UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Application of Northeast )
) CERTIFICATE PURSUANT TO
Utilities, Charter Oak Energy ) RULE 24 UNDER THE PUBLIC
) UTILITY HOLDING COMPANY ACT
Inc. and COE Development ) OF 1935
)
Corp. on Form U-1 )
)
(File No. 70-8507) )
Pursuant to the requirements of Rule 24 under the Public Utility Holding
Company Act of 1935, Charter Oak Energy, Inc. ("Charter Oak"), a wholly-owned
subsidiary of Northeast Utilities ("NU"), a registered holding company,
hereby files this quarterly report as required by the Securities and Exchange
Commission's supplemental order authorizing preliminary development
activities and financing related to such activities and to acquisitions of
interests in exempt wholesale generators ("EWGs") and foreign utility
companies ("FUCOs") by Charter Oak (HCAR. No. 26134, September 30, 1994, File
No. 70-8062, HCAR. No. 26213, December 30, 1994, File No. 70-8507, and HCAR.
No. 26354, August 7, 1995, File No. 70-8507, HCAR, No. 26623, December 12,
1996, File No. 70-8507).
(1) BALANCE SHEET AS OF SEPTEMBER 30, 1997:
Attached as Exhibit A.
(2) TWELVE MONTH INCOME STATEMENT ENDING SEPTEMBER 30, 1997:
Attached as Exhibit B.
(3) GENERAL DESCRIPTION OF THE ACTIVITIES OF CHARTER OAK FOR THE QUARTER
ENDED SEPTEMBER 30, 1997, AND OF THE PROJECTS IN WHICH CHARTER OAK OR ITS
SUBSIDIARIES HAVE AN INTEREST:
During the third quarter of 1997, pursuant to the permission granted by
the Commission in the September 30, 1994 (HCAR. No. 26134), December 30, 1994
(HCAR. No. 26213), August 7, 1995 (HCAR. No. 26354) and December 12, 1996
(HCAR. No. 26623) orders, Charter Oak, through its wholly-owned subsidiary
COE Development Corporation ("COE Development"), has participated in
preliminary development activities for EWGs and FUCOs. These activities have
been performed by COE Development both on its own and with unaffiliated third
parties.
On August 7, 1995 the Commission authorized NU to make investments in
Charter Oak, and Charter Oak to make investments in COE Development, in the
amount of up to $400 million, through December 31, 1996, for preliminary
development activities and for acquisitions of interests in EWGs and FUCOs.
This authorization includes preliminary development of domestic projects as
well as investments in EWGs and FUCOs. On December 12, 1996, this authority
was extended to December 31, 1997 with the authorized amount of investment
reduced to $200 million. The Commission reserved jurisdiction over
increasing the amount of authorized investment by $200 million and extending
the authority to December 31, 1998.
On December 5, 1995, Charter Oak filed a Form U-57 notifying the
Commission of foreign utility company status for Ave Fenix Energia S.A. ("Ave
Fenix"), the 168 MW natural gas project in the Republic of Argentina.
Charter Oak through its wholly-owned subsidiary COE Ave Fenix Corporation,
will own approximately 83% of the issued and outstanding common stock of Ave
Fenix. On January 27, 1997, Ave Fenix closed on a $44 million term loan.
On December 8, 1995, the 114 MW natural gas-fired project (Central
Termica San Miguel de Tucuman, S.A., "C.T.S.M.T.") located in the Republic of
Argentina commenced commercial operation. Charter Oak, through its wholly-
owned subsidiary COE Argentina II Corp. owns 33.33% of the issued and
outstanding common stock of C.T.S.M.T.
On June 24, 1996, the Plantas Eolicas S.A., the 20 MW wind project in
Costa Rica, synchronized with the grid. Charter Oak, through its
wholly-owned subsidiary COE Tejona Corporation, will own approximately 65% of
the issued and outstanding common stock of Plantas Eolicas. It is
anticipated that a Costa Rican company will hold the remaining 35% of the
common stock of Plantas Eolicas.
Charter Oak, through its wholly-owned subsidiary Charter Oak (Paris),
Inc., pursuant to the permission granted by the Commission (HCAR. No. 24893),
has an approximately 10% beneficial equity ownership interest in a 223 MW
gas-fired operational qualifying cogeneration facility in Paris, Texas.
On September 24, 1993, NU was granted permission (HCAR. No. 70-8084) to
invest up to $7 million in Charter Oak for the purchase of an interest in two
non-utility subsidiaries to own an interest in a foreign utility company,
Encoe Partners. Encoe Partners is a general partnership formed for the sole
purpose of building, owning and operating a power generating facility in the
United Kingdom ("Power Plant") and acquiring a one-third interest in certain
rights and obligations under a power contract. The Power Plant is 2.176 MW
and will produce power by harnessing the pressure in the natural gas pipeline
feeding the 1,875 MW Teesside Project in Teesside, Wilton, Cleveland,
England. This transaction was completed by Charter Oak on the close of
business on September 30, 1993 by acquiring interests in two non-utility
subsidiary companies, COE (UK) Corp. and COE (GENCOE) Corp.
At this time, none of the other projects Charter Oak is currently
pursuing are sufficiently defined to move beyond the preliminary development
stage and therefore are not contained in this report.
(4) THE AMOUNTS OF RECOURSE AND NON-RECOURSE DEBT SECURITIES ISSUED TO THIRD
PARTIES BY INTERMEDIATE COMPANIES:
N.A.
(5) REGULATORY STATUS OF FACILITIES ELIGIBLE FOR EXEMPTION AS A PUBLIC
UTILITY UNDER THE ACT.
N.A.
(6) INFORMATION ON INTERCOMPANY SERVICE TRANSACTIONS INVOLVING AFFILIATED
INTERMEDIATE COMPANIES, EWGs AND FUCOs FOR THE QUARTER ENDING SEPTEMBER
30, 1997.
Attached as Exhibit C.
The aggregate amount of all guarantees issued by or for Charter Oak or
any of its subsidiary companies for the quarter ending September 30, 1997 is
approximately $20 million.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned company has duly caused this Certificate to be
signed on its behalf by the undersigned thereunto duly authorized.
Charter Oak Energy, Inc.
/s/ Eugene G. Vertefeuille
Principal
Charter Oak Energy, Inc.
P.O. Box 270
Hartford, CT 06141-0270
November 18, 1997
EXHIBIT A
CHARTER OAK ENERGY, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
---------------------------------------
September 30,
---------------------------
1997 1996
------------ ------------
(Thousands of Dollars)
ASSETS
- ------
Utility Plant, at original cost:
Electric $ 52 $ 52
Less: Accumulated provision for
depreciation 51 49
------------ ------------
Total net utility plant 1 3
------------ ------------
Other Investments, at cost 78,417 56,752
------------ ------------
Current Assets:
Cash 1,086 438
Accounts receivable 31 -
Taxes receivable 3,457 136
------------ ------------
4,574 574
------------ ------------
Deferred Charges:
Accumulated deferred income taxes 2,559 130
Deferred development costs 5,282 9,621
Other 413 707
------------ ------------
8,254 10,458
------------ ------------
Total Assets $ 91,246 $ 67,787
============ ============
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock $ - $ -
Capital surplus, paid in 118,406 84,648
Retained earnings (29,767) (17,458)
------------ ------------
Total capitalization 88,639 67,190
------------ ------------
Minority interest in common equity
of subsidiaries (145) (105)
------------ ------------
Current Liabilities:
Accounts payable 132 121
Accounts payable to affiliated companies 191 300
Taxes accrued 658 -
Other 1,771 281
------------ ------------
2,752 702
------------ ------------
Total Capitalization and Liabilities $ 91,246 $ 67,787
============ ============
EXHIBIT B
CHARTER OAK ENERGY, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
---------------------------------------------
Twelve Months Ended
September 30,
---------------------------
1997 1996
------------ ------------
(Thousands of Dollars)
Operating Revenues $ - $ -
------------ ------------
Operating Expenses:
Operation and maintenance 12,795 5,694
Depreciation 780 653
Federal and state income taxes (5,004) (1,138)
Taxes other than income taxes 66 18
------------ ------------
Total operating expenses 8,637 5,227
------------ ------------
Operating Loss (8,637) (5,227)
------------ ------------
Other Income:
Investment income (2,595) 2,469
Other, net (1,057) 74
------------ ------------
Total other income (3,652) 2,543
------------ ------------
Loss before interest charges (12,289) (2,684)
------------ ------------
Interest Charges 21 11
------------ ------------
Net Income (Loss) $ (12,310) $ (2,695)
============ ============
<PAGE>
EXHIBIT C
Charter Oak Energy and Subsidiaries
Detail of Intercompany Services
Twelve Months Ended September 30, 1997
Charter Oak Energy
------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- -----------------------------------------------------------------------------
NUSCO Charter Oak staff 1,832,926 131,416 1,964,342
Accounting and financial services 33,008 1,316 34,324
Legal services 3,607 34,388 37,995
Miscellaneous 28,205 6,929 35,134
------------------------------
Total NUSCO Services 1,897,746 174,049 2,071,795
------------------------------
NU PARENT Retainer Fee 0 200,000 200,000
------------------------------
Total NU PARENT Services 0 200,000 200,000
CL&P Miscellaneous 0 3,190 3,190
------------------------------
Total CL&P Services 0 3,190 3,190
------------------------------
COE TEJONA Outside Services 0 428 428
------------------------------
Total COE Tejona Services 0 428 428
------------------------------
CHARTER OAK
DEVELOPMENT CORP
Legal services 0 434,665 434,665
CT Use Tax Recoupment 0 (107,816) (107,816)
Miscellaneous 0 56,989 56,989
------------------------------
Total COD Services 0 383,838 383,838
------------------------------
Total Services Provided 1,897,746 761,505 2,659,251
==============================
Charter Oak Paris, Inc.
-----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ----------------------------------------------------------------------------
NUSCO Accounting and financial services 63 0 63
------------------------------
Total NUSCO Services 63 0 63
CL&P Allocated Refund of CCBT Audit 0 (7,628) (7,628)
------------------------------
Total CL&P Services 0 (7,628) (7,628)
------------------------------
Total Services Provided 63 (7,628) (7,565)
==============================
COE Development Corp.
---------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- -----------------------------------------------------------------------------
NUSCO Charter Oak staff 934,984 737,553 1,672,537
Engineering services 2,506 0 2,506
Legal services 0 51,908 51,908
Miscellaneous 11,690 254 11,944
------------------------------
Total NUSCO Services 949,180 789,715 1,738,895
------------------------------
CL&P Miscellaneous 0 201 201
------------------------------
Total CL&P Services 0 201 201
------------------------------
PSNH Engineering Services 0 414 414
------------------------------
Total PSNH Services 0 414 414
WMECO Engineering Services 0 271 271
------------------------------
Total WMECO Services 0 271 271
-----------------------------
CHARTER OAK
ENERGY Miscellaneous 0 (4,808) (4,808)
CT Use Tax Adjustment 0 (5,310) (5,310)
Legal Services 0 1,747 1,747
------------------------------
Total COE Services 0 (8,371) (8,371)
------------------------------
COE TEJONA
CORP. Outside Services 0 13,065 13,065
------------------------------
Total COE Services 0 13,065 13,065
------------------------------
Total Services Provided 949,180 795,295 1,744,475
==============================
COE (UK) Corp.
--------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Charter Oak staff 8,377 3,589 11,966
Accounting and Financial Services 135 75 210
------------------------------
Total NUSCO services 8,512 3,664 12,176
------------------------------
CHARTER OAK
ENERGY Outside Services 0 7,550 7,550
------------------------------
Total COE Services 0 7,550 7,550
------------------------------
CHARTER OAK DEVELOPMENT
CORP. Miscellaneous 0 4,532 4,532
------------------------------
Total COD services 0 4,532 4,532
------------------------------
Total Services Provided 8,512 15,746 24,258
==============================
COE Argentina I Corp.
----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- --------------------------------------------------------------------------
NUSCO Charter Oak Staff 0 150 150
Accounting Staff 71 0 71
-----------------------------
Total NUSCO services 71 150 221
------------------------------
Total Services Provided 71 150 221
==============================
COE (GENCOE) Corp.
----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ----------------------------------------------------------------------------
NUSCO Miscellaneous 141 75 216
-----------------------------
Total Services Provided 141 75 216
==============================
COE Argentina II Corp.
----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- --------------------------------------------------------------------------
NUSCO Miscellaneous 0 11,158 11,158
Charter Oak Staff 26,102 14,992 41,094
-----------------------------
Total NUSCO Services 26,102 26,150 52,252
COE Development
Outside Services 0 55,936 55,936
Legal Services 0 771 771
------------------------------
Total COE Development Services 0 56,707 56,707
CHARTER OAK
ENERGY Outside Services 0 1,032 1,032
------------------------------
Total COE Energy Services 0 1,032 1,032
------------------------------
Total Services Provided 26,102 83,889 109,991
==============================
COE Tejona Corp.
----------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Miscellaneous 4,345 75 4,420
Accounting Services 106 0 106
Charter Oak Staff 108,731 51,897 160,628
Legal Services 0 2,170 2,170
------------------------------
Total Services Provided 113,182 54,142 167,324
COE Development
Charter Oak Staff 0 79,650 79,650
Outside Services 0 230 230
CT Use Tax Recoupment 0 (88,256) (88,256)
Legal Services 0 3,107 3,107
------------------------------
Total COE Development Services 0 (5,269) (5,269)
CHARTER OAK
ENERGY Charter Oak Staff 0 1,925 1,925
Legal Services 0 115 115
------------------------------
Total COE Energy Services 0 2,040 2,040
------------------------------
Total Services Provided 113,182 50,913 164,095
==============================
COE AVE FENIX Corp.
----------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Miscellaneous 36,300 6,152 42,452
------------------------------
Total NUSCO Services 36,300 6,152 42,452
COE Development
Legal Services 0 120 120
Outside Services 0 2,119 2,119
CT Use Tax Recoupment 0 (51,832) (51,832)
------------------------------
Total COE Development Services 0 (49,593) (49,593)
Total Services Provided 36,300 (43,441) (7,141)
==============================
