EXHIBIT A
PROPOSED TERMS OF THE NU SYSTEM MONEY POOL
(Revised November, 2000)
GENERAL
1. The members of the Money Pool (the Pool) are Northeast Utilities (NU), The
Connecticut Light and Power Company (CL&P), Western Massachusetts Electric
Company (WMECO), Northeast Nuclear Energy Company (NNECO), Holyoke Water
Power Company (HWP), The Rocky River Realty Company (RR), The Quinnehtuk
Company (Quinnehtuk), Public Service Company of New Hampshire (PSNH), North
Atlantic Energy Corporation (North Atlantic), HEC Inc. (HEC), Mode 1
Communications, Inc. (Mode 1), Select Energy, Inc. (Select), NU Enterprises,
Inc. (NUEI), Northeast Generation Company (NGC), Northeast Generation
Services Company (NGS), Yankee Energy Systems, Inc. (YES), Yankee Gas
Services Company (Yankee Gas), Yankee Energy Financial Services Company
(Yankee Financial), NorConn Properties, Inc. (NorConn), Yankee Energy
Services Company (Yesco) and RMS Services, Inc. (RMS) (collectively, Pool
Participants).
2. The Pool will be administered by Northeast Utilities Service Company
(Agent).
3. Each member will determine each day, on the basis of cash flow
projections, the amount of surplus funds it has available for contribution to
the Pool (Surplus Funds). In addition to its own Surplus Funds, NU may
borrow funds from third party lenders (Excess Funds) in order to make these
Excess Funds available to meet the borrowing needs of the Pool participants
other than YES, Mode 1 and NGC.
CONTRIBUTIONS TO THE POOL
4. Each member may contribute its Surplus Funds to the Pool. NU may also
contribute any Excess Funds to the Pool. PSNH may only contribute its
Surplus Funds to the Pool if permitted by the New Hampshire Public Utilities
Commission.
5. Each member will receive as interest with respect to its Surplus Funds
that fraction of the total interest received by the Pool equal to the ratio
of the Surplus Funds the member has contributed, times the period in which
such Surplus Funds were available, to the total Surplus Funds in the Pool,
times the period in which all Surplus Funds were in the Pool. NU will
receive the same interest with respect to its Excess Funds that it pays for
its Excess Funds. Such interest will be computed on a daily basis and
settled once per month.
6. Each member may withdraw any of its Surplus Funds at any time without
notice. NU may withdraw its Excess Funds at any time without notice.
BORROWINGS FROM THE POOL
7. Neither NU, YES, NGC nor Mode 1 shall be entitled to borrow from the Pool.
8. No company other than CL&P, NNECO, HWP, RR and Quinnehtuk may borrow
Surplus Funds that are attributable to contributions from WMECO until the
Massachusetts Department of Telecommunications and Energy or other
appropriate Massachusetts regulatory agency which regulates WMECO ("MDTE")
has issued an order authorizing WMECO to lend funds to such companies through
the Pool. Until the time that such an order is received, all transactions
between WMECO and those members permitted to borrow funds attributable to
contributions by WMECO will be documented using grid notes.
9. All short-term borrowing needs of members other than NU, YES, NGC and Mode
1, which shall not be entitled to borrow from the Pool, will be met by
Surplus Funds in the Pool to the extent such funds are available and to the
extent they are not restricted by the conditions specified in paragraph 8.
All Pool participantsother than YES Mode 1 and NGC may meet their short-term
borrowing needs through Excess Funds made available from NU. The aggregate
amount of short-term debt that may be outstanding at any one time, whether
through borrowings from the Money Pool or otherwise may not exceed the
following:
NU $400 Million
CL&P $375 Million
WMECO $250 Million
PSNH $225 Million
HWP $ 5 Million
North Atlantic $260 Million
NNECO $ 75 Million
YES $ 50 Million
Yankee Gas $100 Million
or such other amount which may be approved and authorized by the Securities
and Exchange Commission or the appropriate state agency and the respective
board of directors from time to time.
Restrictions on Borrowings under the Pool are summarized as follows:
May Not Borrow from May Not Borrow
NU's External Borrowings from Pool
YES NU
Mode 1 YES
NGC Mode 1
NGC
May Borrow from WMECO Contributions
CL&P
HWP
NNECO
RR
Quinnehtuk
10. All other Pool participantsmay borrow from the Pool and from NU's
external borrowings. Loans will be made first to borrowers that cannot
access the commercial paper market.
11. Pool participantsborrowing Surplus Funds will pay interest at a rate
equal to the daily Federal Funds Effective Rate as quoted by the Federal
Reserve Bank of New York. The rate to be used for weekends and holidays will
be the prior business day's rate. Members borrowing Excess Funds will pay
interest at the same rate that NU pays for those Excess Funds.
12. Loans made by the Pool will be open account advances for periods of less
than 12 months, although the Agent may receive upon demand a promissory note
evidencing the transaction.
13. All loans made by the Pool from Surplus Funds are payable on demand by
the Agent.
14. All loans made by the Pool from Surplus Funds may be prepaid by the
borrower without penalty. No loans from Excess Funds shall be prepaid prior
to the maturity of the NU borrowing that resulted in the Excess Funds, unless
the prepayment can be made without NU incurring additional costs or unless
the prepayment is accompanied by payment of any additional costs incurred by
NU as a result of such prepayment.
15. If there are more Surplus Funds in the Pool than are necessary to meet
the borrowing needs of the members, the Agent will use the Surplus Funds to
meet the NU system's compensating balance requirements or invest them on
behalf of the Pool directly, or indirectly through an investment fund, in one
of the following instruments:
(i) interest-bearing accounts with banks;
(ii) obligations issued or guaranteed by the U.S. government and/or its
agencies and instrumentalities, including obligations under
repurchase agreements;
(iii) obligations issued or guaranteed by any state or political
subdivision thereof, provided that such obligations are rated not
less than "A" (or "A-1" or "P-1" or their equivalent for short term
debt) by a nationally recognized rating agency;
(iv) commercial paper rated not less than "A-1" or "P-1" or their
equivalent by a nationally recognized rating agency;
(v) moneymarket funds;
(vi) bank certificates of deposit,
(vii) Eurodollar funds; and
(viii) as to WMECO contributions, such other investments as are permitted
by Section 9(c) of the Act and Rule 40 thereunder and approved by the
MDTE pursuant to Massachusetts General Laws Chapter 164, Section 17A
and the regulations thereunder.
TERMINATION
16. Any member may terminate its participation in the Pool at any
time without notice.
