UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM U-9C-3
QUARTERLY REPORT PURSUANT TO RULE 58
For the quarterly period ended June 30, 1999
Northeast Utilities
------------------------------------
(Name of registered holding company)
Selden Street, Berlin, CT 06037
---------------------------------------
(Address of principal executive offices)
Name and telephone number of officer to whom inquiries concerning this report
should be directed:
John J. Roman, Vice President and Controller
Telephone number: 860-665-5000
GENERAL INSTRUCTIONS
A. Use of Form
1. A reporting company, as defined herein, shall file a report on this form
within 60 days after the end of each of the first three quarters, and
within 90 days after the end of the fourth quarter, of the fiscal year of
the registered holding company. The period beginning on the date of
effectiveness of rule 58 and ending at the end of the quarter following
the quarter in which the rule becomes effective shall constitute the
initial period for which any report shall be filed, if applicable.
2. The requirement to provide specific information by means of this form
supersedes any requirement by order of the Commission to provide
identical information by means of periodic certificates under rule 24;
but does not so supersede and replace any requirement by order to
provide information by means of an annual report on Form U-13-60.
3. Information with respect to reporting companies that is required by
Form U-13-60 shall be provided exclusively on that form.
4. Notwithstanding the specific requirements of this form, this Commission
may informally request such further information as, in its opinion, may
be necessary or appropriate.
B. Statements of Monetary Amounts and Deficits
1. Amounts included in this form and in related financial statements may
be expressed in whole dollars, thousands of dollars or hundred
thousands of dollars.
2. Deficits and other similar entries shall be indicated by either brackets
or parentheses. An explanation should be provided by footnote.
C. Formal Requirements
This form, including exhibits, shall be filed with Commission electronically
pursuant to Regulation S-T(17 CFR 232.10 et seq.). A conformed copy of each
such report shall be filed with each state commission having jurisdiction
over the retail rates of a public utility company that is an associate
company of a reporting company. Each report shall provide the name and
telephone number of the person to whom inquiries concerning the report
should be directed.
D. Definitions
As used in this form, the word "reporting company" means an energy-related
company or gas-related company, as defined in rule 58(b). All other words
and terms have the same meaning as in the Public Utility Holding Company Act
of 1935, as amended, and the rules and regulations thereunder.
ITEM 1 - ORGANIZATION CHART
- ----------------------------------------------------
Instructions
- ------------
1. Complete Item 1 only for the first three calendar quarters of the fiscal
year of the registered holding company.
2. Under the caption "Name of Reporting Company," list each energy-related and
gas-related company and each system company that directly or indirectly
holds securities thereof. Add the designation "(new)" for each reporting
company of which securities were acquired during the period, and the
designation "(*)" for each inactive company.
3. Under the caption "Percentage of Voting Securities Held," state the
aggregate percentage of the outstanding voting securities of the reporting
company held directly or indirectly by the registered holding company at the
end of the quarter.
4. Provide a narrative description of each reporting company's activities
during the reporting period.
- ----------------------------------------------------
<TABLE>
<CAPTION>
Percentage Activities
Energy of Voting reported
Name of or Gas Date of State of Securities Nature of during the
Reporting Co. Related Organization Organization Held Business period
- ----------------- ------- ------------ ------------ ----------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
NU Holding 1/4/99 Connecticut 100% by Unregulated (A)
Enterprises, Inc. Northeast businesses
Utilities holding
company
Select Energy 9/26/96 Connecticut 100% by Invest in (B)
Energy, Inc. NU energy-related
Enterprises, Inc. activities
Select Gas 3/17/99 Connecticut 100% by Invest in None
Energy NU gas-related
Portland Enterprises, Inc. activities
Pipeline, Inc.
Northeast Energy 1/4/99 Connecticut 100% by Invest in (C)
Generation NU energy-related
Services Enterprises, Inc. activities
Company
</TABLE>
(A) NU Enterprises, Inc. is not the "reporting company" but is included in this
Item 1 because it holds, directly or indirectly, voting securities issued
by reporting companies as indicated above.
(B) Select Energy provides both wholesale and retail energy, and energy
services. Select Energy participates in retail pilot programs and open-
access retail electricity markets in the Northeast. Select markets natural
gas as well as energy-related products and services in order to enhance its
core electricity service and customer relationships. Select Energy is a
registered retail electricity supplier in the states of Rhode Island,
Massachusetts, New Hampshire, New Jersey, New York and Pennsylvania.
Select Energy is a registered gas marketer in the state of Connecticut and
also with certain local distribution companies in Massachusetts, Rhode
Island, Pennsylvania, New York and New Jersey.
On June 16, 1999 Select Energy purchased the New England retail customer
contracts and associated natural gas supplies of Aurora Natural Gas LLC.
Additionally, Select purchased the rights to utilize Aurora's metering
technology in the 11-state Northeast region.
(C) Effective January 4, 1999, Northeast Generation Services Company (NGS) was
established to provide a full range of energy-related operation and
maintenance services for large industrial, institutional and power
generation customers throughout the 11-state Northeast area. NGS' current
business segments focus on providing turnkey manage and operate services
(MOS) and also a full range of Industrial Services (IS) and Consulting
Services (CS).
MOS is a service that is designed for generation asset owners. NGS has the
ability to offer station management and operation services with a focus on
optimizing the value of that specific asset with the owner. Within the IS
platform, its offerings include mechanical and electrical construction and
maintenance services, as well as environmental maintenance/compliance
services. Within the CS platform, the product and service offerings
include engineering and environmental consulting services, with an emphasis
on power plant system design.
ITEM 2 - ISSUANCES AND RENEWALS OF SECURITIES AND CAPITAL CONTRIBUTIONS
- ----------------------------------------------
Instruction
- -----------
With respect to a transaction with an associate company, report only the type
and principal amount of securities involved.
- ----------------------------------------------
<TABLE>
<CAPTION>
Person
Company Type of Principal to Whom Collateral Consideration Company Amount of
Issuing Security Amount of Issue or Cost of Security Given With Received for Contributing Capital
Security Issued Security Renewal Capital Was Issued Security Each Security Capital Contribution
- -------------- -------- ------------ -------- ------- ------------ ---------- ------------- ------------ ------------
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NU
Select Enterprises,
Energy, Inc. N/A N/A N/A N/A N/A N/A N/A Inc. $29,100,000
Advance NU
Select from Enterprises,
Energy, Inc. Parent $19,400,000 Issue None Inc. None None N/A N/A
Select
Energy
Portland
Pipeline, Inc. No transactions this quarter
Northeast
Generation
Services
Company No transactions this quarter
</TABLE>
ITEM 3 - ASSOCIATE TRANSACTIONS
- -------------------------------------------------------------------------------
Instructions
- ------------
1. This item is used to report the performance during the quarter of contracts
among reporting companies and their associate companies, including other
reporting companies, for service, sales and construction. A copy of any
such contract not filed previously should be provided as an exhibit pursuant
to Item 6.B.
2. Parts I and II concern transactions performed by reporting companies on
behalf of associate companies, and transactions performed by associate
companies on behalf of reporting companies, respectively.
- -------------------------------------------------------------------------------
Part I - Transactions performed by reporting companies on behalf
of associate companies.
Total Amount
Billed*
Reporting Associate
Company Company Types of Three months
Rendering Receiving Services ended
Services Services Rendered June 30, 1999
- ----------------------- ------------------- -------------- -------------
(Thousands
of Dollars)
Select Northeast Utilities
Energy, Inc. Service Company Gas Services $ 25
=============
Part II - Transactions performed by associate companies on behalf
of reporting companies.
Total Amount
Billed*
Associate Reporting
Company Company Types of Three months
Rendering Receiving Services ended
Services Services Rendered June 30, 1999
- ----------------------- ------------------- -------------- -------------
(Thousands
of Dollars)
Northeast Utilities Select Supplies centralized
Service Company Energy, Inc. accounting,
administrative, data
processing, engineering,
financial, legal,
operational, planning,
purchasing and other
services 7,284
Fuel sales 4,620
Special deposits 31,135
Miscellaneous 895
------------
Total $43,934
============
Public Service Company Select
of New Hampshire Energy, Inc. Miscellaneous 38
------------
Total $ 38
============
HEC INC. Select
Energy, Inc. Engineering services $ 6
============
Northeast Utilities Northeast Supplies centralized
Service Company Generation accounting,
Services administrative, data
Company processing, engineering,
financial, legal,
operational, planning,
purchasing and other
services 631
Miscellaneous 92
------------
Total $ 723
============
* 'Total Amount Billed' is direct costs only.
ITEM 4 - SUMMARY OF AGGREGATE INVESTMENT
Investments in energy-related companies:
- ---------------------------------------
(Thousand of Dollars)
Total consolidated capitalization as of 6/30/99 $5,501,914 line 1
Total capitalization multiplied by 15%
(line 1 multiplied by .15) 825,287 line 2
Greater of $50 million or line 2 825,287 line 3
Total current aggregate investment:
(categorized by major line of
energy-related business):
Select Energy, Inc. 36,446
Northeast Generation Services Company (696)
----------- line 4
Total current aggregate investment 35,750
---------
Difference between the greater of $50 million or 15% of
capitalization and the total aggregate investment of the line 5
registered holding company system $789,537
=========
Investments in gas-related companies:
- ------------------------------------
Total current aggregate investment:
(categorized by major line of
gas-related business):
Select Energy Portland Pipeline, Inc. ($1)
-----------
Total current aggregate investment ($1)
=========
ITEM 5 - OTHER INVESTMENTS
- -------------------------------------------------------------------------------
Instruction
- -----------
This item concerns investments in energy-related and gas-related companies that
are excluded from the calculation of aggregate investment under rule 58.
- -------------------------------------------------------------------------------
Major Line Other Other
of Energy- Investment Investment
Related in Last in This Reason for Difference
Business U-9C-3 Report U-9C-3 Report in Other Investment
- ------------- ------------- ------------- ------------------------
NONE
ITEM 6 - FINANCIAL STATEMENTS AND EXHIBITS
- -------------------------------------------------------------------------------
Instructions
- ------------
A. Financial Statements
1. Financial statements are required for reporting companies in which the
registered holding company system has at least 50% equity or other
ownership interest. For all other rule 58 companies, the registered
holding company shall make available to the Commission such financial
statements as are available to it.
2. For each reporting company, provide a balance sheet as of the end of
the quarter and income statements for the three-month and year-to-date
periods ending as of the end of the quarter, together with any notes
thereto. Financial statements shall be for the first three quarters of
the fiscal year of the registered holding company.
3. If a reporting company and each of its subsidiaries engage exclusively
in a single category of energy-related or gas-related activity,
consolidated financial statements may be filed.
4. Separate financial statements need not be filed for inactive companies
or for companies engaged solely in the ownership of interests in energy-
related or gas-related companies.
B. Exhibits
1. Copies of contracts required to be provided by Item 3 shall be filed
as exhibits.
2. A certificate stating that a copy of the report for the previous quarter
has been filed with interested state commissions shall be filed as an
exhibit. The certificate shall provide the names and addresses of the
state commissions.
- -------------------------------------------------------------------------------
A. Financial Statements
Select Energy, Inc.:
Balance Sheet - As of June 30, 1999
Income Statement-Three months and six months ended June 30, 1999
Select Energy Portland Pipeline, Inc.:
Balance Sheet - As of June 30, 1999
Income Statement-Three months and six months ended June 30, 1999
Northeast Generation Services Company:
Balance Sheet - As of June 30, 1999
Income Statement-Three months and six months ended June 30, 1999
Northeast Utilities (PARENT):
Balance Sheet - As of June 30, 1999
Income Statement-Three months and six months ended June 30, 1999
B. Exhibits
Exhibit No. Description
- ----------- -----------
6.B.1.1 The company certifies that a conformed copy of Form U-9C-3
for the previous quarter was filed with the following state
commissions:
Mr. Robert J. Murphy
Executive Secretary
Department of Public Utility Control
10 Franklin Square
New Britain, CT 06051
Ms. Mary L. Cottrell, Secretary
Massachusetts Department of Telecommunications and Energy
100 Cambridge Street
Boston, MA 02202
Mr. Thomas B. Getz
Executive Director and Secretary
State of New Hampshire
Public Utilities Commission
8 Old Suncook Road, Building One
Concord, NH 03301-7319
SELECT ENERGY, INC.
BALANCE SHEET
(Unaudited)
June 30,
1999
--------------
(Thousands
of Dollars)
ASSETS
- ------
Current Assets:
Cash $ 71
Accounts receivable 62,071
Accounts receivable from affiliated companies 147
Taxes receivable 17,624
Fuel, materials and supplies, at average cost 45
Accrued utility revenue 12,220
Prepayments and other 3,283
--------------
Total current assets 95,461
--------------
Investments:
Special Deposits 18,739
--------------
Total investments 18,739
--------------
Deferred Charges:
Accumulated deferred income taxes 179
Aurora goodwill 22,819
Unamortized debt expense 394
--------------
Total deferred charges 23,392
--------------
Fixed Assets:
Other 166
Construction work in progress 4,045
--------------
Total fixed assets 4,211
--------------
Total Assets $ 141,803
==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the periods shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY, INC.
BALANCE SHEET
(Unaudited)
June 30,
1999
--------------
(Thousands
of Dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Notes payable $ 6,500
Advance from parent 19,400
Accounts payable 78,440
Accounts payable to affiliated companies 18,964
Accrued taxes 130
Accrued interest 28
Other 480
--------------
Total current liablilities 123,942
--------------
Long-term Liabilities and Deferred Credits:
Other 815
--------------
Total long-term liabilities and deferred credits 815
--------------
Stockholders' Equity:
Common stock--$1 par value. Authorized
100 shares; outstanding 100 shares -
Capital surplus, paid in 50,151
Retained earnings (33,105)
--------------
Total stockholders' equity 17,046
--------------
Total Liabilities and Stockholders' Equity $ 141,803
==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the periods shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY, INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
1999 1999
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues $ 127,375 $ 213,805
-------------- --------------
Operating Expenses:
Operation--
Fuel, purchased and interchange power 114,099 180,310
Other 32,449 58,566
Federal and state income taxes (7,363) (9,843)
Taxes other than income taxes 262 751
-------------- --------------
Total operating expenses 139,447 229,784
-------------- --------------
Operating Loss (12,072) (15,979)
-------------- --------------
Other loss (278) (172)
-------------- --------------
Loss before interest charges (12,350) (16,151)
-------------- --------------
Interest and financing costs 251 700
-------------- --------------
Net Loss $ (12,601) $ (16,851)
============== ==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the periods shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY PORTLAND PIPELINE, INC.
BALANCE SHEET
(Unaudited)
June 30,
1999
--------------
(Thousands
of Dollars)
ASSETS
- ------
Current Assets:
Taxes receivable $ 8
--------------
Total current assets 8
--------------
Investments:
Other investments 7,678
--------------
Total investments 7,678
--------------
Total Assets $ 7,686
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 2
Accounts payable to affiliated companies 7,685
--------------
Total current liabilities 7,687
--------------
Stockholders' Equity:
Common stock--$1 par value. Authorized
100 shares; outstanding 100 shares -
Capital surplus, paid in 10
Retained earnings (11)
--------------
Total stockholders' equity (1)
--------------
Total Liabilities and Stockholders' Equity $ 7,686
==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the periods shown have been made.
See accompanying notes to financial statements.
SELECT ENERGY PORTLAND PIPELINE, INC.
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
1999 1999
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues $ - $ -
-------------- --------------
Operating Expenses:
Operation and maintenance 18 18
Current income taxes (7) (7)
-------------- --------------
Total operating expenses 11 11
-------------- --------------
Net Loss $ (11) $ (11)
============== ==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the periods shown have been made.
See accompanying notes to financial statements.
NORTHEAST GENERATION SERVICES COMPANY
BALANCE SHEET
(Unaudited)
June 30,
1999
--------------
(Thousands
of Dollars)
ASSETS
- ------
Current Assets:
Accounts receivable from affiliated companies $ 98
Taxes receivable 481
Prepayments 30
--------------
Total current assets 609
--------------
Total Assets $ 609
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $ 1,022
Accounts payable to affiliated companies 283
--------------
Total current liabilities 1,305
--------------
Stockholders' Equity:
Common stock--$1 par value. Authorized
100 shares; outstanding 100 shares -
Capital surplus, paid in 10
Retained earnings (706)
--------------
Total stockholders' equity (696)
--------------
Total Liabilities and Stockholders' Equity $ 609
==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the periods shown have been made.
See accompanying notes to financial statements.
NORTHEAST GENERATION SERVICES COMPANY
INCOME STATEMENT
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
1999 1999
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues $ 106 $ 106
-------------- --------------
Operating Expenses:
Operation and maintenance 255 1,151
Federal and state income taxes (76) (476)
Taxes other than income taxes 43 144
-------------- --------------
Total operating expenses 222 819
-------------- --------------
Operating Loss (116) (713)
-------------- --------------
Other Income:
Other, net - 7
-------------- --------------
Other income, net - 7
-------------- --------------
Net Loss $ (116) $ (706)
============== ==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the periods shown have been made.
See accompanying notes to financial statements.
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
(Unaudited)
June 30,
1999
--------------
(Thousands
of Dollars)
ASSETS
- ------
Other Property and Investments:
Investments in subsidiary companies, at equity $ 2,199,224
Investments in transmission companies, at equity 17,900
Other, at cost 54
--------------
2,217,178
--------------
Current Assets:
Notes receivable from affiliated companies 22,300
Notes and accounts receivable 571
Accounts receivable from affiliated companies 4,172
Prepayments 27
--------------
27,070
--------------
Deferred Charges:
Accumulated deferred income taxes 6,160
Unamortized debt expense 46
Other 2,562
--------------
8,768
--------------
Total Assets $ 2,253,016
==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST UTILITIES (PARENT)
BALANCE SHEET
(Unaudited)
June 30,
1999
--------------
(Thousands
of Dollars)
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common shares, $5.00 par value--Authorized
225,000,000 shares; 137,237,564 shares issued and
131,446,727 shares outstanding $ 686,188
Capital surplus, paid in 940,448
Deferred benefit plan--employee stock ownership plan (133,947)
Retained earnings 579,449
Accumulated other comprehensive income 1,524
--------------
Total common shareholders' equity 2,073,662
Long-term debt 152,000
--------------
Total capitalization 2,225,662
--------------
Current Liabilities:
Accounts payable 742
Accounts payable to affiliated companies 3,233
Long term debt--current portion 19,000
Accrued taxes 2,047
Accrued interest 1,969
Other 2
--------------
26,993
--------------
Other Deferred Credits 361
--------------
Total Capitalization and Liabilities $ 2,253,016
==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of financial position for the period shown have been made.
See accompanying notes to financial statements.
NORTHEAST UTILITIES (PARENT)
STATEMENT OF INCOME
(Unaudited)
Three Months Six Months
Ended Ended
June 30, June 30,
1999 1999
-------------- --------------
(Thousands (Thousands
of Dollars) of Dollars)
Operating Revenues $ 0 $ 0
-------------- --------------
Operating Expenses:
Operation expense (671) 882
Federal and state income taxes (3,265) (4,827)
Taxes other than income taxes (10) (9)
-------------- --------------
Total operating expenses (3,946) (3,954)
-------------- --------------
Operating Income 3,946 3,954
-------------- --------------
Other Income:
Equity in earnings of subsidiaries 7,008 27,955
Equity in earnings of transmission companies 540 1,275
Other, net (2,712) (2,097)
Income taxes (4,776) (4,776)
-------------- --------------
Other income, net 60 22,357
-------------- --------------
Income before interest charges 4,006 26,311
-------------- --------------
Interest Charges:
Interest on long-term debt 3,679 7,441
Other interest 99 198
-------------- --------------
Interest charges 3,778 7,639
-------------- --------------
Net Income for Common Shares $ 228 $ 18,672
============== ==============
Earnings per Common Share $ 0.00 $ 0.14
============== ==============
Common Shares Outstanding (average) 131,317,892 131,214,191
============== ==============
Note: In the opinion of the Company, all adjustments necessary for a fair
presentation of the results of operations for the period shown have
been made.
See accompanying notes to financial statements.
Northeast Utilities
Select Energy, Inc.
Select Energy Portland Pipeline, Inc.
Northeast Generation Services Company
Notes to Financial Statements
1. About Northeast Utilities
Northeast Utilities (NU) is the parent company of the Northeast Utilities
system (the NU system). The NU system furnishes franchised retail electric
service in Connecticut, New Hampshire and western Massachusetts through
three wholly owned subsidiaries: The Connecticut Light and Power Company
(CL&P), Public Service Company of New Hampshire (PSNH) and Western
Massachusetts Electric Company (WMECO). Another wholly owned subsidiary,
North Atlantic Energy Corporation (NAEC), sells all of its entitlement to
the capacity and output of the Seabrook nuclear power plant to PSNH under
two life-of-unit, full cost recovery contracts. A fifth wholly owned
subsidiary, Holyoke Water Power Company (HWP), is also engaged in the
production and distribution of electric power. The NU system also
furnishes firm and other wholesale electric services to various
municipalities and other utilities, and participates in limited retail
access programs, providing off-system retail electric service. The NU
system serves in excess of 30 percent of New England's electric needs and
is one of the 24 largest electric utility systems in the country as
measured by revenues.
Several wholly owned subsidiaries of NU provide support services for the
NU system companies and, in some cases, for other New England utilities.
Northeast Utilities Service Company provides centralized accounting,
administrative, information resources, engineering, financial, legal,
operational, planning, purchasing and other services to the NU system
companies. Northeast Nuclear Energy Company acts as agent for the NU
system companies and other New England utilities in operating the Millstone
nuclear generating facilities. North Atlantic Energy Service Corporation
has operational responsibility for the Seabrook nuclear generating
facility. Three other subsidiaries construct, acquire or lease some of the
property and facilities used by the NU system companies.
Charter Oak Energy, Inc. (COE), HEC Inc. (HEC), Mode 1 Communications, Inc,
(Mode 1), Select Energy, Inc. (Select Energy), Select Energy Portland
Pipeline, Inc. (SEPPI), NU Enterprises, Inc. (NUEI), Northeast Generation
Company (NGC) and Northeast Generation Services Company (NGS) are other NU
system companies which engage in a variety of activities.
Directly and through subsidiaries, COE has an investment in a foreign
utility company as permitted under the Energy Policy Act of 1992. This
investment is accounted for on an equity basis based upon COE's level of
participation. NU has put COE up for sale.
HEC provides energy management services for the NU system's and other
utilities' commercial, industrial and institutional electric customers.
Mode 1 and Select Energy develop and invest in telecommunications and in
energy-related activities, respectively.
During the first quarter of 1999, NU established three new subsidiaries:
NUEI, NGC and NGS. Directly or through multiple subsidiaries, these
entities will engage in a variety of energy-related activities, including
the acquisition and management of non-nuclear generating plants. NUEI, a
direct subsidiary of the NU system, acts as the holding company for the
system's unregulated businesses. Also, as of January 4, 1999, NU
transferred three subsidiaries, Select Energy, HEC and Mode 1 to NUEI.
During March 1999, NU also formed SEPPI, a single-purpose subsidiary of
NUEI, for the purpose of acquiring a 5 percent partnership interest in the
Portland Natural Gas Transmission System Partnership (PNGTS).
2. About Select Energy
NU organized NUSCO Energy Partners, Inc. (NEP), in 1996. NEP acquired
PSNH's interest in the New Hampshire retail electric competition pilot
program in late 1996. During 1997, NEP changed its name to Select Energy,
Inc. Select Energy received approval from the Federal Energy Regulatory
Commission to become a competitive wholesale power marketer effective
December 1, 1998. Select Energy is a subsidiary of NUEI.
Select Energy serves as a vehicle for participation in retail pilot
competition programs and open-access retail and wholesale electric
markets in the Northeast and other areas of the country as appropriate.
In addition, Select Energy markets natural gas and develops and markets
energy-related products and services in order to enhance its core electric
service and customer relationships. Select Energy has taken steps to
establish strategic alliances with other companies in various energy-
related fields including fuel supply and management, power quality, energy
efficiency and load management services.
3. About Northeast Generation Services Company
NGS, another subsidiary of NUEI, was formed on January 4, 1999. NGS
provides management, operations, and maintenance services to the electric
generation market and industrial and large commercial customers in the 11-
state region. NGS also provides consulting services which includes
engineering, construction management, permitting and compliance management.
4. Public Utility Regulation
NU is registered with the Securities and Exchange Commission (SEC) as a
holding company under the Public Utility Holding Company Act of 1935 (1935
Act). NU and its subsidiaries are subject to the provisions of the 1935
Act. Arrangements among the NU system companies, outside agencies and
other utilities covering interconnections, interchange of electric power
and sales of utility property are subject to regulation by the Federal
Energy Regulatory Commission (FERC) and/or the SEC. The NU system
operating subsidiaries are subject to further regulation for rates,
accounting and other matters by the FERC and/or applicable state regulatory
commissions.
5. Presentation
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
6. Special Deposits
Special deposits include amounts representing collateral posted by the
company should Select Energy become delinquent in payments under its
various power purchase and sales agreements. The balance of special
deposits on Select Energy's balance sheet at June 30, 1999 was
approximately $18.7 million.
7. Select Energy Agreement to Acquire Certain Assets of Aurora Natural Gas LLC
On May 12, 1999, Select Energy entered into a $26 million asset purchase
agreement with Aurora Natural Gas LLC of Dallas. This agreement was
consummated on June 16, 1999. The purchase price was paid in cash ($19.5
million) and a short-term note payable ($6.5 million). Select Energy
acquired Aurora's retail customer contracts and associated natural gas
supplies in New England. In addition, Select Energy also purchased
exclusive rights to AMNETTM, the energy data collection and management
system developed by Aurora's affiliate, Aurion Technologies LLC. Select
Energy will use the AMNET system to better manage and forecast real-time
energy consumption for electricity, natural gas and water utilities.
8. Advance from Parent
Select Energy, Inc. received a cash advance ($19.4 million) from its
parent, NU Enterprises, Inc. on June 30, 1999. Select Energy intends to
repay the advance upon acquisition of external financing at an unspecified
date in the future. No interest is being accrued on this transaction.
QUARTERLY REPORT OF SELECT ENERGY, INC.
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act of 1935
and the rules and regulations of the Securities and Exchange Commission issued
thereunder, the undersigned company has duly caused this report to be signed on
its behalf by the undersigned officer thereunto duly authorized.
NORTHEAST UTILITIES
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(Registered Holding Company)
By: /s/ John J. Roman
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(Signature of Signing Officer)
John J. Roman
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/s/ John J. Roman
Vice President and Controller
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Date: August 27, 1999
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