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 December 31, 1998
Northeast Utilities
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(Name of registered holding company)
Selden Street, Berlin, CT. 06037
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(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
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Instructions
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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.
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Name of Reporting Company - Select Energy, Inc.
100% owned by Northeast Utilities
Energy or gas-related company - Energy-related company
Date of organization - September 26, 1996
State of Organization - Connecticut
Percentage of Voting Securities Held - 100% by Northeast Utilities
Nature of Business - Invest in energy-related activities
Activities during the reporting period -
Select Energy, Inc. is a retail energy services and power marketing company.
Select Energy received approval from the Federal Energy Regulatory Commission
to become a competitive wholesale power marketer effective December 1, 1998.
As a result, 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. In addition, Select markets natural gas
and develops and markets energy-related products and services in order to
enhance its core electricity service and customer relationships. These
services include energy services, productivity, business and financial, and
residential services. Select Energy is a registered electricity supplier in
the states of Rhode Island, Massachusetts, New Hampshire, New York and
Pennsylvania.
ITEM 2 - ISSUANCES AND RENEWALS OF SECURITIES AND CAPITAL CONTRIBUTIONS
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Instruction
- -----------
With respect to a transaction with an associate company, report only the
type and principal amount of securities involved.
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Company Issuing Security - None
Type of Security Issued - None
Principal Amount of Security - None
Issue or Renewal - None
Cost of Capital - None
Person to Whom Security was Issued - None
Collateral Given With Security - None
Consideration Received for Each Security - None
Company Contributing Capital - Northeast Utilities
Company Receiving Capital - Select Energy, Inc.
Amount of Capital Contribution - $21,050,000
ITEM 3 - ASSOCIATE TRANSACTIONS
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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.
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Part I - Transactions performed by reporting companies on behalf of associate
companies.
Reporting Associate
Company Company Types of
Rendering Receiving Services Total Amount
Services Services Rendered Billed
- ----------------------- ------------ -------------- -------------
(Thousands
of Dollars)
NONE
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 December 31, 1998
- ----------------------- ------------ -------------- -----------------
(Thousands of
Dollars)
Northeast Utilities Select Marketing services and
Service Company Energy, Inc. new product development 6,108
Security deposits 2,500
Purchased power 1,709
Financing Fees 1,250
Customer billing
system development 710
Legal services 113
Miscellaneous 442
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Total $12,832
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Public Service Company Select Marketing services 14
of New Hampshire Energy, Inc. Power sales agreement 866
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Total $880
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* "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 12/31/98 $5,633,249 line 1
Total capitalization multiplied by 15%
(line 1 multiplied by .15) 844,987 line 2
Greater of $50 million or line 2 844,987 line 3
Total current aggregate investment:
(categorized by major line of
energy-related business):
Select Energy, Inc. 4,797
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Total current aggregate investment 4,797 line 4
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Difference between the greater of $50 million or
15% ofcapitalization and the total aggregate
investment of the registered holding company
system $840,190 line 5
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Investments in gas-related companies:
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NONE
Total current aggregate investment:
(categorized by major line of
gas-related business):
-
-----------
Total current aggregate investment $0
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ITEM 5 - OTHER INVESTMENTS
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Instruction
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This item concerns investments in energy-related and gas-related companies
that are excluded from the calculation of aggregate investment under rule 58.
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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
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NONE
ITEM 6 - FINANCIAL STATEMENTS AND EXHIBITS
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Instructions
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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.
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A. Financial Statements
Select Energy, Inc.:
Balance Sheet - As of December 31, 1998
Income Statement-Three months and twelve months ended December 31, 1998
Northeast Utilities (PARENT):
4th quarter not required
B. Exhibits
Exhibit No. Description
- ----------- -----------
6.B.1.1 * Northeast Utilities Service Company (NUSCO) Service Contract dated
as of October 7, 1996 between NUSCO and NUSCO Energy Partners, Inc.
6.B.1.2 ** Bulk Power Supply Service Agreement dated as of May 27, 1996,
between Public Service Company of New Hampshire (PSNH) and PSNH
Energy.
6.B.1.3 *** Retail Competition Pilot Program Service Agreement dated as of
June 12, 1996 between PSNH and PSNH Energy.
6.B.1.4 Amendment to Bulk Power Supply Service Agreement dated as of
May 29, 1998 between Public Service Company of New Hampshire and
Select Energy, Inc.
6.B.1.5 Northeast Utilities Service Company, acting as agent for the
Connecticut Light and Power Company, Western Massachusetts
Electric Company, Holyoke Water Power Company, Holyoke Power
and Electric Company and Public Service Company of New Hampshire,
and Select Energy, service under Tariff No. 6, effective
June 1, 1998.
6.B.1.6 Northeast Utilities Service Company, acting as agent for the
Connecticut Light and Power Company, Western Massachusetts
Electric Company, Holyoke Water Power Company, Holyoke Power
and Electric Company and Public Service Company of New Hampshire,
and Select Energy, service under Tariff No. 7, effective
June 1, 1998.
The above exhibits 6.B.1.1, 6.B.1.2 and 6.B.1.3 were filed along with Form
U-9C-3 for the quarter ended June 30, 1997. Exhibits 6.B.1.4, 6.B.1.5 and
6.B.1.6 were filed along with Form U-9C-3 for the quarter ended June 30, 1998.
6.B.1.7 Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
6.B.1.8 Copy of contract required by Item 3-filed under confidential
treatment pursuant to Rule 104(b).
- -------------------
* NUSCO Energy Partners, Inc. changed its name to Select Energy, Inc.
** Select Energy, Inc. subsequently acquired PSNH Energy's interest in these
contracts.
*** PSNH Energy was a trade name of NUSCO Energy Partners, Inc. and is a
trade name of Select Energy, Inc.
6.B.2.1 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)
December 31,
1998
-------------
(Thousands
of Dollars)
ASSETS
- ------
Fixed Assets:
Work in progress $ 1,096
Other Investments:
Special Deposits $ 2,647
Current Assets:
Cash $ 1
Receivables, net 25,011
Taxes receivable 9,337
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34,349
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Deferred Charges:
Accumulated deferred income taxes 70
Other 682
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752
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Total Assets $ 38,844
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CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common shares, $1 par value. Authorized
and outstanding 100 shares $ -
Capital surplus, paid in 21,051
Retained earnings (16,254)
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Total capitalization 4,797
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Current Liabilities:
Accounts payable 26,151
Accounts payable to associated companies 7,778
Other 118
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34,047
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Total Capitalization and Liabilities $ 38,844
==============
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 Twelve Months
Ended Ended
December 31, December 31,
1998 1998
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(Thousands of Dollars)
Operating Revenues $ 27,179 $ 29,254
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Operating Expenses:
Operation
Purchased power - energy 21,203 22,467
Other 14,259 26,920
Maintenance 11 29
Federal and state income taxes (3,028) (7,832)
Taxes other than income taxes 260 812
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Total operating expenses 32,705 42,396
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Operating Loss (5,526) (13,142)
Other Deductions, net (25) (227)
-------------- --------------
Net Income (Loss) $ (5,551) $ (13,369)
============== ==============
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
Select Energy, Inc.
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.
In addition, CL&P and WMECO each have established a special purpose
subsidiary whose business consists of the purchase and resale of
receivables.
Charter Oak Energy, Inc. (COE), HEC Inc. (HEC), Mode 1 Communications,
Inc, (Mode 1), and Select Energy, Inc. (Select Energy), 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:
NU Enterprises, Inc., Northeast Generation Company and Northeast
Generation Services Company. 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. Also, as of January 4, 1999, NU transferred three subsidiaries,
Select Energy, HEC and Mode 1 to NU Enterprises, Inc.
2. About Select Energy, Inc.
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 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. 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.
4. 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.
Certain reclassifications of prior years' data have been made to conform
with the current year's presentation.
5. New Accounting Standards
SFAS 133 establishes accounting and reporting standards for derivative
instruments and hedging activities. This statement becomes effective
for the NU system companies on January 1, 2000, and will require
derivative instruments used by the NU system companies to be recognized
on the balance sheets as assets or liabilities at fair value. The NU
system uses derivative instruments for hedging purposes. The accounting
for these hedging instruments will depend on which hedging classification
each derivative instrument falls under, as defined by SFAS 133, offset
by any changes in the market value of the hedged item.
Based on the derivative instruments which currently are being utilized
by NU system companies to hedge some of their fuel-price and interest
rate risks, there will be an impact on earnings upon adoption of SFAS
133 which management cannot estimate at this time.
In November 1998, the Emerging Issues Task Force (EITF) reached a final
consensus on EITF Issue No. 98-10, "Accounting for Contracts Involved in
Energy Trading and Risk Management Activities." The Task Force
determined in its consensus that when an operation's activities are
considered to be trading activities, its energy trading and risk-
management contracts should be marked to market with the gains and
losses included in earnings. The consensus on this Issue is effective
for financial statements issued for years beginning after December 15,
1998. Management has determined that EITF 98-10 currently has no effect
on its financial statements.
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's balance sheets at December 31, 1998 was
approximately $2.5 million.
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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Vice President and Controller
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Date: March 29, 1999
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