File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1
APPLICATION/DECLARATION
Under
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
NORTHEAST UTILITIES
174 Brush Hill Avenue
West Springfield, Massachusetts 08109
NORTHEAST UTILITIES SERVICE COMPANY
107 Selden Street
Berlin, Connecticut 06037
(Name of companies filing this statement and address of principal executive
offices)
NORTHEAST UTILITIES
(Name of top registered holding company)
Cheryl W. Grise, Esq.
Senior Vice President, Secretary and General Counsel
Northeast Utilities Service Company
P.O. Box 270
Hartford, Connecticut 06141-0270
(Name of address of agent for service)
The Commission is requested to mail signed copies of all orders, notices and
communications to:
Jeffrey C. Miller, Esq.
Assistant General Counsel
David R. McHale Jane P. Seidl, Esq.
Vice President and Treasurer Senior Counsel
Northeast Utilities Service Company Northeast Utilities Service Company
P.O. Box 270 P.O. Box 270
Hartford, Connecticut 06141-0270 Hartford, Connecticut 06141-0270
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS
1. The purpose of this Application/Declaration is to seek the
Commission's authorization for a variety of related transactions under which
Northeast Utilities ("NU") would (A) create and finance a subsidiary (a
"first tier subsidiary") that would, through multiple subsidiaries ("second
tier subsidiaries"), engage in a variety of energy-related and other
activities and acquire and manage nonnuclear generating plants, (B) fund the
first tier subsidiary's preliminary development and administrative costs,
whether done internally or through one or more unaffiliated third parties,
for the period ending December 31, 1999, and (C) create and finance through
the first tier subsidiary one or more new second-tier subsidiaries that are
expected to participate as purchasers in affiliate and nonaffiliate
companies' sales of nonnuclear generation.
Organization of NEWCO
2. The transactions for which authorization under the Public Utility
Holding Company Act of 1935 ("Act") is sought herein in connection with the
creation of a new first-tier subsidiary involve (i) the completion of the
initial steps necessary for the organization of NEWCO, Inc. ("NEWCO"), a
corporation to be organized under the laws of the State of Connecticut as a
new wholly-owned first tier subsidiary of NU, a registered holding company
under the Act, in the NU system (the "NU System"); (ii) the issuance by NEWCO
and acquisition by NU of one hundred shares of the common stock, par value $1
per share ("NEWCO Common Stock") of NEWCO for $100,000; and (iii) the
investment by NU of up to an additional $150 million through December 31,
1999 for the purpose of funding NEWCO's preliminary development activities
and administrative costs associated with, among other things, (i) identifying
and analyzing feasible nonnuclear generation ("Generation") acquisition
opportunities and initiating the financing for such projects (in the
aggregate amount of up to $10 million) and (ii) developing and managing
NEWCO's other investments, as described more fully below (in the
aggregate amount of up to $140 million). To the extent that such purchases
of Generation will be made outside of New England, it is anticipated that one
or more subsidiaries of NEWCO will be formed as exempt wholesale generators
("EWGs") to implement such acquisition(s). Generation purchases within New
England may be made by EWGs or by non-EWGs; Generation which is acquired by
non-EWGs will be used to provide both wholesale and retail service within
such territory.
3. NEWCO intends to directly or indirectly acquire, without seeking any
further Commission authority, the securities of one or more companies ("New
Subsidiaries") organized for the purposes of performing energy-related and
other activities currently authorized, or which may be authorized in the
future, by the Commission by rule or statute. These associate companies
would include EWGs, foreign utility companies ("FUCOs"), exempt
telecommunications companies ("ETCs"), energy-related companies within the
meaning of Rule 58 ("ERCs"), other New Subsidiaries and certain existing
subsidiaries of NU ("Authorized Subsidiary Companies"). EWGs, FUCOs, ETCs,
ERCs, New Subsidiaries and Authorized Subsidiary Companies are referred to
in this Application collectively as "Nonutility Companies." NEWCO's
associate companies formed to invest in generation may also be formed as
independent power producers ("IPPs") to sell at wholesale and retail within
New England; such activities are addressed beginning in paragraph 9 below.
4. The Nonutility Companies may be direct or indirect subsidiaries of
NEWCO, and may perform development activities and administrative services
and/or other services, as described below. Investments by NU, through NEWCO,
in Nonutility Companies may take the form of any combination of: (i)
purchases of capital shares, partnership interests, member interests in
limited liability companies, trust certificates or other forms of equity
interests (collectively, "Capital Stock"); (ii) capital contributions; (iii)
open account advances without interest; (iv) loans; and (v) Guarantees, as
defined below, issued in support of securities or other obligations of
Nonutility Companies. The source of funds for direct or indirect investments
by NU or NEWCO in any Nonutility Company will include (a) dividends received
from operating companies derived from proceeds of sales of nonnuclear
generation assets in NU's franchised retail sales territory and/or proceeds
from the securitization of financial assets such as stranded costs; (b)
proceeds derived from securities issuances authorized by the Commission in
future orders; and (c) other available cash resources. Loans by NU to NEWCO
or by NEWCO to a Nonutility Company will have interest rates and maturity
dates that are designed to provide a return to NU or NEWCO, as the case may
be, of not less than NU's or NEWCO's effective cost of capital. To the
extent not exempt or otherwise authorized by the Commission, initial
investments in the Capital Stock of Nonutility Companies will be included in
the Aggregate Authorization, as described below.
5. To the extent that NU or NEWCO provides funds to a Nonutility
Company which are used to invest in any EWG or FUCO, the amount of the
investment will be included in the calculation of "aggregate investment"
required under Rule 53. In addition, to the extent that NU provides funds to
NEWCO which are used to invest in an ERC, the amount of the investment will
be included in the calculation of "aggregate investment" required under Rule
58.
6. From time to time, NU proposes, without further order of the
Commission, to consolidate or reorganize all or any part of its ownership
interests in one or more Nonutility Companies and/or New Subsidiaries
authorized by the Commission.
7. Initially, the Applicants anticipate that NEWCO and each of its
subsidiaries may not have paid employees. It is likely that personnel
employed by Applicants or other associate companies of NU (including
Northeast Utilities Service Company) may provide a wide range of services on
an as-needed basis to NEWCO or its subsidiaries pursuant to a service
agreement ("Service Agreement") to be entered into between NEWCO (or a NEWCO
subsidiary or other affiliate) and such associate company. Under this
Service Agreement, NEWCO or its affiliate will reimburse the NU system
company rendering such service for the cost of services provided, computed in
accordance with Rules 90 and 91 under the Act, as well as applicable rules
and regulations. In addition, in the event that such services are performed
on behalf of an EWG or FUCO, such services will be rendered in accordance
with Rule 53 under the Act.
8. NEWCO may also determine from time to time that it is efficient and
advantageous to have certain development activities performed by unaffiliated
third parties. Such arrangements will be on a fee-for-service negotiated
basis at market rates.
NEWCO's Generation-Related Activities
9. In addition to the acquisition of securities of Nonutility Companies
and other activities described above, NEWCO is also being formed as a first
tier subsidiary of NU for the purpose of facilitating the investment by the
NU System in Generation to support the NU System's wholesale and retail power
marketing and brokering efforts in deregulated retail markets. The
increasing number of sales of generating facilities is part of a nationwide
trend spurred by efforts to deregulate the electric power industry. Utility
operating companies such as NU's subsidiaries, The Connecticut Light and
Power Company ("CL&P") and Western Massachusetts Electric Company ("WMECO"),
are increasingly choosing or being required by law to divest themselves of
power plants to concentrate on other portions of the energy business such as
electric power distribution. NU believes that its ability to purchase
Generation, including through its participation in legislatively-mandated
auctions of nonnuclear generation plants, may be profitable and is
complementary to the NU System's regulated electric business. The Applicants
believe that the activities proposed herein have a clear relationship to the
core business of the NU System and undertaking these activities will permit
the NU System to respond to competition in its core business from other
energy companies.
10. Initially, NEWCO intends to explore acquisitions of, and possibly
invest in, Generation in NU's service territory and throughout New England,
as well as in Delaware, Maryland, New Jersey, New York and Pennsylvania. In
the near term, NEWCO will also be exploring the potential acquisition of
Generation to be auctioned by, among others, its affiliates, WMECO, CL&P and
Public Service Company of New Hampshire ("PSNH"). To the extent that such
purchases of generation will be made outside of New England, it is
anticipated that one or more subsidiaries of NEWCO will be formed as EWGs to
implement such acquisition(s). Generation purchases within New England may
be made by EWGs or by non-EWGs; Generation acquired by non-EWGs will be used
to provide both wholesale and retail service within such territory. It is
possible that NEWCO may also invest in cogeneration facilities and small
power production facilities, within the meaning of such terms under the
Public Utility Regulatory Policies Act of 1978 ("PURPA") and the rules and
regulations promulgated thereunder by the Federal Energy Regulatory
Commission ("FERC"). If, under applicable law, rules, regulations, or orders
in effect at the time, prior approval of the Commission is required under the
Act for NEWCO or any other subsidiary or affiliate of NU or NEWCO to invest
in Generation, applications will be made for such approval at that time.
11. NEWCO intends to undertake the proposed acquisitions of Generation
on its own, either directly or through one or more wholly-owned subsidiaries,
formed as corporations, partnerships, limited liability companies or other
legal entities. Alternatively, to mitigate risk or access skills and
relationships that NEWCO may require, Applicants expect that NEWCO may pursue
proposed business activities in certain instances through alliances with
nonassociates. Certain of these alliances may be informal, not involving the
formation of any new entities; others may encompass formal joint ventures,
possibly involving the formation of one or more wholly - or partly - owned
subsidiaries of NEWCO. The decision of form in which to conduct acquisition
activities will hinge on applicable business, legal, tax, accounting and
strategic considerations.
12. The preliminary development activities in which NEWCO or one or
more of its subsidiaries formed to acquire Generation will engage include the
investigation of plant sites, preliminary engineering and licensing
activities, contract drafting and negotiating, preparation of bid proposals
(including posting of bid bonds, cash deposits and the like), negotiation and
execution of related financing commitments and agreements and the other
necessary activities to identify and analyze feasible investment
opportunities and to initiate the acquisition of Generation. Administration
would include the ongoing personnel, accounting, engineering, legal,
financial and other support activities necessary for NEWCO to develop and
manage its investments in Generation, its marketing and brokering activities
relating thereto and other energy-related activities in which NEWCO or its
subsidiaries may engage under Rule 58 or by further Commission order.
13. The Applicants expect that each of NEWCO's potential investments in
Generation that is determined to be a suitable candidate for acquisition will
take place through one or more first or second tier special purpose
subsidiaries of NEWCO, which entities will be second tier subsidiaries of NU.
In the case of NEWCO's participation in the upcoming auctions of non-nuclear
generating assets, including the expected upcoming auction of WMECO's
non-nuclear generating assets pursuant to Massachusetts legislation, that
subsidiary will be GENCO, Inc. ("GENCO"). Accordingly, the transactions for
which authorization under the Act is sought at this time in connection with
the NU System's proposed investments in Generation include (i) the completion
of the initial steps necessary for the organization of GENCO, a corporation
to be organized under the laws of the State of Connecticut as a new
wholly-owned subsidiary of NEWCO; (ii) the issuance by GENCO and acquisition
by NEWCO of one hundred shares of the common stock, par value $1 per share
("GENCO Common Stock") of GENCO and (iii) NEWCO's additional investment of up
to $10 million in GENCO through December 31, 1999. Following the receipt of
an order of this Commission granting or permitting this
Application/Declaration to become effective, NEWCO will issue to NU and NU
will acquire 100 shares of NEWCO Common Stock for $100,000, payable in cash,
constituting all of the issued and outstanding shares of NEWCO Common Stock,
and, in turn, GENCO will issue to NEWCO and NEWCO will acquire 100 shares of
GENCO Common Stock, for $10,000, payable in cash, constituting all of the
issued and outstanding shares of GENCO Common Stock. NEWCO will thereupon
become a direct subsidiary of NU within the meaning of Section 2(a)(8) of the
Act, and GENCO will become a direct subsidiary of NEWCO within the meaning of
the same section. Proposed forms of the certificate of incorporation and
by-laws of NEWCO and of GENCO will be filed by amendment.
Additional Investments in NEWCO
14. As set forth above, NEWCO believes that it will need a budget of
approximately $150 million through December 31, 1999 to engage in the
activities described herein, including $10 million for the administration and
preliminary development activities described above in connection with
potential acquisitions of Generation. NEWCO will receive these funds from
NU. Each such investment or investments by NU in NEWCO will take the form of
additional acquisitions of capital stock, capital contributions, open account
advances or subordinated loans. In addition, NEWCO or any of its
subsidiaries which are involved in the acquisition or ownership of Generation
may obtain debt financing from unaffiliated third parties. The terms and
conditions applicable to NU's investment of funds in NEWCO for investment in
Generation, as well as the details of any financing required in connection
with such acquisitions, will be the subject of future filings with the
Commission to the extent such items are jurisdictional. Such debt financing
may also require a guaranty by NU, for which Commission authorization will
also be sought to the extent required.
15. Beyond the initial $100,000 invested in NEWCO by NU and the $10,000
invested in GENCO and the amounts of up to $150 million through December 31,
1999 to be invested by NU in NEWCO for the purposes of funding preliminary
development activities and administration of NEWCO and GENCO, additional
investments in NEWCO will be made by NU from time to time to form additional
subsidiaries to acquire Generation or to fund other activities described
herein. Each such investment or investments will take the form of
additional acquisitions of capital stock, capital contributions, open account
advances or subordinated loans. It is contemplated that the balance of such
acquisition price for Generation to be purchased by such subsidiaries will be
debt financed by non-affiliated third parties and Commission approval will be
sought as required for such financing authority. Such debt financing may
require a guarantee by NU, for which additional Commission authorization will
also be requested if required.
Guarantees
16. NU and NEWCO also propose to issue guarantees or provide other
forms of credit support or enhancements (collectively, "Guarantees") to or
for the benefit of Nonutility Companies, GENCO and other direct or indirect
subsidiaries or affiliates of NEWCO in an aggregate amount not to exceed $ 75
million ("Aggregate Authorization"), through December 31, 1999. Guarantees
may take the form of NU or NEWCO agreeing to guarantee, undertake
reimbursement obligations, assume liabilities or other obligations with
respect to or act as surety on, bonds, letters of credit, evidences of
indebtedness, equity commitments, performance and other obligations
undertaken by NU, NEWCO, the Nonutility Companies or GENCO or its affiliates.
NU and NEWCO represent that the terms and conditions of Guarantees will be
established through arm's-length negotiations based upon current market
conditions. NU and NEWCO further undertake that any Guarantee they issue
will be without recourse to any System operating company to the extent not
authorized under Rule 52 under the Act.
17. To the extent that NU or NEWCO provides Guarantees in support of
its investment in any EWG or FUCO, the amount of the investment will be
included in the calculation of "aggregate investment" required under Rule 53.
Moreover, to the extent that NU or NEWCO provides Guarantees in support of
its investment in an ERC, the amount of the investment will be included in
the calculation of "aggregate investment" required under Rule 58.
18. Except in accordance with the Act, neither NU nor any subsidiary
thereof (a) has acquired an ownership interest in an exempt wholesale
generator ("EWG") or a foreign utility company ("FUCO") as defined in
Sections 32 and 33 of the Act, or (b) now is or as a consequence of the
transactions proposed herein will become a party to, or has or will as a
consequence of the transactions proposed herein have a right under, a
service, sales, or construction contract with an EWG or a FUCO. None of the
proceeds from the transactions proposed herein will be used by the NU system
companies to acquire any securities of, or any interest in, an EWG or a FUCO.
19. The NU system is in compliance with Rule 53(a), (b), and (c), as
demonstrated by the following determinations.
(i) NU's aggregate investment in EWGs and FUCOs (i.e., amounts invested in
or committed to be invested in EWGs and FUCOs, for which there is recourse to
NU) does not exceed 50% of the NU system's consolidated retained earnings as
reported for the four most recent quarterly periods on NU's Form 10-K and
10-Qs. At March 31, 1998, the ratio of such investment ($57 million) to such
consolidated retained earnings ($715 million) was 8.0 percent.
(ii) Ave Fenix (NU's only EWG or FUCO at this time) maintains books and
records and prepares financial statements in accordance with Rule 53(a)(2).
Furthermore, NU has undertaken to provide the Commission access to such books
and records and financial statements, as it may request.
(iii) No employees of the NU system's public utility companies have rendered
services to the EWGs/FUCOs.
(iv) NU has submitted (a) a copy of each Form U-1 and Rule 24 certificate
that has been filed with the Commission under Rule 53 and (b) a copy of Item
9 of the Form U5S and exhibits G and H thereof to each state regulator having
jurisdiction over the retail rates of the NU system public utility companies.
(v) Neither NU nor any NU subsidiary has been the subject of a bankruptcy or
similar proceeding unless a plan of reorganization has been confirmed in such
proceeding. In addition, although NU's average consolidated retained
earnings ("CREs") for the four most recent quarterly periods has decreased by
10% or more from the average for the previous four quarterly periods (at
March 31, 1997, NU's CREs were $838 million; at March 31, 1998, NU's CREs
were $715 million), NU's aggregate investment in EWGs/FUCOs at such date
($57 million) did not exceed two percent of NU's consolidated capital
invested in utility operations ($132.7 million).
(vi) In the previous fiscal year, NU's operating losses attributable to its
investment in EWGs/FUCOs did not exceed 5 percent of NU's consolidated
retained earnings (excluding the effects of a reserve for the potential loss
on the sale of Ave Fenix).
ITEM 2. FEES COMMISSIONS, AND EXPENSES
20. The estimated fees, commissions and expenses paid or incurred, or
to be paid or incurred, directly or indirectly, in connection with the
proposed transactions will be specified in Exhibit H (to be filed by
amendment).
21. None of such fees, commissions or expenses are to be paid to any
associate company or affiliate of the Applicants, except for financial, legal
and other services to be performed at cost by NUSCO, an affiliated service
company.
ITEM 3. APPLICABLE STATUTORY PROVISIONS
22. Sections 6(a), 7, 9(a), 10, 11, 12 and 13 of the Act and the
related regulations of the Commission are or may be applicable to the
transactions as herein proposed. To the extent any other sections of the Act
may be applicable to the proposed transaction, the Applicants request
appropriate orders thereunder.
ITEM 4. REGULATORY APPROVAL
23. Other than as set forth above, no other consent or approval of any
other State commission or any Federal commission (other than the Securities
and Exchange Commission) is required for the transactions contemplated
herein.
ITEM 5. PROCEDURE
24. In order to enable the Applicants to participate in upcoming
auctions of nonnuclear generating assets, Commission action with respect to
this Application is respectfully requested on or before October 1, 1998.
25. No recommended decision by a hearing officer or other responsible
officer of the Commission is necessary or required in this matter. The
Office of Public Utility Regulation within the Division of Investment
Management of the Commission may assist in the preparation of the
Commission's decision in this matter. There should be no 30 day waiting
period between the issuance and the effective date of any order issued by the
Commission in this matter, and it is respectfully requested that any such
order be made effective immediately upon the entry thereof.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
26. The following exhibits and financial statements are filed as part
of this Application:
a. Exhibits
A.1 Copy of Certificate of Incorporation of NEWCO (To be filed by amendment)
A.2 Copy of By-Laws of NEWCO (To be filed by amendment)
A.3 Copy of Certificate of Incorporation of GENCO (To be filed by amendment)
A.4 Copy of By-Laws of GENCO (To be filed by amendment)
F. Opinion of Counsel. (To be filed by amendment)
G. Financial Data Schedules.
G.1 Northeast Utilities (Parent Only)
G.2 Northeast Utilities and Subsidiaries
G.3 NEWCO
G.4 NEWCO and Subsidiaries
H. Form of Proposed Notice.
I. Schedules of Fees, Commissions and Expenses. (To be filed by
amendment.)
b. Financial Statements
1. Northeast Utilities (Parent Only)
1.1 Balance Sheet, per books and pro forma, as of March 31, 1998.
1.2 Statement of Income and Surplus, per books and pro forma, 12 months
ended March 31, 1998.
2. Northeast Utilities and Subsidiaries
2.1 Consolidated Balance Sheet, per books and pro forma, as of March
31, 1998.
2.2 Consolidated Statement of Income and Surplus, per books and pro
forma, 12 months ended March 31, 1998.
3. NEWCO
3.1 Pro Forma Balance Sheet as of March 31, 1998.
3.2 Pro Forma Statement of Income and Surplus, 12 months ended March
31, 1998.
4. NEWCO and Subsidiaries
4.1 Pro forma Consolidated Balance Sheet as of March 31, 1998.
4.2 Pro forma Consolidated Statement of Income and Surplus, 12 months
ended March 31, 1998.
27. There has been no material change, not in the ordinary course of
business, in the balance sheets listed above since the date thereof.
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
a. This Application relates to the formation and financing of certain
corporate entities and, as such, it is believed that the granting and
permitting to become effective of this Application will have no environmental
impact. Therefore, the issuance by the Commission of an order with respect
to this Application is not a major federal action significantly affecting the
quality of the human environment.
b. No other federal agency has prepared or is preparing an environmental
impact statement with respect to the proposed transaction.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, each of the undersigned companies has duly caused this statement to be
signed on its behalf by the undersigned officer or attorney thereunto duly
authorized.
Date: August 6, 1998
NORTHEAST UTILITIES
By /s/John H. Forsgren
Executive Vice President
and Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<TOTAL-COMMON-STOCKHOLDERS-EQ> 0 10,541
0 0
0 0
<LONG-TERM-DEBT-NET> 0 0
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 0 0
<TOT-CAPITALIZATION-AND-LIAB> 0 10,541
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> 0 0
<OTHER-OPERATING-EXPENSES> 0 0
<TOTAL-OPERATING-EXPENSES> 0 0
<OPERATING-INCOME-LOSS> 0 0
<OTHER-INCOME-NET> 0 0
<INCOME-BEFORE-INTEREST-EXPEN> 0 0
<TOTAL-INTEREST-EXPENSE> 0 0
<NET-INCOME> 0 0
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 0 0
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0.00 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> OPUR1
<MULTIPLIER> 1000
<FISCAL-YEAR-END> MAR-31-1998 MAR-31-1998
<PERIOD-END> MAR-31-1998 MAR-31-1998
<PERIOD-TYPE> YEAR YEAR
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 1,625 1,625
<OTHER-PROPERTY-AND-INVEST> 5,594 5,594
<TOTAL-CURRENT-ASSETS> 7,422 7,522
<TOTAL-DEFERRED-CHARGES> 3,246 3,246
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 17,887 17,987
<COMMON> 0 0
<CAPITAL-SURPLUS-PAID-IN> 17,568 10,541
<RETAINED-EARNINGS> (7,127) 0
<TOTAL-COMMON-STOCKHOLDERS-EQ> 10,441 10,541
0 0
0 0
<LONG-TERM-DEBT-NET> 325 325
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 7,121 7,121
<TOT-CAPITALIZATION-AND-LIAB> 17,887 17,987
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> 0 0
<OTHER-OPERATING-EXPENSES> 0 0
<TOTAL-OPERATING-EXPENSES> 0 0
<OPERATING-INCOME-LOSS> 0 0
<OTHER-INCOME-NET> 0 0
<INCOME-BEFORE-INTEREST-EXPEN> 0 0
<TOTAL-INTEREST-EXPENSE> 0 0
<NET-INCOME> 0 0
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 0 0
<COMMON-STOCK-DIVIDENDS> 0 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> 0 0
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
EXHIBIT H
FORM OF PROPOSED NOTICE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Release No. 35- / , 1998
Filings Under the Public Utility Holding
Company Act of 1935 ("Act")
Notice is hereby given that the following filing(s) has/have been made
with the Commission pursuant to provisions of the Act and rules promulgated
thereunder. All interested persons are referred to the application(s) and/or
declaration(s) for complete statements of the proposed transaction(s)
summarized below. The application(s) and/or declaration(s) and any
amendment(s) thereto is/are available for public inspection through the
Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
, 1998 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) at the address(es) specified below. Proof of service (by
affidavit or, in 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 the matter. After said date, the application(s) and/or
declaration(s), as filed, or as amended, may be granted and/or permitted to
become effective.
Northeast Utilities, et al.
(70- )
Northeast Utilities ("NU"), a registered holding company, located at 174
Brush Hill Avenue, West Springfield, MA 01090-0010, and NU's wholly-owned
subsidiary, Northeast Utilities Service Company, located at 107 Selden
Street, Berlin, Connecticut 06037, have filed an application-declaration
pursuant to Sections 6(a), 7, 9(a), 10, 12 and 13 of the Act and the related
rules thereunder.
NU proposes to organize, acquire the capital stock of and provide
initial financing for a wholly-owned subsidiary, NEWCO ("NEWCO"), that would,
through multiple subsidiaries ("second tier subsidiaries"), engage in a
variety of energy-related and other activities and acquire and manage
nonnuclear generating plants. NU proposes to fund the first tier
subsidiary's preliminary development and administrative costs, whether done
internally or through one or more unaffiliated third parties, for the period
ending December 31, 1999 in the aggregate amount of $150 million. NU also
seeks authorization to create and finance through the first tier subsidiary
one or more new second-tier subsidiaries that are expected to participate as
purchasers in affiliate and nonaffiliate companies' sales of nonnuclear
generation ("Generation").
Organization of NEWCO
The transactions for which authorization under the Act is sought herein
in connection with the creation of a new first-tier subsidiary involve (i)
the completion of the initial steps necessary for the organization of NEWCO,
(ii) the issuance by NEWCO and acquisition by NU of one hundred shares of the
common stock, par value $1 per share ("NEWCO Common Stock") of NEWCO for
$100,000 and (iii) the investment by NU of up to an additional $150 million
through December 31, 1999 for the purpose of funding NEWCO's preliminary
development activities and administrative costs associated with, among other
things, (i) identifying and analyzing Generation acquisition opportunities
and initiating the financing for such projects (in the aggregate amount of up
to $10 million) and (ii) developing and managing NEWCO's other investments,
as described more fully below (in the aggregate amount of up to $140
million).
NEWCO intends to directly or indirectly acquire, without seeking any
further Commission authority, the securities of one or more companies ("New
Subsidiaries") organized for the purposes of performing energy-related and
other activities currently authorized, or which may be authorized in the
future, by the Commission by rule or statute. These associate companies
would include exempt wholesale generators ("EWGs"), foreign utility companies
("FUCOs"), exempt telecommunications companies ("ETCs"), energy-related
companies within the meaning of Rule 58 ("ERCs"), other New Subsidiaries and
certain existing subsidiaries of NU ("Authorized Subsidiary Companies").
EWGs, FUCOs, ETCs, ERCs, New Subsidiaries and Authorized Subsidiary
Companies are referred to collectively as "Nonutility Companies." NEWCO's
associate companies formed to invest in generation may also be formed as
independent power producers ("IPPs") to sell at wholesale and retail within
New England.
The Nonutility Companies may be direct or indirect subsidiaries of
NEWCO, and may perform development activities and administrative services
and/or other services, as described below. Investments by NU, through NEWCO,
in Nonutility Companies may take the form of any combination of: (i)
purchases of capital shares, partnership interests, member interests in
limited liability companies, trust certificates or other forms of equity
interests (collectively, "Capital Stock"); (ii) capital contributions; (iii)
open account advances without interest; (iv) loans; and (v) Guarantees, as
defined below, issued in support of securities or other obligations of
Nonutility Companies. The source of funds for direct or indirect investments
by NU or NEWCO in any Nonutility Company will include (a) dividends received
from operating companies derived from proceeds of sales of nonnuclear
generation assets in NU's franchised retail sales territory and/or proceeds
from the securitization of financial assets such as stranded costs, etc.;
(b) proceeds derived from securities issuances authorized by the Commission
in future orders; and (c) other available cash resources.
To the extent that NU or NEWCO provides funds to a Nonutility Company
which are used to invest in any EWG or FUCO, the amount of the investment
will be included in the calculation of "aggregate investment" required under
Rule 53. In addition, to the extent that NU provides funds to NEWCO which
are used to invest in an ERC, the amount of the investment will be included
in the calculation of "aggregate investment" required under Rule 58.
From time to time, NU proposes, without further order of the Commission,
to consolidate or reorganize all or any part of its ownership interests in
one or more Nonutility Companies and/or New Subsidiaries authorized by the
Commission.
It is likely that personnel employed by NUSCO or other associate
companies of NU may provide a wide range of services on an as-needed basis to
NEWCO or its subsidiaries pursuant to a service agreement to be entered into
between NEWCO (or a NEWCO subsidiary or other affiliate) and such associate
company. Under this agreement, NEWCO or its affiliate will reimburse the NU
system company rendering such service for the cost of services provided,
computed in accordance with Rules 90 and 91 under the Act, as well as
applicable rules and regulations. In addition, in the event that such
services are performed on behalf of an EWG or FUCO, such services will be
rendered in accordance with Rule 53 under the Act.
NEWCO's Generation-Related Activities
In addition to the acquisition of securities of Nonutility Companies and
other activities described above, NEWCO is also being formed as a first tier
subsidiary of NU for the purpose of facilitating the investment by the NU
System in Generation to support the NU System's wholesale and retail power
marketing and brokering efforts in deregulated retail markets. Each
investment by NU in NEWCO will take the form of additional acquisitions of
capital stock, capital contributions, open account advances or subordinated
loans. In addition, NEWCO or any of its subsidiaries which are involved in
the acquisition or ownership of Generation may obtain debt financing from
unaffiliated third parties. The terms and conditions applicable to NU's
investment of funds in NEWCO for investment in Generation, as well as the
details of any financing required in connection with such acquisitions, will
be the subject of future filings with the Commission to the extent such items
are jurisdictional. Such debt financing may also require a guaranty by NU,
for which Commission authorization will also be sought to the extent
required.
Beyond the initial $100,000 invested in NEWCO by NU and the $10,000
invested in GENCO and the amounts of up to $150 million through December 31,
1999 to be invested by NU in NEWCO and GENCO for the purposes of funding
preliminary development activities and administration of NEWCO, additional
investments in NEWCO will be made by NU from time to time to form additional
subsidiaries to acquire Generation or to fund other activities described
herein. Each such investment or investments will take the form of
additional acquisitions of capital stock, capital contributions, open account
advances or subordinated loans. It is contemplated that the balance of such
acquisition price for Generation to be purchased by such subsidiaries will be
debt financed by non-affiliated third parties and Commission approval will be
sought as required for such financing authority. Such debt financing may
require a guarantee by NU, for which additional Commission authorization will
also be requested if required.
Guarantees
NU and NEWCO also propose to issue guarantees or provide other forms of
credit support or enhancements (collectively, "Guarantees") to or for the
benefit of Nonutility Companies, GENCO and other direct or indirect
subsidiaries or affiliates of NEWCO in an aggregate amount not to exceed $ 75
million ("Aggregate Authorization"), through December 31, 1999. Guarantees
may take the form of NU or NEWCO agreeing to guarantee, undertake
reimbursement obligations, assume liabilities or other obligations with
respect to or act as surety on, bonds, letters of credit, evidences of
indebtedness, equity commitments, performance and other obligations
undertaken by NU, NEWCO, the Nonutility Companies or GENCO or its affiliates.
NU and NEWCO represent that the terms and conditions of Guarantees will be
established through arm's-length negotiations based upon current market
conditions. NU and NEWCO further undertake that any Guarantee they issue
will be without recourse to any System operating company to the extent not
authorized under Rule 52 under the Act.
To the extent that NU or NEWCO provides Guarantees in support of its
investment in any EWG or FUCO, the amount of the investment will be included
in the calculation of "aggregate investment" required under Rule 53.
Moreover, to the extent that NU or NEWCO provides Guarantees in support of
its investment in an ERC, the amount of the investment will be included in
the calculation of "aggregate investment" required under Rule 58.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
EXHIBIT 6.b.1.1
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
AS OF MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.1.1 PAGE 1 OF 2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
ASSETS
OTHER PROPERTY AND INVESTMENTS:
INVESTMENTS IN SUB. CO'S
AT EQUITY $2,299,530 $100 (a) $2,299,630
INVESTMENTS IN TRANSMISSION
COMPANIES, AT EQUITY 20,466 20,466
OTHER, AT COST 412 412
----------------------------------------
TOTAL OTHER PROPERTY &
INVESTMENTS 2,320,408 100 2,320,508
CURRENT ASSETS:
CASH AND SPECIAL DEPOSITS 10 (100)(a) (90)
NOTES REC. FROM AFF. CO'S 16,350 16,350
NOTES AND ACCOUNTS REC. 0 0
ACCOUNTS REC. FROM AFF. CO'S 667 667
PREPAYMENTS 13,636 13,636
-----------------------------------------
TOTAL CURRENT ASSETS 30,663 (100) 30,563
-----------------------------------------
DEFERRED CHARGES:
ACCUMULATED DEF. INCOME TAXES 7,127 7,127
UNAMORTIZED DEBT EXPENSE 198 198
OTHER 46 46
-----------------------------------------
TOTAL DEFERRED CHARGES 7,371 0 7,371
-----------------------------------------
TOTAL ASSETS $2,358,442 $0 $2,358,442
=========================================
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
AS OF MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.1.1 PAGE 2 OF 2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $684,287 $684,287
CAPITAL SURPLUS, PAID IN 934,825 934,825
DEF. BENEFIT PLAN - ESOP (150,604) (150,604)
RETAINED EARNINGS 689,573 689,573
------------------------------------------
TOTAL COMMON STOCKHOLDER'S
EQUITY 2,158,081 0 2,158,081
LONG-TERM DEBT, NET 171,000 171,000
------------------------------------------
TOTAL CAPITALIZATION 2,329,081 0 2,329,081
CURRENT LIABILITIES:
NOTES PAYABLE TO BANK 0 0
ACCOUNTS PAYABLE 7,320 7,320
ACCOUNTS PAYABLE TO AFF. CO'S 214 214
CURR. POR. OF LONG-TERM DEBT 17,000 17,000
ACCRUED INTEREST 4,491 4,491
ACCRUED TAXES 0 0
OTHER 0 0
------------------------------------------
TOTAL CURRENT LIABILITIES 29,025 0 29,025
DEFERRED CREDITS:
OTHER 336 336
-------------------------------------------
TOTAL DEFERRED CREDITS 336 0 336
-------------------------------------------
TOTAL CAPITALIZATION AND
LIABILITIES $2,358,442 $0 $2,358,442
=============================================
EXHIBIT 6.b.1.2
NORTHEAST UTILITIES (PARENT)
INCOME STATEMENT
FOR 12 MONTHS ENDED MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.1.2 PAGE 1 OF 1
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
OPERATING REVENUE $0 $0
-----------------------------------------
OPERATING EXPENSES:
OPERATION EXPENSE 7,105 7,105
FED. AND STATE INCOME TAXES (3,089) (3,089)
TAXES OTHER THAN INCOME TAXES 60 60
-----------------------------------------
TOTAL OPERATING EXPENSES 4,076 0 4,076
-----------------------------------------
OPERATING INCOME (4,076) 0 (4,076)
-----------------------------------------
OTHER INCOME (LOSS):
EQUITY IN EARNINGS OF SUBS. (149,203) (149,203)
EQUITY IN EARNINGS OF
TRANSMISSION COMPANIES 3,041 3,041
OTHER, NET 19,112 19,112
-----------------------------------------
OTHER LOSS, NET (127,050) 0 (127,050)
-----------------------------------------
LOSS BEFORE INTEREST CHARGES (131,126) 0 (131,126)
-----------------------------------------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 17,250 17,250
OTHER INTEREST 445 445
-----------------------------------------
TOTAL INTEREST CHARGES 17,695 0 17,695
-----------------------------------------
NET INCOME (148,821) 0 (148,821)
-----------------------------------------
EARNINGS FOR COMMON SHARES (148,821) 0 (148,821)
EARNINGS PER COMMON SHARE (1.14) (1.14)
COMMON SHARES OUTSTANDING
(AVERAGE) 129,986,000 129,986,000
NORTHEAST UTILITIES (PARENT)
* EXPLANATION OF ADJUSTMENTS
(THOUSANDS OF DOLLARS)
DEBIT CREDIT
(a) INVESTMENTS IN SUB. CO'S 100
CASH 100
To record the additional investment in NewCo on NU's books.
EXHIBIT 6.b.2.1
NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.2.1 PAGE 1 OF 2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
ASSETS
UTILITY PLANT, AT COST:
ELECTRIC $9,881,327 $9,881,327
OTHER 187,646 187,646
---------------------------------------
$10,068,973 $0 10,068,973
LESS: ACC.PROV. FOR DEPREC. 4,429,221 4,429,221
---------------------------------------
5,639,752 0 5,639,752
UNAMORT. PSNH ACQ. COSTS 379,929 379,929
CONSTRUCT. WORK IN PROGRESS 140,471 140,471
NUCLEAR FUEL, NET 192,954 192,954
---------------------------------------
TOTAL NET UTILITY PLANT 6,353,106 0 6,353,106
---------------------------------------
OTHER PROPERTY AND INVESTMENTS:
NUC. DECOM. TRUSTS, AT MKT. 542,376 542,376
INVESTMENTS IN SUB. CO'S
AT EQUITY 90,532 90,532
INVESTMENTS IN TRANSMISSION
COMPANIES, AT EQUITY 20,465 20,465
INVESTMENTS IN CHARTER OAK
ENERGY, INC. PROJECTS 32,428 32,428
OTHER, AT COST 104,461 104,461
---------------------------------------
TOTAL OTHER PROPERTY &
INVESTMENTS 790,262 0 790,262
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS 268,663 268,663
SPECIAL DEPOSITS 2,757 2,757
RECEIVABLES, NET 302,779 302,779
ACCRUED UTILITY REVENUES 33,592 33,592
FUEL, MATERIALS AND SUPPLIES,
AT AVERAGE COST 208,690 208,690
RECOV. ENERGY COST, NET --
CURRENT PORTION 62,917 62,917
PREPAYMENTS AND OTHER 47,804 47,804
---------------------------------------
TOTAL CURRENT ASSETS 927,202 0 927,202
---------------------------------------
DEFERRED CHARGES:
REGULATORY ASSETS:
INCOME TAXES, NET 2,091,849 2,091,849
DEF. COSTS - NUC. PLANTS 0 0
UNREC. CONTRACTUAL OBLIGS 0 0
REC. ENERGY COSTS, NET 0 0
DEF. DEMAND SIDE MGMT.
COSTS 0 0
COGENERATION COST 0 0
OTHER 0 0
UNAMORTIZED DEBT EXPENSE 37,505 37,505
OTHER 71,820 71,820
---------------------------------------
TOTAL DEFERRED CHARGES 2,201,174 0 2,201,174
---------------------------------------
TOTAL ASSETS $10,271,744 $0 $10,271,744
=======================================
NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.2.1 PAGE 2 OF 2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $684,287 $684,287
CAPITAL SURPLUS, PAID IN 934,825 934,825
DEF. BENEFIT PLAN - ESOP (150,604) (150,604)
RETAINED EARNINGS 689,573 689,573
---------------------------------------
TOTAL COMMON STOCKHOLDER'S
EQUITY 2,158,081 0 2,158,081
PREF. STOCK NOT SUBJECT TO
MANDATORY REDEMPTION 136,200 136,200
PREF. STOCK SUBJECT TO
MANDATORY REDEMPTION 222,072 222,072
LONG-TERM DEBT 3,462,197 3,462,197
---------------------------------------
TOTAL CAPITALIZATION 5,978,550 0 5,978,550
MINORITY INTEREST IN CONS. SUBS 100,000 100,000
OBLIGATIONS UNDER CAP. LEASES 29,129 29,129
CURRENT LIABILITIES:
NOTES PAYABLE TO BANK 35,000 35,000
LONG-TERM DEBT AND PREF. STOCK
CURRENT PORTION 425,058 425,058
OBLIGATIONS UNDER CAP. LEASES
CURRENT PORTION 179,138 179,138
ACCOUNTS PAYABLE 315,199 315,199
ACCRUED TAXES 75,328 75,328
ACCRUED INTEREST 67,473 67,473
ACCRUED PENSION BENEFITS 68,722 68,722
NUCLEAR COMPLIANCE 0 0
OTHER 89,970 89,970
---------------------- -------------
TOTAL CURRENT LIABILITIES 1,255,888 0 1,255,888
DEFERRED CREDITS:
ACCUM. DEF. INCOME TAXES 1,976,929 1,976,929
ACCUM. DEF.INVEST.TAX CREDIT 156,443 156,443
DEF. CONTRACTUAL OBLIGATIONS 503,243 503,243
OTHER 271,562 271,562
---------------------------------------
TOTAL DEFERRED CREDITS 2,908,177 0 2,908,177
---------------------------------------
TOTAL CAPITALIZATION AND
LIABILITIES $10,271,744 $0 $10,271,744
========================================
EXHIBIT 6.b.2.2
NORTHEAST UTILITIES AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
FOR 12 MONTHS ENDED MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.2.2 PAGE 1 OF 1
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
OPERATING REVENUE $3,818,343 $0 $3,818,343
---------------------------------------
OPERATING EXPENSES:
OPERATION
FUEL, PURCH. AND NET
INTERCHANGE POWER 1,305,672 1,305,672
OTHER 1,086,752 1,086,752
MAINTENANCE 523,452 523,452
DEPRECIATION 352,379 352,379
AMORT. OF REG. ASSETS, NET 120,553 120,553
FED. AND STATE INCOME TAXES 14,203 14,203
TAXES OTHER THAN INC. TAXES 253,474 253,474
---------------------------------------
TOTAL OPERATING EXPENSES 3,656,485 0 3,656,485
---------------------------------------
OPERATING INCOME 161,858 0 161,858
---------------------------------------
OTHER INCOME (LOSS):
DEF. NUCLEAR PLANTS RETURN
OTHER FUNDS 7,389 7,389
EQUITY IN EARNINGS OF REG.
NUCLEAR GEN.
AND TRANS. COSTS 11,989 11,989
OTHER, NET (33,439) (33,439)
MIN. INT. IN INCOME OF SUB (9,300) (9,300)
INCOME TAXES 14,196 14,196
---------------------------------------
OTHER INCOME, NET (9,165) 0 (9,165)
---------------------------------------
INCOME BEFORE INTEREST CHARGES 152,693 0 152,693
---------------------------------------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 282,115 282,115
OTHER INTEREST 3,572 3,572
DEF. NUC. PLANTS RETURN
BORROWED FUNDS (13,878) (13,878)
---------------------------------------
INTEREST CHARGES, NET 271,809 0 271,809
---------------------------------------
LOSS BEFORE PREF. DIVIDEN (119,116) 0 (119,116)
PREF. DIVIDENDS OF SUBS 29,705 29,705
---------------------------------------
NET (LOSS) / INCOME (148,821) 0 (148,821)
EARNINGS FOR COMMON SHARES (148,821) 0 (148,821)
EARNINGS PER COMMON SHARE (1.14) (1.14)
COMMON SHARES OUTSTANDING
(AVERAGE) 129,986,000 129,986,000
NORTHEAST UTILITIES AND SUBSIDIARIES
*EXPLANATION OF ADJUSTMENTS
(THOUSANDS OF DOLLARS)
DEBIT CREDIT
All entries were made on the books of NU Parent and Newco, with no change to
Northeast Utilities and Subsidiaries consolidated.
EXHIBIT 6.b.3.1
NEWCO (PARENT)
BALANCE SHEET
AS OF MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.3.1 PAGE 1 OF 2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
ASSETS
OTHER PROPERTY AND INVESTMENTS:
INVESTMENTS IN SUB. CO'S
AT EQUITY $0 $10,451 (b,c) $10,451
INVESTMENTS IN TRANSMISSION
COMPANIES, AT EQUITY 0 0
OTHER, AT COST 0 0
----------------------------------------
TOTAL OTHER PROPERTY &
INVESTMENTS 0 10,451 10,451
CURRENT ASSETS:
CASH AND SPECIAL DEPOSITS 0 90 (a,b) 90
NOTES REC. FROM AFF. CO'S 0 0
NOTES AND ACCOUNTS REC. 0 0
ACCOUNTS REC. FROM AFF. CO'S 0 0
PREPAYMENTS 0 0
----------------------------------------
TOTAL CURRENT ASSETS 0 90 90
----------------------------------------
DEFERRED CHARGES:
ACCUMULATED DEF. INCOME TAXES 0 0
UNAMORTIZED DEBT EXPENSE 0 0
OTHER 0 0
----------------------------------------
TOTAL DEFERRED CHARGES 0 0 0
----------------------------------------
TOTAL ASSETS $0 $10,541 $10,541
========================================
NEWCO (PARENT)
BALANCE SHEET
AS OF MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.3.1 PAGE 2 OF 2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $0 $0
CAPITAL SURPLUS, PAID IN 0 10,541 (a,c) 10,541
DEF. BENEFIT PLAN - ESOP 0 0
RETAINED EARNINGS 0 0
----------------------------------------
TOTAL COMMON STOCKHOLDER'S
EQUITY 0 10,541 10,541
LONG-TERM DEBT, NET 0 0
----------------------------------------
TOTAL CAPITALIZATION 0 10,541 10,541
CURRENT LIABILITIES:
NOTES PAYABLE TO BANK 0 0
ACCOUNTS PAYABLE 0 0
ACCOUNTS PAYABLE TO AFF. CO'S 0 0
CURR. POR. OF LONG-TERM DEBT 0 0
ACCRUED INTEREST 0 0
ACCRUED TAXES 0 0
OTHER 0 0
----------------------------------------
TOTAL CURRENT LIABILITIES 0 0 0
DEFERRED CREDITS:
OTHER 0 0
----------------------------------------
TOTAL DEFERRED CREDITS 0 0 0
----------------------------------------
TOTAL CAPITALIZATION AND
LIABILITIES $0 $10,541 $10,541
========================================
EXHIBIT 6.b.3.2
NEWCO (PARENT)
INCOME STATEMENT
FOR 12 MONTHS ENDED MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.3.2 PAGE 1 OF 1
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
OPERATING REVENUE $0 $0
-----------------------------------------
OPERATING EXPENSES:
OPERATION EXPENSE 0 0
FED. AND STATE INCOME TAXES 0 0
TAXES OTHER THAN INCOME TAXES 0 0
-----------------------------------------
TOTAL OPERATING EXPENSES 0 0 0
-----------------------------------------
OPERATING INCOME 0 0 0
-----------------------------------------
OTHER INCOME (LOSS):
EQUITY IN EARNINGS OF SUBS. 0 0
EQUITY IN EARNINGS OF
TRANSMISSION COMPANIES 0 0
OTHER, NET 0 0
-----------------------------------------
OTHER LOSS, NET 0 0 0
-----------------------------------------
LOSS BEFORE INTEREST CHARGES 0 0 0
-----------------------------------------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 0 0
OTHER INTEREST 0 0
-----------------------------------------
TOTAL INTEREST CHARGES 0 0 0
-----------------------------------------
NET INCOME 0 0 0
-----------------------------------------
EARNINGS FOR COMMON SHARES 0 0 0
NEWCO (PARENT)
*EXPLANATION OF ADJUSTMENTS
(THOUSANDS OF DOLLARS)
DEBIT CREDIT
(a) CASH 100
CAPITAL SURPLUS, PAID IN 100
To record the Initial entry on NewCo's books (to establish NewCo and issue
100 shares of common stock at $1 per share par value).
(b) INVESTMENTS IN SUBSIDIARY CO. 10
CASH 10
To record the initial investment in Genco (and its creation) on NewCo's
books.
(c) INVESTMENTS IN SUBSIDIARY CO. 10,441
CAPITAL SURPLUS, PAID IN 10,441
To record the investment in existing subsidiaries [HEC, MODE 1 and Select] on
NewCo's books.
EXHIBIT 6.b.4.1
NEWCO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.4.1 PAGE 1 OF 2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
ASSETS
UTILITY PLANT, AT COST:
ELECTRIC $0 $0
OTHER 4,190 4,190
----------------------------------------
$4,190 $0 4,190
LESS: ACC.PROV. FOR DEPREC. 2,683 2,683
----------------------------------------
1,507 0 1,507
UNAMORT. PSNH ACQ. COSTS 0 0
CONSTRUCT. WORK IN PROGRESS 118 118
NUCLEAR FUEL, NET 0 0
---------------------------------------
TOTAL NET UTILITY PLANT 1,625 0 1,625
---------------------------------------
OTHER PROPERTY AND INVESTMENTS:
NUC. DECOM. TRUSTS, AT MKT. 0 0
INVESTMENTS IN SUB. CO'S
AT EQUITY 0 0
INVESTMENTS IN TRANSMISSION
COMPANIES, AT EQUITY 0 0
INVESTMENTS IN CHARTER OAK
ENERGY, INC. PROJECTS 0 0
OTHER, AT COST 5,594 5,594
---------------------------------------
TOTAL OTHER PROPERTY &
INVESTMENTS 5,594 0 5,594
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS 211 100 (a) 311
TAXES RECEIVABLES 3,921 3,921
RECEIVABLES, NET 2,915 2,915
RECEIVABLES FROM AFFILIATES 219 219
FUEL, MATERIALS AND SUPPLIES,
AT AVERAGE COST 28 28
RECOV. ENERGY COST, NET --
CURRENT PORTION 0 0
PREPAYMENTS AND OTHER 128 128
--------------------------------------
TOTAL CURRENT ASSETS 7,422 100 7,522
--------------------------------------
DEFERRED CHARGES:
REGULATORY ASSETS:
DEFERRED INCOME TAXES 80 80
DEF. COSTS - NUC. PLANTS 0 0
UNREC. CONTRACTUAL OBLIGS 0 0
REC. ENERGY COSTS, NET 0 0
DEF. DEMAND SIDE MGMT.
COSTS 0 0
COGENERATION COST 0 0
OTHER 0 0
UNAMORTIZED DEBT EXPENSE 0 0
OTHER 3,166 3,166
--------------------------------------
TOTAL DEFERRED CHARGES 3,246 0 3,246
--------------------------------------
TOTAL ASSETS $17,887 $100 $17,987
=====================================
NEWCO AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.4.1 PAGE 2 OF 2
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
COMMON SHARES $0 $0
CAPITAL SURPLUS, PAID IN 17,568 (7,027)(a,b) 10,541
DEF. BENEFIT PLAN - ESOP 0 0
RETAINED EARNINGS (7,127) 7,127 (b) 0
---------------------------------------
TOTAL COMMON STOCKHOLDER'S
EQUITY 10,441 100 10,541
PREF. STOCK NOT SUBJECT TO
MANDATORY REDEMPTION 0 0
PREF. STOCK SUBJECT TO
MANDATORY REDEMPTION 0 0
LONG-TERM DEBT 325 325
--------------------------------------
TOTAL CAPITALIZATION 10,766 100 10,866
MINORITY INTEREST IN CONS. SUBS 0 0
OBLIGATIONS UNDER CAP. LEASES 0 0
CURRENT LIABILITIES:
NOTES PAYABLE TO BANK 0 0
LONG-TERM DEBT AND PREF. STOCK
CURRENT PORTION 0 0
OBLIGATIONS UNDER CAP. LEASES
CURRENT PORTION 0 0
ACCOUNTS PAYABLE 4,889 4,889
ACCRUED TAXES 200 200
NOTES PAYABLE TO AFFILIATES 1,150 1,150
ACCOUNTS PAYABLE TO AFFILIATES 64 64
NUCLEAR COMPLIANCE 0 0
OTHER 413 413
--------------------------------------
TOTAL CURRENT LIABILITIES 6,716 0 6,716
DEFERRED CREDITS:
ACCUM. DEF. INCOME TAXES 405 405
ACCUM. DEF.INVEST.TAX CREDIT 0 0
DEF. CONTRACTUAL OBLIGATIONS 0 0
OTHER 0 0
--------------------------------------
TOTAL DEFERRED CREDITS 405 0 405
--------------------------------------
TOTAL CAPITALIZATION AND
LIABILITIES $17,887 $100 $17,987
=====================================
EXHIBIT 6.b.4.2
NEWCO AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT
FOR 12 MONTHS ENDED MARCH 31, 1998
(THOUSANDS OF DOLLARS)
FINANCIAL STATEMENT 6.b.4.2 PAGE 1 OF 1
PRO FORMA
GIVING EFFECT
PRO FORMA TO PROPOSED
PER BOOK ADJUSTMENTS* TRANSACTION
OPERATING REVENUE $0 $0 $0
---------------------------------------
OPERATING EXPENSES:
OPERATION
FUEL, PURCH. AND NET
INTERCHANGE POWER 0 0
OTHER 0 0
MAINTENANCE 0 0
DEPRECIATION 0 0
AMORT. OF REG. ASSETS, NET 0 0
FED. AND STATE INCOME TAXES 0 0
TAXES OTHER THAN INC. TAXES 0 0
---------------------------------------
TOTAL OPERATING EXPENSES 0 0 0
---------------------------------------
OPERATING INCOME 0 0 0
---------------------------------------
OTHER INCOME (LOSS):
DEF. NUCLEAR PLANTS RETURN
OTHER FUNDS 0 0
EQUITY IN EARNINGS OF REG.
NUCLEAR GEN.
AND TRANS. COSTS 0 0
OTHER, NET 0 0
MIN. INT. IN INCOME OF SUB 0 0
INCOME TAXES 0 0
--------------------------------------
OTHER INCOME, NET 0 0 0
--------------------------------------
INCOME BEFORE INTEREST CHARGES 0 0 0
--------------------------------------
INTEREST CHARGES:
INTEREST ON LONG-TERM DEBT 0 0
OTHER INTEREST 0 0
DEF. NUC. PLANTS RETURN
BORROWED FUNDS 0 0
--------------------------------------
INTEREST CHARGES, NET 0 0 0
--------------------------------------
LOSS BEFORE PREF. DIVIDENDS 0 0 0
PREF. DIVIDENDS OF SUBS 0 0
--------------------------------------
NET (LOSS) / INCOME 0 0 0
EARNINGS FOR COMMON SHARES 0 0 0
EARNINGS PER COMMON SHARE 0.00 0.00
COMMON SHARES OUTSTANDING
(AVERAGE) 100 100
NEWCO AND SUBSIDIARIES
*EXPLANATION OF ADJUSTMENTS
(THOUSANDS OF DOLLARS)
NOTE: The Per Book column represents the combined accounts of the first
level subsidiaries that were wholly owned by NU prior to the creation of
NewCo and GenCo, namely Select Energy, Inc.; Mode1 Communications, Inc.; and
HEC, Inc. The stock of these companies which was previously held by NU will
now be held by NewCo, and the stock of NewCo will in turn be wholly owned by
NU. The effect of this is to have the existing subsidiaries go from first
tier to second tier sub's of NU. The income statement shows no activity as
the existing subs only had earnings prior to the new consolidation.
DEBIT CREDIT
(a) Cash $100
Capital Surplus, paid in $100
Initial entry on NewCo's books (to establish NewCo and issue 100 shares of
common stock at $1 per share par value):
(b) Capital Surplus, paid in $7,127
Retained Earnings $7,127
Eliminating entries on Newco's consolidating balance sheet to remove the
retained earnings of the original subsidiaries of Select Energy, Inc.; Mode 1
Communications, Inc. and HEC, Inc.
