FILE NO. 70-8479 U-1/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM U-1
APPLICATION/DECLARATION WITH RESPECT TO:
(1) SHORT-TERM BORROWINGS EVIDENCED BY NOTES TO LENDING
INSTITUTIONS AND TO PURCHASERS OF COMMERCIAL PAPER;
(2) OPEN ACCOUNT ADVANCES; AND
(3) CONTINUED USE OF A SYSTEM COMPANY MONEY POOL
Under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NORTHEAST UTILITIES HOLYOKE WATER POWER
WESTERN MASSACHUSETTS ELECTRIC COMPANY
COMPANY Canal Street
THE QUINNEHTUK COMPANY Holyoke, MA 01040
174 Brush Hill Avenue
West Springfield, MA 01809
THE CONNECTICUT LIGHT AND POWER PUBLIC SERVICE COMPANY OF
COMPANY NEW HAMPSHIRE
NORTHEAST NUCLEAR ENERGY NORTH ATLANTIC ENERGY
COMPANY CORPORATION
THE ROCKY RIVER REALTY COMPANY 1000 Elm Street
107 Selden Street Manchester, NH 03015
Berlin, CT 06037
HEC INC.
24 Prime Parkway
Natick, MA 01760
(Names of companies filing this statement and addresses of principal
executive offices)
NORTHEAST UTILITIES
(Name of top registered holding company)
Robert P. Wax, Esq.
Vice President, Secretary and General Counsel
Northeast Utilities Service Company
107 Selden Street
Berlin, Connecticut 06037
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
Jeffrey C. Miller, Esq. David R. McHale
Assistant General Counsel Manager-Short Term and Project Finance
Northeast Utilities Service Company Northeast Utilities Service Company
107 Selden Street 107 Selden Street
Berlin, Connecticut 06037 Berlin, Connecticut 06037
C. Duane Blinn, Esq.
Day, Berry & Howard
CityPlace
Hartford, Connecticut 06103-3499
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The application/declaration in this proceeding, as previously amended
(the "Application"), is hereby amended as follows:
1. The following is added at the end of paragraph 36 of the
Application:
The NHPUC authorized PSNH to incur as much as $220,500,000 in
short-term borrowings in an order dated July 31, 1984, and the
NHPUC confirmed that short-term borrowing authorization in orders
dated May 6, 1987 and May 28, 1987.
2. The following is added in the appropriate place in Item 6 of the
Application:
D.9 Order of the New Hampshire Public Utilities Commission dated July
31, 1984 authorizing PSNH to incur as much as $220,500,000 in
short-term borrowings.
D.10 Order of the New Hampshire Public Utilities Commission dated May 6,
1987 confirming authorization of PSNH to incur as much as
$220,500,000 in short-term borrowings.
D.11 Order of the New Hampshire Public Utilities Commission dated May
28, 1987 confirming authorization of PSNH to incur as much as
$220,500,000 in short-term borrowings.
3. The financial data schedules for Northeast Utilities (Parent) and
Northeast Utilities and Subsidiaries included in Exhibit G to the Application
are deleted and replaced with Exhibit G.1 filed herewith.
4. The fiscal year end stated in Exhibit G for each of the Applicants
is changed to December 31, 1994.
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5. Financial Statements 1.1 (Balance Sheet - Northeast Utilities
(Parent)), 1.2 (Income Statement - Northeast Utilities (Parent)), 11.1
(Consolidated Balance Sheet - Northeast Utilities and Subsidiaries) and 11.2
(Consolidated Income Statement - Northeast Utilities and Subsidiaries) are
deleted and replaced respectively with Financial Statements 1.1.1, 1.2.1,
11.1.1 and 11.2.1, each of which is filed herewith.
6. The following exhibits are filed herewith:
D.9 Order of the New Hampshire Public Utilities Commission dated July
31, 1984 authorizing PSNH to incur as much as $220,500,000 in
short-term borrowings.
D.10 Order of the New Hampshire Public Utilities Commission dated May 6,
1987 confirming authorization of PSNH to incur as much as
$220,500,000 in short-term borrowings.
D.11 Order of the New Hampshire Public Utilities Commission dated May
28, 1987 confirming authorization of PSNH to incur as much as
$220,500,000 in short-term borrowings.
F Opinion of Counsel
G.1 Financial Data Schedules for Northeast Utilities (Parent) and
Northeast Utilities and Subsidiaries
K Schedule of Fees, Commissions and Expenses
7. The following financial statements are filed herewith:
1. Northeast Utilities (parent company only)
1.1.1 Balance Sheet, per books and pro forma, as of June 30,
1994.
1.2.1 Statement of Income, per books and pro forma, for 12
months ended June 30, 1994 and capital structure, per
books and pro forma, as of June 30, 1994.
11. Northeast Utilities and Subsidiaries (consolidated)
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11.1.1 Consolidated Balance Sheet, per books and pro forma, as
of June 30, 1994.
11.2.1 Consolidated Statement of Income, per books and pro
forma, for 12 months ended June 30, 1994 and capital
structure, per books and pro forma, as of June 30, 1994.
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SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned applicants have duly caused this
amendment to be signed on their behalf by the undersigned hereunto duly
authorized.
Dated: December 8, 1994
Northeast Utilities
The Connecticut Light and Power Company
Western Massachusetts Electric Company
Public Service Company of New Hampshire
Holyoke Water Power Company
Northeast Nuclear Energy Company
The Quinnehtuk Company
North Atlantic Energy Corporation
The Rocky River Realty Company
HEC Inc.
By: DAY, BERRY & HOWARD
CityPlace
Hartford, Connecticut 06103-3499
Their Attorneys
By /s/C. Duane Blinn
C. Duane Blinn
A Partner
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INDEX TO EXHIBITS
(a) Exhibits
D.9 Order of the New Hampshire Public Utilities Commission dated July
31, 1984 authorizing PSNH to incur as much as $220,500,000 in
short-term borrowings.
D.10 Order of the New Hampshire Public Utilities Commission dated May 6,
1987 confirming authorization of PSNH to incur as much as
$220,500,000 in short-term borrowings.
D.11 Order of the New Hampshire Public Utilities Commission dated May
28, 1987 confirming authorization of PSNH to incur as much as
$220,500,000 in short-term borrowings.
F Opinion of Counsel
G.1 Financial Data Schedules for Northeast Utilities (Parent) and
Northeast Utilities and Subsidiaries
K Schedule of Fees, Commissions and Expenses
(b) Financial Statements
1. Northeast Utilities (parent company only)
1.1.1 Balance Sheet, per books and pro forma, as of June 30,
1994.
1.2.1 Statement of Income, per books and pro forma, for 12
months ended June 30, 1994 and capital structure, per
books and pro forma, as of June 30, 1994.
11. Northeast Utilities and Subsidiaries (consolidated)
11.1.1 Consolidated Balance Sheet, per books and pro forma, as
of June 30, 1994.
11.2.1 Consolidated Statement of Income, per books and pro
forma, for 12 months ended June 30, 1994 and capital
structure, per books and pro forma, as of June 30, 1994.
Exhibit D.9
Re Public Service Company of New Hampshire
Intervenors: Office of Consumer Advocate, Community Action Program, and
Business and Industry Association of New Hampshire
DF 84-168, Supplemental Order No. 17,139
New Hampshire Public Utilities Commission
July 31, 1984
APPEARANCES: Frederick J. Coolbroth, Esquire and Sulloway, Hollis & Soden by
Martin L. Gross, Esquire for Public Service Company of New Hampshire; Michael
W. Holmes, Esquire for the Consumer Advocate, Gerald M. Eaton, Esquire for
the Community Action Program; James K. Hoeveler for the Business and Industry
Association of New Hampshire; Larry M. Smukler, Esquire for the Staff of the
Public Utilities Commission of New Hampshire.
By the Commission:
REPORT
On June 29, 1984, Public Service Company of New Hampshire ('PSNH' or
'Company') filed a Petition for Necessary Authority to Enter Restructure
Agreements with Certain Creditors ('Petition'). An Order of Notice was issued
on July 2, 1984 which, inter alia, required the submission of prefiled
testimony and exhibits no later than July 10, 1984 and set a hearing for July
25, 1984.
Pursuant to the terms of the Order of Notice, Motions to Intervene were
filed by the Consumer Advocate, the Community Action Program ('CAP'), the
Business and Industry Association of New Hampshire ('BIA') the Campaign for
Ratepayers' Rights ('CRR'), the Seacoast Anti-Pollution League ('SAPL') and
Chris Spirou. <F1> The Motions to Intervene of the Consumer Advocate, the
CAP and the BIA were granted. All other pending Motions to Intervene were
denied. See Tr. at 23-25.
Hearings on the Petition were held on July 25, 1984 and July 26, 1984.
The Commission heard the testimony of two company witnesses and the public.
In addition, nine exhibits were entered into evidence and certain responses
to oral data requests have been filed and reviewed by the Staff.
PSNH offered the testimony of two witnesses: Mr. Charles Bayless, the
Company's Financial Vice President; and Mrs. Kathlyne Hadley. Mrs. Hadley
provided technical testimony on certain calculations in the Company's
financial runs. Mr. Bayless provided general testimony in support of the
Company's Petition. PSNH is seeking the necessary regulatory authority to
enter into certain restructured agreements with its creditors. The need to
restructure these agreements arose from PSNH's inability to make certain
payments when due as a result of its liquidity crisis of the Spring of 1984.
In the face of impending defaults that could have lead to the bankruptcy of
the Company, PSNH entered into negotiations with its creditors; negotiations
which took place over an extended period of time. Those negotiations resulted
in the restructured agreements which were the subject of this docket.
According to Mr. Bayless, the Company's creditors imposed certain
requirements on the Company in the course of the negotiations. Those
requirements included a PSNH commitment to treat all creditors alike. Thus,
all of the debt in the restructured agreements carries the same interest rate
to a maturity date of May 31, 1985. That interest rate is 116% of the Bank of
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Boston's base rate plus 25 basis points. <F2> In addition, the agreements
are interrelated and interdependent to such an extent that a failure to
execute one agreement for any reason (including the lack of the requisite
regulatory approvals) will constitute a failure to meet the requirements of
all of the remaining agreements. Accordingly, the Commission is being asked
to view each agreement as one component of a package, as distinguished from a
consideration which would allow each agreement to stand or fall on its own
merits.
In this context, the agreements that are a part of the package include:
1) A new revolving credit facility in the amount of $35,000,000 secured
by the Company's accounts receivable (Exh. 1, Attachment 1);
2) An extension of the Company's $50,000,000 Eurodollar Term Loans (Exh.
1, Attachment 2);
3) An amendment to the Company's Nuclear Material Lease and Security
Agreement ('Prulease') which provides additional security in the form of a
pledge of certain PSNH General and Refunding bonds (Exh. 1, Attachment 3);
4) An extension of the Company's $25,000,000 Domestic Term Loans (Exh.
1, Attachment 4);
5) A short term obligation to United Engineers and Constructors ('UE&C
'), the Company's Seabrook Architect and Engineer, in the amount of
$20,485,254 (Exh. 1, Attachment 5); and
6) A lease of certain land underlaying the Company's coal pile at the
Merrimack Station to Consolidation Coal Company ('Consolidation') so that
Consolidation may retain meaningful title to the coal under a new coal
purchase agreement.
Prior to the execution of the above described agreements, the Company
must obtain certain approvals from this Commission. The approvals sought are:
1) Authority to increase the level of short term indebtedness to an
amount outstanding at any one time not exceeding $220,500,000;
2) Authority to secure the revolving credit facility with the Company's
accounts receivable;
3) Authority to use the LIBOR for the Eurodollar Term Loans;
4) Authority to amend the terms of the Company's $50,000,000 Prulease
and to grant additional security therefor;
5) Authority to lease certain real estate and equipment to
Consolidation.
The Staff of the Commission demonstrated that the granting of the
authority sought could have an impact on rates. Thus, the Staff recommended
that the Commission confine its analysis to a review of the approvals sought.
Such an analysis must carry with it the implication that any findings and
conclusions contained herein will not be applicable for ratemaking purposes.
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The CAP, through a written submission filed on July 27, 1984, had
certain comments on each restructured agreement. Those comments included:
1) A recommendation that the Commission assign priority to the review of
the Domestic Term Loan and the Prulease inasmuch as those are the only
agreements which must be expeditiously executed;
2) A recommendation that the Domestic Term Loan be approved;
3) A recommendation (with reservations) that the amended Prulease be
approved;
4) A recommendation (with reservations) that the Eurodollar Term Loans
be approved;
5) A recommendation that the Commission approve the short term note with
UE&C with accompanying encouragement to the Company to repay the note;
6) A recommendation that approval of the revolving credit facility be
deferred pending a requirement that PSNH address certain concerns about the
collateral;
7) A recommendation that approval of the lease of certain land and
equipment to Consolidation be deferred until certain concerns about the new
coal contract are addressed; and
8) A recommendation that the Commission adopt the suggestion of the
Staff.
COMMISSION ANALYSIS
After review, we find that the authority requested by PSNH is in the
public good. This finding is based upon our review of the restructured
agreements as a package which saw its genesis in the Company's liquidity
crisis of 1984. Our finding is also based on our analysis of each individual
approval sought by the Company. That analysis is set forth below.
Short Term Debt Limit
Pursuant to RSA 369:7 (Supp. 1981), the Commission, in Re Public Service
Co. of New Hampshire (1981) 66 NH PUC 151, 153, approved a short term debt
limit of $190,000,000. If the Company were to fully draw on the short term
credit allowed in the restructured agreements, it would incur short term debt
at a level of $220,500,000. This increase of $30,500,000 in the short term
debt limit is reasonable for PSNH given its size and its critical need for a
modicum of financial flexibility.
Our analysis of the increase in the short term debt limit recognizes the
concerns of the parties, as well as our own concerns, with the revolving
credit facility and the UE&C Note. The concerns with the revolving credit
facility were directed at the security interest in the accounts receivable
which will be addressed separately below. The concern with the UE&C Note is
not sufficient to cause us to deny the requested approval. We believe that
the Company should retain maximum flexibility to manage appropriately the
construction of the Seabrook facility. Thus, the UE&C Note balances financial
flexibility against construction management flexibility. On the basis of the
instant record, we believe that it is appropriate to allow PSNH management to
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make the initial decision about where the need for flexibility is greatest.
How ever, we also adopt CAP's recommendation that we encourage PSNH to take
advantage of the Note's prepayment terms, if appropriate, so as to attain
maximum flexibility in construction management.
Accounts Receivable
As a part of the proposed revolving credit facility, the Company agreed
to grant a security interest in its accounts receivable. PSNH is seeking
authority pursuant to RSA 369:2 and 7 to enter into the arrangement.
We share the concerns expressed by CAP and others about the pledge of
accounts receivable. However, we believe that the realities of the Company's
financial situation combined with the practicalities of how the security
interest may be utilized are sufficient to allow us to grant the approval in
spite of these concerns. This approval should not be construed to mean that
the Commission favors this type of transaction. We are aware that in the past
utilities and utility regulators did not favor account receivables as
security for any debt, although this type of security has frequently been
used by nonregulated industries. Since we have no real experience by
utilities with this program it is not comforting to be one of the first
commissions to approve such a security interest. As a result, we do not
approve of this type of transaction on a permanent basis. In future
financings we expect the Company to engage in more traditional finance
transactions or to submit considerable evidence to support the acceptance of
accounts receivable financing on a permanent basis.
Use of the LIBOR for the Eurodollar Term Loans
As described above, the amended Eurodollar Term Loans give the lender
the one time option of selecting an interest rate based on the Bank of
Boston's Base Rate or a rate based on LIBOR. <F3> The rationale for the
option is that the lender's own cost of money is often based on LIBOR. Since
the two rates are roughly comparable (e.g. Ex. 4) as is the risk that either
rate will rise or fall, we find that it is reasonable to approve the option
contained in the amended Eurodollar agreement. Pursuant to RSA 369:7 (Supp.
1981), we will grant the requested approval.
Amendment of Prulease
As described above, the Company has amended its Prulease transaction to
provide for a higher interest rate and additional security in the form of
General and Refunding Bonds. CAP's written submission recommended that the
approval be granted. Our independent analysis is consistent with CAP's
argument. In the context of the default which caused the need to renegotiate
the Prulease, the new agreement is in the public good. Pursuant to RSA
369:1-4 and 7, we will grant the requested authority.
Consolidation Lease
As described above, PSNH proposes to lease certain equipment and the
land underlaying the coal pile at Merrimack Station to Consolidation. This
lease is necessary to allow Consolidation to retain title to the coal in
accordance with the recently amended coal supply contract entered into
between Consolidation and PSNH.
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CAP's concerns are directed at the effect of the new arrangement on
PSNH's ability to continue to generate low cost electricity at Merrimack
Station. These concerns were the subject of Docket No. DR 84-115 which
resulted in Report and Supplemental Order No. 17,072 ([1984] 69 NH PUC 312).
The concerns are also the subject of continuing Commission monitoring of
PSNH's fuel supply situation. Thus, although we share CAP's concerns, we
believe that they are more appropriately addressed in other dockets.
After review, we find that approval of the authority sought will not
restrict the Commission's ability to ensure adequate inventories of fuel. The
transfer will allow Consolidation to retain what is, in effect, a security
interest in the coal inventory. That interest will not be exercised as long
as PSNH complies with the terms of its current contract with Consolidation.
As noted in Supplemental Order No. 17,072, PSNH is on notice that the
Commission will take all appropriate action, including segregation of
customer revenues, to ensure an adequate supply of fuel. Both the lease
considered herein and other steps the Commission can take, if necessary, are
directed at the need to ensure adequate fuel supplies. Thus, pursuant to RSA
374:30, we find that the authority sought herein by the Company is in the
public good.
CONCLUSION
We have found that the authority requested in the Company's Petition is
in the public good. Of necessity, this includes the increased cost of money
which forms a part of these transactions. The record indicates that this
increased cost could affect rates through the calculation of the rate of
return component of the rate formula and through an increased level of
capitalized AFUDC. Both the Staff and CAP expressed concerns about the
ratemaking implications of the approval of the authority sought. We agree
with those concerns.
Our review of the package of restructured agreements is based on an
examination of the circumstances which lead to those agreements. Those
circumstances dictate a conclusion that the restructured agreements are in
the public good; however, that conclusion does not carry with it a finding
that the cost of the agreements is reasonable for ratemaking purposes. That
determination must be left to the time when the Company seeks to pass the
cost of the agreements to ratepayers. We have in this Report expressed some
concerns about the agreements; concerns that are more reasonably directed at
inter alia ratemaking implications. <F4> The existence of those concerns
means, inter alia, that the calculation of the cost of senior capital in the
next rate case will not be a simple arithmetic exercise. PSNH is hereby
placed on notice that the effects of its liquidity crisis on rates will be
fully explored at the appropriate time. Until that time, the Company is
directed to keep the appropriate accounting records so that the cost of the
liquidity crisis may be quantified.
Our Order will issue accordingly.
SUPPLEMENTAL ORDER
Upon consideration of the foregoing Report, which is made a part hereof;
it is hereby
ORDERED, that the authority requested by Public Service Company of New
Hampshire be, and hereby is, approved; and it is
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FURTHER ORDERED, that Public Service Company of New Hampshire maintain
its accounting records as directed in the foregoing report.
By order of the Public Utilities Commission of New Hampshire this
thirty-first day of July, 1984.
Opinion of Commissioner Aeschliman Concurring in Part and Dissenting in Part
I concur with the decision of the majority relative to granting
authority for Public Service Company to enter into restructure agreements
with certain creditors and to increase their short term debt limit except
that I would grant approval subject to the additional following exceptions
and conditions.
I. Authority to increase the level of short term notes, bonds or other
evidences of indebtedness to $220,000,000 pursuant to RSA 369:7 should be
granted provided that the Agreement between Public Service Company of New
Hampshire and United Engineers & Constructors, Inc. is amended to delete
Section II(e). (Exhibit 1, Attachment 5, p. 5.) That section reads as
follows: SECTION 2. DEFAULT '(e) termination or material reduction of
United's service at the Seabrook Project without United's consent.'
While the Company does not require individual approval for short term
financings and PSNH has not petitioned for approval of the Agreement with
United Engineers and Constructors, the testimony in this proceeding indicates
that the need to increase the short term borrowing limit is caused by this
Agreement.
Given PSNH's extraordinary situation it may be reasonable for the
Company to enter into loan agreements with certain contractors and vendors
for payment of contract arrearages. However, under no circumstances is it
reasonable nor is it in the public interest for PSNH to provide work
guarantees to UE&C. This is particularly apparent in light of Public Service
Company's own stated position relative to UE&C.
At a press conference when PSNH released the March 1 cost estimate and
subsequently in statements before this Commission, Mr. Harrison indicated
that PSNH was reviewing all courses of action against UE&C including (1)
termination of service; (2) reduction of employee levels; and (3) legal
action. It is clear that Section II(e) may serve to prevent or constrain
Public Service Company (or any successor -- N.H. Yankee) from taking any of
these actions.
Mr. Bayless, PSNH Financial Vice President, indicated that UE&C is not
interested in providing financing if the Company is terminated. However, UE&C
has already provided the financing, even though involuntarily, and now has a
substantial interest in recovering their $20.5 million as well as in having
the Seabrook project continue It is simply not necessary and it is clearly
unreasonable to provide an employment guarantee, including a guarantee
against material reduction in employment levels. Furthermore, PSNH should
vigorously pursue the prepayment of this agreement in order to obtain the
proper arms length relationship with the contractor.
II. Authority to secure short-term revolving credit by granting a
security interest in all its billed and unbilled receivables pursuant to RSA
369:2 and 7 should be denied.
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The testimony clearly indicates that the banks have negotiated an
arrangement which is unreasonable in its terms and which endangers service to
PSNH customers. The arrangement is unreasonable because (1) the revolving
credit facility will cost approximately $720,000 on an annual basis for
facility and commitment fees alone; (2) use of the facility will add an
additional interest expense of 108% of base rate; (3) the facility can only
be used when PSNH has less than $10 million in cash or other short-term funds
(Exh. 1, Attachment 1, Covenant (b) at 4.); (4) the agreement includes other
grounds for default beyond failure to make payments, including cross-default
provisions; and (5) one of the covenants of the agreement is the successful
accomplishment of at least $200 million of debenture financing. As a
consequence of these requirements, this facility is of no use to PSNH unless
it is experiencing difficulty in obtaining its long-term financing and is
virtually out of cash. This is exactly the time at which using accounts
receivable as collateral would most threaten PSNH's ability to provide
service. Mr. Bayless has assured the Com mission that the Company would not
wait until it had run out of cash to file for Chapter 11 protection should
that be necessary. Mr. Coolbroth also assures the Commission that a
bankruptcy court would surely intercede to protect service to customers by in
effect vacating the terms of this revolving credit facility. Nevertheless, it
is the Commission's duty to assure that service to customers is protected,
and it can not rely upon the Company or a Court to fulfill its
responsibility.
The Commission should advise PSNH that it recognizes the need to provide
security given its financial situation and that the Commission would approve
use of security that is structured so as not to threaten service to
customers. However, PSNH has not demonstrated that it has exhausted all other
possibilities in obtaining a secured credit line with U.S. banks which will
satisfy the European bankers. For example, Mr. Bayless indicated that the
European banks had originally wanted a renewal of the Banker's Acceptance
Facility. Since PSNH has now paid the $5 million in past default under the
Bankers Acceptance Facility and since it must pay its arrearages to
Consolidated Coal within a short time frame, reinstituting this facility
would appear to be a possibility in conjunction with a Commission order
earmarking and segregating funds for fuel bills. The Bankers Acceptance
Facility would provide PSNH with much greater benefit by providing financing
for its fuel inventories, while the Commission could at the same time be
assured that fuel supplies and service to customers were not threatened.
It is apparent that PSNH is hardly in a bargaining position to protect
itself let alone its customers. It is the Commission's responsibility in this
situation to protect both the Company and its customers. As Community Action
Program (CAP) points out, the demands of the creditors must be logical and
the transactions must be reasonable. It is not in the interest of the banks
or other creditors to have these agreements collapse or to lose the money
they already have at stake. Consequently, it is reasonable for the Commission
to require these changes and it is reasonable to anticipate that they would
be accepted by the parties to the agreements.
FOOTNOTES
[FN]
<F1> The Motion to Intervene of Chris Spirou was subsequently withdrawn (Tr.
at 5).
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<F2> While the Company's creditors required equal treatment, there is some
variation in the costs of the various restructured agreements. Thus, the
extension of the Eurodollar Term Loans (Exh. 1, Attachment 2) allows the
lenders the one time option of selecting the above described interest rate or
a rate based on the London interbank rate ('LIBOR') plus 2 1/2%. In addition,
the proposed revolving credit facility (Exh. 1, Attachment 1) requires the
Company to pay to the banks an annual sum of approximately $721,000 whether
or not the line of credit is utilized (Tr. at 146).
<F3> Authority to use LIBOR is necessary because the Commission previously
ordered that short term debt rates be based on prime. Re Public Service Co.
of New Hampshire (1981) 66 NH PUC 151, 153.
<F4> We are particularly concerned with the mechanics of the revolving credit
loan and the facility fee associated therewith. The response to Staff cross-
examination on the subject suggests that the facility fee will be incurred
with only a slight probability that the Company will be able to draw on that
line of credit.
Exhibit D.10
Public Service Company of New Hampshire
DF 87-83
Order No. 18,661
New Hampshire Public Utilities Commission
May 6, 1987
REPORT
The Consumer Advocate requests that the Commission investigate PSNH's
intention to raise 150 million dollars in short term debt pursuant to RSA
369, 374, & 378. For the reasons set forth herein, the Commission denies that
request.
The Consumer Advocate sets forth that the current authority of PSNH to
borrow $190 million dollars in short term debt is no longer valid because the
Commission has not set established rules. He further argues that in the event
the authority of PSNH to borrow 190 million short term is valid, that changed
circumstances require an Easton type hearing.
The Commission has reviewed the petition of the Consumer Advocate and
does not find that an Easton type review is appropriate on every allegation
of changed circumstances on all financings filed by utilities. Short term
financing is a well accepted practice of utilities to meet their ongoing
obligations to provide service to customers between rate cases and the
issuance of long term securities.
The purpose of regulating a utility's financings is to prevent the
problem of over capitalization. See Phillip, "The Regulation of Public
Utilities" second printing, 1985, page 213. The capitalization of a utility
refers to the amount of outstanding securities -- long term, short term,
preferred and common stock. In DR 87-4, Order No. 18,626 (72 NH PUC 124, 129)
we concluded that the scope of the proceeding would include, inter alia:
4. Whether it is economically feasible for PSNH to engage in the
proposed financing including a determination of the level of
revenues necessary to support the additions to the capital
structure which results from successful completion of the proposed
financing.
Within item 4 and the foregoing language the complete existing capital
structure will be examined and all debt existing or about to exist will be
considered in determining the level of revenue necessary to support the
proposed financing.
PSNH requested in "an individual case" a short term borrowing level of
approximately $220 million in DF 84-168. That borrowing level was authorized
by the Commission by Order No. 17,139, 69 NH PUC 415 (1984). That authority
is still valid. It is not necessary to open a new docket to examine the
effect of that borrowing since an examination of the long term debt
outstanding and the short term debt outstanding, including the contemplated
short term borrowing and the effect that said debts have on the total capital
structure of PSNH, is within the scope of the proceeding in DR 87-4 Order No.
18,626 item 3 and 4.
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Upon conclusion of all of the evidence in DR 87-4 the Commission will be
able to conclude whether PSNH should be authorized to borrow the 145 million
dollars requested in addition to the exercise of the authority granted for
short term borrowing or in lieu of short term borrowing. Appropriate
conditions may be attached to any financing order which may be in the public
interest.
In a separate motion, the Consumer Advocate requests that the Commission
develop rules pursuant to RSA 541-A relative to the issuance of debt. The
Commission finds such rules non-essential to the resolution of the instant
petition, and unnecessary with respect to the manner in which the Commission
generally addresses borrowing issues.
Under its statutory authorization, for many years both before and after
the 1981 amendment, the Commission has granted standing short-term borrowing
authority to individual utilities by specific orders. For examples of such
orders issued prior to the 1981 amendment, see Re Merrimack County Teleph.
Co., 61 NH PUC 198 (1976); Re New England Power Co., 64 NH PUC 33 (1979); and
Re Gas Service, Inc., 64 NH PUC 432 (1979). For examples of standing
short-term borrowing orders issued to individual utilities after the 1981
amendment, see Re Hudson Water Co., 67 NH PUC 106 (1982); Re Northern
Utilities, Inc., 68 NH PUC 1 (1983); and Re Concord Nat. Gas Corp., 68 NH PUC
738 (1983). The Commission has clearly understood its authority to issue
standing short-term borrowing orders under RSA 369:7 to individual utilities.
The Commission's long-standing practice in applying the statutory phrase
"specific order of the Commission in an individual case" in no way conflicts
with the statutory language and is an appropriate application of the
statutory language.
The Commission will apply that practice in the instant case. Accordingly,
since application of any rules is unnecessary in addressing the instant
petition, the Commission denies the Consumer Advocate's motion to establish
appropriate rules pursuant to RSA 541:A.
The Consumer Advocate further requests that the question of ". . . what
entails on (sic) individual case" be transferred to the Supreme Court. The
Commission finds no lack of clarity in the statutory wording, and finds it
unnecessary to transfer the issue, to the Court. RSA 369:7 specifically
provides two alternative methods by which a utility's short term borrowing
may be analyzed. The Commission may either establish, by rules, the amount of
borrowings which a company can make without specific investigation of a
particular borrowing, or it may, upon specific investigation of a particular
borrowing, issue an order setting forth the borrowing limits which the record
in that docketed investigation justifies.
Accordingly, the Commission will not transfer the question to the Supreme
Court.
Our Order will issue accordingly.
ORDER
Upon consideration of the foregoing Report, which is made a part hereof,
it is hereby
<PAGE>
-3-
ORDERED, that the Consumer Advocate's request that the Commission
investigate PSNH's intention to raise $150 Million in short term debt is
denied; and it is
FURTHER ORDERED, that the Consumer Advocate's request that the Commission
develop rules pursuant to RSA 541-A relative to the issuance of debt is
denied without prejudice; and it is
FURTHER ORDERED, that the Consumer Advocate's request that the Commission
transfer the question of ". . . what entails on (sic) individual case" to the
Supreme Court is hereby denied.
By Order of the Public Utilities Commission of New Hampshire this sixth
day of May, 1987.
Opinion of Commissioner Aeschliman
I would grant the petition of the Consumer Advocate and I would
consolidate the investigation with the long-term financing proceeding in
docket DF 87-4.
The financial situation of the Company has changed substantially since
the short-term debt authorizations were granted by this Commission. When the
authority was increased to $220 million by Order No. 17,139 in July 1984, all
of the authorization was required for existing debt as part of the
restructure of the Company's obligations. When these obligations were
converted to longer term debt in July, 1985 the question of short-term debt
authorization was not an issue because the Company did not have the
opportunity to borrow additional funds on a short-term basis. Since that time
the Company has continued to indicate that short-term financing was not
possible given the financial condition of the Company. The Company's recent
indication that it was pursuing short-term borrowing is the first indication
the Commission has had that this is an avenue open to the Company.
If the Commission affirms the effectiveness of the 1984 Order authorizing
up to $220 million in short-term debt and grants the authority requested in
DF 87-4, the Company will have the ability to increase its indebtedness by
$440 million without an investigation into the financial condition of the
Company. Consistent with my opinion regarding the proper scope of review in
DF 87-4, I do not believe the Company should be increasing its indebtedness
pending an appropriate review in that case. The purpose of consolidating an
investigation of the short-term financing with that proceeding would be to
provide the flexibility to approve short-term financing sufficient to carry
the Company during the proceeding should it be demonstrated that such
financing was essential.
Exhibit D.11
Public Service Company of New Hampshire
DF 87-83
Supplemental Order No. 18,689
New Hampshire Public Utilities Commission
May 28, 1987
REPORT REGARDING MOTIONS FOR REHEARING AND MOTION TO
REOPEN SHORT TERM FINANCING DOCKETS
I. Introduction and Procedural History
This Report and Order denies certain motions related to Report and Order
No. 18,661 (72 NH PUC 162), issued on May 6, 1987. In that Report and Order,
the Commission denied the Consumer Advocate's request to investigate the
intention of Public Service Company of New Hampshire (PSNH) to raise 150
million dollars in short term debt. It also denied, without prejudice, the
Consumer Advocate's request that the Commission develop rules pursuant to RSA
541-A on the issuance of debt.
On May 18, 1987, the Consumer Advocate filed a motion to rehear Report
and Order No. 18,661 pursuant to RSA 541:3. On the same date the Consumer
Advocate also filed a motion to reopen the consideration of PSNH Short Term
Financing in Dockets DF 81-76 and DF 84-168. On May 20, 1987, the Campaign
for Ratepayers Rights (CRR) also filed a motion for rehearing of Report and
Order 18,661. On May 22, 1987, PSNH filed responses to these Consumer
Advocate and CRR motions. In the Report and Order below, the Commission
discusses PSNH's authority for short term debt under outstanding Commission
orders and denies the Motions.
II. PSNH's Authority
RSA 369:7 provides two methods for the Commission to authorize the
issuance or renewal of short term debt: 1) by rules and, 2) by specific order
in individual cases. The State Administrative Procedures Act (APA) defines a
rule as a:
regulation, standard or other statement of general applicability adopted by
an agency to (a) implement, interpret or make specific a statute enforced or
administered by the agency or (b) prescribe or interpret an agency policy,
procedure or practice requirement binding on persons outside the agency,
whether members of the general public or personnel in other agencies.
RSA 541-A:1 (1986 Supp.). The APA requires agencies such as the PUC
to follow certain specified procedures in promulgating rules. RSA
541-A:3. (1986 Supp.) In contrast to rulemaking, the APA defines a
"contested case" as a proceeding "in which the legal rights, duties
or privileges of a party are required by law to be determined by an
agency after an opportunity for a hearing". RSA 541-A:1 (1986
Supp.).
RSA 363:17-b requires the PUC to issue a final order on all matters
presented to it. RSA 365:26 provides that a Commission order is effective
until it "shall be altered, amended, suspended, annulled, set aside or
otherwise modified by the commission or the court." RSA 365:28 provides that
<PAGE>
-2-
the Commission may "alter, amend, annul, set aside, or otherwise modify any
order made by it" upon following appropriate procedures.
The most recent PUC order addressing PSNH's authority under RSA 369:7
issued on July 31, 1984 by Order No. 17,139 in docket no. DF 84-164. 69 NH
PUC 415, 417, 418, 420 (1984). At the time the petition was filed in Docket
No. DF 84-164 PSNH had authority to borrow short term debt in the sum of
$190,000,000 by Order No. 14,854 issued in Docket No. DF 81-76 (66 NH PUC
151). Historically the Commission had established a policy that generally
allowed a short term debt limit to any utility of up to 10% of a utility's
net fixed capital account rounded to the next higher $10,000. See e.g. Docket
D-E3142, Re Public Utilities: Short Term Notes, Order No. 5968 33 NH PUC 218
(1951), and Order No. 7446, 42 NH PUC 40 (1960).
In docket no. DF 84-164, PSNH sought approval to add an additional
$30,500,000 to its short term debt limit and to obtain approval to enter into
certain restructural agreements with its then creditors. The restructured
agreements required PSNH to treat all creditors alike, carry the same
interest rate, secure creditors with accounts receivable lease of certain
real estate to Consolidated Coal Co. and other items submitted therein. If
the Company used its short term debt to cover all of the terms of the
restructured agreement, the Company would have incurred a short term debt
level of $220,500,000.
Order No. 17,135 issued in docket no. DF 84-168 stated in the section
entitled "Commission Analysis" that the Commission's findings were based upon
both the specific package of PSNH credit agreements before it and its
analysis of each individual approval sought by the company. The Commission
found that the authority that the Company was seeking to, among other things,
increase the authorized level of short term debt, to be in the public good.
ld., 69 NH PUC at 417. With regard to the short term debt, the Commission
particularly found that the level of short term debt requested "is reasonable
for PSNH given its size and its critical need for a modicum of financial
flexibility." Id., 69 NH PUC at 418. The Commission order noted that the
requests before it in that order had their roots in a liquidity crisis that
the Company experienced in 1984. Id., 69 NH PUC at 417. The Commission has
taken no action since the issuance of that order to modify the short term
debt authority provided therein.
III. Motions for Rehearing
The Consumer Advocate and CRR motions assert that the change in
circumstances since the issuance of Order No. 17,139 requires the Commission
to investigate the short term debt limit, citing Re Easton, 125 N.H. 106
(1984). The Commission notes that, as discussed above, when it set the short
term debt limit for PSNH, PSNH faced financial difficulties. The amount of
short term debt authorized was found appropriate considering PSNH's size and
need for financial flexibility. Under the statutes discussed above, that
authority is still good. The Commission has the discretionary authority to
reconsider the order on PSNH's short term debt limit. However, the Consumer
Advocate has not alleged any facts that convinces the Commission of a need to
reconsider PSNH's outstanding authority to incur short term debt. In
particular, PSNH's size and need for financial flexibility -- critical
factors relied upon in developing PSNH's current authority -- does not seem
changed despite the uncertainty over the operation of Seabrook. In addition,
<PAGE>
-3-
Re Easton, supra, does not impose or even address, any requirement for the
Commission to reconsider short term debt authorizations such as PSNH's.
The Consumer Advocate and CRR further allege that the Commission must
investigate the PSNH plans under the requirements of RSA 369:7. Looking at
that Statute, RSA 369:7 I. provides that the Commission may authorize
issuance of short term debt by specific order or rules. RSA 369:7 II.
particularly addresses the rulemaking option -- an option the Commission has
not exercised. Thus, the relevant issue is whether RSA 369:7 I. imposes a
duty to reexamine the PSNH short term debt authorization provided by Order
No. 17,139.
The Commission believes RSA 369:7 I. would require investigation of
PSNH's issuance if the authority provided in 1984 was limited to a specific
transaction. However, if the authority given was for a general short term
debt limit not limited to any particular transaction, then the order
providing authority for the debt limit still provides a short term debt limit
that remains valid today. As is discussed above, the Commission's order
authorized the debt limit in light of PSNH's size and need for financial
flexibility. As was also discussed above, the Commission did not look at just
the instant transaction, but at the specific authority requested. In
addition, the specific terms of the Report and Order generally increase the
short term debt limit authorized to be outstanding at any one time from
190,000,000 to 220,500,000. That authorization was not tied to or conditioned
upon a specific transaction despite the power of the Commission to condition
any such authorization. <F1> The amount of short term debt authorized also
exceeds the dollar level of the transaction that the order discusses. Based
upon all of the above factors, the Commission finds that the Commission set a
generally allowed level of short term debt for PSNH by issuing its order.
That order is still valid pursuant to RSA 365:26 and may not be changed
without following the procedural requirements necessary to comply with RSA
365:28. That order continues to address the legal right, duty or privilege of
PSNH to incur short term debt. <F2>
The Consumer Advocate and CRR also assert that the Commission, by not
investigating, fails to meet the requirements of Re Easton in protecting the
public. The Commission does not agree. The Commission is investigating the
Company's non-Seabrook long term financing consistent with Re Easton in
docket no. DR 87-4. See Report and Order No. 18,626, Docket No. DR 87-4
(April 3, 1987) (72 NH PUC 157). The Commission shall investigate the long
term Seabrook financing in docket no. DF 87-73 consistent with Re Easton.
However, neither Re Easton nor any other legal requirement dictates that the
Commission specifically investigate PSNH's short term debt limit at this
time, for the outstanding order is valid as discussed, supra. The Commission
further declines to exercise its discretion to specifically investigate that
now. However, the Company's total financing picture -- and the part that
short term financing plays in that picture -- will unquestionably be reviewed
in the process of investigating the long term financings in docket nos.
DF 87-4 and DF 87-73.
The Consumer Advocate attacks the authorization for PSNH's short term
debt due to the refusal of former PUC Chairman McQuade to disqualify himself
from the proceeding. The time for moving for rehearing and appeal of that
1984 order has long passed. The Order is thus valid pursuant to RSA 365:28.
<PAGE>
-4-
Finally, the CRR Motion argues that allowing the outstanding PSNH
authorization to continue in effect despite changing circumstances allows the
order to operate as a rule. The Commission has addressed changing
circumstances above and refers CRR to that discussion. With regard to the
order operating as a rule, the Commission notes that the Order No. 17,139,
supra, is an outstanding valid order addressing PSNH only from a proceeding
that the Commission decided after a hearing. The order remains valid under
RSA 365:28. The length of time that the order has been outstanding does not
make it a rule. As the definition of rule quoted above indicates, a rule has
general applicability. See also: Re Nationwide Insurance Co., 120 N.H. 90,
93, 94 (1983). The passage of time has not expanded the applicability of
Order No. 17,139 to an action of general applicability. Thus, it cannot be
considered a rule.
IV. Motion to Reopen Financing Dockets
The Consumer Advocate also requests that the Commission reopen the last
two dockets under which PSNH received short term financing docket nos. DF
81-76 and DF 84-168. He bases this request upon the changed financial
circumstances of PSNH and former PUC Chairman Paul McQuade's refusal to
disqualify himself from docket DF 84-168. The Commission long ago issued
final orders in those dockets. These grounds are identical to those of the
Consumer Advocate's Motion for Rehearing. The Commission rejects these
grounds as a basis for examining the PSNH short term debt authority based
upon its discussion of the same grounds for the Motion for Rehearing above.
Even if the grounds had merit, the Commission finds that actions on these
long closed dockets with perhaps different participants and parties to be an
inappropriate way to proceed. Thus, the Commission declines to take any
action in these old dockets.
Our Order will issue accordingly.
SUPPLEMENTAL ORDER
Based upon the foregoing Report Regarding Motions for Rehearing and
Motion to Reopen Short Term Financing Dockets, which is incorporated herein
by reference; the Commission
ORDERS, that the Consumer Advocate's Motion to Rehearing Report and Order
No. 18,661 (72 NH PUC 162) is denied; and it is
FURTHER ORDERED, that the Campaign for Ratepayers Rights Motion to Rehear
Report and Order No. 18,661 is denied; and it is
FURTHER ORDERED, that the Commission declines to take any action in or
reopen dockets DF 81-76 and DF 84-168.
By order of the Public Utilities Commission of New Hampshire this
twenty-eighth day of May, 1987.
Dissenting Opinion of Commissioner Aeschliman
I would grant the Motions for Rehearing of the Consumer Advocate and the
Campaign for Ratepayers Rights based upon the reasoning in my dissenting
opinion issued on May 6, 1987 from the Commission's Report and Order No.
18,661.
<PAGE>
-5-
At a minimum, the Commission, in the exercise of its discretion, should
be reviewing the entirety of the Company's financing plans at this time due
to the current circumstances of the Company. In addition, the authorization
for financing provided by Order No. 17,139, July 1984 (69 NH PUC 415)
involved a set of circumstances which is very different from those facing the
Commission today. Thus, both reasonable discretionary Commission action and a
reasonable reading of the Commission's Order No. 17,139 dictate the same
result -- that an investigation of the Company's short term financing plans
is appropriate. The fact that the Company has completed a short term
financing subsequent to the Commission's Order of May 6 does not render this
issue moot. The Commission is informed that the financing totaled $100
million and the financing authority in question totals $220 million.
As I indicated in my prior dissent, I believe the appropriate action is
to investigate the short term financing plans and authority in conjunction
with the long term financing request in docket DF 87-4. This course of action
would enable the Commission to approve short-term financing sufficient to
maintain the Company's solvency during the proceeding if evidence relative to
the Company's cash situation warranted such approval.
To the extent that the Consumer Advocate and the Campaign for Ratepayers
Rights are asserting that an Easton review must be completed before any
financing can be approved, I would disagree with their position. The Court
has clearly indicated that financing can be approved pending an appropriate
Easton review when the continued existence of the Company is immediately
threatened. Re Seacoast Anti-Pollution League, 125 N.H. 465, 475, 482, A.2d
509 (1984) and Re Seacoast Anti-Pollution League, 125 N.H. 708, 714, 482,
A.2d 1196 (1984). Under such circumstances the Court affirmed approval of
long term debt. Clearly short term debt authorization under such
circumstances would be appropriate.
If the Commission had held a hearing to review the cash situation of the
Company and had authorized short term financing based upon findings that the
cash situation of the Company required prompt action pending an appropriate
Easton review I would have concurred. I can not agree that authorization for
$220 million in short term debt and authorization of $220 million in long
term debt are routine matters given the financial condition of the Company.
FOOTNOTES
[FN]
<F1> The Commission may impose reasonable conditions upon authorizations of
financings. See Re Public Service Co. of New Hampshire, 122 N.H. 1062, 1072,
51 PUR4th 298, 454 A.2d 435 (1982).
<F2> The CRR Motion also argues that the PSNH authority was based upon a
specific transaction. Thus, the above discussion also addresses that CRR
argument.
Exhibit F
OPINION OF DAY, BERRY & HOWARD,
COUNSEL FOR APPLICANTS
December 8, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Northeast Utilities
The Connecticut Light and Power Company
Western Massachusetts Electric Company
Holyoke Water Power Company
Northeast Nuclear Energy Company
The Quinnehtuk Company
The Rocky River Realty Company
Public Service Company of New Hampshire
North Atlantic Energy Corporation
HEC Inc.
File No. 70-8479
Ladies and Gentlemen:
We have acted as counsel to Northeast Utilities ("NU"), The Connecticut
Light and Power Company ("CL&P"), Western Massachusetts Electric Company
("WMECO"), Holyoke Water Power Company ("HWP"), Northeast Nuclear Energy
Company ("NNECO"), The Quinnehtuk Company ("Quinnehtuk"), The Rocky River
Realty Company ("RRR"), Public Service Company of New Hampshire ("PSNH"),
North Atlantic Energy Corporation ("NAEC") and HEC Inc. ("HEC") in connection
with those transactions contemplated by their application/declaration in the
above referenced file (the "Application"). This opinion is given to you with
respect to such transactions pursuant to your Instructions as to Exhibits to
applications and declarations filed on Form U-1. Except as otherwise defined
herein, terms used herein shall have the meanings given them in the
Application.
We have examined such documents, corporate records and other instruments
as we have deemed necessary or advisable for the purposes of this opinion.
We have assumed the authenticity of all documents submitted to us as
originals, the genuineness of all signatures, the legal capacity of natural
persons and the conformity to originals of documents submitted to us as
copies.
The opinions set forth herein are qualified in their entirety as
follows: (a) every opinion rendered herein is expressly subject to the
consummation of such transactions in accordance with the Application using
documents substantially similar to those filed with the Application, (b) no
opinion is expressed as to any laws other than the federal laws of the United
States and the laws of the States of Connecticut and New Hampshire and of the
Commonwealth of Massachusetts; (c) to the extent any opinion is expressed as
to the laws of the State of New Hampshire, such is based solely upon the
opinion of Robert A. Bersak, Assistant Secretary and Assistant General
Counsel for PSNH, dated the date hereof, and we express no opinion as to such
<PAGE>
-2-
matters except to the extent covered by such opinion and subject to the
qualifications and assumptions contained in such opinion; (d) the opinions
expressed in paragraph 5 are based solely upon the opinion of Jeffrey C.
Miller, Assistant General Counsel for Northeast Utilities Service Company,
dated the date hereof, and we express no opinion as to such matters except to
the extent covered by such opinion and subject to the qualifications and
assumptions contained in such opinion; (e) insofar as any opinion relates to
the Declaration of Trust of NU or the Certificate of Incorporation or Bylaws
of any other Applicant, we have assumed that that Declaration of Trust and
that Certificate and those Bylaws will not be amended between now and the
time the transactions contemplated by the Application are consummated; and
(f) no opinion is expressed as to the securities laws of any state.
Based on and subject to the foregoing, we are of the opinion that:
1. All state laws applicable to the proposed transactions will have
been complied with.
2. NU, WMECO, HWP, Quinnehtuk and HEC is each validly organized and
duly existing under the laws of the Commonwealth of Massachusetts; CL&P,
NNECO and RRR is each validly organized and duly existing under the laws of
the State of Connecticut; and PSNH and NAEC is each validly organized and
duly existing under the laws of the State of New Hampshire.
3. The Notes to be issued to banks and non-bank lending institutions
by NU, CL&P, WMECO, PSNH, HWP, NNECO and RRR, the commercial paper to be
issued by NU, CL&P and WMECO, and the obligations to be issued on behalf of
CL&P, WMECO, PSNH, HWP, NNECO, NAEC, Quinnehtuk, RRR and HEC through the
Northeast Utilities System Money Pool pursuant to the terms of such Money
Pool when issued, sold or renewed, will be the valid and binding obligations
of such Applicants in accordance with their respective terms.
4. Each Applicant participating in the Money Pool will legally acquire
the appropriate interest in any obligation to be acquired by it from any
other member of the Money Pool pursuant to the terms of such Money Pool.
5. The consummation of the proposed transactions will not violate the
legal rights of the holders of any securities issued by any of the Applicants
or any associate company of such Applicants.
We note that the Massachusetts Department of Public Utilities has not
approved loans from WMECO to PSNH, NAEC or HEC, so until such approval has
been given, PSNH, NAEC and HEC may not borrow through the Money Pool from
funds contributed to the Money Pool by WMECO.
This opinion may be relied on by the Commission in connection with the
preparation of its decision in this matter.
Very truly yours,
/s/ Day, Berry & Howard
CDB:PNB
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<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 2,590,950
<TOTAL-CURRENT-ASSETS> 6,571 75,571
<TOTAL-DEFERRED-CHARGES> 6,805 6,805
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 2,623,379 2,673,326
<COMMON> 671,048 671,048
<CAPITAL-SURPLUS-PAID-IN> 903,137 903,137
<RETAINED-EARNINGS> 927,032 904,503
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,280,170 2,257,641
0 0
0 0
<LONG-TERM-DEBT-NET> 230,000 230,000
<SHORT-TERM-NOTES> 81,000 150,000
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 9,000 9,000
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 23,209 26,685
<TOT-CAPITALIZATION-AND-LIAB> 2,623,379 2,673,326
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> (8,200) (10,072)
<OTHER-OPERATING-EXPENSES> 8,206 8,206
<TOTAL-OPERATING-EXPENSES> 6 (1,866)
<OPERATING-INCOME-LOSS> (6) 1,866
<OTHER-INCOME-NET> 303,654 284,601
<INCOME-BEFORE-INTEREST-EXPEN> 303,648 286,467
<TOTAL-INTEREST-EXPENSE> 23,868 29,216
<NET-INCOME> 279,780 257,251
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 279,780 257,251
<COMMON-STOCK-DIVIDENDS> 218,822 218,822
<TOTAL-INTEREST-ON-BONDS> 20,740 20,740
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2.25 2.07
<EPS-DILUTED> 2.25 2.07
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<RESTATED>
<SUBSIDIARY>
<NUMBER> 10
<NAME> NORTHEAST UTILITIES AND SUBSIDIARIES
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<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> 6,632,609 6,632,609
<OTHER-PROPERTY-AND-INVEST> 372,384 372,384
<TOTAL-CURRENT-ASSETS> 779,871 1,264,371
<TOTAL-DEFERRED-CHARGES> 2,792,852 2,792,852
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 10,577,716 11,062,216
<COMMON> 671,048 671,048
<CAPITAL-SURPLUS-PAID-IN> 903,137 903,137
<RETAINED-EARNINGS> 927,032 904,503
<TOTAL-COMMON-STOCKHOLDERS-EQ> 2,280,170 2,257,641
379,000 379,000
239,700 239,700
<LONG-TERM-DEBT-NET> 3,910,661 3,910,661
<SHORT-TERM-NOTES> 233,000 717,500
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 69,500 69,500
<LONG-TERM-DEBT-CURRENT-PORT> 282,527 282,527
1,500 1,500
<CAPITAL-LEASE-OBLIGATIONS> 179,224 179,224
<LEASES-CURRENT> 72,388 72,388
<OTHER-ITEMS-CAPITAL-AND-LIAB> 2,930,046 2,952,575
<TOT-CAPITALIZATION-AND-LIAB> 10,577,716 11,062,216
<GROSS-OPERATING-REVENUE> 3,637,933 3,637,933
<INCOME-TAX-EXPENSE> 286,791 271,771
<OTHER-OPERATING-EXPENSES> 2,830,932 2,830,932
<TOTAL-OPERATING-EXPENSES> 3,117,723 3,102,703
<OPERATING-INCOME-LOSS> 520,210 535,230
<OTHER-INCOME-NET> 84,061 84,061
<INCOME-BEFORE-INTEREST-EXPEN> 604,271 619,291
<TOTAL-INTEREST-EXPENSE> 279,573 317,122
<NET-INCOME> 324,698 302,169
44,918 44,918
<EARNINGS-AVAILABLE-FOR-COMM> 279,780 257,251
<COMMON-STOCK-DIVIDENDS> 218,822 218,822
<TOTAL-INTEREST-ON-BONDS> 321,066 321,066
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 2.25 2.07
<EPS-DILUTED> 2.25 2.07
</TABLE>
Exhibit K
SCHEDULE OF FEES, COMMISSIONS AND EXPENSES
Securities and Exchange Commission Filing Fee: $2,000
Day, Berry & Howard (Legal Fees) $20,500
Northeast Utilities Service Company
(Legal, Financial, Accounting and Other Services) $27,500
TOTAL $50,000
<TABLE>
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 1.1.1 PAGE 1 OF 2
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
<S> <C> <C> <S><C>
ASSETS
OTHER PROPERTY AND INVESTMENTS:
INVESTMENTS IN SUBSIDIARY COMPANIES,
AT EQUITY $2,583,268 ($19,053)(d) $2,564,215
INVESTMENTS IN TRANSMISSION
COMPANIES, AT EQUITY 26,057 26,057
OTHER, AT COST 678 678
------------------------------------------------
TOTAL OTHER PROPERTY & INVESTMENTS 2,610,003 (19,053) 2,590,950
CURRENT ASSETS:
CASH AND SPECIAL DEPOSITS 48 69,000 (a) 69,048
NOTES RECEIVABLE FROM AFFILIATED CO'S 5,525 5,525
NOTES AND ACCOUNTS RECEIVABLES 1 1
ACCOUNTS RECEIVABLE FROM AFFILIATED CO'S 691 691
PREPAYMENTS 306 306
------------------------------------------------
TOTAL CURRENT ASSETS 6,571 69,000 75,571
------------------------------------------------
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 $49,947 $2,673,326
*EXPLANATION AT FINANCIAL STATEMENT 1.2.1 PAGE 3 OF 3
<PAGE>
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 1.1.1 PAGE 2 OF 2
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
<S> <C> <C> <S><C>
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 (22,529) 904,503
------------------------------------------------
TOTAL COMMON STOCKHOLDER'S EQUITY 2,280,170 (22,529) 2,257,641
LONG-TERM DEBT, NET 230,000 230,000
------------------------------------------------
TOTAL CAPITALIZATION 2,510,170 (22,529) 2,487,641
CURRENT LIABILITIES:
NOTES PAYABLE TO BANK 81,000 69,000 (a) 150,000
ACCOUNTS PAYABLE 5,204 5,204
ACCOUNTS PAYABLE TO AFFILIATED COMPANIES 11,761 11,761
CURRENT PORTION OF LONG-TERM DEBT 9,000 9,000
ACCRUED TAXES 2,439 (1,872)(c) 567
ACCRUED INTEREST 3,171 5,348 (b) 8,519
OTHER 17 17
-------------------------- -------------------
TOTAL CURRENT LIABILITIES 112,592 72,476 185,068
DEFERRED CREDITS:
OTHER 617 617
------------------------------------------------
TOTAL DEFERRED CREDITS 617 0 617
------------------------------------------------
TOTAL CAPITALIZATION AND
LIABILITIES $2,623,379 $49,947 $2,673,326
*EXPLANATION AT FINANCIAL STATEMENT 1.2.1 PAGE 3 OF 3
</TABLE>
<TABLE>
NORTHEAST UTILITIES (PARENT)
INCOME STATEMENT
FOR 12 MONTHS ENDED JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 1.2.1 PAGE 1 OF 3
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
<S> <C> <C> <S><C>
OPERATING REVENUE $0 $0 $0
------------------------------------------------
OPERATING EXPENSES:
OPERATION EXPENSE 8,195 8,195
FEDERAL AND STATE INCOME TAXES (8,200) (1,872)(c) (10,072)
TAXES OTHER THAN INCOME TAXES 11 11
------------------------------------------------
TOTAL OPERATING EXPENSES 6 (1,872) (1,866)
------------------------------------------------
OPERATING INCOME (6) 1,872 1,866
------------------------------------------------
OTHER INCOME:
EQUITY IN EARNINGS OF SUBSIDIARIES 298,795 (19,053)(d) 279,742
EQUITY IN EARNINGS OF TRANSMISSION
COMPANIES 3,609 3,609
OTHER, NET 1,250 1,250
------------------------------------------------
OTHER INCOME, NET 303,654 (19,053) 284,601
------------------------------------------------
INCOME BEFORE INTEREST CHARGES 303,648 (17,181) 286,467
------------------------------------------------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 20,740 20,740
OTHER INTEREST 3,128 5,348 (b) 8,476
------------------------------------------------
TOTAL INTEREST CHARGES 23,868 5,348 29,216
------------------------------------------------
NET INCOME 279,780 (22,529) 257,251
------------------------------------------------
EARNINGS FOR COMMON SHARES 279,780 (22,529) 257,251
EARNINGS PER COMMON SHARE 2.25 2.07
COMMON SHARES OUTSTANDING (AVERAGE) 124,329,564 124,329,564
*EXPLANATION AT FINANCIAL STATEMENT 1.2.1 PAGE 3 OF 3
<PAGE>
NORTHEAST UTILITIES (PARENT)
CAPITAL STRUCTURE AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 1.2.1 PAGE 2 OF 3
<CAPTION>
PER BOOK
ADJUSTED TO
PRO FORMA REFLECT
% PER BOOK ADJUSTMENT PRO FORMA %
<S> <C> <C> <C> <C> <C>
DEBT:
LONG-TERM DEBT, NET $239,000 $239,000
------------------------------------------------
TOTAL DEBT 9.5% 239,000 0 239,000 9.6%
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 (22,529) 904,503
------------------------------------------------
TOTAL COMMON STOCKHOLDER'S EQUITY 90.5% 2,280,170 (22,529) 2,257,641 90.4%
------------------------------------------------
TOTAL CAPITAL 100.0%$2,519,170 (22,529) $2,496,641 100.0%
<PAGE>
NORTHEAST UTILITIES (PARENT)
EXPLANATION OF ADJUSTMENTS
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 1.2.1 PAGE 3 OF 3
<CAPTION>
DEBIT CREDIT
<S> <C> <C>
(a) CASH $69,000
NOTES PAYABLE $69,000
To record the additional proposed borrowing up to the entire $150 million available to the company.
(b) OTHER INTEREST EXPENSE 5,348
ACCRUED INTEREST 5,348
To record the interest expense on the additional proposed borrowing at Prime:
$69,000 x 7.75% = 5,348
(c) ACCRUED TAXES 1,872
FEDERAL AND STATE INCOME TAX EXPENSE 1,872
To record the reduction in Federal and State income taxes due to the higher interest and fee expenses:
$5,348 x 35.00% = 1,872
(d) EQUITY EARNINGS OF SUBSIDIARIES 19,053
INVESTMENT IN SUBSIDIARY COMPANIES 19,053
Consolidating entry to reflect the changes in all the subsidairies short-term debt levels on the books of NU Parent.
NOTE: The prime rate and tax rate reflected above represent the rates in effect as of the October 3, 1994 filing date.
</TABLE>
<TABLE>
NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 11.1.1 PAGE 1 OF 2
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
<S> <C> <C> <S><C>
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 30,456 484,500 (a) 514,956
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 779,871 484,500 1,264,371
------------------------------------------------
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 $484,500 $11,062,216
* EXPLANATION AT FINANCIAL STATEMENT 11.2.1 PAGE 3 OF 3
<PAGE>
NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 11.1.1 PAGE 2 OF 2
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
<S> <C> <C> <S><C>
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 (22,529) 904,503
------------------------------------------------
TOTAL COMMON STOCKHOLDER'S EQUITY 2,280,170 (22,529) 2,257,641
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 (22,529) 6,787,002
OBLIGATIONS UNDER CAPITAL LEASES 179,224 179,224
CURRENT LIABILITIES:
NOTES PAYABLE TO BANKS 233,000 484,500 (a) 717,500
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 (15,020)(c) 42,676
ACCRUED INTEREST 68,435 37,549 (b) 105,984
ACCRUED PENSION BENEFITS 83,586 83,586
OTHER 80,458 80,458
-------------------------- -------------------
TOTAL CURRENT LIABILITIES 1,154,535 507,029 1,661,564
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 $484,500 $11,062,216
* EXPLANATION AT FINANCIAL STATEMENT 11.2.1 PAGE 3 OF 3
</TABLE>
<TABLE>
NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
FOR 12 MONTHS ENDED JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 11.2.1 PAGE 1 OF 3
<CAPTION>
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
<S> <C> <C> <S><C>
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 (15,020)(c) 271,771
TAXES OTHER THAN INCOME TAXES 240,594 240,594
------------------------------------------------
TOTAL OPERATING EXPENSES 3,117,723 (15,020) 3,102,703
------------------------------------------------
OPERATING INCOME: 520,210 15,020 535,230
------------------------------------------------
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 15,020 619,291
------------------------------------------------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 321,066 321,066
OTHER INTEREST 11,380 37,549 (b) 48,929
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 37,549 317,122
------------------------------------------------
INCOME BEFORE PREFERRED DIVIDENDS 324,698 (22,529) 302,169
PREFERRED DIVIDENDS OF SUBSIDIARIES 44,918 44,918
------------------------------------------------
NET INCOME 279,780 (22,529) 257,251
EARNINGS FOR COMMON SHARE 279,780 (22,529) 257,251
EARNINGS PER COMMON SHARE 2.25 2.07
COMMON SHARES OUTSTANDING (AVERAGE) 124,329,564 124,329,564
* EXPLANATION AT FINANCIAL STATEMENT 11.2.1 PAGE 3 OF 3
<PAGE>
NORTHEAST UTILITIES AND SUBSIDIARIES
CAPITAL STRUCTURE AS OF JUNE 30, 1994
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 11.2.1 PAGE 2 OF 3
<CAPTION>
PER BOOK
ADJUSTED TO
PRO FORMA REFLECT
% PER BOOK ADJUSTMENT PRO FORMA %
<S> <C> <C> <C> <C> <C>
DEBT:
LONG-TERM DEBT, NET 59.1%$4,193,188 0 $4,193,188 59.3%
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 (22,529) 904,503
------------------------------------------------
TOTAL COMMON STOCKHOLDER'S EQUITY 32.2% 2,280,170 (22,529) 2,257,641 31.9%
------------------------------------------------
TOTAL CAPITAL 100.0%$7,093,558 (22,529) $7,071,029 100.0%
<PAGE>
NORTHEAST UTILITIES AND SUBSIDIARIES
EXPLANATION OF ADJUSTMENTS
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 11.2.1 PAGE 3 OF 3
<CAPTION>
DEBIT CREDIT
<S> <C> <C>
(a) CASH $484,500
NOTES PAYABLE $484,500
To record the additional proposed borrowing up to an aggregate amount of $787 million that will be available to all
applicants seeking authorization to borrow outside the NU system. The consolidated amount being requested
excludes NAEC, Quinnehtuk and HEC who will only be able to borrow internally through the Money Pool.
NU (Parent) $150,000
CL&P 325,000
WMECO 60,000
PSNH 175,000
HWP 5,000
NNECO 50,000
RRR 22,000
-------------------
SUM 787,000
(less currently
outstanding) 302,500
-------------------
$484,500
(b) OTHER INTEREST EXPENSE 37,549
ACCRUED INTEREST 37,549
To record the interest expense on the additional proposed borrowing at Prime:
$484,500 x 7.75% = 37,549
(c) ACCRUED TAXES 15,020
FEDERAL AND STATE INCOME TAX EXPENSE 15,020
To record the reduction in Federal and State income taxes due to the higher interest and fee expenses:
$37,549 x 40.00% = 15,020
NOTE: The prime rate and tax rate reflected above represent the rates in effect as of the October 3, 1994 filing date.
</TABLE>
