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, and December 30, 1997, File No. 70-8507).
(1) BALANCE SHEET AS OF JUNE 30, 1998:
Attached as Exhibit A.
(2) TWELVE MONTH INCOME STATEMENT ENDING JUNE 30, 1998:
Attached as Exhibit B.
(3) GENERAL DESCRIPTION OF THE ACTIVITIES OF CHARTER OAK FOR THE QUARTER
ENDED JUNE 30, 1998, AND OF THE PROJECTS IN WHICH CHARTER OAK OR ITS
SUBSIDIARIES HAVE AN INTEREST:
During the secon 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) 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 JUNE 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 June 30, 1998 is
approximately $2.4 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/ Eugene G. Vertefeuille
Principal
Charter Oak Energy, Inc.
P.O. Box 270
Hartford, CT 06141-0270
August 13, 1998
EXHIBIT A
CHARTER OAK ENERGY, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
---------------------------------------
June 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 216 480
Accounts receivable 671 84
Taxes receivable 3,542 2,228
Investments held for sale 21,004 87,431
------------ ------------
25,433 90,223
------------ ------------
Deferred Charges:
Accumulated deferred income taxes 1,200 200
Deferred development costs 3,770 7,249
Other 287 457
------------ ------------
5,257 7,906
------------ ------------
Total Assets $ 30,690 $ 98,130
============ ============
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock $ - $ -
Capital surplus, paid in 89,944 115,991
Retained earnings (60,073) (20,221)
------------ ------------
Total capitalization 29,871 95,770
------------ ------------
Minority interest in common equity
of subsidiaries - (83)
------------ ------------
Current Liabilities:
Accounts payable 246 1,304
Accounts payable to affiliated companies 514 251
Taxes accrued 15 574
Other 44 314
------------ ------------
819 2,443
------------ ------------
Total Capitalization and Liabilities $ 30,690 $ 98,130
============ ============
EXHIBIT B
CHARTER OAK ENERGY, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
---------------------------------------------
Twelve Months Ended
June 30,
---------------------------
1998 1997
------------ ------------
(Thousands of Dollars)
Operating Revenues $ - $ -
------------ ------------
Operating Expenses:
Operation and maintenance 6,532 5,975
Depreciation 552 450
Federal and state income taxes (2,006) (1,759)
Taxes other than income taxes 238 40
------------ ------------
Total operating expenses 5,316 4,706
------------ ------------
Operating Loss (5,316) (4,706)
------------ ------------
Other (Loss)/Income:
Investment (loss)/income (8,301) 2,060
Other, net (1,859) (89)
Net gain on sale of investments 634 -
Reserve for the loss on sale of COE Ave
Fenix Corp's. investment in Ave Fenix
Energia, S.A. (25,000) -
------------ ------------
Total other (loss)/income (34,526) 1,971
------------ ------------
Loss before interest charges (39,842) (2,735)
------------ ------------
Interest Charges 11 21
------------ ------------
Net Loss $ (39,853) $ (2,756)
============ ============
Charter Oak Energy and Subsidiaries Exhibit C
Detail of Intercompany Services
Twelve Months Ended June 30, 1998
Charter Oak Energy
------------------
NON-
Service Type of Services Provided PAYROLL PAYROLL TOTAL
Provided by
- -----------------------------------------------------------------------------
NUSCO Charter Oak staff 3,151,452 356,510 3,507,962
Accounting and financial services 26,572 3,913 30,485
Legal services 7,540 42,178 49,718
Miscellaneous 19,376 2,009 21,385
------------------------------
Total NUSCO Services 3,204,940 404,610 3,609,550
NU PARENT Fee for sale of companies 0 550,000 550,000
-----------------------------
Total NU PARENT Services 0 550,000 550,000
CL&P Reallocate Refund of CCBT Audit 0 (75,518) (75,518)
Employee Expenses 284 331 615
Outside Services 0 8 8
State of Connecticut Tax 0 1,071 1,071
------------------------------
Total CL&P Services 284 (74,108) (73,824)
COE TEJONA Outside Services 0 428 428
------------------------------
Total COE Tejona Services 0 428 428
CHARTER OAK
DEVELOPMENT
CORP Legal services 0 599,774 599,774
CT Use Tax Recoupment 0 (107,816)(107,816)
Outside Services 0 4,749 4,749
Miscellaneous 0 2,517 2,517
------------------------------
Total COD Services 0 499,224 499,224
Total Services Provided 3,205,224 1,380,154 4,585,378
=============================
COE Development Corp.
---------------------
NON-
Service Type of Services Provided PAYROLL PAYROLL TOTAL
Provided by
- ----------------------------------------------------------------------------
NUSCO Charter Oak staff 154,320 108,442 262,762
Legal services 0 20,603 20,603
Miscellaneous 247 0 247
------------------------------
Total NUSCO Services 154,567 129,045 283,612
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 16 16
CT Use Tax Adjustment 0 (5,310) (5,310)
Outside Services 0 11 11
------------------------------
Total COE Services 0 (5,283) (5,283)
Total Services Provided 156,153 713,826 869,979
===========================
COE (UK) Corp.
--------------
NON-
Service Provided Type of Services Provided PAYROLL PAYROLL TOTAL
By
- ----------------------------------------------------------------------------
NUSCO Charter Oak staff 905 1,280 2,185
Accounting and Financial Services 32 0 32
------------------------------
Total NUSCO services 937 1,280 2,217
Total Services Provided 937 1,280 2,217
==============================
COE Argentina I Corp.
----------------------
NON-
Service Provided Type of Services Provided PAYROLL PAYROLL TOTAL
By
- ---------------------------------------------------------------------------
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 Type of Services Provided PAYROLL PAYROLL TOTAL
By
- ----------------------------------------------------------------------------
NUSCO Charter Oak Staff 8,842 (10,928) (2,086)
-----------------------------
Total NUSCO Services 8,842 (10,928) (2,086)
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 20,450 20,450
------------------------------
Total COE Development Services 0 20,450 20,450
Total Services Provided 8,842 3,274 12,116
==============================
COE Tejona Corp.
----------------
NON-
Service Provided Type of Services Provided PAYROLL PAYROLL TOTAL
By
- ---------------------------------------------------------------------------
NUSCO Miscellaneous 355 0 355
Internal Audit 1,085 0 1,085
Wholesale Marketing 8,276 1,269 9,545
Charter Oak Staff 110,809 16,868 127,677
Legal Services 0 783 783
------------------------------
Total NUSCO Services 120,525 18,920 139,445
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 8,645 8,645
Outside Services 0 294 294
CT Use Tax Recoupment 0 (88,256) (88,256)
Legal Services 0 66 66
------------------------------
Total COE Development Services 0 (79,251) (79,251)
CHARTER OAK ENERGY Legal Services 0 115 115
Outside Services 0 543 543
------------------------------
Total COE Services 0 658 658
Total Services Provided 124,847 (57,508) 67,339
==============================
COE AVE FENIX Corp.
----------------
NON-
Service Provided Type of Services Provided PAYROLL PAYROLL TOTAL
By
- -----------------------------------------------------------------------------
NUSCO Wholesale Marketing 0 19 19
Charter Oak Staff 10,175 0 10,175
Outside Services 0 63 63
------------------------------
Total NUSCO Services 10,175 82 10,257
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 22,990 22,990
CT Use Tax Recoupment 0 (51,832) (51,832)
------------------------------
Total COE Development Services 0 (19,613) (19,613)
Total Services Provided 10,175 (19,289) (9,114)
==============================
