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, HCAR No. 26810, December 30, 1997, File No. 70-8507).
(1) BALANCE SHEET AS OF SEPTEMBER 30, 1998:
Attached as Exhibit A.
(2) TWELVE MONTH INCOME STATEMENT ENDING SEPTEMBER 30, 1998:
Attached as Exhibit B.
(3) GENERAL DESCRIPTION OF THE ACTIVITIES OF CHARTER OAK FOR THE QUARTER
ENDED SEPTEMBER 30, 1998, AND OF THE PROJECTS IN WHICH CHARTER OAK OR ITS
SUBSIDIARIES HAVE AN INTEREST:
During the third quarter of 1998, 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) and December 30, 1997 (HCAR No.26810) orders, Charter Oak,
through its wholly-owned subsidiary COE Development Corporation ("COE
Development"), has participated in limited preliminary development activities
for EWGs and FUCOs, primarily to preserve existing value in these projects.
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 extended the authority to December
31, 1998 on December 30, 1997.
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.
Charter Oak is in the process of selling its interest in this project.
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 sold its interest
in this project on May 5, 1998 and filed a Form U-57/A on May 27, 1998 notifying
the Securities and Exchange Commission that Plantas Eolicas no longer requires
Foreign Utility Company status with respect to Northeast Utilities and its
subsidiaries.
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,
1998.
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, 1998 is
approximately $3.4 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/ John H. Forsgren
Executive Vice President and Chief Financial Officer
Charter Oak Energy, Inc.
P.O. Box 270
Hartford, CT 06141-0270
November 23, 1998
EXHIBIT A
CHARTER OAK ENERGY, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
---------------------------------------
September 30,
---------------------------
1998 1997
------------ ------------
(Thousands of Dollars)
ASSETS
- ------
Utility Plant, at original cost:
Electric $ 52 $ 52
Less: Accumulated provision for
depreciation 52 51
------------ ------------
Total net utility plant - 1
------------ ------------
Current Assets:
Cash 1,760 1,086
Accounts receivable 312 31
Accounts receivable from affiliated
companies 2 -
Taxes receivable 3,558 3,457
Investments held for sale 20,380 78,417
------------ ------------
26,012 82,991
------------ ------------
Deferred Charges:
Accumulated deferred income taxes 1,293 2,559
Deferred development costs 3,488 5,282
Other 253 413
------------ ------------
5,034 8,254
------------ ------------
Total Assets $ 31,046 $ 91,246
============ ============
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock $ - $ -
Capital surplus, paid in 92,744 118,406
Retained earnings (61,964) (29,767)
------------ ------------
Total capitalization 30,780 88,639
------------ ------------
Minority interest in common equity
of subsidiaries - (145)
------------ ------------
Current Liabilities:
Accounts payable 84 132
Accounts payable to affiliated companies 153 191
Taxes accrued 11 658
Other 18 1,771
------------ ------------
266 2,752
------------ -----------
Total Capitalization and Liabilities $ 31,046 $ 91,246
============ ============
EXHIBIT B
CHARTER OAK ENERGY, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
---------------------------------------------
Twelve Months Ended
September 30,
---------------------------
1998 1997
------------ ------------
(Thousands of Dollars)
Operating Revenues $ - $ -
------------ ------------
Operating Expenses:
Operation and maintenance (1,490) 12,795
Depreciation 58 780
Federal and state income taxes (1,386) (5,004)
Taxes other than income taxes 211 66
------------ ------------
Total operating expenses 165 8,637
------------ ------------
Operating Loss (165) (8,637)
------------ ------------
Other (Loss)/Income:
Investment (loss)/income (6,685) (2,595)
Other, net ( 973) (1,057)
Net gain on sale of investments 634 -
Reserve for the loss on sale of COE Corp's
investment in Ave Fenix Energia, S.A. (25,000) -
------------ ------------
Total other (loss)/income (32,024) 3,652
------------ ------------
Loss before interest charges (32,189) (12,289)
------------ ------------
Interest Charges 7 21
------------ ------------
Net Loss $ (32,196) $ (12,310)
============ ============
<PAGE>
EXHIBIT C
Charter Oak Energy and Subsidiaries
Detail of Intercompany Services
Twelve Months Ended September 30, 1998
Charter Oak Energy
------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- -----------------------------------------------------------------------------
NUSCO Charter Oak staff 2,880,136 469,293 3,349,429
Accounting and financial services 17,702 3,869 21,571
Legal services 6,336 12,786 19,122
Miscellaneous 11,314 1,590 12,904
------------------------------
Total NUSCO Services 2,915,488 487,538 3,403,026
------------------------------
NU PARENT Fee for sale of companies 0 0 0
------------------------------
Total NU PARENT Services 0 0 0
CL&P Reallocate Refund of CCBT Audit 0 (75,518) (75,518)
Employee Expenses 1,654 2,527 4,181
Outside Services 0 8 8
Miscellaneous 0 0 0
State of Connecticut Tax 0 1,071 1,071
------------------------------
Total CL&P Services 1,654 (71,912) (70,258)
------------------------------
COE TEJONA Outside Services 0 550,000 550,000
------------------------------
Total COE Tejona Services 0 550,000 550,000
------------------------------
CHARTER OAK
DEVELOPMENT CORP
Legal services 0 457,390 457,390
CT Use Tax Recoupment 0 0 0
Outside Services 0 4,850 4,850
Miscellaneous 0 0 0
------------------------------
Total COD Services 0 462,240 462,240
------------------------------
Total Services Provided 2,917,142 1,427,866 4,345,008
==============================
COE Development Corp.
---------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- -----------------------------------------------------------------------------
NUSCO Charter Oak staff 45,340 37,155 82,495
Legal services 0 0 0
Miscellaneous 85 0 85
------------------------------
Total NUSCO Services 45,425 37,155 82,580
------------------------------
CL&P Employee Expenses 1,586 288 1,874
Reallocate CCB Tax Paid 1994,5,6 0 589,758 589,758
Outside Services 0 18 18
------------------------------
Total CL&P Services 1,586 590,064 591,650
-----------------------------
CHARTER OAK
ENERGY Miscellaneous 0 0 0
CT Use Tax Adjustment 0 0 0
Outside Services 0 11 11
------------------------------
Total COE Services 0 11 11
------------------------------
COE TEJONA
CORP. Outside Services 0 (65) (65)
------------------------------
Total COE Tejona Services 0 (65) (65)
------------------------------
Total Services Provided 47,011 627,165 674,176
==============================
COE (UK) Corp.
--------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Charter Oak staff 0 0 0
Accounting and Financial Services 0 0 0
------------------------------
Total NUSCO services 0 0 0
------------------------------
CHARTER OAK DEVELOPMENT
CORP. Outside Services 0 (23) (23)
------------------------------
Total COD services 0 (23) (23)
------------------------------
Total Services Provided 0 (23) (23)
==============================
COE Argentina I Corp.
----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- --------------------------------------------------------------------------
CL&P Reallocate CCB Tax Paid 1996 0 242 242
-----------------------------
Total CL&P services 0 242 242
------------------------------
Total Services Provided 0 242 242
==============================
COE Argentina II Corp.
----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- --------------------------------------------------------------------------
NUSCO Charter Oak Staff 0 (10,928) (10,928)
-----------------------------
Total NUSCO Services 0 (10,928) (10,928)
CL&P Reallocate CCB Tax Paid 1996 0 (6,248) (6,248)
-----------------------------
Total CL&P Services 0 (6,248) (6,248)
COE Development
Outside Services 0 6,759 6,759
------------------------------
Total COE Development Services 0 6,759 6,759
Total Services Provided 0 (10,417) (10,417)
==============================
COE Tejona Corp.
----------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Miscellaneous 355 0 355
Internal Audit 1,085 0 1,085
Wholesale Marketing 8,276 1,269 9,545
Charter Oak Staff 64,655 3,331 67,986
Legal Services 0 0 0
------------------------------
Total NUSCO Services 74,371 4,600 78,971
CL&P Reallocate CCB Tax Paid 1996 0 302 302
Employee Expenses 4,322 1,863 6,185
-----------------------------
Total CL&P services 4,322 2,165 6,487
-----------------------------
COE Development
Charter Oak Staff 0 1,823 1,823
Outside Services 0 64 64
CT Use Tax Recoupment 0 0 0
Legal Services 0 0 0
------------------------------
Total COE Development Services 0 1,887 1,887
CHARTER OAK
ENERGY Legal Services 0 0 0
Outside Services 0 543 543
------------------------------
Total COE Services 0 543 543
------------------------------
Total Services Provided 78,693 9,195 87,888
==============================
COE AVE FENIX Corp.
----------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Wholesale Marketing 0 19 19
Charter Oak Staff 0 0 0
Outside Services 0 63 63
------------------------------
Total NUSCO Services 0 82 82
CL&P Reallocate CCB Tax Paid 1996 0 242 242
-----------------------------
Total CL&P Services 0 242 242
COE Development
Charter Oak Staff 0 9,229 9,229
Outside Services 0 20,871 20,871
Outside Services 0 2,119 2,119
CT Use Tax Recoupment 0 0 0
------------------------------
Total COE Development Services 0 30,100 30,100
Total Services Provided 0 30,424 30,424
==============================
