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 MARCH 31, 1998:
Attached as Exhibit A.
(2) TWELVE MONTH INCOME STATEMENT ENDING MARCH 31, 1998:
Attached as Exhibit B.
(3) GENERAL DESCRIPTION OF THE ACTIVITIES OF CHARTER OAK FOR THE QUARTER
ENDED MARCH 31, 1998, AND OF THE PROJECTS IN WHICH CHARTER OAK OR ITS
SUBSIDIARIES HAVE AN INTEREST:
During the first 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) 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.
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 MARCH 31,
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 March 31, 1998 is
approximately $12.5 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
May 22, 1998
EXHIBIT A
CHARTER OAK ENERGY, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
---------------------------------------
March 31,
---------------------------
1998 1997
------------ ------------
(Thousands of Dollars)
ASSETS
- ------
Utility Plant, at original cost:
Electric $ 52 $ 52
Less: Accumulated provision for
depreciation 52 50
------------ ------------
Total net utility plant - 2
------------ ------------
Current Assets:
Cash 1,989 1,738
Accounts receivable - 84
Accounts receivable from affiliated
companies - 9
Taxes receivable 4,603 1,843
Investments held for sale 38,382 87,286
------------ ------------
44,974 90,960
------------ ------------
Deferred Charges:
Accumulated deferred income taxes 1,084 130
Deferred development costs 4,053 6,611
Other 319 496
------------ ------------
5,456 7,237
------------ ------------
Total Assets $ 50,430 $ 98,199
============ ============
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock $ - $ -
Capital surplus, paid in 109,344 115,142
Retained earnings (59,786) (19,071)
------------ ------------
Total capitalization 49,558 96,071
------------ ------------
Minority interest in common equity
of subsidiaries - (56)
------------ ------------
Current Liabilities:
Accounts payable 140 474
Accounts payable to affiliated companies 693 750
Taxes accrued 25 663
Other 14 297
------------ ------------
872 2,184
------------ ------------
Total Capitalization and Liabilities $ 50,430 $ 98,199
============ ============
EXHIBIT B
CHARTER OAK ENERGY, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
---------------------------------------------
Twelve Months Ended
March 31,
---------------------------
1998 1997
------------ ------------
(Thousands of Dollars)
Operating Revenues $ - $ -
------------ ------------
Operating Expenses:
Operation and maintenance 7,453 5,011
Depreciation 725 443
Federal and state income taxes (3,460) (1,568)
Taxes other than income taxes 248 26
------------ ------------
Total operating expenses 4,966 3,912
------------ ------------
Operating Loss (4,966) (3,912)
------------ ------------
Other (Loss)/Income:
Investment (loss)/income (5,811) 2,002
Other, net (1,573) (75)
Loss on sale of investments (3,344) -
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 (35,728) 1,927
------------ ------------
Loss before interest charges (40,694) (1,985)
------------ ------------
Interest Charges 21 15
------------ ------------
Net Loss $ (40,715) $ (2,000)
============ ============
EXHIBIT C
Charter Oak Energy and Subsidiaries
Detail of Intercompany Services
Twelve Months Ended March 31, 1998
Charter Oak Energy
------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- -----------------------------------------------------------------------------
NUSCO Charter Oak staff 3,705,419 331,847 4,037,266
Accounting and financial services 31,612 6,310 37,922
Legal services 6,625 39,254 45,879
Miscellaneous 25,331 4,845 30,176
------------------------------
Total NUSCO Services 3,768,987 382,256 4,151,243
------------------------------
NU PARENT Retainer Fee 0 200,000 200,000
------------------------------
Total NU PARENT Services 0 200,000 200,000
CL&P Miscellaneous 0 (705) (705)
Reallocate Refund of CCBT Audit 0 (75,518) (75,518)
State of Connecticut Tax 0 1,071 1,071
------------------------------
Total CL&P Services 0 (75,152) (75,152)
------------------------------
COE TEJONA Outside Services 0 428 428
------------------------------
Total COE Tejona Services 0 428 428
------------------------------
CHARTER OAK
DEVELOPMENT CORP
Legal services 0 697,634 697,634
CT Use Tax Recoupment 0 (107,816) (107,816)
Outside Services 0 4,749 4,749
Miscellaneous 0 11,945 11,945
------------------------------
Total COD Services 0 606,512 606,512
------------------------------
Total Services Provided 3,768,987 1,114,044 4,883,031
==============================
Charter Oak Paris, Inc.
-----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ----------------------------------------------------------------------------
CL&P Miscellaneous 0 (7,628) (7,628)
------------------------------
Total CL&P Services 0 (7,628) (7,628)
------------------------------
Total Services Provided 0 (7,628) (7,628)
==============================
COE Development Corp.
---------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- -----------------------------------------------------------------------------
NUSCO Charter Oak staff 289,453 188,947 478,400
Legal services 0 20,758 20,758
Miscellaneous 385 0 385
------------------------------
Total NUSCO Services 289,838 209,705 499,543
------------------------------
CL&P Employee Expenses 1,502 288 1,790
Reallocate CCB Tax Paid 1994,5,6 0 589,758 589,758
Outside Services 0 18 18
------------------------------
Total CL&P Services 1,502 590,064 591,566
------------------------------
CHARTER OAK
ENERGY Miscellaneous 0 149 149
CT Use Tax Adjustment 0 (5,310) (5,310)
Outside Services 0 11 11
------------------------------
Total COE Services 0 (5,150) (5,150)
------------------------------
Total Services Provided 291,340 794,619 1,085,959
==============================
COE (UK) Corp.
--------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Charter Oak staff 905 1,280 2,185
Accounting and Financial Services 103 0 103
------------------------------
Total NUSCO services 1,008 1,280 2,288
------------------------------
Total Services Provided 1,008 1,280 2,288
==============================
COE Argentina I Corp.
----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- --------------------------------------------------------------------------
NUSCO
Accounting Staff 71 0 71
-----------------------------
Total NUSCO services 71 0 71
CL&P Reallocate CCB Tax Paid 1996 0 242 242
------------------------------
Total CL&P Services 0 242 242
Total Services Provided 71 242 313
==============================
COE (GENCOE) Corp.
----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ----------------------------------------------------------------------------
NUSCO Miscellaneous 141 0 141
-----------------------------
Total Services Provided 141 0 141
==============================
COE Argentina II Corp.
----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- --------------------------------------------------------------------------
NUSCO Miscellaneous 0 11,083 11,083
Charter Oak Staff 20,182 10,928 9,254
-----------------------------
Total NUSCO Services 20,182 155 20 337
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 35,305 35,305
Total COE Development Services 0 35,305 35,305
------------------------------
Total Services Provided 20,182 29,212 49,394
==============================
COE Tejona Corp.
----------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Miscellaneous 483 0 483
Internal Audit 1,085 0 1,085
Accounting Services 106 0 106
Wholesale Marketing 8,276 1,269 9,545
Charter Oak Staff 142,439 29,262 171,701
Legal Services 0 836 836
------------------------------
Total NUSCO Services 152,389 31,367 183,756
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 33,677 33,677
Outside Services 0 294 294
CT Use Tax Recoupment 0 (88,256) (88,256)
Legal Services 0 3,107 3,107
------------------------------
Total COE Development Services 0 (51,178) (51,178)
CHARTER OAK
ENERGY Charter Oak Staff 0 1,014 1,014
Legal Services 0 115 115
Outside Services 0 543 543
------------------------------
Total COE Services 0 1,672 1,672
------------------------------
Total Services Provided 156,711 (15,974) 140,737
==============================
COE AVE FENIX Corp.
----------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Wholesale Marketing 0 19 19
Charter Oak Staff 26,544 6,077 32,621
Outside Services 0 63 63
------------------------------
Total NUSCO Services 26,544 6,159 32,703
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 8,282 8,282
CT Use Tax Recoupment 0 (51,832) (51,832)
Miscellaneous 0 120 120
------------------------------
Total COE Development Services 0 (34,201) (34,201)
Total Services Provided 26,544 (27,800) (1,256)
==============================
