAGE) 124,329,564 124,329,564
NORTHEAST UTILITIES AND SUBSIDIARIES
CAPITAL STRUCTURE AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 4.2
PER BOOK
ADJUSTED TO
PRO FORMA REFLECT
% PER BOOK ADJUSTMENT PRO FORMA %
DEBT:
LONG-TERM DEBT, NET 59.1% $4,193,188 0 $4,193,188 59.2%
PREFERRED STOCK:
NOT SUBJECT TO REDEMPTION 241,200 241,200
SUBJECT TO REDEMPTION 379,000 379,000
--------- -------- ----------
TOTAL PREFERRED STOCK 8.7% 620,200 0 620,200 8.8%
COMMON EQUITY:
COMMON SHARES 671,048 671,048
CAPITAL SURPLUS, PAID IN 903,137 903,137
DEFERRED BENEFIT PLAN-EMPLOYEE
STOCK OWNERSHIP PLAN (221,047) (221,047)
RETAINED EARNINGS 927,032 (10,075) 916,957
--------- --------- ----------
TOTAL COMMON STOCKHOLDER'S
EQUITY 32.2% 2,280,170 (10,075) 2,270,095 32.0%
---------- --------- ----------
TOTAL CAPITAL 100.0% $7,093,558 (10,075) $7,083,483 100.0%
DEBIT CREDIT
(a) ACCRUED TAXES 5,425
FEDERAL AND STATE INCOME TAX EXPENSE 5,425
To record the reduction in Federal and State income
taxes due to the higher interest and fee expenses:
$15,500 x 35.00% = 5,425
(b) OTHER INTEREST EXPENSE 15,500
ACCRUED INTEREST 15,500
To record the interest expense on the additional
proposed borrowing at Prime:
$200,000 x 7.75% = 15,500
NOTE: The prime rate and tax rate reflected above
represent the current rates in effect as of the filing date.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000072741
<NAME> NORTHEAST UTILITIES (PARENT)
<S> <C> <C>
<PERIOD-TYPE> OTHER OTHER
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-END> JUN-30-1994 JUN-30-1994
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 0 0
<OTHER-PROPERTY-AND-INVEST> 2,610,003,000 2,610,003,000
<TOTAL-CURRENT-ASSETS> 6,571,000 206,571,000
<TOTAL-DEFERRED-CHARGES> 6,805,000 6,805,000
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 2,623,379,000 2,823,379,000
<COMMON> 671,048,000 671,048,000
<CAPITAL-SURPLUS-PAID-IN> 903,137,000 903,137,000
<RETAINED-EARNINGS> 927,032,000 916,957,000
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,280,170,000 2,270,095,000
0 0
0 0
<LONG-TERM-DEBT-NET> 230,000,000 230,000,000
<SHORT-TERM-NOTES> 81,000,000 281,000,000
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 9,000,000 9,000,000
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 23,209,000 33,284,000
<TOT-CAPITALIZATION-AND-LIAB> 2,623,379,000 2,823,379,000
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> (8,200,000) (13,625,000)
<OTHER-OPERATING-EXPENSES> 8,206,000 8,206,000
<TOTAL-OPERATING-EXPENSES> 6,000 (5,419,000)
<OPERATING-INCOME-LOSS> (6,000) 5,419,000
<OTHER-INCOME-NET> 303,654,000 303,654,000
<INCOME-BEFORE-INTEREST-EXPEN> 303,648,000 309,073,000
<TOTAL-INTEREST-EXPENSE> 23,868,000 39,368,000
<NET-INCOME> 279,780,000 269,705,000
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 279,780,000 269,705,000
<COMMON-STOCK-DIVIDENDS> 218,822,000 218,822,000
<TOTAL-INTEREST-ON-BONDS> 20,740,000 20,740,000
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2.25 2.17
<EPS-DILUTED> 2.25 2.17
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000888707
<NAME> CHARTER OAK ENERGY, INC.
<S> <C> <C>
<PERIOD-TYPE> OTHER OTHER
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-END> JUN-30-1994 JUN-30-1994
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 8,000 8,000
<OTHER-PROPERTY-AND-INVEST> 6,322,000 6,322,000
<TOTAL-CURRENT-ASSETS> 6,400,000 206,400,000
<TOTAL-DEFERRED-CHARGES> 3,812,000 3,812,000
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 16,542,000 216,542,000
<COMMON> 0 0
<CAPITAL-SURPLUS-PAID-IN> 25,149,000 225,149,000
<RETAINED-EARNINGS> (9,123,000) (9,123,000)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 16,026,000 216,026,000
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 516,000 516,000
<TOT-CAPITALIZATION-AND-LIAB> 16,542,000 216,542,000
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> (3,331,000) (3,331,000)
<OTHER-OPERATING-EXPENSES> 7,985,000 7,985,000
<TOTAL-OPERATING-EXPENSES> 4,654,000 4,654,000
<OPERATING-INCOME-LOSS> (4,654,000) (4,654,000)
<OTHER-INCOME-NET> 1,383,000 1,383,000
<INCOME-BEFORE-INTEREST-EXPEN> (3,271,000) (3,271,000)
<TOTAL-INTEREST-EXPENSE> 5 5
<NET-INCOME> (3,263,000) (3,263,000)
0 0
<EARNINGS-AVAILABLE-FOR-COMM> (3,263,000) (3,263,000)
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000906614
<NAME> CHARTER OAK DEVELOPMENT CORPORATION
<S> <C> <C>
<PERIOD-TYPE> OTHER OTHER
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-END> JUN-30-1994 JUN-30-1994
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 8,000 8,000
<OTHER-PROPERTY-AND-INVEST> 0 0
<TOTAL-CURRENT-ASSETS> 4,913,000 204,913,000
<TOTAL-DEFERRED-CHARGES> 958,000 958,000
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 5,879,000 205,879,000
<COMMON> 0 0
<CAPITAL-SURPLUS-PAID-IN> 10,760,000 210,760,000
<RETAINED-EARNINGS> (4,972,000) (4,972,000)
<TOTAL-COMMON-STOCKHOLDERS-EQ> 5,788,000 205,788,000
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 83,000 83,000
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 8,000 516,000
<TOT-CAPITALIZATION-AND-LIAB> 5,879,000 206,387,000
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> (2,743,000) (2,743,000)
<OTHER-OPERATING-EXPENSES> 6,415,000 6,415,000
<TOTAL-OPERATING-EXPENSES> 3,672,000 3,672,000
<OPERATING-INCOME-LOSS> (3,672,000) (3,672,000)
<OTHER-INCOME-NET> 0 0
<INCOME-BEFORE-INTEREST-EXPEN> (3,672,000) (3,672,000)
<TOTAL-INTEREST-EXPENSE> 0 0
<NET-INCOME> (3,672,000) (3,672,000)
0 0
<EARNINGS-AVAILABLE-FOR-COMM> (3,672,000) (3,672,000)
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0.00 0.00
<EPS-DILUTED> 0.00 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000072741
<NAME> NORTHEAST UTILITIES AND SUBSIDIARIES
<S> <C> <C>
<PERIOD-TYPE> OTHER OTHER
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-END> JUN-30-1994 JUN-30-1994
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 6,623,609,000 6,632,609,000
<OTHER-PROPERTY-AND-INVEST> 372,384,000 372,384,000
<TOTAL-CURRENT-ASSETS> 779,871,000 979,871,000
<TOTAL-DEFERRED-CHARGES> 2,792,852,000 2,792,852,000
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 10,577,716,000 10,777,716,000
<COMMON> 671,048,000 671,048,000
<CAPITAL-SURPLUS-PAID-IN> 903,137,000 903,137,000
<RETAINED-EARNINGS> 927,032,000 916,957,000
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,280,170,000 2,270,095,000
379,000,000 379,000,000
239,700,000 239,700,000
<LONG-TERM-DEBT-NET> 3,910,661,000 3,910,661,000
<SHORT-TERM-NOTES> 233,000,000 433,000,000
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 69,500,000 69,500,000
<LONG-TERM-DEBT-CURRENT-PORT> 282,527,000 282,527,000
1,500,000 1,500,000
<CAPITAL-LEASE-OBLIGATIONS> 179,224,000 179,224,000
<LEASES-CURRENT> 72,388,000 72,388,000
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,930,046,000 2,940,121,000
<TOT-CAPITALIZATION-AND-LIAB> 10,577,716,000 10,777,716,000
<GROSS-OPERATING-REVENUE> 3,637,933,000 3,637,933,000
<INCOME-TAX-EXPENSE> 286,791,000 281,366,000
<OTHER-OPERATING-EXPENSES> 2,830,932,000 2,830,932,000
<TOTAL-OPERATING-EXPENSES> 3,117,723,000 3,112,298,000
<OPERATING-INCOME-LOSS> 520,210,000 525,635,000
<OTHER-INCOME-NET> 84,061,000 84,061,000
<INCOME-BEFORE-INTEREST-EXPEN> 604,271,000 609,696,000
<TOTAL-INTEREST-EXPENSE> 279,573,000 295,073,000
<NET-INCOME> 324,698,000 314,623,000
44,918,000 44,918,000
<EARNINGS-AVAILABLE-FOR-COMM> 279,780,000 269,705,000
<COMMON-STOCK-DIVIDENDS> 218,822,000 218,822,000
<TOTAL-INTEREST-ON-BONDS> 321,066,000 321,066,000
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2.25 2.17
<EPS-DILUTED> 2.25 2.17
</TABLE>
