UNITED STATES OF AMERICA
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Application of Northeast )
) CERTIFICATE PURSUANT TO
Utilities, Charter Oak Energy ) RULE 24 UNDER THE PUBLIC
) UTILITY HOLDING COMPANY ACT
Inc. and COE Development ) OF 1935
)
Corp. on Form U-1 )
)
(File No. 70-8507) )
Pursuant to the requirements of Rule 24 under the Public Utility Holding
Company Act of 1935, Charter Oak Energy, Inc. ("Charter Oak"), a wholly-owned
subsidiary of Northeast Utilities ("NU"), a registered holding company,
hereby files this quarterly report as required by the Securities and Exchange
Commission's supplemental order authorizing preliminary development
activities and financing related to such activities and to acquisitions of
interests in exempt wholesale generators ("EWGs") and foreign utility
companies ("FUCOs") by Charter Oak (HCAR. No. 26134, September 30, 1994, File
No. 70-8062, HCAR. No. 26213, December 30, 1994, File No. 70-8507, and HCAR.
No. 26354, August 7, 1995, File No. 70-8507, HCAR, No. 26623, December 12,
1996, File No. 70-8507, HCAR No. 26810, December 30, 1997, File No. 70-8507).
(1) BALANCE SHEET AS OF DECEMBER 31, 1998:
Attached as Exhibit A.
(2) TWELVE MONTH INCOME STATEMENT ENDING DECEMBER 31, 1998:
Attached as Exhibit B.
(3) GENERAL DESCRIPTION OF THE ACTIVITIES OF CHARTER OAK FOR THE QUARTER
ENDED DECEMBER 31, 1998, AND OF THE PROJECTS IN WHICH CHARTER OAK OR ITS
SUBSIDIARIES HAVE AN INTEREST:
During the fourth 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) and December 30, 1997 (HCAR No.26810) orders, Charter Oak,
through its wholly-owned subsidiary COE Development Corporation ("COE
Development"), has participated in limited preliminary development activities
for EWGs and FUCOs, primarily to preserve existing value in these projects.
These activities have been performed by COE Development both on its own and
with unaffiliated third parties.
On August 7, 1995 the Commission authorized NU to make investments in
Charter Oak, and Charter Oak to make investments in COE Development, in the
amount of up to $400 million, through December 31, 1996, for preliminary
development activities and for acquisitions of interests in EWGs and FUCOs.
This authorization includes preliminary development of domestic projects as
well as investments in EWGs and FUCOs. On December 12, 1996, this authority
was extended to December 31, 1997 with the authorized amount of investment
reduced to $200 million. The Commission extended the authority to December
31, 1998 on December 30, 1997.
On December 5, 1995, Charter Oak filed a Form U-57 notifying the
Commission of foreign utility company status for Ave Fenix Energia S.A. ("Ave
Fenix"), the 168 MW natural gas project in the Republic of Argentina.
Charter Oak through its wholly-owned subsidiary COE Ave Fenix Corporation,
will own approximately 83% of the issued and outstanding common stock of Ave
Fenix. On January 27, 1997, Ave Fenix closed on a $44 million term loan.
Charter Oak is in the process of selling its interest in this project.
On June 24, 1996, the Plantas Eolicas S.A., the 20 MW wind project in
Costa Rica, synchronized with the grid. Charter Oak, through its
wholly-owned subsidiary COE Tejona Corporation, will own approximately 65% of
the issued and outstanding common stock of Plantas Eolicas. It is
anticipated that a Costa Rican company will hold the remaining 35% of the
common stock of Plantas Eolicas. Charter Oak sold its interest
in this project on May 5, 1998 and filed a Form U-57/A on May 27, 1998
notifying the Securities and Exchange Commission that Plantas Eolicas no
longer requires Foreign Utility Company status with respect to Northeast
Utilities and its subsidiaries.
At this time, none of the other projects Charter Oak is currently
pursuing are sufficiently defined to move beyond the preliminary development
stage and therefore are not contained in this report.
(4) THE AMOUNTS OF RECOURSE AND NON-RECOURSE DEBT SECURITIES ISSUED TO THIRD
PARTIES BY INTERMEDIATE COMPANIES:
N.A.
(5) REGULATORY STATUS OF FACILITIES ELIGIBLE FOR EXEMPTION AS A PUBLIC
UTILITY UNDER THE ACT.
N.A.
(6) INFORMATION ON INTERCOMPANY SERVICE TRANSACTIONS INVOLVING AFFILIATED
INTERMEDIATE COMPANIES, EWGs AND FUCOs FOR THE QUARTER ENDING DECEMBER
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 December 31, 1998 is
approximately $3.4 million.
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, the undersigned company has duly caused this Certificate to be
signed on its behalf by the undersigned thereunto duly authorized.
Charter Oak Energy, Inc.
/s/ John H. Forsgren
Executive Vice President and Chief Financial Officer
Charter Oak Energy, Inc.
P.O. Box 270
Hartford, CT 06141-0270
February 25, 1999
EXHIBIT A
CHARTER OAK ENERGY, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
---------------------------------------
December 31,
---------------------------
1998 1997
------------ ------------
(Thousands of Dollars)
ASSETS
- ------
Utility Plant, at original cost:
Electric $ 51 $ 52
Less: Accumulated provision for
depreciation 51 52
------------ ------------
Total net utility plant - -
------------ ------------
Current Assets:
Cash 755 1,637
Accounts receivable 208 14
Taxes receivable 2,915 4,364
Other investments 6,178 33,391
------------ ------------
10,056 39,406
------------ ------------
Deferred Charges:
Accumulated deferred income taxes 1,898 1,028
Deferred development costs - 4,335
Other 230 296
------------ ------------
2,128 5,659
------------ ------------
Total Assets $ 12,184 $ 45,065
============ ============
CAPITALIZATION AND LIABILITIES
- ------------------------------
Capitalization:
Common stock $ - $ -
Capital surplus, paid in 92,744 102,344
Retained earnings (83,204) (58,129)
------------ ------------
Total capitalization 9,540 44,215
------------ ------------
Current Liabilities:
Accounts payable 299 205
Accounts payable to affiliated companies 30 400
Taxes accrued - 25
Other 2,315 220
------------ ------------
2,644 850
------------ -----------
Total Capitalization and Liabilities $ 12,184 $ 45,065
============ ============
EXHIBIT B
CHARTER OAK ENERGY, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
---------------------------------------------
Twelve Months Ended
December 31,
---------------------------
1998 1997
------------ ------------
(Thousands of Dollars)
Operating Revenues $ - $ -
------------ ------------
Operating Expenses:
Operation and maintenance 1,995 8,199
Depreciation - 896
Federal and state income taxes 425 (3,678)
Taxes other than income taxes (57) 247
------------ ------------
Total operating expenses 2,363 5,664
------------ ------------
Operating Loss (2,363) (5,664)
------------ ------------
Other (Loss)/Income:
Investment loss (5,804) (4,642)
Other, net (886) (1,328)
Net gain (loss)on sale of investments 3,978 (3,344)
Reserve for the loss on sale of COE
Ave Fenix Corp's investment
in Ave Fenix Energia, S.A. (20,000) (25,000)
------------ ------------
Total other (loss)/income (22,712) (34,314)
------------ ------------
Loss before interest charges (25,075) (39,978)
------------ ------------
Interest Charges - 25
------------ ------------
Net Loss $ (25,075) $ (40,003)
============ ============
EXHIBIT C
Charter Oak Energy and Subsidiaries
Detail of Intercompany Services
Twelve Months Ended December 31, 1998
Charter Oak Energy
------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- -----------------------------------------------------------------------------
NUSCO Charter Oak staff 936,880 436,618 1,373,498
Accounting and financial services 7,227 0 7,227
Legal services 3,035 5,302 8,337
Miscellaneous 4,796 21 4,817
------------------------------
Total NUSCO Services 951,938 441,941 1,393,879
------------------------------
NU PARENT Fee for sale of companies 0 0 0
------------------------------
Total NU PARENT Services 0 0 0
CL&P Reallocate Refund of CCBT Audit 0 0 0
Employee Expenses 1,654 2,629 4,283
Outside Services 0 8 8
Miscellaneous 0 0 0
State of Connecticut Tax 0 1,071 1,071
------------------------------
Total CL&P Services 1,654 3,708 5,362
------------------------------
COE TEJONA Outside Services 0 550,000 550,000
------------------------------
Total COE Tejona Services 0 550,000 550,000
------------------------------
CHARTER OAK
DEVELOPMENT CORP
Legal services 0 246,339 246,339
CT Use Tax Recoupment 0 0 0
Outside Services 0 3,686 3,686
Miscellaneous 0 0 0
------------------------------
Total COD Services 0 250,025 250,025
------------------------------
Total Services Provided 953,592 1,245,674 2,199,266
==============================
COE Development Corp.
---------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- -----------------------------------------------------------------------------
NUSCO Charter Oak staff 28,385 6,585 34,970
Legal services 0 0 0
Miscellaneous 85 0 85
------------------------------
Total NUSCO Services 28,470 6,585 35,055
------------------------------
CL&P Employee Expenses 84 0 84
Reallocate CCB Tax Paid 1994,5,6 0 0 0
Outside Services 0 0 0
------------------------------
Total CL&P Services 84 0 84
-----------------------------
CHARTER OAK
ENERGY Miscellaneous 0 0 0
CT Use Tax Adjustment 0 0 0
Outside Services 0 0 0
------------------------------
Total COE Services 0 0 0
------------------------------
COE TEJONA
CORP. Outside Services 0 0 0
------------------------------
Total COE Tejona Services 0 0 0
------------------------------
Total Services Provided 28,554 6,585 35,139
==============================
COE Argentina II Corp.
----------------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- --------------------------------------------------------------------------
NUSCO Controller-Accounting 12 0 12
Charter Oak Staff 0 0 0
-----------------------------
Total NUSCO Services 12 0 12
CL&P Reallocate CCB Tax Paid 1996 0 0 0
-----------------------------
Total CL&P Services 0 0 0
COE Development
Outside Services 0 526 526
------------------------------
Total COE Development Services 0 526 526
Total Services Provided 12 526 526
==============================
COE Tejona Corp.
----------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Miscellaneous 355 0 355
Internal Audit 0 0 0
Wholesale Marketing 4,815 1,269 6,084
Charter Oak Staff 31,376 2,061 33,437
Legal Services 0 0 0
------------------------------
Total NUSCO Services 36,546 3,330 39,876
CL&P Reallocate CCB Tax Paid 1996 0 0 0
Employee Expenses 0 697 697
-----------------------------
Total CL&P services 0 697 697
-----------------------------
COE Development
Charter Oak Staff 0 0 0
Outside Services 0 0 0
CT Use Tax Recoupment 0 0 0
Legal Services 0 0 0
------------------------------
Total COE Development Services 0 0 0
CHARTER OAK
ENERGY Legal Services 0 0 0
Outside Services 0 0 0
------------------------------
Total COE Services 0 0 0
------------------------------
Total Services Provided 36,546 4,027 40,573
==============================
COE AVE FENIX Corp.
----------------
NON-
Service Provided By- Type of Services Provided- PAYROLL PAYROLL TOTAL
- ---------------------------------------------------------------------------
NUSCO Controller-Accounting 12 0 12
Wholesale Marketing 0 19 19
Charter Oak Staff 0 4,386 4,386
SVP-Strategy & Development 7,439 0 7,439
Outside Services 0 12,969 12,969
------------------------------
Total NUSCO Services 7,451 17,374 24,825
CL&P Reallocate CCB Tax Paid 1996 0 0 0
-----------------------------
Total CL&P Services 0 0 0
COE Development
Charter Oak Staff 0 0 0
Outside Services 0 15,675 15,675
CT Use Tax Recoupment 0 0 0
------------------------------
Total COE Development Services 0 15,675 15,675
Total Services Provided 7,451 33,049 40,500
==============================
