FILE NO. 70-8875
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 2
(AMENDMENT NO. 4)
TO
FORM U-1
APPLICATION/DECLARATION WITH RESPECT TO (1) PROPOSED REVOLVING CREDIT
FACILITY FOR NORTHEAST UTILITIES ("NU"), THE CONNECTICUT LIGHT AND POWER
COMPANY ("CL&P") AND WESTERN MASSACHUSETTS ELECTRIC COMPANY ("WMECO") AND
(2) INCREASES AND EXTENSIONS OF SHORT-TERM BORROWING LIMITS OF NU, CL&P,
WMECO, PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE,
HOLYOKE WATER POWER COMPANY AND NORTH ATLANTIC
ENERGY CORPORATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Northeast Utilities The Connecticut Light
Western Massachusetts Electric Company and Power Company
174 Brush Hill Avenue 107 Selden Street
West Springfield, MA 01090-0010 Berlin, CT 06037
Holyoke Water Power Company Public Service Company of New Hampshire
Canal Street North Atlantic Energy Corporation
Holyoke, MA 01040 1000 Elm Street
Manchester, NH 03015
(Name 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, CT 06037
(Name and address of agent for service)
The Commission is requested to mail signed copies of all orders,
notices and communications to
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Jeffrey C. Miller, Esq. David R. McHale Richard C. MacKenzie, Esq.
Assistant General Counsel Assistant Treasurer - Finance Day, Berry & Howard
Northeast Utilities Service Company Northeast Utilities Service Company CityPlace I
107 Selden Street 107 Selden Street Hartford, CT 06103-3499
Berlin, CT 06037 Berlin, CT 06037
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BACKGROUND
1. By Order dated November 20, 1996 (HCAR No. 35-26612),
Supplemental Order dated February 11, 1997 (HCAR No. 35-26665) and Supplemental
Order dated March 25, 1997 (HCAR No.35-26692) in this File No. 70-8875, the
Commission, among other things, authorized Northeast Utilities ("NU"), The
Connecticut Light and Power Company ("CL&P") and Western Massachusetts Electric
Company ("WMECO") to enter into an unsecured revolving credit facility (the
"Facility") with various lending institutions (the "Lenders") permitting
borrowings thereunder aggregating up to $313.75 million. Under the Facility,
NU, CL&P and WMECO (individually, a "Borrower" and, collectively, the
"Borrowers") each has its own maximum borrowing limit ("Sublimit") as follows:
NU ($150 million), CL&P ($313.75 million) and WMECO ($150 million). Each
Borrower also entered into certain financial covenants with the Lenders which
obligate it to maintain during various periods certain minimum levels of
common equity and interest coverage.
2. Primarily because of the financial impact of the increased costs
associated with current nuclear outages on the NU system and other difficulties
related to the Millstone nuclear generating units, NU and CL&P needed and
obtained waivers from the Lenders with respect to their interest coverage
covenants for the fiscal quarters ended December 31, 1996 and March 31,
1997, respectively. In addition, for the same reasons, CL&P and WMECO expect
that they will not be able to meet their financial covenants under the Facility
at various points in 1997.
3. The Borrowers have requested the Lenders to make certain
amendments to the financial covenants in the Facility consistent with the
present financial forecasts of the Borrowers. As a condition to agreeing to
such request, the Lenders requested that (a) CL&P and WMECO collateralize their
obligations under the Facility with first mortgage bonds; (b) NU's Sublimit be
reduced to zero subject to reinstatement to up to $50 million at such time as
the Borrowers meet certain financial tests; (c) the Sublimit of CL&P and WMECO
not exceed at any time the aggregate principal amount of collateral first
mortgage bonds issued by each of them to secure their respective obligations
under the Facility; (d) on the closing date of the amendment, the Borrowers pay
each Lender an amendment fee equal to .25% of its commitment under the
Facility; and (e) the amendments become effective no later than May 30, 1997.
The Borrowers have agreed to the Lenders' requests.
4. The Orders of the Commission referred to in paragraph 1 above
also authorized a maximum short-term borrowing authorization for North Atlantic
Energy Corporation ("NAEC") of $50 million. The Applicants now seek the
Commission's authorization to increase the short-term borrowing authorization
of NAEC to $60 million to ensure that NAEC will have access to adequate cash
resources to meet its operating requirements.
5. The aforementioned Orders also authorized the continued
participation of NAEC, along with other subsidiaries of NU, in the NU system
money pool (the "Money Pool"). See paragraphs 8 and 13 through 19 of the
application/declaration in this proceeding, as previously amended (the
"Application"). NAEC is now entitled to borrow through the Money Pool only if
and to the extent that funds in the Money Pool attributable to contributions of
surplus funds from or borrowings by NU are available for such borrowing. See
paragraph 15 of the Application. The Applicants propose to modify the Money
Pool to enable NAEC to borrow from all participants in the Money Pool, thereby
giving NAEC greater financing flexibility.
6. This post-effective amendment to the Application is filed to
obtain authorization for the proposed changes to the Facility described above,
for an increase in the short-term borrowing authorization of NAEC to $60
million and for the above-described change in NAEC's participation in the Money
Pool.
AMENDMENTS TO THE APPLICATION
To reflect the foregoing, the Application in this proceeding is further
amended as follows:
7. The second sentence of paragraph 2 is deleted and replaced with
the following to take into account NU's reduced borrowing limit and to reflect
that CL&P's and WMECO's borrowing limit may not exceed the amount of mortgage
bonds securing its obligations under the Facility:
"Each Borrower will have its own maximum borrowing limit under
the Facility as follows: NU ($50 million), CL&P ($313.75
million) and WMECO ($150 million); provided, however, until each
Borrower maintains certain interest coverage ratio tests for two
consecutive fiscal quarters, NU will not be able to borrow under
the Facility and provided further, the borrowing limit of CL&P
and WMECO may never exceed the aggregate principal amount of its
respective first mortgage bonds securing their respective
obligations under the Facility. See paragraph 5 below."
8. The following sentence is added at the end of paragraph 4 to
take into account the first amendment to the revolving credit agreement:
"A summary of the principal terms and conditions of the first
amendment to the revolving credit agreement is filed herewith as
Exhibit B.3. The final terms of the first amendment will be
filed by post-effective amendment as Exhibit B.4."
9. To reflect that the obligations of CL&P and WMECO under the
Facility will be secured, paragraph 5 is amended by deleting the words "will be
unsecured," in the first sentence and adding the following sentence after the
first sentence:
"The respective obligations of CL&P and WMECO under the Facility
for principal, interest and fees will be secured by first
mortgage bonds issued by CL&P or WMECO, as the case may be, in a
principal amount equal to its borrowing limit under the Facility
and an additional principal amount of bonds to cover the
estimated amount of certain interest and fee expense which will
not be paid from interest owing on the bonds."
10. Paragraph 8 is amended by substituting "$60 million" for "$50
million" where it appears therein to take into account the increase of NAEC's
short-term borrowing authorization from $50 million to $60 million.
11. The table in paragraph 11 is amended by changing from $50
million to $60 million the maximum aggregate amount of all short-term debt of
NAEC proposed to be outstanding at any one time at or prior to December 31,
2000. The maximum outstanding short-term debt of NAEC during the period
January 1, 1996 to March 31, 1997 was $34 million. Exhibit H.7 sets forth the
Cash Receipts and Disbursements projections for NAEC in 1997, 1998 and 1999,
with contingencies for short-term debt level variances during a given month in
such years.
12. To recognize that NAEC and HEC, Inc. ("HEC") will be entitled to
borrow from all participants in the Money Pool (subject to certain limitations
with respect to WMECO contributions) and not only from contributions of surplus
funds from or borrowings by NU, the first sentence of paragraph 15 is deleted
and the second sentence is replaced with the following:
"PSNH and NAEC will not be entitled to borrow funds through the
Money Pool that are attributable to contributions from WMECO
unless and until the DPU has issued an order authorizing WMECO
to lend funds to PSNH or NAEC, as the case may be, through the
Money Pool."
HEC is not an applicant hereunder by virtue of the exemption provided by Rule
52 under the Act.
13. To reflect that NAEC as well as PSNH may not borrow from WMECO
in the Money Pool without Massachusetts regulatory approval, paragraph 16 is
deleted and replaced with the following:
"The Applicants request that the Commission reserve jurisdiction
over any PSNH and NAEC borrowings of Money Pool funds
attributable to contributions thereto by WMECO until such time
as the DPU has issued an order authorizing such borrowings.
Without such an order, WMECO may not lend money to PSNH or
NAEC through the Money Pool. In the event that such an order is
received from the DPU, the Applicants will file a post-effective
amendment hereto seeking the necessary Commission approval."
14. To take into account the increase of NAEC's short-term borrowing
authorization from $50 million to $60 million, paragraph 27 is amended by
substituting "$60 million" for "$50 million" where it appears therein.
15. The second sentence of paragraph 31 is deleted and replaced with
the following to reflect that NAEC will be entitled to borrow from Money Pool
participants other than NU:
"In addition, surplus funds may be borrowed by HWP and NAEC from
the Money Pool to the extent available."
16. The first sentence of paragraph 38 is deleted and replaced with
the following to take into account that the issuance of collateral mortgage
bonds by CL&P and WMECO is exempt from Section 6(a) of the Act by virtue of
Rule 52 thereunder:
"The Applicants believe that Sections 6(a), 7 and 12 of the Act
and Rules 45 and 52 thereunder are applicable to the
transactions contemplated by the Facility described in the
Application, as amended, by virtue of Rule 52, CL&P and
WMECO are exempt from the provisions of Section 6(a) as it
relates to their issuance of first mortgage bonds to secure
their obligations under the Facility."
17. To reflect that NAEC as well as PSNH will require Massachusetts
regulatory approval for NAEC to borrow Money Pool funds from WMECO, paragraph
41 is deleted and replaced with the following:
"The approval of the DPU is required pursuant to C.164, Section
17A of the Massachusetts General Laws for the participation of
WMECO in the Money Pool. The DPU granted such approval on
October 29, 1986. As explained in paragraph 15 above, the
approval of the DPU will be required under Massachusetts General
Laws C.164, Section 17A before PSNH or NAEC can borrow Money
Pool funds attributable to contributions by WMECO. WMECO has
not yet requested that authorization. Until that authorization
is granted, PSNH and NAEC may not borrow through the Money Pool
from funds attributable to WMECO."
18. Paragraph 43 is deleted and replaced with the following to take
into account that Connecticut and Massachusetts regulatory authorities must
approve the issuance of mortgage bonds to secure CL&P's and WMECO's obligations
under the Facility:
"The approval of the Connecticut Department of Public Utility
Control ("DPUC") is required pursuant to Section 16-43 of the
Connecticut General Statutes for issuance by CL&P of its first
mortgage bonds to secure its obligations under the Facility.
The application seeking such approval and a certified copy of
the DPUC Decision approving such issuance are filed as Exhibits
D.7 and D.8, respectively. The approval of the DPU is required
pursuant to C.164, Section 14 of the Massachusetts General Laws
for the issuance by WMECO of its first mortgage bonds to secure
its obligations under the Facility. The petition seeking such
approval and a certified copy of the DPU order approving such
issuance are filed as Exhibits D.9 and D.10, respectively.
Other than the DPUC, the DPU and the Commission, no other state
or federal commission has jurisdiction with respect to
any aspect of the proposed transaction."
19. The fees, commissions and expenses paid or incurred, or
estimated to be paid or incurred, directly or indirectly, by the Applicants
with respect to this post-effective amendment are set forth in Exhibit K.2
hereto. None of such fees, commissions or expenses will be paid to any
associate company or affiliate of the Applicants except for financial and other
services performed at cost by Northeast Utilities Service Company, an
affiliated service company, and except that C. Duane Blinn, a member of the
firm of Day, Berry & Howard, counsel to the applicants, is Assistant Secretary
of Connecticut Yankee Atomic Power Company, an affiliate, and the estimate of
fees set forth above will include payment to be made to that firm for legal
services in connection with the transactions proposed in this post-effective
amendment.
20. A condition of the Lenders' consent to the amendments to the
Facility is that the amendments become effective not later than May 30, 1997.
The Applicants therefore respectfully request that the Commission issue its
order permitting this post-effective amendment to become effective as soon as
practicable, and in any event no later than May 27, 1997. The 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 immediately. The Applicants 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.
21. The following additional exhibits and financial statements are
filed herewith:
(a) Exhibits
A.6 Terms of the NU System Money Pool, as modified with
respect to the participation of NAEC and HEC.
B.3 Summary of Terms of First Amendment and Waiver.
*B.4 First Amendment and Waiver Agreement
D.7 Application of CL&P to the Connecticut Department of
Public Utility Control for approval of the issuance of
first mortgage bonds as collateral for the Facility.
*D.8 Certified copy of the Decision of the Connecticut
Department of Public Utility Control approving the
collateralization of the Facility.
D.9 Petition of WMECO to the Massachusetts Department of
Public Utilities for approval of the issuance of first
mortgage bonds as collateral for the Facility.
*D.10 Certified copy of the Order of the Massachusetts
Department of Public Utilities approving the
collateralization of the Facility.
*F.2 Opinion of Counsel.
H.7 Cash Receipts and Disbursements -- NAEC
I.2 Proposed Form of Notice.
*K.2 Schedule of Fees, Commissions and Expenses related to
the matters covered by Post-Effective Amendment No. 2.
(b) Financial Statements
1. North Atlantic Energy Corporation *
1.1 Balance Sheet, per books and pro forma as of December
31, 1996.
1.2 Statement of Income, per books and pro forma, for 12
months ended December 31, 1996 and capital structure,
per books and pro forma, as of December 31, 1996.
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*to be filed by further post-effective amendment.
22. The Applicants respectfully request the Commission's approval of
all transactions described herein, whether under the sections of the Act and
rules thereunder enumerated herein or otherwise.
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned have duly caused this Amendment to be
signed on behalf of each of them by the undersigned thereunto duly authorized.
Date: April 24, 1997
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
WESTERN MASSACHUSETTS ELECTRIC COMPANY
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
HOLYOKE WATER POWER COMPANY
NORTH ATLANTIC ENERGY CORPORATION
By: /s/ John H. Forsgren
John H. Forsgren
Executive Vice President and Chief Financial Officer
<PAGE>
EXHIBIT A.6
PROPOSED TERMS OF THE NU MONEY POOL
(Revised May, 1997)
GENERAL
1. The members of the Money Pool (the Pool) are Northeast Utilities
(NU), The Connecticut Light and Power Company (CL&P), Western Massachusetts
Electric Company (WMECO), Northeast Nuclear Energy Company (NNECO), Holyoke
Water Power Company (HWP), The Rocky River Realty Company (RRR), The Quinnehtuk
Company (Quinnehtuk), Public Service Company of New Hampshire (PSNH), North
Atlantic Energy Corporation (North Atlantic) and HEC Inc. (HEC).
2. The Pool will be administered by Northeast Utilities Service
Company (Agent).
3. Each member will determine each day, on the basis of cash flow
projections, the amount of surplus funds it has available for contribution to
the Pool (Surplus Funds). In addition to its own Surplus Funds, NU may borrow
funds from third party lenders (Excess Funds) in order to make these Excess
Funds available to meet the borrowing needs of NNECO, HWP, RRR, Quinnehtuk,
PSNH, North Atlantic and HEC.
CONTRIBUTIONS TO THE POOL
4. Each member will contribute its Surplus Funds to the Pool. NU
will contribute any Excess Funds to the Pool.
5. Each member will receive as interest with respect to its Surplus
Funds that fraction of the total interest received by the Pool equal to the
ratio of the Surplus Funds the member has contributed, times the period in
which such Surplus Funds were available, to the total Surplus Funds in the
Pool, times the period in which all Surplus Funds were in the Pool. NU will
receive the same interest with respect to its Excess Funds that it pays for its
Excess Funds. Such interest will be computed on a daily basis and settled once
per month.
6. Each member may withdraw any of its Surplus Funds at any time
without notice. NU may withdraw its Excess Funds at any time without notice.
BORROWINGS FROM THE POOL
7. NU shall not be entitled to borrow from the Pool.
8. PSNH and North Atlantic shall not be entitled to borrow Surplus
Funds that are attributable to contributions from WMECO until the Massachusetts
Department of Public Utilities has issued an order authorizing WMECO to lend
funds to PSNH or NAEC, as the case may be, through the Pool.
9. All short-term borrowing needs of members other than NU, which
shall not be entitled to borrow from the Pool and PSNH, and North Atlantic,
which may borrow only subject to the conditions set forth in paragraph 8, will
be met by Surplus Funds in the Pool to the extent such funds are available.
NNECO, HWP, RRR, Quinnehtuk, PSNH, North Atlantic and HEC may meet their short-
term borrowing needs through Excess Funds made available from NU.
10. Loans will be made first to borrowers that cannot access the
commercial paper market.
11. Members borrowing Surplus Funds will pay interest at a rate
equal to the daily composite Federal funds rate. The rate to be used for
weekends and holidays will be the prior business day's rate. Members borrowing
Excess Funds will pay interest at the same rate that NU pays for those Excess
Funds.
12. Loans made by the Pool will be open account advances for periods
of less than 12 months, although the Agent may receive upon demand a promissory
note evidencing the transaction.
13. All loans made by the Pool from Surplus Funds are payable on
demand by the Agent.
14. All loans made by the Pool from Surplus Funds may be prepaid by
the borrower without penalty. No loans from Excess Funds shall be prepaid
prior to the maturity of the NU borrowing that resulted in the Excess Funds,
unless the prepayment can be made without NU incurring additional costs or
unless the prepayment is accompanied by payment of any additional costs
incurred by NU as a result of such prepayment.
15. If there are more Surplus Funds in the Pool than are necessary
to meet the borrowing needs of the members, the Agent will use the Surplus
Funds to meet the NU system's compensating balance requirements or invest them
on behalf of the Pool directly, or indirectly through an investment fund, in
one of the following instruments:
(a) obligations issued or guaranteed by the United States of
America;
(b) obligations issued or guaranteed by any person
controlled, sponsored by, or supervised by and acting as
an instrumentality of the United States of America
pursuant to authority granted by the Congress of the
United States, including but not limited to the
obligations of the Government National Mortgage
Association (GNMA), Student Loan Marketing Association
(SLMA), Federal Home Loan Mortgage Corporation
(FHLMC) and Federal National Mortgage Association
(FNMA);
(c) obligations issued or guaranteed by any state or
political subdivision thereof, provided that such
obligations are rated for investment purposes
at not less than "A" by Moody's Investors Service, Inc.
("Moody's") or by the Standard & Poor's Rating Group
("S&P");
(d) certificates of deposit issued or banker's acceptances
drawn on and accepted by commercial banks which are
members of the Federal Deposit Insurance Corporation and
which have a combined capital, surplus and undistributed
profits of at least $100,000,000;
(e) commercial paper rated not less than "P-1" by Moody's or
not less than "A-1" by S&P;
(f) repurchase agreements with any commercial or investment
bank secured by obligations issued or guaranteed by the
United States of America or an instrumentality thereof
provided collateral is held by a third party; and
(g) such other instruments as are permitted by Rule 40(a)(1)
under the Act and approved by the Massachusetts
Department of Public Utilities (the "DPU") pursuant to
Massachusetts General Laws Chapter 164, Section
17A and the regulations thereunder.
TERMINATION
16. Any member may terminate its participation in the Pool at any
time without notice.
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EXHIBIT B.3
[INDICATIVE TERMS FOR DISCUSSION ONLY. THE SUMMARY THAT FOLLOWS
IS SUBJECT TO CREDIT APPROVAL AND DOES NOT CONSTITUTE
AN OFFER OR COMMITMENT]
NORTHEAST UTILITIES
THE CONNECTICUT LIGHT AND POWER COMPANY
WESTERN MASSACHUSETTS ELECTRIC COMPANY
Summary of Terms
First Amendment and Waiver
$313,750,000 Three-Year Revolving Credit Facility
Facility: $313,750,000 Credit Agreement, dated as of November 21,
1996 (the "Original Credit Agreement"), among Northeast
Utilities, The Connecticut Light and Power Company and
Western Massachusetts Electric Company (the "Borrowers";
individually, a "Borrower"), the banks and co-agents
named therein and Citibank, N.A., as administrative
agent, as amended by the First Amendment and Waiver
described in this Summary of Terms. Capitalized terms
used in this Summary of Terms and not otherwise defined
shall have the meanings ascribed thereto in the Original
Credit Agreement.
Waivers: Under the First Amendment and Waiver, the Lenders will
waive, on a permanent basis, compliance by NU with the
interest coverage ratio set forth in Section 7.03(b) of
the Original Credit Agreement for the fiscal quarter
ended December 31, 1996. Through amendments to Sections
7.03(a) (Common Equity Ratio) and 7.03(b) (Interest
Coverage Ratio), the Lenders will effectively waive
anticipated future non-compliances with those ratios.
Amendment Fee: In consideration of the Majority Lenders entering into
the First Amendment and Waiver, an Amendment Fee to each
Lender executing the First Amendment and Waiver equal to
25 basis points of each such Lender's commitment,
payable to the Agent on behalf of such Lenders on the
Closing Date.
Borrower
Sublimits: Upon execution and delivery of the First Amendment and
Waiver, the Borrower Sublimit for NU will be reduced
from $150,000,000 to zero, and all outstanding Advances
to NU will be repaid. If, for any two consecutive fiscal
quarters, each Borrower shall maintain an interest
coverage ratio of at least 2.50:1.0, the NU Sublimit
shall be reinstated to $50,000,000.
The Borrower Sublimit for WMECO and CL&P will be
$150,000,000 and $313,750,000 respectively, provided,
however, such Borrower Sublimits shall be reduced from
time to time as necessary such that at all times the
Borrower Sublimit of CL&P or WMECO, as the case may be,
does not exceed the aggregate principal amount of the
Collateral FMBs (as defined below) of CL&P or WMECO,
respectively, securing the Facility.
Closing Date: May 30, 1997, or such other date as may be agreed upon
by the Borrowers and the Agents.
Security: NU's obligations under the Facility will be unsecured.
The obligations of CL&P and WMECO under the Facility
will be secured by special series of first mortgage
bonds of those Borrowers on the terms and in the manner
set forth on Annex A to this Summary of Terms (the
"Collateral FMBs").
Financial
Covenants: Each of the following Financial Covenants shall be
amended and restated as follows:
Common Equity
Ratio: Each of the Borrowers will be required to maintain at
all times a ratio of Common Equity to Total
Capitalization as follows:
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1997 1998 and Thereafter
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NU (Consol.) 0.31:1.00 0.32:1.00
CL&P 0.31:1.00 0.32:1.00
WMECO 0.31:1.00 0.32:1.00
</TABLE>
Interest Coverage Ratio: Each of the Borrowers will be required to maintain
for each fiscal quarter in each fiscal year a ratio of Operating Income to
Interest Expense as follows:
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4Q 1Q and 2Q 3Q 1998 and 4Q and
1997 1998 thereafter thereafter
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NU --- 1.75:1.00 2.00:1.00 2:50:1:00
(Consol.)
CL&P 1.25:1.00 1.50:1.00 2.00:1.00 2:50:1.00
WMECO 1.25:1.00 1.50:1.00 2.00:1.00 2.50:1.00
</TABLE>
Dividend Paying Availability: Section 7.03(c) of the
Original Credit Agreement will not be amended.
Other Covenants: NU Debt. Section 7.02(d) of the Original Credit
Agreement will be amended by increasing the amount of
Debt permitted under clause (iii) thereof from
$50,000,000 to $100,000,000. Furthermore, Schedule III
(NU Debt) to the Original Credit Agreement will be
amended to include NU's guarantee of the obligations of
The Rocky River Realty Company under (i) the 8.81% Cigna
Investments, Inc. Series A Note due 2007 and (ii)
the 8.82% Cigna Investments, Inc. Series B Note due
2017. The aggregate amount outstanding under the
aforementioned Notes as of December 31, 1996 was
$38,444,385. The aforementioned Debt was inadvertently
omitted from Schedule III at the time of the initial
closing of the Original Credit Agreement.
Limitations on First Mortgage Bonds, etc. Section
7.02(e) and such other sections of the Original Credit
Agreement as determined by the Agents shall each be
amended to permit CL&P and WMECO to issue the Collateral
FMBs.
Representations and
Warranties: Section 6.01 of the Original Credit Agreement will be
amended by adding appropriate representations and
warranties of CL&P and WMECO concerning the validity,
enforceability and lien priority of the Collateral FMBs
(and such representations and warranties shall be
accurate as of the Closing Date).
Events of Default: Section 8.01 of the Original Credit Agreement will be
amended by inserting the following additional Events of
Default:
(a) any Collateral FMB shall for any reason (iii)
cease to be entitled to the benefits and security
of the first mortgage indenture to which WMECO or
CL&P, as the case may be, is a party, equally
and ratably with all other mortgage bonds
outstanding under such first mortgage indenture,
(iv) become subject to any Lien, except
for any Lien in favor of the Collateral Agent for
the benefit of the Lenders, or (v) cease to be a
legal, valid and binding obligation of WMECO or
CL&P, as the case may be; or
(b) at any time the first mortgage indenture to which
WMECO or CL&P, as the case may be, is a party,
shall for any reason fail to constitute a valid
and direct first priority Lien, upon
substantially all the properties referred to in
the granting clauses of such first mortgage
indenture; or the Collateral Agent shall for any
reason fail to have a valid and perfected first
priority security interest in the related
Collateral FMB.
Conditions Precedent
to Effectiveness: (a) Finalized and fully-executed definitive First
Amendment and Waiver, duly issued Collateral FMBs
and other related documents (the "Amendment
Documents") satisfactory to the Agents and the
Majority Lenders.
(b) Certified copies of the resolutions of the Board
of Directors of each Borrower authorizing the
execution, delivery and performance of the
Amendment Documents to be delivered by it.
(c) A certificate of incumbency signed by the
Secretary or an Assistant Secretary of each
Borrower certifying the names and true signatures
of the officers of such Borrower authorized to
sign the Amendment Documents to be delivered by
it.
(d) Certified copies of the orders of the Securities
and Exchange Commission ("SEC"), the Connecticut
DPUC and the Massachusetts DPU approving the
transactions contemplated by the Amendment
Documents, and any other governmental and
regulatory approval, order, etc., necessary for
the consummation of the transactions contemplated
by the Amendment Documents.
(e) Opinions of counsel for the Borrowers acceptable
to the Agents, as to such matters as the Majority
Lenders may reasonably request.
(f) Copies of audited consolidated financial
statements of each Borrower, as at and for the
fiscal year ended December 31, 1996, which shall
be satisfactory to the Majority Lenders.
Governing Law: State of New York except that the Collateral FMBs will
be governed by the laws of Connecticut (in the case of
CL&P) and Massachusetts (in the case of WMECO).
Counsel to the
Administrative Agent: King & Spalding.
Expenses: The Borrowers shall reimburse the Administrative Agent
for all of its reasonable out-of-pocket expenses
(including fees and expenses of counsel to the
Administrative Agent) incurred in the negotiation and
execution of the Amendment Documents, whether the
transaction contemplated is actually completed or the
Amendment Documents are signed.
All other terms and conditions of the Amendment Documents shall be subject to
further discussion and mutual agreement.
<PAGE>
ANNEX A
Security: The obligations of CL&P and WMECO under the Facility will be
secured as follows:
(a) Each of CL&P and WMECO will cause to be issued to
Citibank, N.A., as collateral agent (the "Collateral
Agent"), a single First Mortgage Bond of a special
series created for the purpose of securing such
Borrower's principal, interest and Facility Fee
obligations under the Facility (in each case a
"Collateral FMB") in a principal amount equal
to the Borrower Sublimit of CL&P or WMECO, as
applicable.
(b) Each Collateral FMB will rank pari passu with all other
first mortgage bonds of CL&P or WMECO, as the case may
be, and be entitled to the benefits of the relevant
first mortgage indenture.
(c) Each Collateral FMB will bear interest in such amounts
and be payable at such times as is sufficient to pay all
interest on the Advances made to CL&P or WMECO, as the
case may be, under the Facility and each such Borrower's
share of the Facility Fee payable under the Facility.
(d) Payments by CL&P or WMECO, as the case may be, of its
principal, interest or Facility Fee obligations under
the Facility shall be deemed to satisfy the
corresponding payment obligations under the related
Collateral FMB and vice versa.
(e) Upon any acceleration of the Advances made to CL&P or
WMECO, a like principal amount of the related Collateral
FMB shall become immediately due and payable.
<PAGE>
EXHIBIT D.7
March 21, 1997
Mr. Robert J. Murphy
Executive Secretary
Department of Public Utility Control
One Central Park Plaza
New Britain, CT 06051
Re: The Connecticut Light and Power Company
Application to Issue First and Refunding Mortgage Bonds
Dear Mr. Murphy:
The Connecticut Light and Power Company ("CL&P" or the "Company"), a
public service company within the meaning of Section 16-1 of the General
Statutes of Connecticut, Revision of 1958, hereby applies for the Department's
approval, pursuant to Section 16-43 of said General Statutes, of the issue and
sale by the Company of its first and refunding mortgage bonds (the "Bonds")
during the period beginning April 21, 1997 and ending June 30, 1997.
CL&P is requesting approval to issue and sell Bonds, as follows: (i)
up to $200 million in principal amount of Bonds to be used for "new money"
purposes, which is generally the repayment of short-term borrowings; and (ii)
up to $313.75 million in principal amount of Bonds to secure its obligations to
repay borrowings under a revolving credit agreement; provided, however, the
aggregate principal amount of Bonds to be issued and outstanding at any one
time will not exceed $430 million.
The Company adopts in support of this application the written testimony
and exhibits listed in Appendix I hereto. This application, the written
testimony and exhibits listed in Appendix I hereto set forth all the documents
required to be filed by the Company and which the Company deems necessary
and desirable to support the granting of this application.
The following information is supplied as part of this application:
A. The exact legal name of the applicant and its principal place of
business:
The Connecticut Light and Power Company
107 Selden Street
Berlin, Connecticut 06037
B. The Company is a corporation specially chartered by the
General Assembly of the State of Connecticut.
C. The name, title, address and telephone number of the
attorney or other person to whom correspondence or
communications in regard to this application are to be
addressed:
John B. Keane
Vice President and Treasurer
The Connecticut Light and Power Company
c/o Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
(860) 665-3541
and
Jane P. Seidl, Esq.
Senior Counsel
The Connecticut Light and Power Company
c/o Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
(860) 665-5051
The Company respectfully requests the approval of the Department pursuant
to said Section 16-43 of the General Statutes of Connecticut of the issue(s)
and sale(s) of the Bonds as set forth herein. To meet its financing needs, the
Company requests approval by April 21, 1997.
Enclosed herewith are one (1) original and ten (10) copies of this
application, together with prepared testimony and exhibits.
Very truly yours,
THE CONNECTICUT LIGHT AND POWER COMPANY
By__/s/ John B. Keane____________________
John B. Keane
Vice President and Treasurer
The Connecticut Light and Power Company
<PAGE>
Exhibit A
TESTIMONY OF JOHN B. KEANE
Q. Will you please state your position with The Connecticut Light and
Power Company (CL&P or the Company)?
A. I am Vice President and Treasurer of the Company. I am also Vice
President and Treasurer of Northeast Utilities Service Company (the
Service Company) and of Northeast Utilities.
Q. Will you please state the relationship of the Service Company to CL&P?
A. The Service Company is a system service company that provides, among
other things, financial planning services to the affiliated companies
of the NU system. The applicant in this proceeding, CL&P, together
with Public Service Company of New Hampshire, Western Massachusetts
Electric Company, North Atlantic Energy Corporation and Holyoke Water
Power Company, are the largest operating companies in this system. As
the Treasurer of the Service Company, I have participated in the
financial planning for each of these operating companies, including
CL&P.
Q. Will you please describe the application that is the subject of this
hearing?
A. The Company is requesting the Department's approval to issue first and
refunding mortgage bonds in the aggregate principal amount of up to
$430 million (the Bonds) on or before June 30, 1997. Of this amount,
CL&P requests approval to issue up to $313.75 million in principal
amount of Bonds to secure its obligations to repay borrowings under its
1996 revolving credit agreement with banks. CL&P also requests
approval to issue and sell for cash up to $200 million in principal
amount of Bonds for the purpose of repaying short-term borrowings and
other purposes as described more fully below. Whether CL&P issues
Bonds as security to repay revolving credit borrowing, or issues and
sells Bonds for cash, or does both, the aggregate principal amount of
Bonds to be issued and outstanding at any one time will not exceed $430
million.
USE OF PROCEEDS
New Money
Q. How will the Company use the net proceeds from the sale(s) of the
Bonds?
A. Up to $200 million of the proceeds from the issue and sale of the Bonds
would be used to repay short-term borrowings (consisting of bank loans,
commercial paper and system company money pool borrowings), which were
incurred or are expected to be incurred to finance the Company's
maturing debt, sinking fund requirements and for general working
capital purposes, including costs associated with the current outages
at the Millstone nuclear units. The Company generally refers to this
type of proceeds as "new money" and, accordingly, the bonds to be
issued for the purposes set forth above are referred to herein as New
Money Bonds.
The Company had no short-term borrowings outstanding as of December 31,
1996. Attached as Exhibit B.6 is a forecast of the Company's "new
money" financing requirements during the time period covered by this
application.
Security for Revolving Credit Agreement
Q. Please briefly describe the parameters of the Company's 1996 revolving
credit agreement.
A. After a lengthy negotiation and syndication process, a total of twelve
banks committed to a three-year revolving credit facility totaling
$313.75 million on November 21, 1996 (the Revolving Credit Agreement).
In addition to the Company, which can borrow up to the entire amount
available under the Revolving Credit Agreement, certain other
companies in the NU system may borrow funds under the facility. The
facility is currently unsecured and the Company may choose from among a
number of variable interest rate modes for each borrowing. The lenders
from which CL&P may borrow funds under the Revolving Credit Agreement
are collectively referred to herein as the Banks.
Q. Why is the Company seeking authority to secure its borrowings under the
Revolving Credit Agreement at this time?
A. In light of the Company's recent nuclear difficulties at the Millstone
plants, and the financial impacts resulting from increased costs
associated with the current nuclear outages, the Company forecasts that
it will not be able to meet certain financial covenants required by the
Revolving Credit Agreement. In response to the Company's requests
for amendments to the agreement so that the Company's access to funds
to meet its needs continues in effect, the Banks are seeking security
to support the Company's obligations to repay balances that might be
outstanding from time to time under the Revolving Credit Agreement and
the interest and facility fees relating thereto. Because the
Revolving Credit Agreement is an important element in enabling the
Company to maintain its financial flexibility and its ability to meet
unanticipated needs for working capital funds, the Company has been
working closely with the Banks to fulfill their request.
As the Banks have indicated that first mortgage bonds would be
acceptable as a form of security, the Company is seeking authorization
from the Department to issue a new series of Bonds in an aggregate
principal amount of up to $313.75 million (which is the total available
commitments to the Company under the Revolving Credit Agreement) to
secure the Company's principal, interest and facility fees under such
agreement (the Collateral Bonds). Upon issuance of the Collateral
Bonds, the Banks will receive the benefit of a first mortgage lien on
substantially all of the Company's physical property and franchises,
including the Company's generating stations (but not its interest in
the four regional Yankee nuclear plants) and its transmission and
distribution facilities, pari passu with other outstanding first
mortgage bonds.
Q. Has the Company issued first mortgage bonds in the past to secure other
financial obligations?
A. Yes. In the January 15, 1997 Decision relating to the Application of
The Connecticut Light and Power Company for Approval of Financing of
Pollution Control Facilities (Reopened), Docket No. 96-03-26, the
Department granted the Company's request to, among other things, issue
a new series of bonds in the aggregate principal amount of $62 million
as security to replace a note issued by the Connecticut Development
Authority and a second mortgage on the Company's interest in Millstone
1. Those bonds were issued on January 23, 1997.
In addition, in the December 13, 1989 Decision relating to the
Application of The Connecticut Light and Power Company for Approval of
Financing of Pollution Control Bonds, Docket No. 89-11-12, the
Department approved the issuance of a new series of first mortgage
bonds in the aggregate principal amount of $20 million to secure the
Company's borrowing from the Industrial Development Authority of the
State of New Hampshire of the proceeds of its issuance of pollution
control revenue bonds. Those bonds were issued on December 21, 1989.
Q. Did the Company consider any alternatives to securing the Revolving
Credit Agreement with first mortgage bonds?
A. Yes, however, the Company's current financial condition is such that
the Banks' willingness to amend the Revolving Credit Agreement is
dependent on the availability of security in the form of first mortgage
bonds.
FINANCING REQUIREMENTS
Q. Does CL&P expect to meet its remaining 1997 financing requirements
solely through the sale of the Bonds?
A. No. In addition to the sale of Bonds, the Company expects that its
financing requirements will be met through the internal generation of
funds and by the continued utilization of a nuclear fuel trust, bank
notes, sales of accounts receivable and borrowings under the NU system
money pool. Exhibit B.6 provides the detail on the Company's financing
requirements, internal generation of funds and financing sources.
SALES PROCESS
Q. Will you please describe the process by which the New Money Bonds will
be sold?
A. Yes. The Company expects to sell the New Money Bonds either in a
public offering, through direct negotiations with underwriters, or
through a private placement, depending on which is determined to be the
most beneficial at the time of sale. At present, if the Company
remains eligible to sell the New Money Bonds under a Form S-3
registration statement as described below, the Company believes it
would issue and sell the New Money Bonds in a public offering through
direct negotiations with underwriters. However, if the Company is not
eligible to use a Form S-3 registration statement, the Company believes
it is likely that the issue and sale of the New Money Bonds could be
accomplished in a more timely manner and on more favorable terms
through a private placement whereby the terms of the New Money Bonds
(including the price and the interest rate) would be negotiated with
one, or a limited group of, institutional investors, through an
investment banking firm hired to manage that private placement. The
Company believes that either of these scenarios, both of which involve
negotiation of the terms of the New Money Bonds, would result in more
favorable terms than if the New Money Bonds were to be sold in a
competitively bid public offering because of the adverse publicity
surrounding the operation of the Company's nuclear plants and the need
to ensure that purchasers of the Bonds are well-informed and educated
as to the advantages of the New Money Bonds notwithstanding the near-
term nuclear concerns.
Q. Will you please describe the process by which the Collateral Bonds will
be issued?
A. Yes. The Company will cause to be issued to Citibank, N.A., as
collateral agent for the Banks, a series of Bonds created for the
purpose of securing the Company's principal, interest and facility fee
obligations under the Revolving Credit Agreement in a principal amount
of up to $313.75 million. Certain terms of the Collateral Bonds, other
than as specifically set forth in the Company's Application and herein,
will be negotiated between the Company and the Banks prior to issuance
of the Bonds.
DESCRIPTION OF THE BONDS
Q. Will you please describe the Bonds proposed to be offered for sale?
A. CL&P proposes to issue and sell, in one or more offerings, up to a
total of $430 million aggregate principal amount of Bonds. Of this
amount, up to $200 million can be used for "new money" purposes, which
is generally to repay short-term borrowings and other purposes
described above. The remaining amount, up to $313.75 million, can be
used only to secure the Company's repayment obligations under the
Revolving Credit Agreement. The New Money Bonds would be designated as
the "First and Refunding Mortgage ____% Bonds," followed by the year of
sale and a sequentially lettered series. The first series of New Money
Bonds to be issued will be designated the "First and Refunding Mortgage
__% Bonds, 1997 Series A." The first series of Collateral Bonds to be
issued will be designated the "First and Refunding Mortgage Collateral
Bonds," followed by the year of sale and a sequentially lettered
series.
The New Money Bonds will have a maturity of not more than five years.
The Collateral Bonds will have a term of not more than three years; it
is anticipated that the term(s) of the Collateral Bonds issued to
secure the Company's borrowings will reflect the term of the underlying
credit obligation. The interest rate and the price, exclusive of
accrued interest, if any, to be paid to CL&P (which shall not be less
than 98% nor more than 100% of the principal amount thereof) for the
New Money Bonds will be determined through negotiation, as described
above. The Collateral Bonds will bear interest in such amounts as is
sufficient to pay all interest on advances made to the Company under
the Revolving Credit Agreement and the related facility fee.
The Bonds will be issued under the Indenture of Mortgage and Deed of
Trust dated as of May 1, 1921, between CL&P and Bankers Trust Company,
Trustee, as amended and supplemented (the Indenture), and as to be
further supplemented in the case of each series of the Bonds, by a
supplemental mortgage indenture (the Supplemental Mortgage Indenture).
All outstanding bonds are secured equally and ratably by the direct
first mortgage lien of the Indenture on substantially all of the
properties and franchises owned by the Company.
Q. Please describe the redemption provisions applicable to the Bonds.
A. The redemption schedule for the New Money Bonds will be determined at
the time of the offering based on market conditions and investor
requirements at the proposed time of issuance for each series. In the
past, it has been customary for the Company to issue a series of bonds
with provisions prohibiting redemption at the applicable general
redemption price prior to a date approximately five years after
issuance. Bonds issued with maturities of five or fewer years have not
been refundable throughout the life of the bonds.
While the Company may issue series of bonds with similar terms in the
future, market conditions may enable the Company to achieve additional
cost savings through the issuance of series of Bonds with shorter
maturities and/or more restrictive redemption provisions. In order to
enable the Company to design a redemption schedule that is most
favorable to the Company while still being acceptable to the financial
markets, the Company is requesting the flexibility to determine the
redemption schedule through negotiation with underwriters or other
purchasers.
Q. Is a copy of the Supplemental Mortgage Indenture, which sets out the
terms of each series of the Bonds, filed with this Department?
A. A copy of the Form of the Supplemental Mortgage Indenture to be
completed at the time of sale is filed herewith as Exhibit B.1.
Q. Do you contemplate any other changes in the terms of the Bonds?
A. Due to favorable market conditions, the Company has in recently issued
series been able to minimize the impact of two burdensome Indenture
provisions. The Company has not been required to reset the restriction
on its ability to pay dividends. Also, the Company has negotiated
terms that will, in the future, eliminate the annual sinking and
improvement fund which requires it to annually give the Trustee
property or cash equal to one percent of the bonds outstanding. The
Company is uncertain if future market conditions will continue to
provide such opportunities.
SEC JURISDICTION
Q. Does the Securities and Exchange Commission (SEC) have jurisdiction
over the issuance and sale of the Bonds?
A. Yes. The Company is subject to the jurisdiction of the SEC under the
Public Utility Holding Company Act of 1935, as amended (the 1935 Act).
However, as long as the Company complies with Rule 52 under the 1935
Act, which includes a requirement that the Department approve the issue
and sale of the Bonds, no approval of the issue and sale of the Bonds
is required under that Act.
In addition, the Company will file one or more registration statements,
on Form S-3 or other appropriate form, with the SEC under the
Securities Act of 1933, as amended (the 1933 Act), which will allow it
to offer the New Money Bonds for sale pursuant to a public offering, as
permitted by Rule 415 under the 1933 Act. A draft of the Registration
Statement for the New Money Bonds is filed herewith as Exhibit B.4.
The prospectus, in substantially the form of the prospectus contained
in the Registration Statement for the New Money Bonds, will be used as
the basic prospectus in connection with the solicitation of offers for
the New Money Bonds in a negotiated public offering if the Company's
securities ratings make it eligible to use Form S-3. At the present
time, the Company's Bonds are rated investment grade, which is a
requirement for utilizing Form S-3.. The interest rate, maturity,
principal amount, initial public offering price, redemption prices,
other terms with respect to the New Money Bonds and a description of
the underwriting arrangements will be added to the prospectus contained
in the Registration Statement by prospectus supplements after such
terms have been determined.
If the ratings of the Company's Bonds are downgraded and if the Company
determines that it would be advantageous to proceed with a public issue
of the New Money Bonds under those circumstances, then the Company
would register the New Money Bonds on Form S-1. A Form S-1
registration statement is considerably more detailed and complex, as it
does not rely on the incorporation of previously filed SEC documents by
reference, as does Form S-3. The additional expense of preparing an S-
1 is a factor that the Company would consider under those circumstances
in weighing the advisability of such an issuance.
If the Company were to issue any portion of the New Money Bonds in a
private placement, an offering memorandum containing essentially
similar information to that required to be set forth in a registration
statement would be prepared and distributed to potential purchasers.
A copy of the Company's annual report to the SEC on Form 10-K for the
twelve months ended December 31, 1996 which is to be incorporated by
reference into the Registration Statement, will be filed as Exhibit F
promptly after filing with the SEC (currently scheduled for March 21,
1997). A copy of NU's most recent proxy statement is filed herewith
as Exhibit C and copies of NU's 1996 annual report to shareholders and
CL&P's 1996 report to shareholders will be filed as Exhibits D and E,
respectively, promptly after the filing of such reports with the SEC.
As the Collateral Bonds are not being sold publicly or privately, but
are being issued solely as security for repayment of credit borrowings,
no registration statement or private placement memorandum will be
distributed in connection with the issuance of such bonds.
ADDITIONAL INFORMATION
Q. Are copies of the offering papers proposed to be used in connection
with the proposed sale of the Bonds filed with the Department?
A. The proposed form of Underwriting Agreement for the New Money Bonds is
filed herewith as Exhibit B.3. It is expected that if the New Money
Bonds are issued in a private placement, the purchase agreement will
have terms which are similar to those set forth in the form of
Underwriting Agreement.
Q. Have the issue and sale of the Bonds been approved by the Company's
Board of Directors?
A. Yes. The Board of Directors adopted initial resolutions approving the
proposed issue and sale of the Bonds on March 10, 1997. Certified
copies of the resolutions are filed herewith as Exhibit B.1.
Q. Have you provided financial statements of the Company?
A. The December 31, 1996 (Annual Report to Shareholders) financial
statements will be filed as Exhibit E promptly after the filing of such
report with the SEC.
Q. Have you prepared exhibits that show the effect of the proposed new
financings on the balance sheet and income statements of this Company?
A. Yes. Exhibit B.5 includes a balance sheet, income statement, statement
of retained earnings capital structure and explanation of pro forma
adjustments for the twelve months ended December 31, 1996 (preliminary)
for CL&P , which are adjusted to reflect the issuance of $430 million
of Bonds. The Company's final December 31, 1996 financial statements
will be included in Exhibit E when they are filed.
The pro forma adjustments reflect the issuance of $200 million of Bonds
at an assumed interest rate of 7.75 percent and secured short-term
borrowings of $230 million.
Q. Have you prepared statements to show the estimated expenses to be paid
by the Company in connection with the proposed issue of the Bonds?
A. Yes. The statements are included herein as Exhibit B.7.
Q. Are you requesting, as the Company did in Dockets 92-10-21 and 94-07-
16, a change from prior procedures to enable the Company to issue the
Bonds within defined limits without the need for a reopening of this
docket?
A. Yes, but only with respect to the Collateral Bonds. The practice prior
to 1993 had been for the Company to request that the Department reopen
the docket for a hearing and special meeting to address the terms of
new securities on the day the securities are priced (the Pricing Date).
This practice restricted the Company's ability to move quickly in
rapidly-changing interest and dividend rate environments and created
unnecessary administrative burdens for the Company and the Department.
In Dockets 92-10-21 and 94-07-16, the Department authorized the Company
to issue and sell bonds within certain parameters without a reopening
of the docket and special meeting..
The Company submits that continued authorization to use the more
flexible authority granted in Dockets 92-10-21 and 94-07-16 is still in
the public interest in connection with the issue of Collateral Bonds
due to the nature of such bonds. The Collateral Bonds will be issued
as evidence of the Company's indebtedness to repay loans from the
Banks. These Bonds will be issued in a principal amount not to exceed
the principal amount of funds available to the Company under the
Revolving Credit Agreement, which is $313.75 million, and will bear
interest in such amounts as is sufficient to pay interest, and the
related facility fee, on all advances made under the Revolving Credit
Agreement. If conditions arise under which the Company would seek to
issue Collateral Bonds upon terms other than as proposed herein, the
Company will request a reopening of the docket, a hearing and a special
meeting. The Company believes that the issuance of Collateral Bonds to
secure its credit obligations as proposed herein is prudent and the
commencement of a hearing on a pricing date and the request for
approval of the specific terms of the Collateral Bonds by the
Department are not necessary in connection with such issuance.
The Company proposes that a reopening of the docket for a hearing and
special meeting not be required for the Company to issue Collateral
Bonds under this application so long as the following parameters are
met:
1. The Collateral Bonds will have a maturity of not less
than one nor more than three years.
2. The Collateral Bonds will be issued on or before June
30, 1997.
3. The Collateral Bonds will bear interest in such amounts
as is sufficient to pay interest and the related facility fee on
all advances made under the Revolving Credit Agreement.
4. The Company will file with the Department within two
days of the closing relating to the issuance of Collateral
Bonds:
a. The principal amount, date of issuance
and years to maturity of the issue;
b. Redemption provisions and any other
features of the Collateral Bonds; and
c. Estimated issuance costs.
Q. What procedures does the Company propose to follow in connection with
the issuance of the New Money Bonds?
As the Company expects to negotiate the terms of the New Money Bonds
with underwriters or other investors, the Company will request that the
Department reopen the docket for a hearing and special meeting to
address such terms on the date the New Money Bonds are priced. As
explained above, this is the practice that was followed by the Company
prior to 1993 for public offerings.
Q. Does that complete your testimony, Mr. Keane?
A. Yes. I have nothing further to offer at this time. At the reconvened
hearing on the day of the pricing for the New Money Bonds, the Company
will present evidence with respect to the results of negotiation
regarding the issuance and sale of the New Money Bonds.
<PAGE>
THE CONNECTICUT LIGHT AND POWER COMPANY
APPENDIX 1
Testimony and Exhibits
filed as part of Application to
Issue and Sell First and Refunding Mortgage Bonds
A. Testimony of John B. Keane, Vice President and Treasurer of The
Connecticut Light and Power Company.
B. Exhibits to Testimony
1. Draft of Supplemental Mortgage Indenture.
2. Form of Resolutions of Board of Directors of The
Connecticut Light and Power Company approving issue and sale of
Bonds, to be adopted on March 7, 1997.
3. Draft of Underwriting Agreement for the Bonds.
4. Draft of Registration Statement on Form S-3 for the Bonds.
5. The Connecticut Light and Power Company Pro Forma
Financial Statements reflecting issuance of $430 million of
Bonds.
6. The Connecticut Light and Power Company external "New
Money" Financing Requirements, six months ending June 30, 1997.
7. Estimated expenses to be incurred by The Connecticut
Light and Power Company for Bond issue.
C. 1996 Proxy Statement of Northeast Utilities.
D. 1996 Annual Report to Shareholders of Northeast Utilities.
E. 1996 Annual Report to Shareholders of The Connecticut Light and Power
Company.
F. 1996 Form 10-Ks of The Connecticut Light and Power Company and Northeast
Utilities.
<PAGE>
EXHIBIT D.9
April 7, 1997
Ms. Mary Cottrell
Secretary
Department of Public Utilities
100 Cambridge Street
Boston, MA 02202
RE: Petition of Western Massachusetts Electric Company for Approval
of the Issue and Sale of First Mortgage Bonds
Dear Ms. Cottrell:
Enclosed is Western Massachusetts Electric Company's (the "Company")
original and nine copies of a petition for approval of the issue and sale of
First Mortgage Bonds. The testimony of John B. Keane, Vice President and
Treasurer of the Company, and additional exhibits will be filed at least
seven days before any hearing. In addition to other matters, Mr. Keane's
testimony will address the relationship of the proposed financing to the
current electric utility restructuring initiatives in Massachusetts.
A check in the amount of $23,100.00 is enclosed in payment of the
filing fee.
Please contact Jane P. Seidl, Senior Counsel, at (860) 665-5051 or, in
her absence, the undersigned at (860) 665-3532 to schedule a hearing on this
matter.
Please acknowledge receipt of this petition by stamping the enclosed
copy of this letter and returning it to me in the enclosed stamped, self-
addressed envelope.
Very truly yours,
/s/ Jeffrey C. Miller
Jeffrey C. Miller
Assistant General Counsel
Enclosures
<PAGE>
COMMONWEALTH OF MASSACHUSETTS
DEPARTMENT OF PUBLIC UTILITIES
PETITION OF WESTERN )
MASSACHUSETTS ELECTRIC )
COMPANY FOR APPROVAL ) D.P.U. ________________
OF ISSUANCE OF FIRST )
MORTGAGE BONDS AND )
PREFERRED STOCK )
A. INTRODUCTION
1. This is a petition by Western Massachusetts Electric Company
(WMECO or the Petitioner) for approval by the Department of Public Utilities
(the Department) under Chapter 164, Section 14 of the Massachusetts General
Laws to issue first mortgage bonds in the aggregate principal amount of up to
$150 million (the Bonds). The Bonds will be issued during the period from
April 1, 1997 through June 30, 1997 to secure the Petitioner's obligations to
repay its short-term borrowings under its 1996 revolving credit agreement with
banks.
The aggregate principal amount of Bonds to be issued hereunder will be
reduced by the principal amount of first mortgage bonds, if any, to be issued
pursuant to the authority granted in D.P.U. 96-96.{1} Accordingly, the
aggregate principal amount of first mortgage bonds to be issued and outstanding
at any one time pursuant to this Petition and D.P.U. 96-96 will not exceed $150
million.
**FOOTNOTES**
{1} In its Decision dated March 21, 1997 in D.P.U. 96-96, the Department
authorized the Petitioner to issue up to an aggregate principal amount
of $60 million of its first mortgage bonds and/or Class A preferred stock
through October 1, 1998.
<PAGE>
B. BACKGROUND
1. The Petitioner is an electric company duly organized and
existing under the laws of the Commonwealth.
2. The exact legal name of the Petitioner and its principal place
of business are:
Western Massachusetts Electric Company
174 Brush Hill Avenue
West Springfield, Massachusetts 01089
3. The name, title, address and telephone number of the attorneys
or other persons to whom correspondence or communications in regard to this
application are to be addressed:
Mr. John B. Keane
Vice President and Treasurer
Western Massachusetts Electric Company
c/o Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
(860) 665-3541
and
Jane P. Seidl, Esq.
Western Massachusetts Electric Company
c/o Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
(860) 665-5051
and
Stephen Klionsky, Esq.
Western Massachusetts Electric Company
260 Franklin Street, 21{st} Floor
Boston, Massachusetts 02110-3179
(617) 345-4778
4. The Petitioner currently has issued and outstanding 1,072,471
shares of its Common Stock with a par value of $25 per share; 200,000 shares of
7.72% Preferred Stock, Series B, with a par value of $100 per share and 840,000
shares of 7.6% Class A Preferred Stock, 1987 Series, with a par value of $25
per share.
5. As of December 31, 1996, the Petitioner had issued and
outstanding long-term debt and other long-term obligations in the aggregate
principal amount of approximately $335,720,325, as follows:
(a) First Mortgage Bonds in the aggregate principal amount of
$259,500,000, consisting of six outstanding series, Series F, G and V through
Y, with maturity dates from 1997 to 2024 and interest rates ranging from 5.750
percent for the Series F Bonds to 7.75 percent for the Series V and Y
Bonds;
(b) Pollution Control Notes in the aggregate principal amount of
$53,800,000 due in 2028; and
(c) Long-term obligations of approximately $37,055,000 for spent
fuel disposal costs.
C. USE OF BONDS AS COLLATERAL
The Petitioner is hereby requesting approval to issue up to $150
million in principal amount of Bonds to secure its obligations to repay certain
short-term revolving credit borrowings. After a lengthy negotiation and
syndication process, a total of twelve banks committed to a revolving credit
facility totaling $313.75 million on November 21, 1996 (the Revolving Credit
Agreement) which expires in November 1999. In addition to the Petitioner,
which can currently borrow up to $150 million under the Revolving Credit
Agreement, certain other companies in the NU system may borrow funds under the
facility. The facility is currently unsecured and the Petitioner may choose
from among a number of variable interest rate modes for each borrowing. The
lenders from which WMECO may borrow funds under the Revolving Credit Agreement
are collectively referred to herein as the Banks.
In light of WMECO's recent nuclear difficulties at the Millstone
plants, and the financial impacts resulting from increased costs associated
with the current nuclear outages, the Petitioner forecasts that it will not be
able to meet certain financial covenants required by the Revolving Credit
Agreement, for one or more quarters of 1997. If the Petitioner fails to meet
these covenants, it would not be permitted to borrow under the Revolving Credit
Agreement and would be obligated to repay any borrowings outstanding
thereunder, unless waived by the Banks. In response to the Petitioner's
requests for the amendments to the agreement so that WMECO's access to funds to
meet its needs continues in effect, the Banks are seeking security to support
WMECO's obligations to repay balances that might be outstanding from time to
time under the Revolving Credit Agreement and the interest and facility fees
relating thereto. Because the Revolving Credit Agreement is an important
element in enabling the Petitioner to maintain its financial flexibility and
its ability to meet unanticipated needs for working capital funds, the
Petitioner has been working closely with the Banks to fulfill their request.
The Banks have indicated that first mortgage bonds would be acceptable
as a form of security. Accordingly, WMECO is seeking authorization from the
Department to issue a new series of Bonds in an aggregate principal amount of
up to $150 million to secure WMECO's principal, interest and facility fees
under such agreement. Upon issuance of the Bonds, the Banks will receive the
benefit of a first mortgage lien on substantially all of the WMECO's physical
property and franchises, including WMECO's generating stations (but not its
interest in the four regional Yankee nuclear plants) and its transmission and
distribution facilities, pari passu with other outstanding first mortgage
bonds.
To the extent that the Petitioner issues first mortgage bonds in the
aggregate principal amount of up to $60 million, as authorized in D.P.U. 96-96,
the principal amount of Bonds to be issued hereunder will be decreased by a
like amount. The Petitioner will base its decision on the amount and
type of first mortgage bonds to be issued under the authority granted in D.P.U.
96-96 on prevailing market conditions for its securities and cash requirements
at the time of proposed issuance.
D. NET PLANT TEST
The Petitioner believes that the net plant test does not apply because
the Bonds are contingent obligations as to which Petitioner will have no
payment requirement unless the underlying short-term debt to which they relate
is not paid. However, if the net plant test were to apply to the full $150
million of Bonds referred herein, the Petitioner would meet the test because
its net utility plant (utility plant less accumulated depreciation and less
construction work in progress), which includes nuclear fuel and fossil
inventories, is equal to or in excess of its outstanding stock (common and
preferred) (not including retained earnings) and long-term debt. As of
December 31, 1996, the Petitioner had net utility plant of at least
$783,404,000 while its outstanding stock and long-term debt was
$568,165,000.{2}
E. ISSUANCE PROCESS
The Petitioner hereby requests that the Department authorize the
Petitioner to issue the Bonds within the parameters set forth in this Petition.
The Petitioner will cause to be issued to Citibank, N.A., as collateral agent
for the Banks, a series of Bonds created for the purpose of securing the
Petitioner's principal, interest and facility fee obligations under the
Revolving Credit Agreement in a principal amount of up to $150 million.
Certain terms of the Bonds, other than as specifically set forth herein, will
be negotiated between the Company and the Banks prior to issuance of the Bonds.
F. SEC JURISDICTION
The Petitioner is subject to the jurisdiction of the Securities and
Exchange Commission (SEC) under the Public Utility Holding Company Act of 1935,
as amended (the 1935 Act). However, as long as the Petitioner complies with
Rule 52 under the 1935 Act, which includes a requirement that the Department
approve the issue of the Bonds, no approval of the issue of the Bonds is
required under that Act.
A copy of WMECO's annual report to the SEC on Form 10-K for the twelve
months ended December 31, 1996 is filed as Exhibit 3. As the Bonds are not
being sold publicly or privately, but are being issued solely as security for
repayment of credit borrowings, no registration statement or private placement
memorandum will be distributed in connection with the issuance of such bonds.
G. DESCRIPTION OF THE BONDS
1. The Petitioner proposes to issue, on or before June 30, 1997,
pursuant to this Petition up to a total of $150 million aggregate principal
amount of Bonds. The Bonds will be used only to secure the Petitioner's
repayment obligations under the Revolving Credit Agreement. The Bonds will
have a term of not more than three years; but in no event exceeding the
remaining term of the Revolving Credit Agreement. The Bonds will bear interest
in such amounts as is sufficient to pay all interest on advances made to WMECO
under the Revolving Credit Agreement and the related facility fee, subject to a
cap amount which may be negotiated.
2. In order to enable the Petitioner to design redemption and/or
reacquisition terms and other provisions that are favorable to the Petitioner
while still being acceptable to the Banks, the Petitioner is requesting the
flexibility to determine redemption, reacquisition and other terms at the
time of issuance of the Bonds. Similarly, the Petitioner seeks the flexibility
to determine, at the time of the issuance based upon market conditions, whether
the Bonds shall have a sinking fund provision.
3. The Bonds would be issued under and secured by the First
Mortgage Indenture and Deed of Trust dated as of August 1, 1954, between the
Petitioner and State Street Bank and Trust Company, Successor Trustee, as
heretofore supplemented and amended by indentures supplemental thereto, and as
to be further supplemented by a supplemental indenture setting out the terms of
the Bonds.
4. The issuance of the Bonds would be consummated on or before June
30, 1997.
H. TESTIMONY AND EXHIBITS
1. At least seven days before the hearing on this petition, the
Petitioner will file in support of this petition the testimony and those
exhibits not listed with an asterisk in Appendix I hereto. Those exhibits
listed with an asterisk are being filed with this petition.
WHEREFORE YOUR PETITIONER PRAYS that this Honorable Department will
determine pursuant to Section 14 of Chapter 164 of the General Laws of
Massachusetts:
(a) That the issue by the Petitioner of up to $150 million aggregate
principal amount of the Bonds is reasonably necessary to enable the Petitioner
to secure its obligations to repay borrowings under the Revolving Credit
Agreement;
(b) That the Bonds will have a maturity of not more than three
years;
(c) That the Bonds shall bear interest at such rates as is
sufficient to pay the interest and the related facility fee on all advances
made under the Revolving Credit Agreement, subject to a cap amount which may be
negotiated; and
(d) That the Department will make such other orders with respect to
the proposed issue of the Bonds as it shall deem proper.
Dated this 7th day of April, 1997.
Respectfully submitted,
WESTERN MASSACHUSETTS ELECTRIC COMPANY
By__/s/__________________________________
John B. Keane
Vice President and Treasurer
**FOOTNOTES**
{2} This calculation excludes construction work in progress and retained
earnings as in the Department's Decision in D.P.U. 96-96.
<PAGE>
APPENDIX I
The following testimony and exhibits will be filed as part of the petition of
Western Massachusetts Electric Company (WMECO) for the Department of Public
Utilities' approval for the issuance of up to $150 million aggregate principal
amount of its first mortgage bonds (the Bonds). Those exhibits noted with an
asterisk are being filed with this initial petition and the testimony and
remaining exhibits will be filed at least seven days prior to a hearing on this
matter.
1. Testimony of Mr. John B. Keane, Vice President and Treasurer of WMECO.
2. Proposed form of Supplemental Indenture.
*3. Copies of WMECO's 1996 Annual Report and 1996 Form 10-K.
4. Resolutions of the Board of Directors dated April 14, 1997.
*5. Pro Forma Financial Statements as of December 31, 1996.
5.1 WMECO Pro Forma Financial Statements reflecting issuance of
$150 million of Bonds.
5.2 Northeast Utilities Pro Forma Financial Statements reflecting
issuance of $150 million of Bonds.
6. Copy of the proposed application to the Connecticut Department of
Public Utility Control.
7. Cash Forecast (including summary of the construction program and
nuclear expenditures) for January 1997 through June 1997.
8. Copy of the Northeast Utilities Proxy Statement dated
April 30, 1997.
*9. WMECO Net Plant Test.
<TABLE>
NORTH ATLANTIC ENERGY COMPANY EXHIBIT H.7
PROJECTED MONTH ENDING SHORT-TERM DEBT LEVEL
(THOUSANDS OF DOLLARS)
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ENDING SHORT-TERM
DEBT (a) 6,112 (1,867) 21,896 15,063 8,118 48,050 40,124 30,682 46,044 38,142 29,778 (41,091)
CONTINGENCIES:
(b) 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
16,112 8,133 31,896 25,063 18,118 58,050 50,124 40,682 56,044 48,142 39,778 (31,091)
</TABLE>
<TABLE>
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ENDING SHORT-TERM
DEBT (a) (60,144) (68,034) 6,782 (3,741)(10,360) 42,837 35,693 26,777 25,400 19,428 13,818 25,731
CONTINGENCIES:
(b) 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
-------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
(50,144) (58,034) 16,782 6,259 (360) 52,837 45,693 36,777 35,400 29,428 23,818 35,731
</TABLE>
(a) Short-term debt levels based on the Company's Receipt and Disbursements
Forecast (attached).
(b) Contingency based on an estimate of average monthly variances of cash
balances forecast to be approximately $10 million.
<PAGE>
<TABLE>
Wednesday, February 12, 1997
NORTH ATLANTIC ENERGY COMPANY
RECEIPTS AND DISBURSEMENTS
1997 FORECAST - PSNH CUSTOMER FIRST
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jan Feb Mar Apr May Jun Jul Aug Sep
1997 1997 1997 1997 1997 1997 1997 1997 1997
PLANNED FINANCINGS
FIRST MORTGAGE BONDS
OTHER LONG-TERM DEBT
PREFERRED STOCK
COMMON STOCK ISSUE
CAPITAL CONTR TO SUBS
CASH RETIREMENTS-LTD (20000)
CASH RETIREMENTS-COMMON STK
CASH RETIREMENTS-PFD STK
CASH RETIREMENTS-PRIOR SPENT F
FINANCING EXPENSE
------ ------ ------ ------ ------ ------ ------ ------ ------
NET PLANNED FINANCING (20000)
CASH BEFORE AUTOMATIC FINANCINGS (3612) 7979 (21896) 6833 7444 (39432) 7926 9942 (14861)
AUTOMATIC FINANCINGS
SHORT-TERM DEBT BORROWED 3612 21896 39432 14861
SHORT-TERM DEBT REPAID (6112) (6333) (6944) (7426) (9442)
------ ------ ------ ------ ------ ------ ------ ------ ------
NET AUTOMATIC FINANCINGS 3612 (6112) 21896 (6333) (6944) 39432 (7426) (9442) 14861
ENDING CASH BALANCE ( ) 1867 0 500 500 ( ) 500 500
ENDING BALANCES:
---------------
CASH 500 500 500 500 500
TEMP CASH INVESTMENTS 1367
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL CASH BALANCE 1867 500 500 500 500
SHORT TERM DEBT 6112 21896 15563 8618 48050 40624 31182 46044
------ ------ ------ ------ ------ ------ ------ ------ ------
NET CASH + TCI - STD (6112) 1867 (21896) (15063) (8118) (48050) (40124) (30682) (46044)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Wednesday, February 12, 1997
NORTH ATLANTIC ENERGY COMPANY
RECEIPTS AND DISBURSEMENTS
1997 FORECAST - PSNH CUSTOMER FIRST
Oct Nov Dec Year
1997 1997 1997 1997
<S> <C> <C> <C> <C>
FIRST MORTGAGE BONDS
OTHER LONG-TERM DEBT
PREFERRED STOCK
COMMON STOCK ISSUE
CAPITAL CONTR TO SUBS
CASH RETIREMENTS-LTD (190000) (210000)
CASH RETIREMENTS-COMMON STK
CASH RETIREMENTS-PFD STK
CASH RETIREMENTS-PRIOR SPENT F
FINANCING EXPENSE (9500) (9500)
------ ------ ------ ------
NET PLANNED FINANCING (199500) (219500)
CASH BEFORE AUTOMATIC FINANCINGS 7902 8864 71369 43591
SHORT-TERM DEBT BORROWED 79801
SHORT-TERM DEBT REPAID (7402) (8364) (30278) (82301)
------ ------ ------ ------
NET AUTOMATIC FINANCINGS (7402) (8364) (30278) (2500)
ENDING CASH BALANCE 500 500 41091 41091
ENDING BALANCES:
---------------
CASH 500 500 500 500
TEMP CASH INVESTMENTS 40591 40591
------ ------ ------ ------
TOTAL CASH BALANCE 500 500 41091 41091
SHORT TERM DEBT 38642 30278
------ ------ ------ ------
NET CASH + TCI - STD (38142) (29778) 41091 41091
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Wednesday, February 12, 1997
NORTH ATLANTIC ENERGY COMPANY
RECEIPTS AND DISBURSEMENTS
1997 FORECAST - PSNH CUSTOMER FIRST
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jan Feb Mar Apr May Jun Jul Aug Sep
1997 1997 1997 1997 1997 1997 1997 1997 1997
BEGINNING CASH BALANCE 1038 1867 500 500 500 500
CASH RECEIPTS
CASH RECEIPTS:
RESIDENTIAL
COMMERCIAL
INDUSTRIAL
OTHER RETAIL
WHOLESALE
ADDITIONAL REQUIRED
OTHER REVENUE
INTEREST INCOME 0 6
DIVIDENDS RECEIVED
OTHER RECEIPTS
PAYMENTS FROM ASSOC. COS 14196 13661 13491 13608 13617 14194 15797 15611 15557
RESERVES FROM SWAP
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RECEIPTS 14196 13661 13497 13608 13617 14194 15797 15611 15557
CASH DISBURSEMENTS
CASH DISBURSEMENTS:
FOSSIL FUEL
NUCLEAR FUEL 14152 293 321 2228 321 790 (14) 229 312
PURCHASED POWER
INTERCOMPANY BILLINGS - NUGT
INTERCOMPANY BILLINGS - NAECO
INTERCOMPANY BILLINGS - IRREG
OTHER TAXES 136 126 125 1479 211 5637 133 114 98
FEDERAL INCOME TAX 4037 (2086) 2086
STATE INCOME TAX 161
O&M LABOR 1278 1042 1105 1258 1919 2092 1427 1087 1072
O&M NON-LABOR 2344 2981 2431 2579 2935 4479 4880 3330 2536
INTEREST ON SHORT-TERM DEBT 12 30 107 76 42 235 199 153
INTEREST ON LONG-TERM DEBT 2871 17791 3536
PREFERRED DIVIDEND
COMMON DIVIDEND 25000 22000
MISC DISBURSEMENTS 56 56 56 56 56 56 57 57 57
NUCLEAR DECOMMISSIONING 375 375 375 375 375 375 375 375 375
MMWEC SETTLEMENT
SPP SETTLEMENT
COST OF REMOVAL
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL OPERATING DIBURSEMENTS 18357 4907 36486 6001 5899 33352 7097 5395 30144
CASH GENERATION BEFORE CONST (4161) 8754 (22989) 7607 7718 (19158) 8700 10216 (14587)
CONST EXP - LABOR 72 72 72 72 72 72 72 72 72
CONST EXP - NON-LABOR 418 703 703 703 703 703 703 703 703
INV NOT INCLUDED IN CONSTR
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL CONSTR EXPENDITURES 490 774 774 774 774 774 774 774 774
INTERNAL CASH BEFORE FINANCINGS (3612) 7979 (21896) 6833 7444 (19432) 7926 9942 (14861)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Wednesday, February 12, 1997
NORTH ATLANTIC ENERGY COMPANY
RECEIPTS AND DISBURSEMENTS
1997 FORECAST - PSNH CUSTOMER FIRST
Oct Nov Dec Year
1997 1997 1997 1997
<S> <C> <C> <C> <C>
BEGINNING CASH BALANCE 500 500 1038
CASH RECEIPTS:
RESIDENTIAL
COMMERCIAL
INDUSTRIAL
OTHER RETAIL
WHOLESALE
ADDITIONAL REQUIRED 321896 321896
OTHER REVENUE
INTEREST INCOME 6
DIVIDENDS RECEIVED
OTHER RECEIPTS
PAYMENTS FROM ASSOC. COS 13732 13769 13733 170966
RESERVES FROM SWAP
------ ------ ------ ------
TOTAL RECEIPTS 13732 13769 335629 492868
CASH DISBURSEMENTS:
FOSSIL FUEL
NUCLEAR FUEL 724 312 321 19989
PURCHASED POWER
INTERCOMPANY BILLINGS - NUGT
INTERCOMPANY BILLINGS - NAECO
INTERCOMPANY BILLINGS - IRREG
OTHER TAXES 85 84 4668 12896
FEDERAL INCOME TAX 4037
STATE INCOME TAX 161
O&M LABOR 1083 1082 1219 15664
O&M NON-LABOR 2502 2527 2524 36049
INTEREST ON SHORT-TERM DEBT 225 189 148 1416
INTEREST ON LONG-TERM DEBT 16885 41083
PREFERRED DIVIDEND
COMMON DIVIDEND 5000 52000
MISC DISBURSEMENTS 57 57 33341 33962
NUCLEAR DECOMMISSIONING 375 375 375 4500
MMWEC SETTLEMENT
SPP SETTLEMENT
COST OF REMOVAL
------ ------ ------ ------
TOTAL OPERATING DIBURSEMENTS 5056 4631 64486 221809
CASH GENERATION BEFORE CONST 8676 9138 271143 271059
CONST EXP - LABOR 72 72 72 859
CONST EXP - NON-LABOR 703 703 703 8146
INV NOT INCLUDED IN CONSTR
------ ------ ------ ------
TOTAL CONSTR EXPENDITURES 774 774 774 9006
INTERNAL CASH BEFORE FINANCINGS 7902 8864 270869 263091
</TABLE>
<PAGE>
<TABLE>
Wednesday, February 12, 1997
NORTH ATLANTIC ENERGY COMPANY
RECEIPTS AND DISBURSEMENTS
1997 FORECAST - PSNH CUSTOMER FIRST
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jan Feb Mar Apr May Jun Jul Aug Sep
1998 1998 1998 1998 1998 1998 1998 1998 1998
PLANNED FINANCINGS
FIRST MORTGAGE BONDS
OTHER LONG-TERM DEBT
PREFERRED STOCK
COMMON STOCK ISSUE
CAPITAL CONTR TO SUBS
CASH RETIREMENTS-LTD (40000)
CASH RETIREMENTS-COMMON STK
CASH RETIREMENTS-PFD STK
CASH RETIREMENTS-PRIOR SPENT F
FINANCING EXPENSE
------ ------ ------ ------ ------ ------ ------ ------ ------
NET PLANNED FINANCING (40000)
CASH BEFORE AUTOMATIC FINANCINGS 60144 68034 (6782) 10523 10360 (42837) 7144 9416 1877
AUTOMATIC FINANCINGS
SHORT-TERM DEBT BORROWED 6782 42837
SHORT-TERM DEBT REPAID (6782) (6644) (8916) (1377)
------ ------ ------ ------ ------ ------ ------ ------ ------
NET AUTOMATIC FINANCINGS 6782 (6782) 42837 (6644) (8916) (1377)
ENDING CASH BALANCE 60144 68034 0 3741 10360 () 500 500 500
ENDING BALANCES:
---------------
CASH 500 500 () 500 500 500 500 500
TEMP CASH INVESTMENTS 59644 67534 3241 9860
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL CASH BALANCE 60144 68034 () 3741 10360 500 500 500
SHORT TERM DEBT 6782 42837 36193 27277 25900
------ ------ ------ ------ ------ ------ ------ ------ ------
NET CASH + TCI - STD 60144 68034 (6782) 3741 10360 (42837) (35693) (26777) (25400)
<PAGE>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Wednesday, February 12, 1997
NORTH ATLANTIC ENERGY COMPANY
RECEIPTS AND DISBURSEMENTS
1997 FORECAST - PSNH CUSTOMER FIRST
Oct Nov Dec Year
1998 1998 1998 1998
<S> <C> <C> <C> <C>
FIRST MORTGAGE BONDS
OTHER LONG-TERM DEBT
PREFERRED STOCK
COMMON STOCK ISSUE
CAPITAL CONTR TO SUBS
CASH RETIREMENTS-LTD (40000)
CASH RETIREMENTS-COMMON STK
CASH RETIREMENTS-PFD STK
CASH RETIREMENTS-PRIOR SPENT F
FINANCING EXPENSE
------ ------ ------ ------
NET PLANNED FINANCING (40000)
CASH BEFORE AUTOMATIC FINANCINGS 6472 6111 (11413) (25371)
SHORT-TERM DEBT BORROWED 11413 61033
SHORT-TERM DEBT REPAID (5972) (5611) (35302)
------ ------ ------ ------
NET AUTOMATIC FINANCINGS (5972) (5611) 11413 25371
ENDING CASH BALANCE 500 500 () 0
ENDING BALANCES:
---------------
CASH 500 500
TEMP CASH INVESTMENTS
------ ------ ------ ------
TOTAL CASH BALANCE 500 500
SHORT TERM DEBT 19928 14318 25731 25731
------ ------ ------ ------
NET CASH + TCI - STD (19428) (13818) (25731) (25731)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Wedneday February 12, 1997
NORTH ATLANTIC ENERGY COMPANY
RECEIPTS AND DISBURSEMENTS
1997 FORECAST - PSNH CUSTOMER FIRST
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Jan Feb Mar Apr May Jun Jul Aug Sep
1998 1998 1998 1998 1998 1998 1998 1998 1998
BEGINNING CASH BALANCE 41091 60144 68034 () 3741 10360 500 500
CASH RECEIPTS
CASH RECEIPTS:
RESIDENTIAL
COMMERCIAL
INDUSTRIAL
OTHER RETAIL
WHOLESALE
ADDITIONAL REQUIRED (387) (382) (386) (386) (402) (448) (442) (441)
OTHER REVENUE
INTEREST INCOME 180 265 300 14 44
DIVIDENDS RECEIVED
OTHER RECEIPTS
PAYMENTS FROM ASSOC. COS 24512 13661 13491 13608 13617 14914 15797 15611 15557
RESERVES FROM SWAP
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL RECEIPTS 24692 13539 13409 13222 13246 13836 15349 15169 15116
CASH DISBURSEMENTS
CASH DISBURSEMENTS:
FOSSIL FUEL
NUCLEAR FUEL 266 292 320 257 320 311 266 320 311
PURCHASED POWER
INTERCOMPANY BILLINGS - NUGT
INTERCOMPANY BILLINGS - NAECO
INTERCOMPANY BILLINGS - IRREG
OTHER TAXES 121 108 108 1465 198 5911 120 99 85
FEDERAL INCOME TAX 63458 (4112) (5356) (5148)
STATE INCOME TAX 6057
O&M LABOR 1137 893 959 1116 1800 1977 1291 940 925
O&M NON-LABOR 2844 2653 2084 2237 2605 4199 4614 3013 2192
INTEREST ON SHORT-TERM DEBT 33 211 178 134
INTEREST ON LONG-TERM DEBT 3536 8288 3536
PREFERRED DIVIDEND
COMMON DIVIDEND 10000 10000 10000
MISC DISBURSEMENTS 57 58 58 58 58 58 58 59 59
NUCLEAR DECOMMISSIONING 390 390 390 390 390 390 390 390 390
MMWEC SETTLEMENT
SPP SETTLEMENT
COST OF REMOVAL
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL OPERATING DIBURSEMENTS 4820 4398 86975 1449 5375 25783 6954 5002 12489
CASH GENERATION BEFORE CONST 19872 9141 (73566) 11773 7870 (11947) 8395 10167 2627
CONST EXP - LABOR 116 116 116 116 116 116 116 116 116
CONST EXP - NON-LABOR 703 1135 1135 1135 1135 1135 1135 1135 1135
INV NOT INCLUDED IN CONSTR
------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL CONSTR EXPENDITURES 819 1251 1251 1251 1251 1251 1251 1251 1251
INTERNAL CASH BEFORE FINANCINGS 60144 68034 (6782) 10523 10360 (2837) 7144 9416 1877
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NORTH ATLANTIC ENERGY COMPANY
RECEIPTS AND DISBURSEMENTS
1997 FORECAST - PSNH CUSTOMER FIRST
Oct Nov Dec Year
1998 1998 1998 1998
<S> <C> <C> <C> <C>
BEGINNING CASH BALANCE 500 500 500 41091
CASH RECEIPTS:
RESIDENTIAL
COMMERCIAL
INDUSTRIAL
OTHER RETAIL
WHOLESALE
ADDITIONAL REQUIRED (389) (390) (389) (4442)
OTHER REVENUE
INTEREST INCOME 803
DIVIDENDS RECEIVED
OTHER RECEIPTS
PAYMENTS FROM ASSOC. COS 13732 13769 13733 181282
RESERVES FROM SWAP
------ ------ ------ ------
TOTAL RECEIPTS 13343 13379 13344 177643
CASH DISBURSEMENTS:
FOSSIL FUEL
NUCLEAR FUEL 2373 2776 1616 9428
PURCHASED POWER
INTERCOMPANY BILLINGS - NUGT
INTERCOMPANY BILLINGS - NAECO
INTERCOMPANY BILLINGS - IRREG
OTHER TAXES 73 73 4703 13605
FEDERAL INCOME TAX (2571) 46272
STATE INCOME TAX 6057
O&M LABOR 935 934 1076 13984
O&M NON-LABOR 2158 2183 2180 32962
INTEREST ON SHORT-TERM DEBT 127 98 70 852
INTEREST ON LONG-TERM DEBT 6478 21838
PREFERRED DIVIDEND
COMMON DIVIDEND 10000 40000
MISC DISBURSEMENTS 59 59 59 700
NUCLEAR DECOMMISSIONING 390 390 390 4680
MMWEC SETTLEMENT
SPP SETTLEMENT
COST OF REMOVAL
------ ------ ------ ------
TOTAL OPERATING DIBURSEMENTS 6120 6517 24006 189889
CASH GENERATION BEFORE CONST 7223 6861 (10662) (12246)
CONST EXP - LABOR 116 116 116 1388
CONST EXP - NON-LABOR 1135 1135 1135 13188
INV NOT INCLUDED IN CONSTR
------ ------ ------ ------
TOTAL CONSTR EXPENDITURES 1251 1251 1251 14576
INTERNAL CASH BEFORE FINANCINGS 6472 6111 (11413) 14269
</TABLE>
<PAGE>
EXHIBIT I.2
PROPOSED FORM OF NOTICE
(Release No. 35- ______; 70-_______ )
PROPOSED AMENDMENTS TO REVOLVING CREDIT FACILITY FOR NORTHEAST UTILITIES ("NU),
THE CONNECTICUT LIGHT AND POWER COMPANY ("CL&P") AND WESTERN MASSACHUSETTS
ELECTRIC COMPANY ("WMECO") AND INCREASE IN SHORT-TERM BORROWING LIMIT OF NORTH
ATLANTIC ENERGY CORPORATION ("NAEC") AND MODIFICATION OF NAEC'S PARTICIPATION
IN THE NORTHEAST UTILITIES SYSTEM MONEY POOL
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
___________________________, 1997
Northeast Utilities ("NU"), a public utility holding company registered
under the Public Utility Holding Company Act of 1935, as amended (the "Act"),
and The Connecticut Light and Power Company ("CL&P"), Western Massachusetts
Electric Company ("WMECO"), Public Service Company of New Hampshire ("PSNH"),
Holyoke Water Power Company ("HWP") and North Atlantic Energy Corporation
("NAEC"), each of which is a wholly-owned subsidiary of NU (the "Applicants"),
have filed with the Commission a post-effective amendment (the "Amendment") to
their application/declaration in File No. 70-8875 pursuant to Section 6(a), 7,
9(a), 10 and 12 of the Act and Rules 43, 45 and Rule 52 thereunder. NU and
WMECO are located at 174 Brush Hill Avenue, West Springfield, Massachusetts
01090-0010, CL&P is located at 107 Selden Street, Berlin, Connecticut 06037,
PSNH and NAEC are located at 1000 Elm Street, Manchester, New Hampshire 03105
and HWP is located at Canal Street, Holyoke, Massachusetts 01040.
Authorization is requested for NU, CL&P and WMECO to enter into
amendments to its revolving credit facility (the "Facility") with certain
lending institutions which will provide, among other things, that (a) CL&P and
WMECO collateralize their obligations under the Facility with first mortgage
bonds; (b) NU's borrowing limit thereunder be reduced to zero subject to
reinstatement to up to $50 million at such time as NU, CL&P and WMECO meet
certain financial tests; (c) the borrowing limit thereunder of CL&P and WMECO
not exceed at any time the aggregate principal amount of collateral first
mortgage bonds issued by it as security for its respective obligations under
the Facility; (d) on the closing date of the amendment, the Borrowers pay each
Lender an amendment fee equal to .25% of its commitment under the Facility; and
(e) the amendments become effective no later than May 30, 1997.
Authorization is also requested by the Applicants to increase the
short-term borrowing limit of NAEC from $50 million to $60 million and to amend
the Northeast Utilities System Money Pool (the "Money Pool") to enable NAEC to
borrow from all of the NU system companies participating in the Money Pool
instead of NU alone as is now the case.
The Applicants state that they intend to request the Commission's
approval, pursuant to the Amendment, of all transactions described therein,
whether under the sections of the Act and the rules thereunder enumerated
therein or otherwise.
The Amendment and any further amendments thereto are available for
public inspection through the Commission's Office of Public Reference. Any
interested persons wishing to comment or request a hearing on the Amendment
should submit their views in writing by _______________________________, 1997,
to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549,
and serve a copy on the Applicants at the addresses specified above. Proof of
service (by affidavit or, in the case of an attorney at law, by certificate)
should be filed with the request. Any request for hearing shall identify
specifically the issues of fact or law that are disputed. A person who so
requests will be notified of any hearing, if ordered, and will receive a copy
of any notice or order issued in this matter. After said date, the Amendment
as filed or as it may be further amended, may be permitted to become effective.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
_________________________
Secretary
