SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 22, 1996
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Commission File Number 1-5324
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NORTHEAST UTILITIES
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2147929
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
174 BRUSH HILL AVENUE, WEST SPRINGFIELD, MASSACHUSETTS 01090-0010
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(Address of principal executive offices) (Zip Code)
(413) 785-5871
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events
1. Dividend Reduction
On July 23, 1996, the Northeast Utilities ("NU") Board of Trustees
declared a dividend on NU's common shares of 25 cents a share, payable
September 30, 1996 to shareholders of record on September 1, 1996. The new
level represents a 43 percent reduction from the 44-cent-a-share level NU has
paid quarterly since March 1987.
The reduction resulted primarily from the cost of returning the
Millstone units to service and will conserve approximately $100 million on an
annual basis if continued at that level. This action is intended, after
conclusion of the current nuclear outages, to provide additional funds to
reduce debt, and improve NU's financial position and its competitive
position. Management considers the new dividend level to be sustainable in a
range of scenarios.
2. Nuclear Operations
a. Millstone
Millstone Unit 1, a 660-MW boiling water reactor, and Millstone Unit 2,
an 870-MW pressurized water reactor, are each owned 81 percent by The
Connecticut Light and Power Company ("CL&P") and 19 percent by Western
Massachusetts Electric Company ("WMECO"). Millstone Unit 3, a 1154-MW
pressurized water reactor, is jointly owned by CL&P (52.93 percent), WMECO
(12.24 percent), Public Service Company of New Hampshire ("PSNH") (2.85
percent) and other New England utilities. CL&P, WMECO and PSNH are
subsidiaries of NU.
The three Millstone units are located in Waterford, Connecticut.
Millstone Units 1, 2 and 3 have been out of service since November 4, 1995,
February 21, 1996 and March 30, 1996, respectively.
Another NU subsidiary, Northeast Utilities Service Company ("NUSCO"),
has been responding to a series of requests from the Nuclear Regulatory
Commission ("NRC") beginning in December, 1995 seeking assurances that the
Millstone units would be operated in accordance with the terms of their
operating licenses and other NRC requirements and regulations and dealing
with a series of issues that NU has identified in the course of these
reviews. Providing these assurances and addressing these issues will be
components of an Operational Readiness Plan ("ORP") to be developed for each
of the Millstone units. The ORP for Millstone 3 was submitted to the NRC on
July 2, 1996 and is presently being implemented.
NUSCO had previously estimated that it would be able to respond to the
NRC requests over the course of the summer, with respect to Millstone 3; by
the end of the third quarter, with respect to Millstone 2; and by the end of
the fourth quarter, with respect to Millstone 1. Management now estimates
that it will fully implement the Millstone 3 ORP during October 1996, that
the ORP for Millstone 2 will be prepared and completed by the end of 1996 and
that the ORP for Millstone 1 will not be prepared and completed until well
into 1997.
Following implementation of any ORP, management would expect to file a
letter with the NRC expressing its belief that the subject unit is ready to
restart. This letter would be followed by extensive NRC staff inspections.
The NRC Commissioners would then have to affirmatively vote to allow restart.
Management had previously estimated the combined cost of replacement
power for the three Millstone units to range from $21 million to $27 million
per month. Management now estimates such costs will range from $21 million to
$30 million per month. The increase stems from a refinement in prior
estimates, including generally higher estimates for fossil fuel prices.
Management cannot predict when the NRC will allow any of the Millstone
units to return to service and thus cannot estimate the total replacement
power costs the companies will ultimately incur.
In addition, management had previously estimated that the companies
would incur approximately $100 million of incremental nuclear operation and
maintenance costs, substantially all of which would be expended in 1996.
Management now estimates NU will expense about $120 million of such costs in
1996. The corresponding amounts for CL&P, WMECO and PSNH are $95 million, $23
million and $2 million, respectively. It is likely these estimates will rise
as NU and the NRC identify additional issues that need to be resolved.
$85 million of the $120 million was expensed in the first and second
quarters of 1996; $68 million for CL&P, $16 million for WMECO and $1 million
for PSNH.
The recovery of fuel and other outage-related costs is subject to
prudence reviews in Connecticut, Massachusetts and New Hampshire. While it
is too early to estimate the total amount of such costs or the results of any
prudence reviews, management believes that there is significant exposure to
non-recovery of a material amount of such costs.
For further information, see "Electric Operations - Nuclear Operations"
in NU's, CL&P's, WMECO's and PSNH's Form 10-K, Form 8-K dated March 30, 1996
and June 28, 1996 and Form 10-Q for the quarterly period ended March 31,
1996; NU's and PSNH's Form 8-K dated June 3, 1996; CL&P's and WMECO's Form 8-
K dated June 6, 1996; and NU's and CL&P's Form 8-K dated June 18, 1996.
b. Connecticut Yankee
On July 22, 1996, the Connecticut Yankee nuclear power plant ("CY"), a
582-MW pressurized-water reactor located in Haddam, Connecticut, began an
unscheduled outage as a precautionary measure to evaluate the plant's service
water system, which provides cooling water to certain critical plant
components. CY is owned and operated by the Connecticut Yankee Atomic Power
Company ("CYAPCO"), the stockholder-sponsors of which are CL&P (34.5
percent), PSNH (5.0 percent), WMECO (9.5 percent) and other New England
electric utilities.
The shut-down began after an analysis of a hypothetical, though
unlikely, accident scenario which demonstrated that the cooling water system
might not perform its intended function. NU moved immediately to shut down
CY as a precautionary measure and to commence further analysis of the system
to determine what measures must be taken prior to restart of the unit.
Management and the NRC staff are evaluating the situation, and NU cannot
presently estimate the length of the outage or the additional costs
associated with the outage.
For information concerning a submittal by CYAPCO to the NRC on May 30,
1996, and the NRC's review of that submittal, see NU's and PSNH's Form 8-K
dated June 3, 1996 and CL&P's and WMECO's Form 8-K dated June 6, 1996.
3. Summer Capacity Situation
If CY were to remain out of service, management expects, assuming normal
weather conditions for the remainder of the summer, that it will have
sufficient capacity to meet peak customer load demands if all remaining units
are operational. If high levels of forced outages of the remaining units,
which could occur due to sustained operation during long periods of hot
weather, coincide with peak load, NU and the other Connecticut utilities may
have to resort to operating procedures designed to reduce demand.
For further information see NU's, CL&P's, WMECO's and PSNH's Form 10-Q
for the quarterly period ended March 31, 1996; NU's and PSNH's Form 8-K dated
June 3, 1996; and CL&P's and WMECO's Form 8-K dated June 6, 1996.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTHEAST UTILITIES
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Registrant
Date July 25, 1996 By /s/John B. Keane
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John B. Keane
Vice President and Treasurer
