GREAT BAY POWER CORP, 10-K405, 1996-03-22

GREAT BAY POWER CORP
10-K405, 1996-03-22
ELECTRIC SERVICES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 0-25748

GREAT BAY POWER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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<TABLE>
<S> <C>
NEW HAMPSHIRE 02-0396811
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
20 LADD STREET
PORTSMOUTH, NEW HAMPSHIRE 03801-4080
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (603) 433-8822
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
(TITLE OF CLASS)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulations S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. /X/

As of March 13, 1996, the approximate aggregate market value of the voting
stock held by non-affiliates of the registrant was $21,199,344 based on the last
reported sale price of the registrant's Common Stock on the Nasdaq National
Market as of the close of business on March 13, 1996. There were 7,999,948
shares of Common Stock outstanding as of March 13, 1996.

DOCUMENTS INCORPORATED BY REFERENCE

<TABLE>
<CAPTION>
PART OF FORM 10-K
INTO WHICH
DOCUMENT INCORPORATED
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<S> <C>
Portions of the Registrant's Proxy Statement Items 10, 11, 12 & 13
for the 1996 Annual Meeting of Stockholders of Part III
</TABLE>

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PART I

ITEM 1. BUSINESS.

INTRODUCTION

Great Bay Power Corporation ("Great Bay" or the "Company") is a New
Hampshire public utility whose principal asset is a 12.1% joint ownership
interest in the Seabrook Nuclear Power Project (the "Seabrook Project") in
Seabrook, New Hampshire. The Company sells its share of the electricity output
of the Seabrook Project in the wholesale electricity market, primarily in the
Northeast United States. Great Bay does not have operational responsibility for
the Seabrook Project. The Company's share of the Seabrook Project capacity is
approximately 140 megawatts ("MW"). Great Bay currently sells all but 10 MW of
its share of the Seabrook Project capacity in the short-term market.

THE SEABROOK PROJECT

The Seabrook Project is located on an 896 acre site in Seabrook, New
Hampshire. It is owned by the Company and nine other utility companies,
consisting of Northeast Utilities and its affiliates, The United Illuminating
Company, Canal Electric Company, Massachusetts Municipal Wholesale Electric
Company, Montaup Electric Company, New England Power Company, New Hampshire
Electric Cooperative, Inc., Taunton Municipal Lighting Plant and Hudson Light &
Power Department (together with the Company, the "Participants").

Seabrook Unit 1 is a 1,150 MW nuclear-fueled steam electricity generating
station. It employs a four loop, pressurized water reactor and support auxiliary
systems designed by the Westinghouse Electric Company. The reactor is housed in
a steel-lined reinforced concrete containment structure and a concrete
containment enclosure structure. Reactor cooling water is obtained from the
Atlantic Ocean through a 17,000 foot long intake tunnel and returned through a
16,500 foot long discharge tunnel. The station has a remaining expected service
life of 30 years. Seabrook Unit 1 transmits its generated power to the New
England 345 kilovolt transmission grid, a major network of interconnecting lines
covering New England, through three separate transmission lines emanating from
the station. On March 15, 1990, the Joint Owners of Seabrook Unit 1 received
from the Nuclear Regulatory Commission (the "NRC") a full power operating
license which authorizes operation of Seabrook Unit 1 until October 2026.
Commercial operation of Seabrook Unit 1 commenced on August 19, 1990. Management
believes that Seabrook Unit 1 is in good condition.

Since the Seabrook Project was originally designed to consist of two
generating units, the Company also owns a 12.1% joint ownership interest in
Seabrook Unit 2, to which it has assigned no value. On November 6, 1986, the
joint owners of the Seabrook Project, recognizing that Seabrook Unit 2 had been
canceled in 1984, voted to dispose of Unit 2. Certain assets of Seabrook Unit 2
have been and are being sold from time to time to third parties. The
Participants are currently considering plans regarding disposition of Seabrook
Unit 2, but such plans have not yet been finalized and approved. The Company is
unable to estimate the costs for which it will be responsible in connection with
the disposition of Seabrook Unit 2. Because Seabrook Unit 2 was never completed
or operated, costs associated with its disposition will not include any amounts
for decommissioning. The Company currently pays its share of monthly expenses
required to preserve and protect the value of the Seabrook Unit 2 components.

JOINT OWNERSHIP OF SEABROOK

The Company and the other Participants are parties to an Agreement for
Joint Ownership, Construction and Operation of New Hampshire Nuclear Units dated
May 1, 1973, as amended (the "JOA"). The JOA establishes the respective
ownership interests of the Participants in the Seabrook Project and defines
their responsibilities with respect to the ongoing operation, maintenance and
decommissioning of the Seabrook Project. In general, all ongoing costs of the
Seabrook Project are divided proportionately among the Participants in
accordance with their ownership interests in the Seabrook Project. Each
Participant is only liable for its share of the Seabrook Project's costs and not
liable for any other Participant's share. The Company's joint ownership interest
of 12.1% is the third largest interest among the Participants, exceeded only
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by the approximately 40% interest held by Northeast Utilities and its affiliates
and the 17.5% interest held by The United Illuminating Company.

A Participant may sell any portion of its ownership interest to any entity
that is engaged in the electric utility business in New England. Before such
sale, however, such selling Participant must give certain other Participants the
right of first refusal to purchase the interest on the same terms. Any
Participant may transfer, free from the foregoing right of first refusal, any
portion of its interest (a) to a wholly-owned subsidiary, (b) to another company
in the same holding company system or a construction trust for the benefit of
the transferor or another company in the same holding company system, or (c) in
connection with a merger, consolidation or acquisition of the assets of such
Participant.

The JOA provides for a Managing Agent to carry out the daily operational
and management responsibilities of the Seabrook Project. The current Managing
Agent, appointed on June 29, 1992, is North Atlantic Energy Service Corporation
("NAESCO"), a wholly-owned subsidiary of Northeast Utilities. Northeast
Utilities, in conjunction with certain of its affiliates, holds the largest
joint ownership interest, as described above. Certain material decisions
regarding the Seabrook Project are made by an Executive Committee consisting of
the chief executive officers of certain of the Participants or their designees.
There are currently five members of the Executive Committee. The Executive
Committee acts by majority vote of its members, although any action of the
Executive Committee may be modified by vote of 51% of the ownership interests.
The Company does not have a representative on the Executive Committee. Under the
JOA, the appointment of the managing agent of the Seabrook Project may only be
made by a majority in interest of the Participants.

BANKRUPTCY PROCEEDING AND REORGANIZATION

The Company filed a voluntary petition under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy
Court for the District of New Hampshire (the "Bankruptcy Court") on February 28,
1991. It conducted its business as a Debtor in Possession until November 23,
1994, at which time the Company's First Amendment to the First Modified Plan
dated September 9, 1994 (the "Amended Plan") became effective and the Company
emerged from Chapter 11. Financing for the Amended Plan was provided by
affiliates of Omega Advisors, Inc. and by Elliott Associates, L.P.
(collectively, the "Investors"). At the time the Company emerged from Chapter
11, the Investors purchased 4,800,000 shares of the Company's Common Stock for
$35,000,000.

CURRENT BUSINESS

The business of Great Bay consists of the management of its joint ownership
interest in the Seabrook Project and the sale in the wholesale power market of
its share of electricity produced by the Seabrook Project. Great Bay does not
have operational responsibility for the Seabrook Project. To date, the Company
has entered into one long-term power contract for approximately 10 MW of Great
Bay's share of the Seabrook Project capacity. The Company's business strategy is
to seek purchasers, either in the short-term market or pursuant to medium or
long-term contracts, for its share of the Seabrook Project electricity output at
prices in excess of the prices currently available in the short-term market
since sales at current short-term prices result in revenues which are less than
the Company's cash requirements for operations, maintenance and capital
expenditures.

The Company is currently considering reorganizing into a holding company
structure pursuant to which the Company would become a wholly-owned subsidiary
of a holding company. Such a structure would permit the holding company to
engage in business activities, through subsidiaries other than the Company, from
which the Company is prohibited from engaging because of its status as an Exempt
Wholesale Generator ("EWG") under the Public Utility Holding Company Act of
1935. The Company is also subject to regulation by the New Hampshire Public
Utilities Commission (the "NHPUC") as a New Hampshire public utility. Many
transactions by the Company are subject to approval by the NHPUC. While the
activities of the Company would continue to be subject to such regulation, the
activities of the holding company would not be.

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MARKETING

The Company and PECO Energy Company ("PECO") entered into a Services
Agreement dated as of November 3, 1995 (the "PECO Services Agreement"), pursuant
to which PECO was appointed as the Company's exclusive agent to market and sell
the Company's uncommitted portion of electricity generated by the Seabrook
Project. Proceeds from the sale of the Company's electricity together with
reservation fees payable by PECO to the Company will be shared between the
Company and PECO in accordance with formulas set forth in the PECO Services
Agreement.

The PECO Services Agreement became effective on December 31, 1995, and has
an initial term of two years. The term will be automatically extended for one
additional year (to December 31, 1998) if PECO exercises the PECO Warrant to
purchase the Warrant Shares, described below. At any time prior to the Warrant
Expiration Date (as defined below), the Company is entitled to terminate the
PECO Services Agreement; however, if the PECO Services Agreement is so
terminated, the Company will be required to refund to PECO the $1,000,000
purchase price for the Warrant plus interest.

At the time that the Company entered into the PECO Services Agreement, the
Company and PECO entered into a Warrant Purchase Agreement, dated November 3,
1995, pursuant to which on February 15, 1996, PECO purchased a warrant (the
"PECO Warrant") from the Company for $1,000,000. The PECO Warrant entitles PECO
to purchase 420,000 shares of the Company's Common Stock (the "Warrant Shares")
at an exercise price of the higher of (1) $9.75 per share, or (2) the highest
trading price per share of the Company's Common Stock prior to the expiration
date of the PECO Warrant. The $1,000,000 purchase price for the PECO Warrant
will be credited toward the aggregate exercise price of the PECO Warrant upon
exercise. If PECO does not exercise the PECO Warrant, the purchase price for the
PECO Warrant is wholly or partially refundable only if the Company terminates
the PECO Services Agreement for convenience prior to the Warrant Expiration Date
or if PECO exercises certain of its rights to terminate the PECO Services
Agreement. The PECO Warrant expires on September 30, 1996 (the "Warrant
Expiration Date") unless extended because the Seabrook Project fails to maintain
a 60% capacity factor for the first 9 months of 1996, in which case the Warrant
Expiration Date will be extended until the earlier of such time as the Seabrook
Project's rolling 12-month capacity factor equals or exceeds 60% or December 31,
1997.

From November 23, 1994 to December 31, 1995, UNITIL Resources, Inc.
("URI"), a wholly owned subsidiary of UNITIL Company ("UNITIL") marketed the
Company's energy. The Company paid URI commissions for sales of power plus
reimbursement for URI's time. The amount of the commission varied based on the
length of the power sale contracts and prices obtained. For the year ended
December 31, 1995, the Company paid $333,138 for services rendered pursuant to
this marketing agreement with URI. The marketing agreement with URI terminated
as of December 31, 1995.

The Company currently sells most of its power to utility companies located
in the Northeast United States in the short-term wholesale power market. Great
Bay is currently not dependent on any single customer because many utilities and
marketers are willing to buy the Company's share of electricity from the
Seabrook Project at substantially the same price. Prices in the short-term
market are typically higher during the summer and winter because the demand for
electrical power is higher during these periods in the Northeast United States.
Sales of power to UNITIL Power Corporation ("UNITIL Power"), a wholly owned
subsidiary of UNITIL, accounted for more than 10% of the Company's revenues
during 1995. See "Power Purchase Agreements."

POWER PURCHASE AGREEMENTS

The Company is a party to a power agreement, dated as of April 1, 1993 (the
"UNITIL Power Purchase Agreement"), with UNITIL Power Corp. ("UNITIL Power"), a
wholly-owned subsidiary of UNITIL, which provides for the Company to sell to
UNITIL Power approximately 10 MW of power. The UNITIL Power Purchase Agreement
commenced on May 1, 1993 and runs through October 31, 2010. During the first
year of this term, the price of power under the UNITIL Power Purchase Agreement
was 5.0 cents per kilowatt-hour ("kWh"). Thereafter, the price is subject to
increase in accordance with a formula which

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provides for adjustments at less than the actual rate of inflation. UNITIL Power
has an option to extend the UNITIL Power Purchase Agreement for an additional 12
years until 2022.

The UNITIL Power Purchase Agreement is front-end loaded whereby UNITIL
Power pays higher prices, on an inflation adjusted basis, in the early years of
the Agreement and lower prices in later years. The amount of the excess paid by
UNITIL Power in the early years of the UNITIL Power Purchase Agreement is
quantified in a "Balance Account" which increases annually to $4.1 million in
1998, then decreases annually, reaching zero in 2001. If the UNITIL Power
Purchase Agreement terminates prior to its scheduled termination, and if at that
time there is a positive amount in the Balance Account, the Company is obligated
to refund that amount to UNITIL Power.

To secure the obligations of the Company under the UNITIL Power Purchase
Agreement, including the obligation to repay to UNITIL Power the amount of the
Balance Account, the UNITIL Power Purchase Agreement grants UNITIL Power a
mortgage on the Company's interest in the Seabrook Project. This mortgage may be
subordinated to first mortgage financing of up to a maximum amount of
$80,000,000. The UNITIL Power Purchase Agreement further provides that UNITIL
Power's mortgage will rank pari passu with other mortgages that may hereafter be
granted by the Company to other purchasers of power from the Company to secure
similar obligations, provided that (i) the maximum amount of indebtedness
secured by the first mortgage on the Seabrook Interest may not exceed
$80,000,000 and (ii) the combined total of all second mortgages on the Seabrook
Interest may not exceed the sum of (a) $80,000,000 less the total amount of the
Company's debt then outstanding which is secured by a first mortgage plus (b)
$57,000,000.

In addition to the UNITIL Power Purchase Agreement, the Company also has
entered into an option agreement with UNITIL Power (the "Power Purchase Option
Agreement") under which the Company has granted UNITIL Power the option to
purchase, during the period from November 1, 1998 through October 31, 2018,
approximately 15 MW of electricity at a price equal to 6.5 cents per kWh,
subject to adjustment in accordance with a formula. UNITIL Power is required to
exercise its option under the Power Purchase Option Agreement on or before the
earlier of (i) October 31, 1996, or (ii) 30 days after the first date on which
the Company is prepared to commit to sell, for a minimum of 10 years, all or any
part of the last remaining 15 MW of the Company's share of power generated by
the Seabrook Project. Based on the current market conditions, the Company
believes that it is unlikely that UNITIL Power will exercise this option under
the Power Purchase Option Agreement.

The Company has also entered into a Purchased Power Agreement, dated as of
March 2, 1995 (the "Freedom Purchased Power Agreement"), with Freedom Energy
Company ("Freedom Energy") pursuant to which the Company agreed to sell to
Freedom Energy, subject to the satisfaction of certain material conditions
precedent, up to 20 MW of power at an initial price of approximately 4.5 cents
per kWh. The Freedom Purchased Power Agreement is subject to the receipt by
Freedom Energy of all necessary regulatory approvals, including approval from
the NHPUC to operate as a utility and to sell electricity directly to end-users
and approval by the Federal Energy Regulatory Commission ("FERC") of the rates
specified in the agreement. In addition, the agreement is subject to the entry
by Freedom Energy into an agreement with Public Service Company of New Hampshire
("PSNH") for transmission services. The Company has the right, which it has not
exercised, to terminate the Freedom Purchased Power Agreement since these
conditions were not satisfied by February 28, 1996. Freedom Energy has
petitioned the NHPUC for permission to sell electric power directly to end-users
located in the franchise service area of PSNH, but it is not currently
authorized to operate as an electric utility. The Company is unable to predict
whether Freedom Energy will obtain the necessary approvals or customers to
purchase electricity from the Company.

The Company is also a party to a Purchased Power Agreement, dated November
9, 1995 (the "Bangor Purchased Power Agreement"), with Bangor Hydro-Electric
Company ("Bangor Hydro") pursuant to which Bangor Hydro agreed to purchase from
the Company, subject to increase or reduction under certain circumstances, 10 MW
of electricity during the months of January through March 1996 and for the
months of November 1996 through March 1997 and November 1997 through March 1998.
Pursuant to the Bangor Purchased Power Agreement, the Company also granted to
Bangor Hydro an option to purchase from the

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Company up to 10 MW of electricity for the months of November 1998 through March
1999 and November 1999 through March 2000.

COMPETITION

The Company sells its share of Seabrook electricity into the wholesale
electricity market in the Northeast United States. There are a large number of
suppliers to this market and a surplus of capacity, resulting in intense
competition. A primary source of competition comes from traditional utilities,
many of which presently have excess capacity. In addition, non-utility wholesale
generators of electricity, such as independent power producers ("IPPs"),
Qualifying Facilities ("QFs") and EWGs, a new class of non-utility generators
established by the Energy Policy Act of 1992 (the "Energy Act"), as well as
power marketers and brokers, actively sell electricity in this market.

The Company may face increased competition, primarily based on price, from
all the foregoing sources in the future. The Company believes that it will be
able to compete effectively in the wholesale electricity market because of the
current low cost of electricity generated by the Seabrook Project in comparison
with existing alternative sources and the reduction of the Company's capital
costs resulting from the implementation of the Chapter 11 reorganization plan.
In addition, the Company believes that the commitment by PECO to provide back-up
power under the PECO Services Agreement, as well as PECO's marketing
capabilities, will favorably affect the Company's competitive position.

NEPOOL

The Company is a party to the New England Power Pool ("NEPOOL") Agreement
(the "NEPOOL Agreement") and is a member of NEPOOL. NEPOOL is open to all
investor-owned, municipal and cooperative electric utilities in New England that
are connected to the New England power grid. Effective November 13, 1995, the
NEPOOL Agreement was amended to permit broader membership and participation in
NEPOOL by power marketers and other non-utilities that transact business in the
bulk power market in New England. The NEPOOL Agreement provides for coordinated
planning of future facilities as well as the operation of nearly 100% of
existing generating capacity in New England and of related transmission
facilities as if they were one system. The NEPOOL Agreement imposes on its
participants obligations concerning generating capacity reserves and the right
to use major transmission lines. On occasions when one or more transmission
lines are out of service, the quantity of power being produced by then operating
generation plants may exceed the quantity of power that can be carried safely by
the transmission system. In such instances, one or more generation plants may be
taken off-line by NEPOOL. To date, the Seabrook Project has not been taken
off-line in these instances. The Company believes that it is unlikely that the
Seabrook Project would be taken off-line in such instances because NEPOOL
prefers to take off-line non-nuclear plants which are less complex and less
difficult to schedule than nuclear units.

The NEPOOL agreement also provides for central dispatch of the generating
capacity of NEPOOL members with the objective of achieving economical use of the
region's facilities. Pursuant to the NEPOOL Agreement, interchange sales
(purchases from or sales to the pool by a NEPOOL member) are made at prices
approximately equal to the fuel cost for generation without contribution to the
support of fixed charges, if NEPOOL has the right to schedule delivery of the
power. On rare occasions, unscheduled power is delivered, or "dumped," to the
pool, for which no payment is made by NEPOOL. The Company does not expect to
"dump" power to NEPOOL. NEPOOL members also jointly schedule generation plant
maintenance to avoid capacity shortages in the NEPOOL area. The number of
generation plants undergoing maintenance at any time affects the cost of
replacement power in the market. Thus, the Company's operating revenues and
costs are affected to some extent by the operations of plants of other members.

NUCLEAR POWER, ENERGY AND UTILITY REGULATION

The Seabrook Project and the Company, as part owner of a licensed nuclear
facility, are subject to the broad jurisdiction of the NRC, which is empowered
to authorize the siting, construction and operation of nuclear reactors after
consideration of public health and safety, environmental and antitrust matters.
The

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Company has been, and will be, affected to the extent of its proportionate share
by the cost of any such requirements made applicable to Seabrook Unit 1.

The Company is also subject to the jurisdiction of the FERC under Parts II
and III of the Federal Power Act and, as a result, is required to file with FERC
all contracts for the sale of electricity. FERC has the authority to suspend the
rates at which the Company proposes to sell power, to allow such rates to go
into effect subject to refund and to modify a proposed or existing rate if FERC
determines that such rate is not "just and reasonable." FERC's jurisdiction also
includes, among other things, the sale, lease, merger, consolidation or other
disposition of facilities, interconnection of certain facilities, accounts,
service and property records.

Because it is an EWG, the Company is not subject to the jurisdiction of the
Securities and Exchange Commission (the "Commission") under the Public Utility
Holding Company Act of 1935. In order to maintain its EWG status, the Company
must continue to engage exclusively in the business of owning and/or operating
all or part of one or more "eligible facilities" and to sell electricity only at
wholesale (i.e., not to end users). An "eligible facility" is a facility used
for the generation of electric energy exclusively at wholesale or used for the
generation of electric energy and leased to one or more public utility
companies. The term "facility" may include a portion of a facility. In the case
of the Company, its 12.1% joint ownership interest in the Seabrook Project
comprises an "eligible facility."

The Company is subject to regulation by the NHPUC in many respects
including the issuance of securities, the issuance of debt, contracts with
affiliates, forms of accounts, transfers of utility properties, mortgaging of
utility property and other matters. The NHPUC does not regulate rates charged
for sales of electricity at wholesale.

The NHPUC and the utilities regulatory authorities and state legislatures
of several other states in which the Company sells electricity are considering a
range of proposals relating to the deregulation of the utilities industry. It is
not possible to predict what steps will be taken by these authorities and
legislatures or their impact on the Company.

NUCLEAR POWER ISSUES

Nuclear units in the United States have been subject to widespread
criticism and opposition, which has led to construction delays, cost overruns,
licensing delays and other difficulties. Various groups have sought to prohibit
the completion and operation of nuclear units and the disposal of nuclear waste
by litigation, legislation and participation in administrative proceedings. The
Seabrook Project was the subject of significant public controversy during its
construction and licensing and remains controversial. An increase in public
concerns regarding the Seabrook Project or nuclear power in general could
adversely affect the operating license of Seabrook Unit 1. While the Company
cannot predict the ultimate effect of such controversy, it is possible that it
could result in a premature shutdown of the unit.

In the event of a permanent shutdown of any unit, NRC regulations require
that it be completely decontaminated of any residual radioactivity. While the
owners of the Seabrook Project are accumulating a trust fund to pay
decommissioning costs, if these costs exceed the amount of the trust fund, the
owners (including the Company) will be liable for the excess.

NUCLEAR RELATED INSURANCE

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amount of financial protection available, then each licensee can be assessed an
additional 5% ($3.775 million) of the maximum retrospective assessment. With
respect to the Seabrook Project, the Company would be obligated to pay its
ownership share of any assessment resulting from a nuclear incident at any
United States nuclear generating facility. The Company estimates its maximum
liability per incident currently would be an aggregate amount of approximately
$9.59 million per accident, with a maximum annual assessment of about $1.21
million per incident, per year.

In addition to the insurance required by the Price Anderson Act, the NRC
regulations require licensees, including the Seabrook Project, to carry all risk
nuclear property damage insurance in the amount of at least $1.06 billion, which
amount must be dedicated, in the event of an accident at the reactor, to the
stabilization and decontamination of the reactor to prevent significant risk to
the public health and safety.

During 1995, the Company purchased business interruption insurance from
Nuclear Electric Insurance Limited ("NEIL"). This policy is in effect from
December 22, 1995 until September 15, 1996 and provides for the payment of a
fixed weekly loss amount of $520,000 in the event of an outage at the Seabrook
Project of more than 21 weeks resulting from property damage occurring from a
"sudden fortuitous event, which happens by chance, is unexpected and
unforeseeable." The maximum amount payable to the Company is $70.3 million.
Under the terms of the policy, the Company is subject to a potential
retrospective premium adjustment of up to approximately $650,000 should NEIL's
board of directors deem that additional funds are necessary to preserve the
financial integrity of NEIL. Since NEIL was founded in 1980, there has been no
retrospective premium adjustment; however, there can be no assurance that NEIL
will not make retrospective adjustments in the future. The liability for this
retrospective premium adjustment ceases six years after the end of the policy
unless prior demand has been made.

NUCLEAR FUEL

The Seabrook Project's joint owners have made, or expect to make, various
arrangements for the acquisition of uranium concentrate, the conversion,
enrichment, fabrication and utilization of nuclear fuel and the disposition of
that fuel after use. Many of these arrangements are pursuant to multi year
contracts with concentrate or services providers. Based on the Seabrook
Project's existing contractual arrangements, the Company believes that the
Seabrook Project has available or under supply contract sufficient nuclear fuel
for operations through approximately 2001. The next refueling, based on NAESCO's
expectation for fuel consumption, is currently scheduled for June 1997. Uranium
concentrate and conversion, enrichment and fabrication services currently are
available from a variety of sources. The cost of such concentrate and such
services varies based upon market factors.

NUCLEAR WASTE DISPOSAL

Costs associated with nuclear plant operations include amounts for disposal
of nuclear wastes, including spent fuel, as well as for the ultimate
decommissioning of the plants. Under the Nuclear Waste Policy Act of 1982 (the
"NWPA"), the United States Department of Energy (the "DOE") is required (subject
to various contingencies) to design, license, construct and operate a permanent
repository for high level radioactive wastes and spent nuclear fuel and
establish prescribed fees for the disposal of such waste and fuel. The NWPA
specifies that the DOE provide for the disposal of such waste and spent nuclear
fuel starting in 1998.

The owners of the Seabrook Project have entered into contracts with the DOE
for disposal of spent nuclear fuel in accordance with the NWPA. In return for
payment of the prescribed fees, the federal government is to take title to and
dispose of the Seabrook Project's high level wastes and spent nuclear fuel
beginning no later than 1998. However, the DOE has announced that its first high
level waste repository will not be in operation earlier than 2010,
notwithstanding the DOE's statutory and contractual responsibility to begin
disposal of high-level radioactive waste and spent fuel, beginning not later
than January 31, 1998.

Until the federal government begins receiving such materials in accordance
with the NWPA, operating nuclear generating units such as the Seabrook Project
will need to retain high level wastes and spent fuel on-site or make other
provisions for their storage. The Company has been advised by the Managing Agent
that on-site storage facilities for the Seabrook Project are expected to be
adequate until at least 2010.

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Disposal costs for low-level radioactive wastes ("LLW") that result from
normal operation of nuclear generating units have increased significantly in
recent years and are expected to continue to rise. The cost increases are
functions of increased packaging and transportation costs and higher fees and
surcharges charged by the disposal facilities. Pursuant to the Low-Level
Radioactive Waste Policy Act of 1980, each state was responsible for providing
disposal facilities for LLW generated within the state and was authorized to
join with other states into regional compacts to jointly fulfill their
responsibilities. However, pursuant to the Low-Level Radioactive Waste Policy
Amendments Act of 1985, each state in which a currently operating disposal
facility is located (South Carolina, Nevada and Washington) is allowed to impose
volume limits and a surcharge on shipments of LLW from states that are not
members of the compact in the region in which the facility is located. On June
19, 1992, the United States Supreme Court issued a decision upholding certain
parts of the Low-Level Radioactive Waste Policy Amendments Act of 1985, but
invalidating a key provision of that law requiring each state to take title to
LLW generated within that state if the state fails to meet federally-mandated
deadlines for siting LLW disposal facilities. The decision has resulted in
uncertainty about states' continuing roles in siting LLW disposal facilities and
may result in increased LLW disposal costs and the need for longer interim LLW
storage before a permanent solution is developed.

In April 1995, a privately owned facility in Utah was approved as a
disposal facility for certain types of LLW. Additionally, the Barnwell, South
Carolina disposal facility was reopened in July 1995 to all states except North
Carolina as a result of legislation passed by the South Carolina legislature.
The Seabrook Project began shipping certain LLW to the Utah facility in December
1995. All LLW generated by the Seabrook Project which exceeds the maximum
radioactivity level of LLW accepted by the Utah facility and LLW resulting from
the Seabrook Project's operation prior to that date is stored on-site.

DECOMMISSIONING

NRC licensing requirements and restrictions are also applicable to the
decommissioning of nuclear generating units at the end of their service lives,
and the NRC has adopted comprehensive regulations concerning decommissioning
planning, timing, funding and environmental review. Any changes in NRC
requirements or technology can increase estimated decommissioning costs.

Along with the other Participants, the Company is responsible for its pro
rata share of the decommissioning and cancellation costs for Seabrook. The
decommissioning funding schedule is determined by the New Hampshire Nuclear
Decommissioning Financing Committee (the "NDFC"). The NDFC reviews the
decommissioning funding schedule for the Seabrook Project at least annually and,
for good cause, may increase or decrease the amount of the funds or alter the
funding schedule. The Company pays its share of decommissioning costs on a
monthly basis.

The estimated cost to decommission the Seabrook Project, based on a study
performed in 1994 for the lead owner of the Plant, is approximately $414 million
in 1995 dollars and $2.1 billion in 2026 dollars, assuming a 36-year life for
the facility and a future escalation rate of 4.25%. Based on this estimate, the
current value of the Company's share of this liability in 1995 dollars is
approximately $50.2 million.

The Seabrook Project's decommissioning estimate and funding schedule is
subject to review each year by the New Hampshire Nuclear Decommissioning Finance
Committee ("NDFC"). The review of the 1996 estimate and funding schedule by the
NDFC is currently scheduled for May 1996. Although the owners of the Seabrook
Project are accumulating funds in an external trust to defray decommissioning
costs, these costs could substantially exceed the value of the trust fund, and
the owners, including the Company, would remain liable for the excess.

On November 15, 1992 , the Company, the Bondholder's Committee and the
Predecessor's former parent, Eastern Utilities Associates ("EUA") entered into a
settlement agreement which resolved certain proceedings against EUA brought by
the Bondholder's Committee. Under the settlement agreement EUA reaffirmed its
guarantee in an amount not to exceed $10 million of the Company's future
decommissioning costs of Seabrook Unit 1 in the event that the Company is unable
to pay its share of such decommissioning costs.

8
<PAGE> 10

ENVIRONMENTAL REGULATION

The Seabrook Project, like other electric generating stations, is subject
to standards administered by federal, state and local authorities with respect
to the siting of facilities and associated environmental factors. The United
States Environmental Protection Agency (the "EPA"), and certain state and local
authorities, have jurisdiction over releases of pollutants, contaminants and
hazardous substances into the environment and have broad authority in connection
therewith, including the ability to require installation of pollution control
devices and remedial actions. The NRC has promulgated a variety of standards to
protect the public from radiological pollution caused by the normal operation of
nuclear generating facilities.

The EPA issued a National Pollutant Discharge Elimination System permit,
valid for a period of five years, to NAESCO on October 30, 1993 authorizing
discharges from Seabrook Station into the Atlantic Ocean and the Browns River in
accordance with limitations, monitoring requirements and conditions specified in
the permit. On August 31, 1994, the New Hampshire Department of Environmental
Services issued to NAESCO permits to operate two auxiliary boilers and two
emergency diesel generators in accordance with New Hampshire RSA 125-C. These
permits, which are effective until August 31, 1997, prescribe limits for the
emission of air pollutants into the ambient air as well as record keeping and
other reporting criteria.

In some environmental areas, the NRC and the EPA have overlapping
jurisdiction. Thus, NRC regulations are subject to all conditions imposed by the
EPA and a variety of federal environmental statutes, including obtaining permits
for the discharge of pollutants (including heat, which is discharged by the
Seabrook Project) into the nation's navigable waters. In addition, the EPA has
established standards, and is in the process of reviewing existing standards,
for certain toxic air pollutants, including radionuclides, under the Clean Air
Act which apply to NRC-licensed facilities. The effective date for the new EPA
radionuclide standards has been stayed as applied to nuclear generating units.
Environmental regulation of the Seabrook Project may result in material
increases in capital and operating costs, delays or cancellation of construction
of planned improvements, or modification or termination of operation of existing
facilities.

ENERGY POLICY ACT

The Energy Act addresses many aspects of national energy policy and
includes important changes for electric utilities and registered holding
companies. For example, the Energy Act grants FERC new authority to mandate
transmission access for QFs, EWGs and traditional utilities. It is not possible
to predict the impact which the Energy Act and the rules and regulations which
will be promulgated by various regulatory agencies pursuant to the Energy Act
will have on the Company. It is also not possible to predict the timing or
content of future energy policy legislation and the significance of such
legislation to the Company. Various issues not addressed by the Energy Act,
including regional planning and transmission arrangements, could be addressed in
future legislation.

EMPLOYEES AND MANAGEMENT

The Company has only two employees, its President, John A. Tillinghast, and
its Vice President and General Counsel, Frank W. Getman Jr. See "Executive
Officers" below. A Management and Administrative Services Agreement was in
effect during 1995 between the Company and URI which provided for URI to provide
a full range of services to the Company including management, accounting and
bookkeeping, budgeting and regulatory compliance. Under the Management and
Administrative Services Agreement with URI, the Company paid URI $225,000 per
year for senior executive management services and reimbursed day-to-day
operational services at URI's cost plus 25%. The Company terminated this
agreement effective January 2, 1996. The Company has assumed responsibility for
many of the services previously provided by URI. Certain administrative
functions, including accounting and bookkeeping, continue to be provided to the
Company by other parties, but the Company expects to assume control of these
functions by the end of the second quarter of 1996.

9
<PAGE> 11

ITEM 2. PROPERTIES.

The Company's principal asset is its 12.1% joint ownership interest in the
Seabrook Project. The Seabrook Project is a nuclear-fueled, steam electricity,
generating plant located in Seabrook, New Hampshire, which was planned to have
two Westinghouse pressurized water reactors, Seabrook Unit 1 and Seabrook Unit 2
(each with a rated capacity of 1,150 megawatts), utilizing ocean water for
condenser cooling purposes. Seabrook Unit 1 entered commercial services on
August 19, 1990. Seabrook Unit 2 has been canceled. See "Item 1. Business -- The
Seabrook Project."

ITEM 3. LEGAL PROCEEDINGS.

The Company filed applications for abatement of its 1994 property taxes
with the Towns of Seabrook, Hampton and Hampton Falls, New Hampshire (the "New
Hampshire Towns"). Each of the New Hampshire Towns denied the Company's
abatement requests. On December 22, 1994 with respect to Hampton and Hampton
Falls and February 18, 1995 with respect to Seabrook, the Company filed appeals
with the Board of Land and Tax Appeals (the "1994 Tax Appeals"). The Company
believes that the New Hampshire Towns significantly overvalued the Company's
interest in the Seabrook Project. The 1994 Tax Appeals are presently pending and
the Company is unable to predict the outcome.

In December 1995, the Town of Seabrook, New Hampshire (the "Town of
Seabrook") issued a bill for property taxes for the second half of 1995 to North
Atlantic Energy Corp., et al. The Town of Seabrook informed the Company that it
believed the Company's share of this bill was equal to $1,293,000. The Company
did not pay the bill because the Company believes that the Town of Seabrook's
assessment of the Company's interest in the Seabrook Project is overstated and
because the bill fails to recognize the Company as an independent taxpayer with
a separately assessed and valued parcel of real estate. While the Company
refused to pay the December property tax bill, the Company has accrued the full
$1,293,000 liability related to the bill. A Notice of Lien will be issued by the
Town of Seabrook if the Company does not pay the bill by March 22, 1996.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

Executive Officers of the Registrant

<TABLE>

The following table sets forth the names and ages of, and the positions and
offices with the Company as of February 29, 1996 held by, all executive officers
of the Company:

<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- --------------------------------------------------
<S> <C> <C>
John A. Tillinghast................ 68 Chief Executive Officer, President, Treasurer and
Chairman of the Board of Directors
Frank W. Getman, Jr................ 32 Vice President, Secretary and General Counsel
</TABLE>

Mr. Tillinghast has served as Chief Executive Officer, President, Treasurer
and a director of the Company since November 23, 1994. Since 1987, Mr.
Tillinghast has served as President and the sole stockholder of Tillinghast
Technology Interests, Inc. ("TILTEC"), a private consulting firm that provides
services to various corporations relative to cogeneration, alternative energy
projects, third party power generation and general restructuring of the U.S.
utility industry. In addition, from 1986 to 1993, Mr. Tillinghast served as
Chairman of the Energy Engineering Board of the National Academy of Sciences. He
holds an M.S. in Mechanical Engineering from Columbia University.

Mr. Getman has served as Vice President, Secretary and General Counsel
since August 1, 1995. From September 1991 to August 1995, Mr. Getman was an
attorney with the law firm of Hale and Dorr, Boston, Massachusetts. Mr. Getman
holds J.D. and M.B.A. degrees from Boston College and a B.A. in Political
Science from Tufts University.

10
<PAGE> 12

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

From January 27, 1995 to April 17, 1995, the Company's Common Stock traded
on the Nasdaq over-the-counter market and was quoted on the Nasdaq OTC Bulletin
Board. Transfers occurred infrequently and at a low volume level. During this
period, the low and high prices at which transactions in the Company's Common
Stock occurred on the Nasdaq OTC Bulletin Board were $7.12 and $9.00 per share,
respectively. These prices may have reflected inter-dealer prices, without
retail mark-ups, mark downs or commissions, and may not have necessarily
represented actual transactions.

<TABLE>
The Company's Common Stock commenced trading on the Nasdaq National Market
("NNM") on April 18, 1995 under the symbol "GBPW". Following are the reported
high and low sales prices of the Company's Common Stock on the NNM as reported
daily in the Wall Street Journal for each quarter in 1995 since the Company's
Common Stock commenced trading on the NNM:

<CAPTION>
1995
------------
HIGH LOW
---- ---
<S> <C> <C>
Second quarter (beginning April 18, 1995).............................. 9 3/4 7
Third quarter.......................................................... 9 7 3/4
Fourth quarter......................................................... 9 1/4 6 3/4
</TABLE>

As of December 31, 1995, the Company had 73 holders of record of its Common
Stock.

The Company has never paid cash dividends on the Common Stock. The Company
currently expects that it will retain all of its future earnings and does not
anticipate paying a dividend in the foreseeable future.

ITEM 6. SELECTED FINANCIAL DATA.

SELECTED FINANCIAL DATA

The following table sets forth selected financial data and other operating
information of the Company. The selected financial data presented below for
periods subsequent to November 23, 1994 give effect to the consummation of the
Company's Reorganization Plan and to the adoption of fresh start reporting by
the Company as of that date in accordance with the American Institute of
Certified Public Accountants' Statement of Position 90-7 Financial Reporting by
Entities in Reorganization under the Bankruptcy Code". Accordingly, periods
prior to November 23, 1994 have been designated "Predecessor Company" or the
"Predecessor" and periods subsequent to November 23, 1994 have been designated
"Reorganized Company" or the "Company". Selected balance sheet and statement of
income (loss) data of the Predecessor Company periods are not comparable to
those of the Reorganized Company periods and a line has been drawn in the tables
to separate the Predecessor financial data from the Company financial data.

The following data presents (i) selected financial data of the Reorganized
Company as of December 31, 1995 and the period from November 24, 1994 to
December 31, 1994 and (ii) selected financial data of the Predecessor Company
for the period from January 1, 1994 to November 23, 1994 and for each of the
three years in the period ended December 31, 1993. The information below should
be read in conjunction with the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's financial
statements, including the notes thereto, contained elsewhere in this Report.

11
<PAGE> 13
<TABLE>
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
<CAPTION>
REORGANIZED PREDECESSOR
COMPANY COMPANY
------------------- -------------------------------------------------
NOVEMBER 24 JANUARY 1
TO TO
DECEMBER 31 NOVEMBER 23
------------------- -------------------------------------------------
DECEMBER 31, FOR THE YEARS ENDED DECEMBER 31,
------------------- -------------------------------------------------
1995 1994 1994 1993 1992 1991
-------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating Revenues................. $ 24,524 $ 3,129 $ 13,989 $ 24,620 $ 23,027 $ 20,919
Fuel, Operation and Maintenance.... 24,899 2,409 21,762 22,991 26,823 27,896
Net (Loss) Income.................. (6,059) 182 131,385 (9,433) (47,468)(2) (19,792)
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
------------------- ---------------------------------
1995 1994 1993 1992 1991
-------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash & Cash Equivalents............ 16,469 22,217 138 4,817 133
Working Capital (1)................ 20,516 27,169 (289,585) (284,819) (160,756)
Total Assets....................... 138,771 145,666 324,590 333,758 359,058
Decommissioning Liability.......... 50,228 48,530 -- -- --
Capitalization:
Long-Term Debt (excluding current
maturities) (1)................ 0 0 0 0 180,000
Common Equity.................... 82,223 88,292 (139,783) (130,350) (82,882)
Cumulative Convertible Preferred
Stock.......................... 63,090 63,090 63,090
Total Capitalization............... 82,233 88,292 (76,693) (67,260) 160,208
<FN>
- ---------------
(1) As a result of Predecessor's bankruptcy filing, the Predecessor was in
default under the indenture pursuant to which the secured notes were issued.
Long-Term Debt of the Predecessor was thereafter classified as a current
liability subject to compromise.

(2) In 1992 the Predecessor Company reversed all accumulated tax benefits
related to carry forwards of net operating losses and alternative minimum
tax credits to reflect the anticipated imposition of certain tax law
limitations and the impact of certain settlement agreements between the
Predecessor Company and EUA.
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

EMERGENCE FROM CHAPTER 11

On February 28, 1991, the Company filed a petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. On November 23, 1994 (the "Effective
Date"), a formal confirmation order by the U.S. Bankruptcy Court for the
District of New Hampshire with respect to the Company's Reorganization Plan
became effective. At that time, the Company emerged from bankruptcy. As a result
of the Chapter 11 proceeding and in accordance with the provisions of the
Reorganization Plan, the capital structure of the Company was completely
changed. In particular, as part of its Chapter 11 proceeding, the Company
discharged all of its pre-petition debt, which consisted primarily of the
approximately $280 million principal amount of outstanding Notes and unpaid
accrued interest on the Notes of approximately $14 million, and raised gross
proceeds of $35 million in the Reorganization Plan. See "Business -- Bankruptcy
Proceeding and Reorganization." Thus, as a result, the Company's net worth
increased significantly and the Company was relieved of the obligation to make
principal and interest payments on the Notes.

The following discussion focuses solely on operating revenues and operating
expenses which are presented in a substantially consistent manner for all of the
periods presented. As a result of the Chapter 11 proceeding and subsequent
effectiveness of the Reorganization Plan on November 23, 1994, the 1994
Statement of

12
<PAGE> 14

Income represents separately the results of operations of the predecessor
company prior to November 23, 1994 from the results of operations of the Company
after that date.

On the Effective Date, the Company adopted a "Fresh Start" Balance Sheet.
That Balance Sheet reflects the assets and liabilities of the Company at their
estimated fair values as of the Effective Date, including the net proceeds of
the Reorganization Plan Equity Financing, and eliminating liabilities discharged
under the Reorganization Plan.

OVERVIEW

The Company reported an operating loss in each of the year ended December
31, 1995, the combined twelve-month period ended December 31, 1994 and the year
ended December 31, 1993. These losses were primarily due to sales of the
Company's share of electricity from the Seabrook Project in the short-term
market at prices resulting in revenues substantially below actual expenses.

The Seabrook Project from time to time experiences both scheduled and
unscheduled outages. The Company incurs losses during outage periods due to the
loss of all operating revenues and additional costs associated with the outages
as well as continuing operating and maintenance expenses and depreciation.
Unscheduled outages or operation of the unit at reduced capacity can occur due
to the automatic operation of safety systems following the detection of a
malfunction. In addition, it is possible for the unit to be shut down or
operated at reduced capacity based on the results of scheduled and unscheduled
inspections and routine surveillance by Seabrook Project personnel. It is not
possible for the Company to predict the frequency or duration of any future
unscheduled outages; however, it is likely that such unscheduled outages will
occur. The Seabrook Project Managing Agent has scheduled the next refueling
outage for June 1997. Refueling outages are scheduled generally every 18-24
months depending upon the Seabrook Project capacity factor and the rate at which
the nuclear fuel is consumed.

This Annual Report on Form 10-K contains forward-looking statements. For
this purpose, any statements contained herein which are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," "expects" and
similar expressions are intended to identify forward-looking statements. There
are a number important factors that could cause the Company's actual results to
differ materially from those indicated by the forward-looking statements. These
factors include, without limitation, those set forth below under the caption
"Certain Factors That May Affect Future Results."

RESULTS OF OPERATIONS

Operating Revenues

Years Ended December 31, 1995, 1994 and 1993

Operating revenues for 1995 increased by approximately $7.4 million, or
43%, as compared with the combined twelve months ended 1994. The increase was
due to reduced scheduled and unscheduled outage time during 1995, with an
average capacity factor of 83.2% in 1995 as compared with 61.6% in the combined
twelve months ended 1994. Operating revenues were also favorably affected in
1995 by an increase in the sales price per kWh to 2.41 cents per kWh as compared
with 2.27 cents per kWh in the combined twelve months ended 1994. The Company's
cost of power (determined by dividing Total Operating Expenses by the Company's
12.1% share of the power produced by the Seabrook Project during the applicable
period) decreased by 34.7% to 3.18 cents per kWh in 1995 as compared with 4.88
cents per kWh in the combined twelve months ended 1994, primarily as a result of
reduced depreciation and amortization expenses in 1995 resulting from the write
down to fair value of all of the Company's assets following its emergence from
bankruptcy in November 1994.

Operating revenues for the combined twelve months ended 1994 decreased by
approximately $7.5 million, or 30.5%, in comparison with 1993. The decrease was
primarily due to greater scheduled and unscheduled outages at the Seabrook
Project during 1994 than in 1993, with an average capacity factor of 61.6% in
1994 in comparison with 89.9% in 1993. The sales price per kilowatt-hour power
was substantially unchanged,

13
<PAGE> 15

increasing to 2.27 cents in the combined twelve-month period in 1994 from 2.24
cents in 1993. The Company's cost of power for the same periods increased by
68.3% to 4.88 cents per kWh in the combined twelve-month period in 1994 as
compared with 2.90 cents per kWh in 1993, primarily as a result of the outages
in the combined twelve months ended 1994.

Expenses

Years Ended December 31, 1995, 1994 and 1993

Total Operating Expenses (excluding depreciation and all taxes) for 1995
increased $0.7 million, or 3.0%, in comparison with the combined twelve months
ended 1994, primarily as a result of increased administrative and general
expenses. This increase was partially offset by lower maintenance costs during
the Seabrook Project's 1995 scheduled outage. Depreciation and amortization
expenses decreased by 59.6% to $3.3 million during 1995 as compared with $8.3
million in the combined twelve months ended 1994. The decrease was the result of
a reduction in the depreciable value of the Company's investment in the Seabrook
Project due to the write down to fair value of all the Company's assets
following its emergence from bankruptcy in November 1994. In the combined twelve
months ended 1994, as part of the its emergence from bankruptcy, the Company
wrote off $137.9 million of assets and liabilities. Interest income increased in
1995 to $1.5 million as a result of the Company's significantly higher cash and
investment balances in 1995.

Total Operating Expenses (excluding depreciation and all taxes) for the
combined twelve-month period in 1994 increased $1.2 million, or 5.1%, in
comparison with 1993, primarily as a result of increased maintenance costs
during the Seabrook Project's 1994 outages. Taxes Other Than Income increased
for the combined twelve-month period in 1994 by approximately $0.4 million, or
10.4%, over 1993, reflecting changes in the manner in which the Company accrued
for this liability as a result of the uncertainty regarding the timing and
magnitude of the NOLs described below.

Net Operating Losses

For federal income tax purposes, as of December 31, 1995, the Company had
net operating loss carry forwards ("NOLs") of approximately $167 million, which
are scheduled to expire between 2005 and 2010. Because the Company has
experienced one or more ownership changes, within the meaning of Section 382 of
the Internal Revenue Code of 1986, as amended, an annual limitation is imposed
on the ability of the Company to use $136 million of these carryforwards. The
Company's best estimate at this time is that the annual limitation on the use of
$136 million of the Company's NOLs is approximately $5.5 million per year. The
Company's other $31 million of NOLs are not currently subject to such
limitations.

LIQUIDITY AND CAPITAL RESOURCES

The Company is required under the JOA to pay its share of Seabrook Unit 1
and Seabrook Unit 2 expenses, including, without limitation, operation and
maintenance expenses, construction and nuclear fuel expenditures and
decommissioning costs, regardless of the level of Seabrook Unit 1's operations.
The Company currently is selling most of its power in the Northeast United
States short-term wholesale power market. The cash generated from electricity
sales by the Company is and has been less than the Company's ongoing cash
requirements. The Company expects that it will continue to incur cash deficits
until the prices at which it is able to sell its share of the Seabrook Project
electricity increase, which may be a number of years, if ever. The Company
intends to cover such deficits with its cash and short-term investments which
totaled approximately $16.5 million at December 31, 1995. However, if the
Seabrook Project operates at a capacity factor below historical levels, or if
expenses associated with the ownership or operation of the Seabrook Project,
including without limitation decommissioning costs, are materially higher than
anticipated, or if the prices at which the Company is able to sell its share of
the Seabrook Project electricity do not increase at the rates and within the
time expected by the Company, the Company would be required to raise additional
capital, either through a debt financing or an equity financing, to meet its
ongoing cash requirements.

The Company's principal asset available to serve as collateral for
borrowings is its 12.1% joint interest in the Seabrook Project. Pursuant to a
power purchase agreement, dated as of April 1, 1993, between the

14
<PAGE> 16

Company and UNITIL Power Corp., the Company's interest in the Seabrook Project
is encumbered by a mortgage. This mortgage may be subordinated to up to $80
million of senior secured financing. See "Business -- Power Purchase Agreement."

The Company's cash and short-term investments decreased approximately $5.7
million during 1995, primarily as a result of the operating loss discussed above
plus $7.5 million of capital expenditures for plant and nuclear fuel, payments
of $1.0 million to the decommissioning trust fund and payments of $2.7 million
for bankruptcy-related reorganization expenses. Partially offsetting the items
listed above were non-cash charges to income of $7.9 million for depreciation
and amortization.

The Company's fiscal 1995 decommissioning expenses totaled approximately
$1.0 million. The decommissioning funding schedule is determined by the New
Hampshire Nuclear Decommissioning Financing Committee (the "NDFC"), which
reviews such schedule for the Seabrook Project at least annually. The Company's
decommissioning expenses for fiscal 1996 and fiscal 1997 will depend upon the
outcome of pending proceedings before the NDFC. The Company expects to use
revenues from the sale of power to pay these decommissioning expenses.

The Company anticipates that its share of the Seabrook Project's capital
expenditures for the 1996 fiscal year will total approximately $2.7 million,
primarily for nuclear fuel.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

The following important factors, among others, could cause actual results
to differ materially from those indicated by forward-looking statements made in
this Annual Report on Form 10-K.

OWNERSHIP OF SINGLE ASSET. The Company owns a single principal asset, its
12.1% joint interest in the Seabrook Nuclear Power Project in Seabrook, New
Hampshire. Accordingly, the Company's results of operations are completely
dependent upon the successful and continued operation of the Seabrook Project.
In particular, if the Seabrook Project experiences unscheduled outages of
significant duration, the Company's results of operations will be materially
adversely affected.

HISTORY OF LOSSES; IMPLEMENTATION OF BUSINESS STRATEGY. The Company has
never reported an operating profit since its incorporation. The Company's
business strategy is to seek purchasers for its share of the Seabrook Project
electricity output at prices, either in the short-term market or pursuant to
medium or long-term contracts, significantly in excess of the prices currently
available in the short-term wholesale electricity market since sales at current
short-term rates do not result in sufficient revenue to enable the Company to
meet its cash requirements for operations, maintenance and capital related
costs. The Company's ability to obtain such higher prices will depend on
regional, national and worldwide energy supply and demand factors which are
beyond the control of the Company. There can be no assurance that the Company
ever will be able to sell power at prices that will enable it to meet its cash
requirements.

LIQUIDITY NEEDS. The Company had approximately $16.5 million in cash, cash
equivalents and short-term investments at December 31, 1995. The Company
believes that such cash, together with the anticipated proceeds from the sale of
electricity by the Company, will be sufficient to enable the Company to meet its
cash requirements until the prices at which the Company can sell its electricity
increase sufficiently to enable the Company to cover its annual cash
requirements. However, if the Seabrook Project operates at a capacity factor
below historical levels, or if expenses associated with the ownership or
operation of the Seabrook Project, including without limitation decommissioning
costs, are materially higher than anticipated, or if the prices at which the
Company is able to sell its share of the Seabrook Project electricity do not
increase at the rates and within the time expected by the Company, the Company
would be required to raise additional capital, either through a debt financing
or an equity financing, to meet its ongoing cash requirements. There is no
assurance that the Company would be able to raise such capital or that the terms
on which any additional capital is available would be acceptable. If additional
funds are raised by issuing equity securities, dilution to then existing
stockholders will result.

CHANGES IN POWER SALE CONTRACT TERMS AVAILABLE IN WHOLESALE POWER
MARKET. In the past, wholesale sellers of electric power, which typically were
regulated electric utilities, frequently entered into medium or

15
<PAGE> 17

long-term power sale contracts providing for prices in excess of the prices
available in the short-term market. Recently, increased competition in the
wholesale electric power market, reduced growth in the demand for electricity
and low prices in the short-term market have reduced the willingness of
wholesale power purchasers to enter into medium or long-term contracts and have
reduced the prices obtainable from such contracts.

RISKS IN CONNECTION WITH JOINT OWNERSHIP OF SEABROOK PROJECT. The Company
is required under the Agreement for Joint Ownership, Construction and Operation
of New Hampshire Nuclear Units dated May 1, 1973, as amended, by and among the
Company and the other 11 utility companies who are owners of the Seabrook
Project (the "JOA"), to pay its share of Seabrook Unit 1 and Seabrook Unit 2
expenses, including without limitation operations and maintenance expenses,
construction and nuclear fuel expenditures and decommissioning costs, regardless
of the level of Seabrook Unit 1's operations. Under certain circumstances, a
failure by the Company to make its monthly payments under the JOA entitles
certain other joint owners of the Seabrook Project to purchase the Company's
interest in the Seabrook Project for 75% of the then fair market value thereof.

In addition, the failure to make monthly payments under the JOA by owners
of the Seabrook Project other than the Company may have a material adverse
effect on the Company by requiring the Company to pay a greater proportion of
the Seabrook Unit 1 and Seabrook Unit 2 expenses in order to preserve the value
of its share of the Seabrook Project. In the past, certain of the owners of the
Seabrook Project other than the Company have not made their full respective
payments.

The Seabrook Project is owned by the Company and the other owners thereof
as tenants in common, with the various owners holding varying ownership shares.
This means that the Company, which owns only a 12.1% interest, does not have
control of the management of the Seabrook Project. As a result, decisions may be
made affecting the Seabrook Project, notwithstanding the Company's opposition.

Certain costs and expenses of operating the Seabrook Project or owning an
interest therein, such as certain insurance and decommissioning costs, are
subject to increase or retroactive adjustment based on factors beyond the
Company's control. The cost of disposing of Unit 2 of the Seabrook Project is
not known at this time. These various costs and expenses may adversely effect
the Company, possibly materially.

EXTENSIVE GOVERNMENT REGULATION. The Seabrook Project is subject to
extensive regulation by federal and state agencies, including the NRC, FERC and
the NHPUC. Compliance with the various requirements of the NRC and FERC is
expensive. Noncompliance with NRC requirements may result, among other things,
in a shutdown of the Seabrook Project.

The NRC has promulgated a broad range of regulations affecting all aspects
of the design, construction and operation of a nuclear facility, such as the
Seabrook Project, including performance of nuclear safety systems, fire
protection, emergency response planning and notification systems, insurance and
quality assurance. The NRC retains authority to modify, suspend or withdraw
operating licenses, such as that pursuant to which the Seabrook Project
operates, at any time that conditions warrant. The NRC might order Seabrook Unit
1 shut down (i) if flaws were discovered in the construction or operation of
Seabrook Unit 1, (ii) if problems developed with respect to other nuclear
generating plants of a design and construction similar to Unit 1, or (iii) if
accidents at other nuclear facilities suggested that nuclear generating plants
generally were less safe than previously believed.

RISK OF NUCLEAR ACCIDENT. Nuclear reactors have been used to generate
electric power for more than 30 years and there are currently more than 100
nuclear reactors used for electric power generation in the United States.
Although the safety record of such nuclear reactors in the United States
generally has been very good, accidents and other unforeseen problems have
occurred both in the United States and elsewhere, including the well-publicized
incidents at Three Mile Island in Pennsylvania and Chernobyl in the former
Soviet Union. The consequences of such an accident can be severe, including loss
of life and property damage, and the available insurance coverage may not be
sufficient to pay all the damages incurred.

PUBLIC CONTROVERSY CONCERNING NUCLEAR POWER PLANTS. Substantial
controversy has existed for some time concerning nuclear generating plants and
over the years such opposition has led to construction delays, cost overruns,
licensing delays, demonstrations and other difficulties. The Seabrook Project
was the subject of

16
<PAGE> 18

significant public controversy during its construction and licensing and remains
controversial. An increase in public concerns regarding the Seabrook Project or
nuclear power in general could adversely affect the operating license of
Seabrook Unit 1. While the Company cannot predict the ultimate effect of such
controversy, it is possible that it could result in a premature shutdown of the
unit.

WASTE DISPOSAL; DECOMMISSIONING COST. There has been considerable public
concern and regulatory attention focused upon the disposal of low- and
high-level nuclear wastes produced at nuclear facilities and the ultimate
decommissioning of such facilities. As to waste disposal concerns, both the
federal government and the State of New Hampshire are currently delinquent in
the performance of their statutory obligations. This has necessitated on-site
storage of such wastes at the Seabrook Project. Although LLW storage facilities
in Utah and South Carolina became available in 1995, certain LLW continue to be
stored on-site at the Seabrook Project. The Seabrook Project anticipates
increasing its on-site storage capacity for low-level wastes in 1996. The
increased capacity is expected to be sufficient through 2006. In addition, the
Managing Agent has advised the Company that the Seabrook Project has adequate
on-site storage capacity for high-level wastes until approximately 2010.

As to decommissioning, the NRC regulations require that upon permanent
shutdown of a nuclear facility, appropriate arrangements for full
decontamination and decommissioning of the facility be made. These regulations
include a requirement to set aside during operation sufficient funds to defray
decommissioning costs. While the owners of the Seabrook Project are accumulating
a trust fund to defray decommissioning costs, these costs could substantially
exceed the value of the trust fund, and the owners (including the Company) would
remain liable for the excess. Moreover, the amount that is required to be
deposited in the trust fund is subject to periodic review and adjustment by an
independent commission of the State of New Hampshire, which could result in
material increases in such amounts. Such a review is currently in process.

INTENSE COMPETITION. The Company sells its share of Seabrook Project
electricity primarily into the Northeast United States wholesale electricity
market. There are a large number of suppliers to this market and a surplus of
electricity, resulting in intense competition. A primary source of competition
comes from traditional utilities, many of which presently have excess capacity.
In addition, non-utility wholesale generators of electricity, such as
independent power producers ("IPPs"), Qualifying Facilities ("QFs") and EWGs, as
well as power marketers and brokers, actively sell electricity in this market.
The Company may face increased competition, primarily based on price, from all
such sources in the future.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The response to this item is submitted in the response found under Item
14(a)(i) in this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Coopers & Lybrand L.L.P., whose report for the year ended December 31,
1993, appears elsewhere in this Annual Report on Form 10-K, were the Company's
independent accountants until November 23, 1994. In connection with the
Company's bankruptcy proceeding, the Bondholders' Committee determined to select
a new accounting firm to be engaged by the Company following the Company's
emergence from bankruptcy. Coopers & Lybrand L.L.P. did not resign and did not
decline to stand for reelection. During the period of Coopers & Lybrand L.L.P.'s
engagement by the Company, there were no disagreements between Coopers & Lybrand
L.L.P. and the Company on any matters of accounting principles or practices,
financial statement disclosure or auditing scope or procedure and no reportable
events relating to the relationship between the Company and Coopers & Lybrand
L.L.P.

On November 26, 1993 the Bankruptcy Court approved the Company's selection
of Arthur Andersen LLP as the Company's independent accountant, to be effective
only upon the Company's emergence from bankruptcy. Prior to November 23, 1994
the Predecessor Company had not consulted Arthur Andersen LLP regarding the
application of accounting principles to specified transactions or the type of
audit opinion that might be rendered on the Company's financial statements
during the periods from January 1, 1991 through December 31, 1993.

17
<PAGE> 19

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

(a) Directors. The information with respect to directors required under
this item is incorporated herein by reference to the section captioned "Election
of Directors" in the Company's Proxy Statement with respect to the Annual
Meeting of Stockholders to be held on April 16, 1996.

(b) Executive Officers. The information with respect to executive officers
required under this item is incorporated herein by reference to Part I of this
Report.

ITEM 11. EXECUTIVE COMPENSATION.

The information required under this item is incorporated herein by
reference to the sections entitled "Election of Directors -- Compensation for
Directors," "-- Executive Compensation," "-- Employment Agreements," "-- Report
of the Compensation Committee," "-- Stock Performance Graph" and "Approval of
the 1995 Stock Option Plan" in the Company's Proxy Statement with respect to the
Annual Meeting of Stockholders to be held on April 16, 1996.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required under this item is incorporated herein by
reference to the section entitled "Security Ownership of Certain Beneficial
Owners and Management" in the Company's Proxy Statement with respect to the
Annual Meeting of Stockholders to be held on April 16, 1996.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required under this item is incorporated herein by
reference to the sections entitled "Election of Directors -- Employment
Agreements" and "-- Certain Transactions" in the Company's Proxy Statement with
respect to the Annual Meeting of Stockholders to be held on April 16, 1996.

PART IV

ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) Documents filed as a part of this Form 10-K:

1. Financial Statements. The Consolidated Financial Statements listed
in the Index to Consolidated Financial Statements and Financial Statement
Schedules are filed as part of this Annual Report on Form 10-K.

2. Financial Statement Schedules. The Financial Statement Schedules
listed in the Index to Consolidated Financial Statements and Financial
Statement Schedules are filed as part of this Annual Report on Form 10-K.

3. Exhibits. The Exhibits listed in the Exhibit Index immediately
preceding such Exhibits are filed as part of this Annual Report on Form
10-K.

(b) Reports on Form 8-K:

None.

18
<PAGE> 20

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GREAT BAY POWER CORPORATION
Report of Independent Public Accountants.............................................. F-1
Balance Sheets as of December 31, 1995 and 1994....................................... F-2
Statements of Income -- Year Ended December 31, 1995 and Period from November 24 to
December 31, 1994................................................................... F-3
Statements of Changes in Stockholders' Equity, Year Ended December 31, 1995 and Period
from November 24 to December 31, 1994............................................... F-4
Statements of Cash Flow -- Year Ended December 31, 1995 and Period from November 24 to
December 31, 1994................................................................... F-5
Notes to Financial Statements......................................................... F-6
GREAT BAY POWER CORPORATION (f.k.a. EUA Power Corporation)("The Predecessor")
Statement of Income -- Period from January 1 to November 23, 1994..................... F-3
Statement of Changes in Stockholders' Equity -- Period from January 1 to November 23,
1994................................................................................ F-4
Statement of Cash Flows -- Period from January 1 to November 23, 1994................. F-5
Report of Independent Accountants..................................................... F-20
Statement of Loss and Retained (Deficit) Earnings for the year ended December 31,
1993................................................................................ F-21
Statement of Cash Flow for the year ended December 31, 1993........................... F-22
Notes to Financial Statements......................................................... F-23
</TABLE>

19
<PAGE> 21

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Great Bay Power Corporation and

To the Director of
Great Bay Power Corporation (formerly EUA Power Corporation)

We have audited the accompanying balance sheets of Great Bay Power
Corporation (a New Hampshire corporation) as of December 31, 1995 and 1994 and
the related statements of income, changes in stockholders' equity and cash flows
for the year ended December 31, 1995 and the period from November 24, 1994 to
December 31, 1994. We have also audited the accompanying statements of income,
changes in stockholders' equity and cash flows of Great Bay Power Corporation
(formerly EUA Power Corporation, the "Predecessor") for the period from January
1, 1994 to November 23, 1994. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to about present fairly,
in all material respects, the financial position of Great Bay Power Corporation
as of December 31, 1995 and 1994, and the results of the operations and cash
flows of Great Bay Power Corporation and Great Bay Power Corporation (formerly
EUA Power Corporation, the "Predecessor") for the year ended December 31, 1995,
and the periods from November 24, 1994 to December 31, 1994 and January 1, 1994
to November 23, 1994, respectively, in conformity with generally accepted
accounting principles.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
January 26, 1996

F-1
<PAGE> 22
<TABLE>

GREAT BAY POWER CORPORATION
BALANCE SHEET
(DOLLARS IN THOUSANDS)

<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash & Cash equivalents....................................... $ 8,874 $ 18,533
Short-term Investments, at market............................. 7,595 3,684
Accounts Receivable........................................... 1,535 2,598
Materials & Supplies.......................................... 4,230 4,846
Prepayments & Other Assets.................................... 1,249 2,976
-------- --------
Total Current Assets.................................. 23,483 32,637
-------- --------
Property, Plant, & Equipment:
Utility Plant................................................. 104,696 101,308
Less: Accumulated Depreciation................................ (4,165) (95)
-------- --------
Net Utility Plant............................................. 100,531 101,213
Nuclear Fuel.................................................. 9,925 10,556
Less: Accumulated Amortization................................ (304) (2,118)
-------- --------
Net Nuclear Fuel.............................................. 9,621 8,438
Net Property, Plant & Equipment....................... 110,152 109,651
Other Assets:
Decommissioning Trust Fund.................................... 5,108 3,290
Deferred Debits & Other....................................... 28 88
-------- --------
Total Other Assets.................................... 5,136 3,378
-------- --------
TOTAL ASSETS.......................................... $138,771 $145,666
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts Payable and Accrued Expenses......................... $ 237 $ 303
Taxes Accrued................................................. 1,293 1,166
Reorganization Expenses....................................... 0 2,653
Miscellaneous Current Liabilities............................. 1,437 1,346
-------- --------
Total Current Liabilities............................. 2,967 5,468
Operating Reserves:
Decommissioning Liability..................................... 50,228 48,530
Miscellaneous Other........................................... 671 719
-------- --------
Total Operating Reserves.............................. 50,899 49,249
Other Liabilities & Deferred Credits............................ 2,672 2,563
Accumulated Deferred Taxes...................................... 0 94
Commitments & Contingencies.....................................
Stockholders' Equity:
Common stock, $.01 par value
Authorized, issued and outstanding -- 8,000,000 shares... 80 80
Additional paid-in capital.................................... 88,030 88,030
Retained earnings............................................. (5,877) 182
-------- --------
Total Stockholders' Equity............................ 82,233 88,292
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............ $138,771 $145,666
======== ========
</TABLE>

(The accompanying notes are an integral part of these statements.)

F-2
<PAGE> 23

<TABLE>

GREAT BAY POWER CORPORATION
STATEMENT OF INCOME
(DOLLARS IN THOUSANDS)

<CAPTION>
SUCCESSOR PREDECESSOR
------------------------------- -------------
JANUARY 1 TO NOVEMBER 24 TO JANUARY 1 TO
DECEMBER 31, DECEMBER 31, NOVEMBER 23,
1995 1994 1994
------------- --------------- -------------
<S> <C> <C> <C>
Operating Revenues............................ $24,524 $ 3,129 $ 13,989
Operating Expenses:
Production.................................. 17,433 1,836 16,891
Transmission................................ 934 70 834
Administrative & General.................... 6,532 503 4,037
Depreciation & Amortization................. 3,339 240 8,027
Taxes other than Income..................... 4,143 346 3,934
------------- ------- -------------
Total Operating Expenses............ 32,381 2,995 33,723
------------- ------- -------------
Operating Income (Loss)....................... (7,857) 134 (19,734)
------------- ------- -------------
Other (Income) Deductions:
Write-down of Assets & Liabilities.......... -- -- $ 137,908
Reorganization Expenses..................... -- -- 4,038
Interest and Divident (Income) Expense...... (1,546) (143) 760
Miscellaneous............................... (198) 1 (102)
------------- ------- -------------
Total Other Deductions.............. (1,744) (142) 142,604
------------- ------- -------------
Earnings (Loss) Before Income Taxes........... (6,113) 276 (162,338)
------------- ------- -------------
Income Taxes:
Current..................................... (54) -- --
Deferred.................................... 0 94 --
------------- ------- -------------
Total Income Taxes.................. (54) 94 --
------------- ------- -------------
Income (Loss) Before Extraordinary Item....... (6,059) 182 (162,338)
Extraordinary Income (Loss) Forgiveness of
Long-term Debt and Accrued Interest......... -- -- 293,723
------------- ------- -------------
Net Income (Loss)............................. $(6,059) $ 182 $ 131,385
============= ================ =============
</TABLE>

(The accompanying notes are an integral part of these statements.)

F-3
<PAGE> 24

GREAT BAY POWER CORPORATION

<TABLE>

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<CAPTION>
COMMON STOCK, $.01 COMMON STOCK, $.01
PAR VALUE PAR VALUE
------------------ ------------------
AUTHORIZED, ISSUED LESS: AUTHORIZED, ISSUED ADDITIONAL
AND OUTSTANDING TREASURY STOCK, PAID-IN CAPITAL TOTAL AND OUTSTANDING PAID-IN
10,000 SHARES 10,000 SHARES TREASURY STOCK COMMON STOCK 8,000,000 SHARES CAPITAL
------------------ --------------- --------------- ------------ ------------------ ----------
<S> <C> <C> <C> <C> <C> <C>
PREDECESSOR
Balance at December 31,
1993................... $ 10 $ (10) $ 10 $ 10 $ -- $ --
Financial Results,
January 1 to November
23, 1994............. -- -- -- -- --
Equity Infusion and
Fresh-Start Adj's...... (10) 10 (10) (10) 80 88,030
- ----------------------------------------------------------------------------------------------------------------------------
SUCCESSOR
Balance at November 23,
1994................... -- -- -- 80 88,030
Financial Results,
November 24 to
December 31, 1994.... -- -- -- -- --
Balance at December 31,
1994................... -- -- -- 80 88,030
Financial Results,
January 1 to December
31, 1995............. -- -- -- -- --
Balance at December 31,
1995................... -- -- -- $ 80 $ 88,030

REDEEMABLE TOTAL
PREFERRED RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
---------- --------- -------------
<S> <C> <C> <C>
PREDECESSOR
Balance at December 31,
1993................... $ 63,090 $(139,793) $ (76,693)
Financial Results,
January 1 to November
23, 1994............. -- 127,789 127,789
Equity Infusion and
Fresh-Start Adj's...... (63,090) 12,004 37,014
- -----------------------------------------------------------------------------
SUCCESSOR
Balance at November 23,
1994................... -- -- 88,110
Financial Results,
November 24 to
December 31, 1994.... -- 182 182
Balance at December 31,
1994................... -- 182 88,292
Financial Results,
January 1 to December
31, 1995............. -- (6,059) (6,059)
Balance at December 31,
1995................... -- $ (5,877) $ 82,233
</TABLE>

(The accompanying notes are an integral part of these statements.)

F-4
<PAGE> 25

GREAT BAY POWER CORPORATION

<TABLE>

STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<CAPTION>
SUCCESSOR PREDECESSOR
------------------------------ ------------
JANUARY 1 TO NOVEMBER 24 TO JANUARY 1 TO
DECEMBER 31, DECEMBER 31, NOVEMBER 23,
1995 1994 1994
------------ -------------- ------------
<S> <C> <C> <C>
Net cash flow from operating activities:
Net Income....................................... $ (6,059) $ 182 $131,385
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation................................ 3,339 240 5,092
Amortization of nuclear fuel................ 4,520 553 3,571
Deferred income taxes....................... (94) 94 --
Writedown of assets, net.................... 758 -- 137,908
Gain on forgiveness of debt................. -- -- (293,723)
Gain on transfer of assets.................. (193) -- --
Provision for reorganization expenses....... -- -- 4,038
Payment of reorganization expenses.......... (2,653) (1,518) --
(Increase) decrease in accounts
receivable................................ 1,021 (635) 507
Decrease in materials & supplies............ 113 39 201
(Increase) decrease in prepaids and other
assets.................................... 1,718 (520) 1,631
Increase (decrease) in accounts payable..... (66) 293 (81)
Increase in taxes accrued................... 126 273 312
Increase in misc. current liabilities....... 400 946
Other....................................... 183 261 717
------------ -------------- ------------
Net cash provided by (used in) operating activities... 2,713 (358) (7,496)
------------ -------------- ------------
Net cash flows (used in) investing activities:
Utility plant additions.......................... (1,770) (260) (1,774)
Nuclear fuel additions........................... (5,703) -- (361)
Payments to decommissioning fund................. (988) (98) (830)
Short term investments, net...................... (3,911) (3,684) --
------------ -------------- ------------
Net cash used in investing activities................. (12,372) (4,042) (2,965)
Net cash provided by financing activities:
Sale of common stock............................. -- -- 35,000
Borrowings under DIP financing................... -- -- 8,823
Repayment of DIP financing....................... -- -- (10,567)
------------ -------------- ------------
Net cash provided by financing activities............. -- -- 33,256
------------ -------------- ------------
Net (decrease) increase in cash and cash
equivalents......................................... (9,659) (4,400) 22,795
Cash and cash equivalents, beginning of period........ 18,533 22,933 138
------------ -------------- ------------
Cash and cash equivalents, end of period.............. $ 8,874 $ 18,533 $ 22,933
========== =========== ==========
</TABLE>

(The accompanying notes are an integral part of these statements.)

F-5
<PAGE> 26

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. THE COMPANY

The Company, Great Bay Power Corporation, is a New Hampshire corporation,
which emerged from bankruptcy on November 23, 1994. The Predecessor Company, EUA
Power Corporation ( "The Predecessor") was incorporated in 1986. The Company is
authorized by the New Hampshire Public Utilities Commission ("NHPUC") to engage
in business as a public utility for the purposes of participating as a joint
owner in the Seabrook Project, acquiring its 12.1% interest in the Seabrook
Project and selling its share of the output of Seabrook Unit 1 for resale. The
Seabrook Project is a nuclear-fueled, steam electricity, generating plant
located in Seabrook, New Hampshire, which was originally planned to have two
Westinghouse pressurized water reactors, Seabrook Unit 1 and Seabrook Unit 2
(each with a rated capacity of 1,150 megawatts), utilizing ocean water for
condenser cooling purposes. Seabrook Unit 1 entered commercial service on August
19, 1990. Seabrook Unit 2 has been canceled. The Company became a wholesale
generating company when Seabrook Unit 1 commenced commercial operation on August
19, 1990. In 1993, the Company became an Exempt Wholesale Generator ("EWG")
under the Energy Policy Act of 1992.

The Company is required to pay its share (i.e., the same percentage as the
percentage of its ownership and its entitlement to the output) of all of the
costs of the Seabrook Project, including fixed costs (whether or not Seabrook
Unit 1 is operating), operating costs, costs of additional construction or
modification, costs associated with condemnation, shutdown, retirement, or
decommissioning of the Seabrook Project, and certain transmission charges. The
Predecessor never reported an operating profit from the time of its
incorporation until it filed for bankruptcy in 1991. See Footnote 1B for further
discussion. The Company's current business strategy is to seek purchasers for
its share of the Seabrook Project electricity output at prices, either in the
short term market or pursuant to medium or long term contracts, in excess of the
prices currently available in the short term wholesale electricity market since
sales at current short term rates do not result in sufficient revenue to enable
the Company to meet its long term cash requirements for operations, maintenance
and capital related costs. The Company's ability to obtain such higher prices
will depend on regional, national and worldwide energy supply and demand
factors.

The Company currently has two employees and substantially all the Company's
power marketing and administrative functions for 1995 were performed on the
Company's behalf by third parties pursuant to contractual agreements. See Notes
7 and 8 for further discussion of these agreements.

B. BANKRUPTCY PROCEEDING AND REORGANIZATION

The Company filed a voluntary petition under Chapter 11 of the United
States Bankruptcy Code ("the Bankruptcy Code") in the United States Bankruptcy
Court for the District of New Hampshire ("the Bankruptcy Court") on February 28,
1991. It conducted its business as a Debtor in Possession until November 23,
1994, at which time the Company's First Amendment to the First Modified Plan
dated September 9, 1994 ("the Amended Plan") became effective and the Company
emerged from Chapter 11.

The Bankruptcy Court confirmed the Bondholders' Committee's Fifth Amended
Plan of Reorganization on March 5, 1993. After confirmation, the Predecessor was
unable to obtain the $45 million of debt financing contemplated by the Fifth
Amended Plan of Reorganization. In February 1994, however, the Bondholders'
Committee obtained a commitment from Omega Advisers, Inc. ("Omega") or its
designees to provide $35 million of equity financing for the Company (the
"Financing").

On April 7, 1994, the Company and the Bondholders' Committee entered into a
definitive Stock and Subscription Agreement (the "Stock and Subscription
Agreement") with Omega and Elliott Associates, L.P. (Elliott) (collectively, the
Investors) with respect to the Omega Financing.

F-6
<PAGE> 27

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

The Bondholders' Committee prepared a First Modification to the Fifth
Amended Plan of Reorganization to reflect the change from debt to equity
financing and submitted a Supplemental Disclosure Statement describing that
First Modification to the Bankruptcy Court for its approval. The Fifth Amended
Plan of Reorganization, as modified by the First Modification, is hereinafter
referred to as the "Plan." The Bankruptcy Court approved the Supplemental
Disclosure Statement at a hearing on March 11, 1994. The Plan was mailed to the
Company's creditors for their approval on April 7, 1994, and the creditors
approved the Plan by a significant margin.

On May 23, 1994, the Bankruptcy Court confirmed the Plan. The only
condition which remained to be satisfied for the occurrence of the Effective
Date of the Plan was the closing of the Stock and Subscription Agreement. The
Committee believed that all of the conditions to closing set forth in the Stock
and Subscription Agreement had been satisfied and was prepared to close the
Stock and Subscription Agreement. Before the closing could occur, however, the
operators of the Seabrook Project determined, during a regularly scheduled
refueling outage, that certain repairs to the Seabrook Project were required.
These repairs have been completed and the Seabrook Project is now operating. The
repairs, however, caused the Seabrook Project to be out of service for
approximately eight weeks longer than anticipated in connection with the
scheduled refueling outage.

Because of the unplanned extension of the outage, the repairs required, and
the related loss of revenue of the Company, Omega and Elliott asserted that a
material adverse event had occurred with respect to the Company and that,
therefore, they were not obligated to complete the Omega Financing. The Company
disagreed with those assertions, and informed Omega and Elliott that they were
in default under the Stock and Subscription Agreement and informed Omega and
Elliott that the Company would bring suit to enforce the obligations of Omega
and Elliott to close the Omega Financing. Notwithstanding its position on this
matter, the Company engaged in negotiations with Omega and Elliott to settle the
dispute and to complete the Omega Financing. On September 9, 1994, the Company,
Omega and Elliott resolved their disputes and entered into a Settlement
Agreement (the "Settlement Agreement").

The terms of the Settlement Agreement changed the terms of the Omega
Financing. As described above, under the Plan before its amendment, the
Investors were to receive 4.8 million shares, representing 60% of the common
stock of the Company, in exchange for their $35 million investment. The
Settlement Agreement changed the Plan to provide also that, on the Effective
Date of the Amended Plan, 480,000 shares of new common stock of the Company,
which would have otherwise been distributed to the creditors of the Company,
would be issued to the Disbursing Agent under the Plan (the "Escrow Shares").
The Escrow Shares represent 6% of the common stock of the Company. The Company's
creditors received the remaining 34% on the Effective Date of the amended Plan.

On the first anniversary of the Effective Date of the Amended Plan, if the
Aggregate Value, as defined in the Settlement Agreement, of the Purchasers' 4.8
million shares of common stock was less than $38.5 million, the Company would be
obligated to pay to the Investors an amount (the "True-Up Amount") equal to the
lesser of (a) $38.5 million less the Aggregate Value, or (b) the total value of
all of the Escrow Shares, based on their per share value. The Settlement
Agreement permitted the Investors to elect to have their True-Up amounts, if
any, satisfied by the issuance of Escrow Shares or in cash. If the Aggregate
Value was equal to or greater than $38.5 million, the Escrow Shares would be
issued on a pro rata basis to the Company's creditors in accordance with the
Amended Plan. In no event, however, would the Investors be entitled to more than
the 480,000 Escrow Shares, or the cash proceeds from the sale of those shares.
On the first anniversary date, November 23, 1995, the Aggregate Value of the
escrow shares was greater than $38.5 million and they were issued to the
creditors.

Pursuant to the Settlement Agreement, the Company amended the Plan and its
related Disclosure Statement, submitted the Amended Plan and the Amended
Disclosure Statement to the Bankruptcy Court for

F-7
<PAGE> 28

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

its approval and obtained that approval, circulated the Amended Plan and the
Amended Disclosure Statement to the Company's creditors in order to give them
the opportunity to change their previous votes approving the Plan, and then
applied to the Bankruptcy Court for confirmation of the Amended Plan. The
Bankruptcy Court confirmed the Amended Plan on November 4, 1994. In addition,
the Company obtained extensions of time and, in some cases, reapprovals, from
certain regulatory agencies which had previously approved the Omega Financing.
Closing of the Omega Financing occurred on November 23, 1994, at which time the
Company's First Amendment to the First Modified Plan dated September 9, 1994
("the Amended Plan") became effective and the Company emerged from Chapter 11.

<TABLE>
In accordance with Statement of Position 90-7, "Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code", the historical amounts of
individual assets and liabilities have been adjusted to fair values and
Liabilities Subject to Compromise of $293,864,000 have been discharged as a
result of the Reorganization Plan. The amount of prior retained deficit
eliminated as a result of the reorganization was $159,659,000. The
reorganizational value has been determined based on the fair value of the
Company (See Note 1D). The adjustments to individual assets and liabilities are
as follows:

<CAPTION>
ADJUSTMENTS
--------------
(IN THOUSANDS)
<S> <C>
Writedown of Net Utility Plant and Nuclear Fuel........................ $ 193,635
Writedown of Deferred Debits........................................... 27,470
Recognition of Decommissioning Liability, net.......................... 45,193
Writedown of Deferred Taxes and ITC.................................... (73,927)
Writedown of Deferred Gains and Credits................................ (47,375)
Other, net............................................................. (7,088)
---------
Net Writedown of Assets...................................... $ 137,908
Forgiveness of Liabilities Subject to Compromise....................... (293,864)
Recognition of Reorganization Expenses................................. 4,038
---------
Net adjustment to assets and liabilities............................... $(151,918)
=========
</TABLE>

F-8
<PAGE> 29

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995
<TABLE>
The following unaudited proforma condensed statement of (loss) income is
presented to illustrate the estimated effect of the reorganization as if such
transaction had occurred as of January 1, 1994.
<CAPTION>
PROFORMA
YEAR ENDED YEAR ENDED
DECEMBER 31, PROFORMA DECEMBER 31,
1994 ADJUSTMENTS 1994
------------- ----------- -------------
<S> <C> <C> <C>
Operating Revenues................................ $ 17,118 $ 17,118
Operating Expenses:
Production & Transmission....................... 19,631 $ (2,830)(f) 16,801
Administrative & General........................ 4,540 700 (e) 5,240
Depreciation & Amortization..................... 8,267 (5,461)(d) 2,806
Taxes Other than Income......................... 4,280 4,280
-------- --------
Total Operating Expenses................ 36,718 29,127
Operating Income.................................. (19,600) (12,009)
Write down of Assets, net....................... 137,908 (137,908)(a) 0
Reorganization Expenses......................... 4,038 (4,038)(b) 0
Other Income.................................... (101) (101)
Interest Charges, net........................... 617 (706)(c) (89)
-------- --------
Net Loss Before Taxes............................. (162,062) (11,819)
Income Taxes.................................... 94 (4,096)(g) (4,002)
Net Loss before Extraordinary Item................ (162,156) (7,817)
Forgiveness of Debt............................. 293,723 (293,723)(c) 0
-------- --------
Net Income (Loss)................................. $131,567 $ (7,817)
======== ========
<FN>
- ---------------
(a) Elimination of Writedown of Assets, Net

(b) Elimination of Reorganization Expenses

(d) Depreciation expense adjusted to reflect asset writedown

(e) Additional expenses associated with UNITIL and Tillinghast agreements

(f) Recognition of new outage accrual policy

(g) Tax impact of above entries assuming ability to fully benefit loss
</TABLE>

C. REGULATION

The Company is subject to the regulatory authority of the Federal Energy
Regulatory Commission ("FERC"), the Nuclear Regulatory Commission ("NRC") and
the New Hampshire Public Utilities Commission ("NHPUC") and other federal and
state agencies as to rates, operations and other matters. The Company's cost of
service is not regulated. As such, the Company's accounting policies are not
subject to the provisions of Statement of Financial Accounting Standards No. 71
"Accounting for the Effects of Certain Types of Regulation".

D. USE OF MANAGEMENT ESTIMATES

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 assets and liabilities at the date of the financial
statements and the

F-9
<PAGE> 30

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

E. UTILITY PLANT

Utility plant at November 23, 1994 was revalued to its estimated fair value
based on the fair value of the Company. The reorganization value of the Company
at November 23, 1994 was determined based on discounted cash flow valuation. The
cost of additions to utility plant subsequent to November 23, 1994 are recorded
at original cost. During the period from January 1, 1994 to November 23, 1994,
the Predecessor capitalized $121,000 of interest related to plant additions.

F. DEPRECIATION AND MAINTENANCE

Electric plant is depreciated on the straight-line method at rates designed
to fully depreciate all depreciable properties over the lesser of estimated
useful lives or the Plant's remaining NRC license life, which extends to 2026.

Capital projects constituting retirement units are charged to electric
plant. Minor repairs are charged to maintenance expense. When properties are
retired, the original cost, plus cost of removal, less salvage, are charged to
the accumulated provision for depreciation.

G. AMORTIZATION OF NUCLEAR FUEL

The cost of nuclear fuel is amortized to expense based on the rate of
burn-up of the assemblies comprising the total core. The Company also provides
for the cost of disposing of spent nuclear fuel at rates specified by the United
States Department of Energy ("DOE") under a contract for disposal between the
Company and the DOE.

The Company amortizes to expense on a straight-line basis the estimated
cost of the final unspent nuclear fuel core, which is expected to be in place at
the expiration of the Plant's NRC operating license, in conformity with rates
authorized by the FERC.

H. AMORTIZATION OF MATERIALS AND SUPPLIES

The Company amortizes to expense an amount designed to fully amortize the
cost of the material and supplies inventory that is expected to be on hand at
the expiration of the Plant's NRC operating license.

I. DECOMMISSIONING

Based on the Financial Accounting Standards Board's ("FASB") tentative
conclusions, the Company has recognized as a liability its proportionate share
of the estimated Seabrook Project decommissioning. The initial recognition of
this liability was capitalized as part of the Fair Value of the Utility Plant at
November 23, 1994. The estimated cost to decommission the Seabrook Project,
based on a study performed for the lead owner of the Plant, is approximately
$414 million in 1995 dollars and $2.1 billion in 2026 dollars and assumes a 36
year life for the facility and a future escalation rate of 4.25%. Based on this
estimate, the Company's share in 1995 dollars is approximately $50.2 million,
which has been recorded as a liability in the December 31, 1995 balance sheet.

The Seabrook project's decommissioning estimate and funding schedule is
subject to review each year by the New Hampshire Nuclear Decommissioning Finance
Committee ("NDFC"). This estimate is based on a number of assumptions. Changes
in assumptions for such things as labor and material costs, technology,

F-10
<PAGE> 31

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

inflation and timing of decommissioning could cause these estimates to change in
the near term. The review of the 1996 estimate and funding schedule by the NDFC
is currently scheduled for May.

The Staff of the SEC has questioned certain of the current accounting
practices of the electric utility industry regarding the recognition,
measurement and classification of decommissioning costs for nuclear generating
stations and joint owners in the financial statements of these entities. In
response to these questions, the FASB has agreed to review the accounting for
nuclear decommissioning costs. Although the Company's accounting for
decommissioning was based on the FASB's tentative conclusions, if the accounting
practices for nuclear power plant decommissioning are changed, the annual
provision for decommissioning could change relative to 1995. The Company is
uncertain as to the impact, if any, changes in the current accounting will have
on the Company's financial statements.

Funds collected by Seabrook for Decommissioning are deposited in an
external irrevocable trust pending their ultimate use. The earnings on the
external trusts also accumulate in the fund balance. The trust funds are
restricted for use in paying the decommissioning of Unit I. The investments in
the trust are available for sale. The Company has therefore reported its
investment in trust fund assets at market value.

Although the owners of Seabrook are accumulating funds in an external trust
to defray decommissioning costs, these costs could substantially exceed the
value of the trust fund, and the owners, including the Company, would remain
liable for the excess. The amount that is required to be deposited in the trust
fund is subject to periodic review and adjustment by the NDFC, which could
result in material increases in such amounts.

On November 15, 1992 , the Company, the Bondholder's Committee and the
Predecessor's former parent, Eastern Utilities Associates (EUA) entered into a
settlement agreement which resolved certain proceedings against EUA brought by
the Bondholder's Committee. Under the settlement agreement EUA reaffirmed its
guarantee of up to $10 million of the Company's future decommissioning costs of
Seabrook Unit 1.

J. OPERATING REVENUES

Revenues are recorded on an accrual basis based on billing rates provided
for in contracts and approved by FERC.

K. TAXES ON INCOME

The Company accounts for taxes on income under the liability method
required by Statement of Financial Accounting Standards No. 109.

L. CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

For purposes of the Statements of Cash Flows, the Company considers all
highly liquid short-term investments with an original maturity of three months
or less to be cash equivalents. The carrying amounts approximate fair value
because of the short-term maturity of the investments.

All other short term investments with a maturity of greater than three
months are classified as trading securities and reflected as a current asset at
market value.

M. SEABROOK UNIT 2

The Company also has a 12.1% ownership interest in Seabrook Unit 2 to which
it has assigned no value. On November 6, 1986, the joint owners of the Seabrook
Project, recognizing that Seabrook Unit 2 had been canceled, voted to dispose of
the Unit. Certain assets of Seabrook Unit 2 have been and are being sold from

F-11
<PAGE> 32

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

time to time to third parties and or used in Seabrook Unit 1. Plans regarding
disposition of Seabrook Unit 2 are now under consideration, but have not been
finalized and approved. The Company is unable, therefore, to estimate the costs
for which it would be responsible in connection with the disposition of Seabrook
Unit 2. Monthly charges are required to be paid by the Company with respect to
Seabrook Unit 2 in order to preserve and protect its components and various
warranties. Any sales or transfers to Unit 1 of Unit 2 property or inventory are
reflected in other income as gains on the sale or transfer of assets.

N. SEABROOK OUTAGE COSTS

The Company's operating results and the comparability of these results on
an interim and annual basis are directly impacted by the operations of the
Seabrook Project, including the cyclical refueling outages (generally 18-24
months apart) as well as unscheduled outages. During outage periods at the
Seabrook Project, the Company has no electricity for resale and consequently no
revenues. Therefore the impact of outages on the Company's results of operations
and financial position is materially adverse.

The Company accrues for the incremental costs of the Seabrook Project's
scheduled outages over the periods between those outages. However, the Company
continues to expense the normal Seabrook operating and maintenance expenses as
incurred. Therefore, the Company will incur losses during scheduled outage
periods as a result of the combination of the lack of revenue and the
recognition of normal recurring operation and maintenance costs as well as the
continuing depreciation of the Utility Plant. Based on expected fuel
consumption, the Seabrook plant management has scheduled the next refueling
outage for June 1997 at an estimated cost of $20 million. The Company's share is
approximately $2.4 million. The estimate is based on a number of assumptions.
Changes in assumptions for such things as labor and contractor costs, required
repairs and days to perform the outage and plant operations in the interim,
could cause this estimate to change in the near term.

2. NUCLEAR ISSUES

The NRC has promulgated numerous requirements affecting safety systems,
fire protection, emergency response planning and notification systems, and other
aspects of nuclear plant construction, equipment and operation. The Company has
been, and may be, affected to the extent of its proportionate share by the cost
of any such modifications to Seabrook Unit 1.

Nuclear units in the United States have been subject to widespread
criticism and opposition. Some nuclear projects have been canceled following
substantial construction delays and cost overruns as the result of licensing
problems, unanticipated construction defects and other difficulties. Various
groups have by litigation, legislation and participation in administrative
proceedings sought to prohibit the completion and operation of nuclear units and
the disposal of nuclear waste. In the event of a shutdown of any unit, NRC
regulations require that it be completely decontaminated of any residual
radioactivity. The cost of such decommissioning, depending on the circumstances,
could substantially exceed the owners' investment at the time of cancellation.

Public controversy concerning nuclear power could adversely affect the
operating license of Seabrook Unit 1. While the Company cannot predict the
ultimate effect of such controversy, it is possible that it could result in a
premature shutdown of the unit.

A. NUCLEAR FUEL

F-12
<PAGE> 33

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

the disposition of that fuel after use. The owners and lead participants of each
United States nuclear unit have entered into contracts with the DOE for disposal
of spent nuclear fuel, in accordance with the NWPA. The NWPA requires (subject
to various contingencies) that the federal government design, license, construct
and operate a permanent repository for high level radioactive wastes and spent
nuclear fuel and establish prescribed fees for the disposal of such wastes and
fuel. The NWPA specifies that the DOE provide for the disposal of such wastes
and spent nuclear fuel starting in 1998.

Objections on environmental and other grounds have been asserted against
proposals for storage as well as disposal of spent fuel. The DOE anticipates
that a permanent disposal site for spent fuel will be ready to accept fuel for
storage on or before the year 2010. However, the NRC, which must license the
site, stated only that a permanent repository will become available by the year
2025. At the Seabrook Project, there is on-site storage capacity which, with
minimal capital expenditures, should be sufficient for twenty years or until the
year 2010. No near-term capital expenditures are anticipated to deal with any
increase in storage requirements after 2010.

B. FEDERAL DEPARTMENT OF ENERGY ("DOE") DECONTAMINATION AND DECOMMISSIONING
ASSESSMENT

Title XI of the Energy Policy Act of 1992 (the "Policy Act") provides for
decontaminating and decommissioning of the DOE's enrichment facilities to be
partially funded by a special assessment against domestic utilities. Each
utility's share of the assessment is to be based on its cumulative consumption
of DOE enrichment services. As of December 31, 1995, the Company had accrued its
pro rata estimated obligation of $738,000 related to the project's prior years'
usage to be paid over the 15-year period beginning October 1, 1992.

C. PRICE ANDERSON ACT

In accordance with the Price Anderson Act, the limit of liability for a
nuclear-related accident is approximately $8.9 billion, effective November 18,
1994. The primary layer of insurance for this liability is $200 million of
coverage provided by the commercial insurance market. The secondary coverage is
approximately $8.7 billion, based on the 110 currently licensed reactors in the
United States. The secondary layer is based on a retrospective premium
assessment of $79.3 million per nuclear accident per licensed reactor, payable
at a rate not exceeding $10 million per year per accident and a maximum of $20
million per year. In addition, the retrospective premium is subject to inflation
based indexing at five year intervals and, if the sum of all public liability
claims and legal costs arising from any nuclear accident exceeds the maximum
amount of financial protection available, then each licensee can be assessed an
additional 5% ($3.775 million) of the maximum retrospective assessment. With
respect to the Seabrook Project, the Company would be obligated to pay its
ownership share of any assessment resulting from a nuclear incident at any
United States nuclear generating facility. The Company estimates its maximum
liability per incident currently would be an aggregate amount of approximately
$9.59 million per accident, with a maximum annual assessment of about $1.21
million per incident, per year.

D. NUCLEAR INSURANCE

Insurance has been purchased by the Seabrook Project from Nuclear Electric
Insurance Limited ("NEIL") to cover the costs of property damage,
decontamination or premature decommissioning resulting from a nuclear incident
and American Nuclear Insurance/Mutual Atomic Energy Liability Underwriters

F-13
<PAGE> 34

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

("ANI") to cover workers claims. All companies insured with NEIL and ANI are
subject to retroactive assessments, if losses exceed the accumulated funds
available to NEIL and ANI, respectively. The maximum potential assessment
against the Seabrook Project with respect to losses arising during the current
policy years are $26.4 million. The Company's liability for the retrospective
premium adjustment for any policy year ceases six years after the end of that
policy year unless prior demand has been made.

The Company purchased additional business interruption insurance from NEIL
with the current policy in effect from December 22, 1995 until September 15,
1996. NEIL business interruption insurance is designed to pay a weekly indemnity
in the event of a prolonged outage at Seabrook resulting from property damage
occurring from a "sudden fortuitous event, which happens by chance, is
unexpected and unforeseeable." The Company is seeking $520,000 of weekly
indemnity with a limit of liability of $70.3 million. This policy has an annual
premium of $129,000 and for the period ending December 31, 1995 the Company
expensed $3,520 related to this policy. Under the terms of this policy, the
Company is subject to a potential retrospective premium adjustment of $647,000
should NEIL's board of directors deem that additional funds are necessary to
preserve the financial integrity of NEIL. There has never been a retrospective
adjustment since NEIL was founded in 1980. The liability for this retrospective
premium adjustment ceases six years after the end of the policy unless prior
demand has been made.

3. TAXES ON INCOME
<TABLE>
The following is a summary of the (benefit) provision for income taxes for
the year ended December 31, 1995, the period from November 24 to December 31,
1994, and the period from January 1 to November 23, 1994:

<CAPTION>
SUCCESSOR PREDECESSOR
----------------- -----------
JANUARY 1
NOVEMBER 24 TO TO
DECEMBER 31, NOVEMBER
----------------- 23,
1995 1994 1994
------- ----- -----------
(000'S)
<S> <C> <C> <C>
Federal
Current......................................... $(8,065) $(353) $(11,253)
Deferred........................................ 8,011 447 11,253
------- ----- --------
(54) 94 --
State
Current......................................... (1,923) (84) (2,684)
Deferred........................................ 1,923 84 2,684
------- ----- --------
-- -- --
------- ----- --------
Total (benefit) provision.................... $ (54) $ 94 $ --
======= ===== ========
</TABLE>

F-14
<PAGE> 35

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

Accumulated deferred income taxes consisted of the following at December
31, 1995 and 1994:

<TABLE>
<CAPTION>
1995 1994
------- -------
(000'S)
<S> <C> <C>
Assets
Net operating loss carryforwards............................... $64,957 $54,472
Decommissioning expense........................................ 618 325
Utility plant.................................................. -- 1,009
Unfunded pension expense....................................... 225 102
Accrued outage expense......................................... 43 84
Inventory...................................................... 196 --
Liabilities
Utility plant.................................................. (7,250) --
------- -------
Accumulated deferred income tax asset............................ 58,789 55,992
Valuation allowance.............................................. (58,789) (56,086)
------- -------
Accumulated deferred income tax asset (liability) net............ $ -- $ (94)
======= =======
</TABLE>

The total income tax provision set forth above represents 0% in the year
ended 1995, 34% in the period from November 24 to December 31, 1994 and 0% in
the period from January 1, 1994 to November 23, 1994 of income before such
taxes. The following table reconciles the statutory federal income tax rate to
those percentages:

<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------------ -----------
JANUARY 1
NOVEMBER 24 TO TO
DECEMBER 31, NOVEMBER
------------------ 23,
1995 1994 1994
------- ---- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
(Loss) Income before taxes....................... $(6,113) $276 $ 131,385
Federal statutory rate........................... 34% 34% 34%
Federal income tax (benefit) expense at statutory
levels......................................... (2,078) 94 44,671
Increase (Decrease) from statutory levels
State tax net of federal tax benefit........... (1,269) (55) (913)
Valuation allowance............................ 2,703 49 858
Income of decommissioning trust................ 305 6 55
Benefit from reorganization.................... -- -- (44,671)
Other.......................................... 285 -- --
------- ---- -----------
Effective federal income tax expense............. $ (54) $ 94 $ --
======= ==== =============
</TABLE>

Valuation allowances have been provided against any deferred tax assets,
net due to the limitations on the use of carryforwards, discussed below and the
uncertainty associated with future taxable income. The valuation allowance of
$56,086,000 as of December 31, 1994, if subsequently recognized will be
allocated directly to paid in capital.

As of December 31, 1995, the Company has an estimated $167 million in net
operating loss carryforwards ("NOL's") that expire between the years 2005 to
2010. However, because the Company has experienced one or more ownership
changes, within the meaning of Section 382 of the Internal Revenue Code of 1986,
as amended (the "Tax Code"), an annual limitation has been imposed on the
ability of the Company to use $136 million of these carryforwards. The Company's
best estimate at this time is that the annual limitation is approximately $5.5
million, and therefore, the ability to use $136 million in NOL's is restricted.

F-15
<PAGE> 36

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

4. COMMON STOCK RESTRICTIONS

5. CAPITAL EXPENDITURES

The Company's cash construction expenditures, including nuclear fuel, are
estimated to be approximately $2.7 million in 1996 and to aggregate
approximately $21.5 million for the years 1997 through 2000.

6. UNITIL POWER PURCHASE AGREEMENT AND POWER PURCHASE OPTION

The Company has entered into an agreement (the "Power Purchase Agreement"),
dated as of April 1, 1993 with UNITIL Power Corporation ("UNITIL Power"), a
wholly owned subsidiary of UNITIL Corporation ("UNITIL"), which provides for the
Company to sell to UNITIL Power approximately 10MW of power. The Power Purchase
Agreement commenced on May 1, 1993 and runs through October 31, 2010. During the
first year, the price of power under the Power Purchase Agreement was 5.0 cents
per kilowatt hour (kWh). Thereafter, the price is subject to increase in
accordance with a formula which provides for adjustments at less than the actual
rate of inflation. UNITIL Power has the option to extend the Power Purchase
Agreement for an additional twelve years to 2022.

The Power Purchase Agreement is front-end loaded whereby UNITIL Power pays
higher prices, on an inflation adjusted basis, in the early years of the
Agreement and lower prices in later years. The average price per kWh and the
contract formula rate in the contract are fixed over the life of the contract,
so that any excess cash received in the beginning of the contract will be
returned by the end of the contract, provided the contract does not terminate
early. The difference between revenue billed under each rate is recorded in a
"Balance Account" which increases annually to $4.1 million in 1998, then
decreases annually, reaching zero in 2001. Therefore, contract revenue is
recorded under Generally Accepted Accounting Principles and Emerging Issues Task
Force Ruling 91-6 based on the contract rates and no liability for the "Balance
Account" is recognized provided that it is not probable that the contract will
terminate early. Management believes it is not probable that either party will
terminate this contract prior to the end of its initial term. The balance in the
balance account as of December 31, 1995 is approximately $2.0 million.

To secure the obligation of the Company under the Power Purchase Agreement
and to repay to UNITIL Power the amounts in the balance account, if the contract
terminates early, the Power Purchase Agreement grants UNITIL Power a mortgage on
the Company's Seabrook Interest. This mortgage granted to UNITIL Power is junior
only to the existing mortgage on the Seabrook Interest granted pursuant to the
Third Stipulation and any successor first mortgage financing up to a maximum
amount of $80,000,000. The Power Purchase Agreement further provides that UNITIL
Power's second mortgage will rank pari passu with other mortgages that may
hereafter be granted to other purchasers of power from the Company to secure
similar obligations, provided that the maximum amount of indebtedness secured by
the first mortgage on the Seabrook Interest does not exceed $60,000,000, and
provided that the combined total of all second mortgages on the Seabrook
Interest does not exceed the sum of (a) $80,000,000 less the total amount of the
Company's debt then outstanding which is secured by a first mortgage plus (b)
$57,000,000.

In addition to the Power Purchase Agreement, the Company also has entered
into an agreement (the "Power Purchase Option Agreement") with UNITIL Power
under which the Company will grant UNITIL Power the option to purchase during
the period from November 1, 1998 through October 31, 2018, approximately 15MW of
electricity at 6.5 cents per kWh, subject to adjustment in accordance with a
formula. UNITIL Power will be required to exercise its option under the Power
Purchase Option Agreement on or before the earlier of (a) October 31, 1996, and
(b) 30 days after the first date on which the Company is

F-16
<PAGE> 37

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

prepared to commit to sell, for a minimum of 10 years, all or any part of the
last remaining 15 MW of electricity from Seabrook Unit 1 to which the Company is
entitled.

7. PECO SERVICES AGREEMENT AND WARRANT AGREEMENT

The Company has entered into a Services Agreement (the "Services
Agreement"), dated November 3, 1995 with PECO Energy Company (PECO). As
exclusive agent for the Company, PECO will market the Company's approximately
130MW of uncommitted capacity generated by Great Bay Power's 12% ownership in
the Seabrook Nuclear Power Plant. The Services Agreement commenced on November
3, 1995 and runs through December 31, 1997. PECO pays the Company a reservation
fee based on the hours during which Seabrook generates energy. The Company pays
PECO a service fee based on net revenues and a Seabrook operating capacity
factor. This service from PECO is expected to permit the Company to compete more
effectively for firm, all requirements power contracts. The arrangement also
provides for the Company and PECO to jointly pursue other opportunities which
are intended to maximize the value of the Company's interest in Seabrook.

The Company entered into another agreement with PECO, also dated November
3, 1995, whereby PECO agreed to purchase a warrant from the Company for
$1,000,000. The warrant grants to PECO the right to purchase 420,000 shares of
the Company s $.01 par value common stock (4.99% of the total shares
outstanding) at an exercise price of the higher of (1) $9.75 per share, or (2)
the highest trading price per share of the Company's common stock prior to the
expiration date. The purchase price for the warrant will be credited toward the
purchase price for the shares upon exercise of the warrant. The warrant expires
on September 30, 1996 unless extended because the Seabrook facility fails to
maintain a 60% capacity factor for the first 9 months of 1996, in which case the
expiration date is extended until the earlier of such time as Seabrook's rolling
12-month capacity factor equals or exceeds 60% or December 31, 1997. If PECO
exercises the warrant to acquire 4.99% of the Company, the marketing agreement
will be extended to December 31, 1998.

8. TRANSACTIONS WITH RELATED PARTIES

The Company entered into two other agreements with affiliates of UNITIL.

A Management and Administrative Services Agreement was in effect during
1995 between the Company and UNITIL Resources, Inc. ("UNITIL Resources"), a
wholly owned subsidiary of UNITIL until December 31, 1995. The Management and
Administrative Services Agreement went into effect on November 23, 1994 and
provided for UNITIL Resources to provide a full range of services to the
Company, including management, accounting and bookkeeping, budgeting and
regulatory compliance. Under the Management and Administrative Services
Agreement, the Company was paying UNITIL Resources $225,000 per year for senior
executive management services and was paying for day-to-day operational services
by paying an amount equal to the cost of providing those services plus 25% of
such cost. For the year ended December 31, 1995 and for the period from November
24, 1994 to December 31, 1994, the Company expensed $591,352 and $52,900
respectively related to this agreement. The Management and Administrative
Services Agreement had an automatically renewing one year term, except that
either the Company or UNITIL Resources may terminate without cause on 60 days
prior written notice. The Company gave notice and terminated this agreement on
December 31, 1995.

The Company's marketing efforts were provided by UNITIL Resources until
December 31, 1995. Under the terms of this Marketing Agreement with UNITIL
Resources, the Company was paying UNITIL Resources all costs incurred by UNITIL
Resources to obtain new sales contracts plus a commission for sales of power.
The amount of the commission payable varied based on the length of the power
sale contracts and prices obtained. For the year ended December 31, 1995 and for
the period from November 24, 1994 to

F-17
<PAGE> 38

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

December 31, 1994, the Company expensed $333,138 and $11,500, respectively,
related to this agreement. This agreement was also terminated as of December 31,
1995.

The Company leases its headquarters space under an expense sharing
agreement with TILTEC, a company owned by the Company's President. Under the
agreement, TILTEC provides the Company with furnished office space and
administrative support services for a total fee of $7,400 per month. The expense
sharing agreement has a one year term and provides for automatic one year
renewals. Either party may terminate the agreement on 60 days prior written
notice to the other party.

Prior to February 5, 1993, the Predecessor was a wholly-owned subsidiary of
EUA. EUA has interests in other retail and wholesale utility companies, a
service corporation, and other non-utility companies. Transactions between the
Predecessor and EUA affiliated companies prior to the reorganization include
accounting, engineering and other services rendered by EUA Service of
approximately $116,000 for the period from January 1, 1994 to November 23, 1994.

9. STOCK OPTION PLAN

On April 24, 1995, the Board of Directors of the Company established the
1995 Stock Option Plan (the "Plan"), subject to shareholder approval. The
purpose of the Plan is to secure for the Company and its shareholders the
benefits arising from capital stock ownership by employees, officers and
directors of, and consultants or advisors to, the Company who are expected to
contribute to the Company's future growth and success. Options granted pursuant
to the Plan may be either incentive stock options meeting the requirements of
Section 422 of the Internal Revenue Code or non-statutory options which are not
intended to meet the requirements of Section 422. The maximum number of shares
of Common Stock which may be issued and sold under the Plan is 600,000 shares.
The Plan will be administered by the Board of Directors of the Company and may
be modified or amended by the Board in any respect, subject to shareholder
approval in certain instances. Shareholder approval of the Plan has not yet been
sought or obtained. The Company expects the Plan to be approved by shareholders
at the Company's annual meeting scheduled to be held in April 1996.

<TABLE>
To date, the following options have been granted under the Plan:
<CAPTION>
NUMBER OF AVERAGE OPTION
SHARES PRICE
--------- --------------
<S> <C> <C>
1995 Activity
Granted................................................... 335,000 8.17
Exercised................................................. -- --
Canceled.................................................. -- --
Outstanding at December 31, 1995............................ 335,000
</TABLE>

10. NEW ACCOUNTING PRONOUNCEMENTS

In March 1995, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 121, "Accounting for Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed Of", effective for fiscal years beginning after December
15, 1995. SFAS No. 121 establishes accounting standards for the impairment of
long-lived assets and requires that assets which are no longer probable of
recovery be charged to earnings. The Company adopted SFAS No. 121 on January 1,
1996, and the adoption did not have a material impact on the Company's financial
position or results of operations.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", effective for fiscal years beginning after December 15, 1995.
SFAS No. 123 requires that financial statements include certain disclosures
related to stock-based employee compensation arrangements regardless of the
method used to account for them. The Company does not plan to adopt the
accounting under this

F-18
<PAGE> 39

GREAT BAY POWER CORPORATION

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1995

pronouncement but rather adopt the required audited pro forma disclosure. Based
on arrangements used by the pronouncement, the pro forma effects on earnings and
earnings per share are not expected to be material.

11. PROPERTY TAXES

In December 1995, the Town of Seabrook, New Hampshire (the "Town") issued a
bill for property taxes for the second half of 1995 to "North Atlantic Energy
Corp., et al." The Town informed the Company that it believed the Company's
share of this bill was equal to $1,293,000. The Company has refused to pay the
bill because the Company believes that the Town's assessment of the Company's
interest in the Seabrook Project is greatly overstated and because the bill
fails to recognize the Company as an independent taxpayer with a separately
assessed and valued parcel of real estate. While the Company refused to pay the
December property tax bill, the Company has accrued the $1,293,000 related to
the bill. No litigation resulting from the Company's refusal to pay such tax
bill is pending, but the Town has available to it a variety of remedies for the
nonpayment of taxes, including placing a lien on the property. Management is
unable to express an opinion as to the likely outcome of this matter.

12. SUBSEQUENT EVENTS

On January 18, 1996, the Company held a special meeting of stockholders. At
the special meeting, the stockholders approved the following amendments to the
Company s Restated Articles of Incorporation: (1) the number of authorized
shares of common stock was increased from 8,000,000 to 20,000,000 shares; (2)
5,000,000 shares of undesignated Preferred Stock were authorized, the terms and
rights of which may be designated from time to time by the Board of Directors;
(3) a provision requiring the affirmative vote of the holders of at least 75% of
the shares of capital stock issued and outstanding to amend, repeal or adopt any
provision inconsistent with the Articles of Incorporation was deleted; and (4) a
provision eliminating any preemptive rights of the Company's stockholders to
acquire shares issued by the Company was added.

F-19
<PAGE> 40

REPORT OF INDEPENDENT ACCOUNTANTS

To the Director of Great Bay Power Corporation:

We have audited the statements of loss and retained (deficit) earnings and
cash flows for the year ended December 31, 1993 of Great Bay Power Corporation
(formerly EUA Power Corporation; the "Company"). These financial statements are
the responsibility of the Company's management. Our responsibility is to express
our opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of the
Company for the year ended December 31, 1993 in conformity with generally
accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Boston, Massachusetts
April 7, 1994, except as to the
information presented in
Note I, for which the date is
November 23, 1994

F-20
<PAGE> 41

GREAT BAY POWER CORPORATION
(F.K.A. EUA POWER CORPORATION)

STATEMENT OF LOSS
DECEMBER 31, 1993
(DEBTOR-IN-POSSESSION)(IN THOUSANDS)

<TABLE>
<S> <C>
Operating Revenues............................................................... $24,620
-------
Operating Expenses:
Fuel........................................................................ 6,869
Other Operation............................................................. 13,052
Maintenance................................................................. 3,070
Depreciation and Decommissioning............................................ 9,020
Taxes Other Than Income..................................................... 3,878
Income Tax (Credit)......................................................... (630)
Deferred Taxes (Credit)..................................................... (3,421)
-------
Total Operating Expenses............................................... 31,838
-------
Operating (Loss)................................................................. (7,218)
Deferred Income Taxes............................................................ (459)
Other Income -- Net.............................................................. 226
Reorganization Expenses.......................................................... 1,867
-------
Income Before Interest Charges......................................... (9,318)
-------
Interest Charges:
Interest on Long-Term Debt (Contractual Interest Expense for 1993 was
$48,929,510)
Other Interest Expense (Contractual Interest Expense for 1993 was
$144,763).................................................................. 115
-------
Net Interest Charges (Deductions)...................................... 115
-------
Net Loss......................................................................... $(9,433)
=======
</TABLE>

GREAT BAY POWER CORPORATION
(F.K.A. EUA POWER CORPORATION)

STATEMENT OF RETAINED (DEFICIT) EARNINGS
YEARS ENDED DECEMBER 31, 1993
(DEBTOR-IN-POSSESSION)(IN THOUSANDS)

<TABLE>
<S> <C>
Retained (Deficit) Earnings -- Beginning of Year:.............................. $(130,360)
Net Loss....................................................................... (9,433)
---------
Retained (Deficit) Earnings -- End of Year..................................... $(139,793)
=========
</TABLE>

Note 1 -- Other than the changes to Retained Earnings resulting from the Net
Loss of $9,433,000, there was no change in the Equity of the Company
during the year ended December 31, 1993.

(The accompanying notes are an integral part of these statements.)

F-21
<PAGE> 42

GREAT BAY POWER CORPORATION
(F.K.A. EUA POWER CORPORATION)

STATEMENTS OF CASH FLOW
DECEMBER 31, 1993
(DEBTOR-IN-POSSESSION)(IN THOUSANDS)

<TABLE>
<S> <C>
Cash Flow From Operating Activities:
Net Loss........................................................................... $(9,433)
-------
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
Depreciation and Amortization................................................. 8,124
Amortization of Nuclear Fuel.................................................. 5,818
Deferred Taxes................................................................ (2,962)
Investment Tax Credit, Net.................................................... (630)
Other -- Net.................................................................. 1,026
Net Changes of Working Capital:
Accounts Receivable........................................................... (97)
Accounts Payable.............................................................. (122)
Accrued Taxes................................................................. 139
Other -- Net.................................................................. (1,401)
-------
Net Cash (Used In) Provided from Operating Activities.............................. 462
-------
Cash Flow From Investing Activities:
Construction Expenditures..................................................... (6,885)
-------
Net Cash (Used In) Provided From Investing Activities.............................. (6,885)
-------
Cash Flow From Financing Activities:
Issuances:
Debtor-in-Possession Financing........................................... 1,744
Settlement Proceeds
-------
Net Cash Provided from Financing Activities........................................ 1,744
-------
Net Increase (Decrease) in Cash.................................................... (4,679)
-------
Cash and Temporary Cash Investments at Beginning of Year........................... 4,817
-------
Cash and Temporary Cash Investments at End of Period............................... $ 138
=======
</TABLE>

(The accompanying notes are an integral part of these statements.)

F-22
<PAGE> 43

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1993

NOTE A -- BUSINESS:

The Registrant, Great Bay Power Corporation (formerly known as EUA Power
Corporation), is a New Hampshire corporation, incorporated in 1986, authorized
by the NHPUC to engage in business as a public utility for the purposes of
participating as a joint owner in the Seabrook Project, acquiring its 12.1%
interest in the Seabrook Project and selling its share of the output of Seabrook
Unit 1 for resale. The Company, organized as a wholly-owned subsidiary of EUA,
became fully independent of EUA on February 5, 1993 in connection with the
bankruptcy proceeding described in Note B -- Bankruptcy Proceeding. The Company
became a wholesale generating company when Seabrook Unit 1 commenced commercial
operation on August 19, 1990.

On February 28, 1991, the Company filed a voluntary petition in the
Bankruptcy Court for the District of New Hampshire for protection under Chapter
11 of the Bankruptcy Code. The Bankruptcy Court confirmed the Bondholders
Committees' Fifth Amended Plan of Reorganization on March 5, 1993. After
confirmation, the Company was unable to obtain the $45 million of debt financing
contemplated by the Fifth Amended Plan of Reorganization. In February 1994,
however, the Bondholders Committee obtained a commitment from Omega Advisers,
Inc. ("Omega") or its designees to provide $35 million of equity financing for
the Company (the "Omega Financing"). The Bondholders Committee prepared a First
Modification to Fifth Amended Plan of Reorganization to reflect this change in
financing and submitted a Supplemental Disclosure Statement describing that
First Modification to the Bankruptcy Court for its approval. The Fifth Amended
Plan of Reorganization, as modified by the First Modification is hereinafter
referred to as the "Plan." The Bankruptcy Court approved the Supplemental
Disclosure Statement at a hearing on March 11, 1994. The Plan is scheduled to be
mailed to the Company's creditors for their approval on or before April 7, 1994.
If the Creditors approve the Plan, the Company expects the Bankruptcy Court to
confirm the plan in a hearing currently scheduled for May 13, 1994, although
such confirmation cannot be assured. The Omega Financing and the Plan are
subject to approval by certain regulatory authorities. On February 15, 1994 the
Nuclear Regulatory Commission issued an order approving a transfer of control of
the Company as contemplated by the Omega Financing and extending the deadline
for completion of such transfer to June 30, 1994. There can be no assurance that
other such approvals will be obtained. Moreover, the Omega Financing is not yet
reduced to a definitive agreement. The Plan will not be circulated to creditors
unless and until such a definitive agreement has been signed.

The Omega Financing provides for the Company to sell its common stock
representing a 60% ownership interest in the Company to Omega or its designees
for an aggregate purchase price of $35 million. The 40% balance of the Company's
common stock will be issued 34% to the Company's Bondholders in full payment and
satisfaction of their secured claims and 6% to the Company's unsecured creditors
with claims in excess of $25,000 in full payment and satisfaction of their
claims. These unsecured claims consist primarily of the unsecured deficiency
claims of the Bondholders under the Bonds. (See BANKRUPTCY PROCEEDING below for
a discussion of the Company's bankruptcy proceeding and the Omega Financing.)

F-23
<PAGE> 44

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993

Seabrook Unit 1 is a 1,150 MW nuclear generating plant located in Seabrook,
New Hampshire. The Company acquired its joint ownership interest in the Seabrook
Project for approximately $174,000,000 in November 1986 from five New England
electric utilities in independently negotiated transactions. At that time,
construction of Seabrook Unit 1 was substantially completed. Because Seabrook
Unit 2 had been canceled, the Company assigned no value to it. On March 29,
1991, the Company announced that it had provided an impairment reserve in 1990
against its investment in Seabrook Unit I, which was recorded effective on
December 31, 1990. For financial statement reporting purposes, the Company
valued its investment in Seabrook Unit I, including nuclear fuel but net of the
related Series B and C Notes which it collateralizes as follows:

<TABLE>
<CAPTION>
DECEMBER 31, 1990 DECEMBER 31, 1993
----------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
Net Investment................................... $ 340,640 $ 311,932
Related Secured Debt............................. (300,597) (293,723)(1)
----------------- -----------------
Net Carrying Amount.............................. $ 40,043 $ 18,209
================= =================
</TABLE>

(1) includes accrued interest of $14,126

The ultimate value of the investment and the related debt (which is a
liability subject to compromise) cannot be determined until the bankruptcy is
resolved.

The Company has no employees. John R. Stevens, president of EUA serves as
president and sole director of the Company at the request and subject to the
direction of the Bondholders Committee. Mr. Stevens expects to resign both
positions on the Effective Date. Since the Company's organization, EUA Service,
a wholly owned subsidiary of EUA, has provided, or arranged for, various
management and professional services. Pursuant to various Bankruptcy Court
orders, EUA Service continues to provide similar services to the Company. Under
the terms of the Settlement Agreement (as discussed below), EUA Service will
continue to provide, at cost, certain services to the Company at the request of
the Bondholders Committee for a period of not more than two years from the
effective date of the Settlement Agreement. However, such services specifically
exclude the marketing of the Company's entitlement in Seabrook Unit 1 on a
long-term basis. The Company has agreed with UNITIL that an affiliate of UNITIL
will replace EUA Service in providing various services on the Effective Date. In
addition, the Company has entered into a contract with an affiliate of UNITIL
pursuant to which that affiliate is marketing the Company's share of electricity
from Seabrook Unit 1.

NOTE B -- BANKRUPTCY PROCEEDING:

Background:

On February 28, 1991, the Company filed a voluntary petition in the
Bankruptcy Court for the District of New Hampshire for protection under Chapter
11 of the federal Bankruptcy Code and has been conducting its business as a
Debtor and Debtor-in-Possession under the provisions of the Bankruptcy Code. The
Company filed such petition because the cash generated by short-term sales of
electricity from its entitlement in Seabrook Unit 1 would have been insufficient
to pay interest on its outstanding Secured Notes when interest became due on May
15, 1991 and the prospects for signing long-term power sales contracts prior to
that date were minimal. The Company continues its efforts to market its
entitlement to Seabrook Unit 1 under the direction of the Bondholders Committee.

Settlement Agreement:

On November 18, 1992, the Company, the Bondholders Committee and EUA
entered into a Settlement Agreement which resolved certain adversary proceedings
against EUA, brought, or threatened to be brought,

F-24
<PAGE> 45

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993

by the Bondholders Committee including, (i) a claim for recovery of certain
alleged preferential transfers in the aggregate amount of $38.5 million, plus
interest; (ii) a threatened claim for the recovery of $100 million plus treble
damages arising from, among other things, certain alleged breaches of fiduciary
duties by EUA, EUA Service and the officers and directors of the Company; and,
(iii) certain matters arising out of tax sharing agreements between EUA, its
subsidiaries, and the Company. The Settlement Agreement also provided for the
payment of $20 million to the Company by EUA. The Settlement Agreement further
provided for the relinquishment by EUA of its equity interest in the Company and
all claims filed in Bankruptcy Court by EUA and its affiliates against the
Company. These claims related primarily to obligations of the Company guaranteed
and paid by EUA, including $21 million of Solid Waste Disposal Facility Revenue
Bonds, issued by the New Hampshire Industrial Development Authority on behalf of
the Company and other notes payable. The settlement of these claims was recorded
as a deferred credit on the Company's 1992 Balance Sheet, pending the ultimate
outcome of the Bankruptcy Proceeding. The Settlement Agreement became effective
on December 30, 1992 at which time EUA paid $20 million to the Company. The
Company used a substantial portion of the proceeds from the Settlement Agreement
to repay amounts outstanding under the First Stipulation (as described below)
and to pay reorganization expenses and other operating expenses. The Company
redeemed all of its outstanding equity securities which were held by EUA, at no
cost, on February 5, 1993. The redeemed shares have been classified as treasury
stock on the Company's financial statements as of December 31, 1993. As a result
of the redemption, the Company is no longer part of the EUA System.

Under the Settlement Agreement, EUA reaffirmed its guarantee of up to $10
million of the Company's share of future decommissioning costs of Seabrook Unit
1 and any costs of cancellation of Seabrook Unit 1 or Unit 2. EUA had guaranteed
this obligation in 1990 in order to secure the release to the Company of a $10
million fund established by the Company for the same purpose at the time the
Company acquired its Seabrook Interest. Further, under the Settlement Agreement,
all of the officers and directors of the Company (except Mr. Stevens) resigned
and the Company changed its name to Great Bay Power Corporation. EUA now has no
ownership interest in the Company.

Reorganization Plan:

The Bankruptcy Court confirmed the Bondholders Committees Fifth Amended
Plan of Reorganization on March 5, 1993. After confirmation, the Company was
unable to obtain the $45 million of debt financing contemplated by the Fifth
Amended Plan of Reorganization. In February 1994, however, the Bondholders
Committee obtained a commitment from Omega or its designees to provide $35
million of equity financing for the Company. The Bondholders Committee prepared
a First Modification to Fifth Amended Plan of Reorganization to reflect this
change in financing and submitted a Supplemental Disclosure Statement describing
that First Modification to the Bankruptcy Court for its approval. The Bankruptcy
Court approved the Supplemental Disclosure Statement at a hearing on March 11,
1994. The Plan is scheduled to be mailed to the Company's creditors for their
approval on or before April 7, 1994. If the Creditors approve the Plan, the
Company expects the Bankruptcy Court to confirm the Plan in a hearing currently
scheduled for May 13, 1994, although such confirmation cannot be assured. The
Omega Financing and the Plan are subject to approval by certain regulatory
authorities. On February 15, 1994 the Nuclear Regulatory Commission issued an
order approving a transfer of control of the Company as contemplated by the
Omega Financing and extending the deadline for completion of such transfer to
June 30, 1994. There can be no assurance that other such approvals will be
obtained. Moreover, the Omega Financing is not yet reduced to a definitive
agreement. The Plan will not be circulated to creditors unless and until such a
definitive agreement has been signed.

F-25
<PAGE> 46

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993

and satisfaction of their secured claims pursuant to the Bonds and 6% to the
Company's unsecured creditors with claims in excess of $25,000 in full payment
and satisfaction of their claims. These unsecured claims consist primarily of
the unsecured deficiency claims of the Bondholders under the Bonds. The holders
of unsecured claims of less than $25,000, other than those unsecured claims
resulting from the ownership of the Secured Notes, will be paid 50% of the
amounts of their claims allowed by the Bankruptcy Court in cash on the Effective
Date. The Plan requires that prior to the Effective Date the Bondholders
Committee obtain the Omega Financing.

Although a bar date for all claims has been entered and passed, claims
arising from the rejection of contracts or claims which the Bankruptcy Court
permits to be filed notwithstanding the bar date may dilute the percentage of
the unsecured claims held by the Secured Bondholders. All of the previously
issued and outstanding equity securities of the Company have been redeemed by
the Company. The CICs issued in connection with the Series B Notes or otherwise
will be extinguished on the Effective Date. After the Effective Date, the equity
of the Company will be represented by a single class of common stock. The
Company will use good faith efforts to list its shares of common stock so that
they will be tradeable on the American Stock Exchange or the NASDAQ National
Market System.

The Bondholders Committee has appointed or will appoint agents to manage
the Company's business and to market the Company's share of Seabrook
electricity. During the period between the Confirmation of the Plan and the
Effective Date, those agents are to report to the Bondholders Committee and, to
the extent actions are to be taken outside of the ordinary course of business,
such actions shall be subject to the approval of the Bankruptcy Court and
regulatory bodies with jurisdiction under applicable law. John R. Stevens,
president of EUA, expects to resign as president and director of the Company on
the Effective Date. The Bondholders Committee has disclosed the names of two
individuals proposed to serve on the Board of Directors (the New Board) of the
Company after the Effective Date. The proposed two members of the New Board are
John A. Tillinghast and Walter H. Goodenough. The Bondholders Committee is also
considering other candidates to serve as members of the New Board. The persons
who will serve on the New Board will be finally determined before the Effective
Date. The New Board will take office upon the Effective Date. The New Board will
serve until its members resign or are replaced in accordance with New Hampshire
corporate law and the requirements of the Company's charter and by-laws.

The effectiveness of the Plan is conditioned upon obtaining plan of
reorganization financing and approvals from various regulatory agencies
including the NRC. The Company has obtained the approval of the NRC, provided
the Company obtains plan of reorganization financing. The Company cannot predict
whether it will be able to obtain plan of reorganization financing or whether
the plan, or any other plan if filled, will be approved by the various
regulatory agencies having jurisdiction.

DIP Financing:

The Company is required under the JOA to pay its share of Seabrook Unit 1
and Seabrook Unit 2 expenses including, without limitation, operations and
maintenance expenses, construction and nuclear fuel expenditures and
decommissioning costs, regardless of Seabrook Unit 1's operations. Under certain
circumstances, a failure by the Company to make its monthly payments under the
JOA could adversely affect its entitlement in Unit 1. At current market prices,
the cash generated by such electricity sales continues to be less than the
Company's on-going cash requirements.

On August 29, 1991, the Bankruptcy Court approved a Stipulation and Consent
Order (the First Stipulation) with respect to DIP Financing to be provided by
certain joint owners of Seabrook for the benefit of the Company. The First
Stipulation was entered into by the Company and CL&P and UI (the Participating
Joint Owners), two of the other eleven joint owners of the Seabrook Project, as
well as the Bondholders Committee. The First Stipulation was also approved by
the NHPUC and the SEC under the 1935 Act.

F-26
<PAGE> 47

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993

On July 21, 1992, the Bankruptcy Court issued a procedural order permitting
an extension of the First Stipulation. For the period after September 30, 1992
until March 5, 1993, the procedural order permitted continued
debtor-in-possession financing on a month-to-month basis at the sole discretion
of the Participating Joint Owners terminable on 30 days notice. The Bankruptcy
Court issued a second procedural order on September 8, 1992 increasing to $22
million from $15 million the amount of advances outstanding at any one time
permitted under the First Stipulation. The Participating Joint Owners continued
to advance funds under the First Stipulation, as amended, until the amounts
advanced thereunder were repaid with the proceeds of the Company's Settlement
Agreement with EUA. The First Stipulation expired on March 5, 1993.

A second stipulation was entered into by the Company and the Participating
Joint Owners and was approved by the Bankruptcy Court and various regulatory
authorities. However, that stipulation did not become effective, and on March 5,
1993, the Company and the Participating Joint Owners entered into a third
stipulation (the Third Stipulation) which was approved by the Bankruptcy Court.

The Third Stipulation provides that the Participating Joint Owners shall
provide up to a maximum of $20 million in advances to the Company to enable the
Company to pay its pro rata share of the Seabrook Project's operating expenses,
expenses of the Company in connection with its Chapter 11 proceedings and
certain other costs of operation of the Company. Pursuant to the Third
Stipulation, the advances made by the Participating Joint Owners bear an
interest rate equal to the prime rate of The First National Bank of Boston plus
7% per annum. The Third Stipulation provides the Participating Joint Owners with
a priority lien on all the Company's assets, which lien has priority over the
Bondholders' mortgage. The Third Stipulation further provides that in the event
of a default thereunder, the Participating Joint Owners are entitled to purchase
the Company's Seabrook Interest for 75% of the lesser of fair market value or
book value and to apply all or part of the amounts owing under the Third
Stipulation against the purchase price. The Third Stipulation terminates on the
earliest to occur of (a) July 1, 1994, (b) the Effective Date or the closing of
a sale of all or substantially all of the Company's assets or business, and (c)
an event of default under the terms of the Third Stipulation. The Company is in
default of the Third Stipulation for, among other reasons, failure to obtain
financing for the Plan by the date required in the Third Stipulation. Although
the Company has been in default since November 1, 1993, the Participating Joint
Owners have continued to provide financing pursuant to the Third Stipulation.
There is, however, no assurance that they will continue to do so. As of March
25, 1994, outstanding advances under the Third Stipulation were approximately
$2.2 million in the aggregate.

Other Matters:

The Company's reorganization expenses are subject to approval by the
Bankruptcy Court. For the period March 1, 1991 through August 31, 1993,
professionals have submitted fees and expenses in the amount of approximately
$5.9 million to the Bankruptcy Court for its approval, and the Bankruptcy Court
has provisionally authorized, subject to its review at the conclusion of the
Chapter 11 proceeding, payments of approximately $4.5 million. The Company has
paid amounts provisionally authorized by the Bankruptcy Court, and those are
reflected on the Company's Statement of Loss during the period in which they
have been paid. Other submitted, but not provisionally authorized, expenses have
not been recorded.

Since August 31, 1993, no hearings on approval of reorganization expenses
have been held and no requests for allowance for such expenses have been made.
According to the Supplemental Disclosure Statement, the Bondholders Committee
has budgeted reorganization expenses payable on closing of the Omega Financing
and subject to Bankruptcy Court approval of $4.5 million.

Under Chapter 11, certain claims against the Company in existence prior to
the filing of the petition for relief under the Bankruptcy Code are stayed while
the Company continues business operations as debtor-in-possession. These claims
are reflected in the Company's Balance Sheet as of December 31, 1993 and
December 31, 1992 as "Liabilities Subject to Compromise." Additional claims
(Liabilities Subject to

F-27
<PAGE> 48

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993

Compromise) may arise subsequent to the filing date resulting from rejection of
executory contracts and from the determination by the Bankruptcy Court (or
agreed to by parties in interest) of allowed contingent and disputed claims.
Enforcement of claims secured by certain of the Company's assets (secured
claims) also are stayed, although the holders of such claims have the right to
move the court for relief from the stay. Secured claims, principally the Secured
Notes, are secured by an interest in certain Seabrook Project assets of the
Company, principally realty and personalty.

NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

SYSTEM OF ACCOUNTS: The accounting policies and practices of the Company
are subject to regulation by FERC with respect to its rates and accounting. The
accounts of the Company are maintained in accordance with the uniform system of
accounts prescribed by FERC.

UTILITY PLANT AND DEPRECIATION: Utility plant is stated at original cost.
The cost of additions to utility plant includes contracted work, direct labor
and material, allocated overhead, allowance for funds used during construction
and indirect charges for engineering and supervision. For financial statement
purposes, depreciation is computed on the straight-line method based on the
estimated useful life of Seabrook Unit 1. Since the commencement of commercial
operation, the provision for depreciation for the Company has been calculated at
2.5%.

OPERATING REVENUES: Revenues are based on billing rates authorized by FERC
and are recognized when billed.

INCOME TAXES: The general policy of the Company with respect to accounting
for federal income taxes is to reflect in income the estimated amount of taxes
currently payable and to provide for deferred taxes on certain items subject to
temporary differences to the extent permitted by the various regulatory
commissions. It is the policy of the Company to defer the investment tax credits
and to amortize these credits over the productive lives of the related assets.

TRANSACTIONS WITH AFFILIATES: Prior to February 5, 1993, the Company was a
wholly-owned subsidiary of EUA. EUA has interests in other retail and wholesale
utility companies, a service corporation, and other non-utility companies.

Transactions between the Company and EUA affiliated companies include the
following: accounting, engineering and other services rendered by EUA Service of
approximately $209,000 in 1993. Transactions with other affiliated companies are
subject to review by applicable regulatory commissions (See Note D -- Income
Taxes).

CASH AND TEMPORARY CASH INVESTMENTS: The Company considers all highly
liquid investments with a maturity of three months or less when acquired to be
cash equivalents.

F-28
<PAGE> 49

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993

NOTE D -- INCOME TAXES:

Components of income tax expense for the year 1993 is as follows:

<TABLE>
<CAPTION>
1993
---------------
<S> <C>
(IN THOUSANDS)
Federal:
Current.......................................... $
Deferred......................................... (3,421)
Investment Tax Credit, Net....................... (630)
---------------
Total Charge to Operations............................ (4,051)
---------------
Charged to Other Income:
Current..........................................
Deferred......................................... 459
---------------
Total charged to Other Income......................... 459
---------------
Total................................................. $(3,592)
===============
</TABLE>

Total income tax expense (credit) was different from the amounts computed
by applying federal income tax at statutory rates to book income subject to tax
for the following reasons:

<TABLE>
<CAPTION>
1993
---------------
<S> <C>
(IN THOUSANDS)
Federal Income Tax (FIT) Computed at Statutory
Rates............................................... $(4,559)
Increases (Decreases) in Tax from:
Depreciation of Equity AFUDC..................... 548
Amortization of ITC.............................. (630)
FIT Net Operating Loss Carryforward.............. 926
Nuclear Decommissioning Costs.................... 313
Other............................................ (190)
---------------
Total Income Tax Expense (Credit)..................... $(3,592)
===============
</TABLE>

The provision for deferred taxes resulting from temporary differences is
comprised of the following:

<TABLE>
<CAPTION>
1993
---------------
<S> <C>
(IN THOUSANDS)
Debt Component of AFUDC............................... $(1,458)
Capitalized Overheads................................. (59)
Excess Tax Depreciation............................... 7,181
Net Operating Loss Carryforward....................... (8,724)
Provision for Estimated Loss on Seabrook Investment... 459
Other................................................. (361)
---------------
Total............................................ $(2,962)
===============
</TABLE>

The Company adopted FAS96 in 1990 which requires the use of the liability
method to record deferred income taxes for temporary differences that are
reported in different years for financial reporting and tax purposes. Under the
liability method adopted by FAS96, deferred tax liabilities or assets are
computed using the tax rates that will be in effect when the temporary
differences reverse. Generally, for regulated companies, the changes in tax
rates applied to accumulated deferred income taxes may not be immediately
recognized in operating results because of rate making treatment and provisions
in the Tax Reform Act of 1986.

The Company has filed consolidated income tax returns together with EUA and
other EUA affiliates. As a result of such consolidated filings, certain federal
income tax benefits available to the Company have reduced the federal income tax
obligations of EUA and such other EUA affiliates. Under a tax allocation

F-29
<PAGE> 50

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993

agreement between EUA and its subsidiaries, EUA and its subsidiaries compensate
each other for the use of the tax benefits.

As a result of the redemption of the Company's outstanding common stock,
the Company was deconsolidated from the EUA tax group effective February 5,
1993. Under the terms of the Settlement Agreement, EUA is entitled to utilize
the Company's tax credits to reduce EUA's 1993 consolidated tax liability
without compensation (see Note B - Bankruptcy Proceeding). The Company will be
included in EUA's consolidated tax return for the years 1992 and 1993. However,
the Company's net operating losses of approximately $25 million arising from its
post February 5, 1993 activities will not be included in the EUA consolidated
tax return for 1993, and have been treated as available to the Company.

To the extent that the Company's carryforwards of net operating losses,
investment tax credits, alternative minimum tax credits, and deductions
attributable to built in losses are available after the Company is no longer
part of the consolidated return, the Company's ability to utilize these
carryforwards will be significantly limited due to the impact of provisions of
the tax law relating to the treatment of debt forgiveness in bankruptcy and the
effect of changes in the ownership of the Company. The precise impact of these
limitations cannot be determined until the Bankruptcy proceeding has concluded.
In 1992, the Company reversed all accumulated tax benefits relating to
carryforwards of net operating losses and alternative minimum tax credits to
reflect the anticipated imposition of the limitations and the impact of the
Settlement Agreement.

NOTE E -- CAPITAL STOCK:

COMMON STOCK: On December 31, 1993, the Company had issued and
outstanding, no shares of its Common Stock, par value $.01.

PREFERRED STOCK: At December 31, 1993, the Company had outstanding no
shares of preferred stock.

Pursuant to the terms of the Settlement Agreements, on February 5, 1993 the
Company redeemed all of its outstanding common and preferred stock, which were
held by EUA, at no cost to the Company (See Note B -- Bankruptcy Proceeding).
The redemption has been classified as treasury stock on the Company's financial
statements as of December 31, 1993.

NOTE F -- LONG-TERM DEBT:

As a result of the Bankruptcy filing, the Company is in default under the
indenture pursuant to which the Secured Notes were issued. The current face
amount of principal, and accrued interest to February 28, 1991, on the Company's
Secured Notes is $279,597,200 and $14,126,174 respectively. The Secured Notes
are collateralized in part principally with a security interest in the Company's
12.1% ownership interest in the realty and personalty of the Seabrook Project.
As a result of the bankruptcy filing, the Company is in default under the
indenture pursuant to which the Secured Notes were issued and ceased accruing
interest expense as of February 28, 1991.

The contractual interest expense on the Secured Notes in 1993 was
approximately $49 million. In 1993, no interest was paid. The Company also had
outstanding 180,000 CICs evidencing the right to receive additional payments
contingent upon and measured by the Company's income in certain years following
the commercial operation of Seabrook Unit 1. Under the Plan, the CICs have been
extinguished. (See Note B -- Bankruptcy Proceeding)

The Secured Notes and CICs are solely the obligation of the Company and are
not guaranteed by EUA or any other person.

The Series B Secured Notes, which have a stated maturity date of May 15,
1993, are redeemable at 100.125% of principal amount. The Series C Secured Notes
have a stated maturity date of November 15, 1992.

F-30
<PAGE> 51

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993

NOTE G -- COMMITMENTS AND CONTINGENCIES:

Nuclear Power Issues

Like other nuclear generating facilities, the Seabrook Project is subject
to extensive regulation by the NRC. The NRC is empowered to authorize the
siting, construction and operation of nuclear reactors after consideration of
public health, safety, environmental and anti-trust matters. The NRC has
promulgated numerous requirements affecting safety systems, fire protection,
emergency response planning and notification systems, and other aspects of
nuclear plant construction, equipment and operation. The Company has been, and
may be, affected to the extent of its proportionate share by the cost of any
such modifications to Seabrook Unit 1.

Nuclear units in the United States have been subject to widespread
criticism and opposition. Some nuclear projects have been canceled following
substantial construction delays and cost overruns as the result of licensing
problems, unanticipated construction defects and other difficulties. Various
groups have by litigation, legislation and participation in administrative
proceedings sought to prohibit the completion and operation of nuclear units and
the disposal of nuclear waste. In the event of shutdown of any unit, NRC
regulations require that it be completely decontaminated of any residual
radioactivity. The cost of such decommissioning, depending on the circumstances,
could substantially exceed the owners' investment at the time of cancellation.

The Price-Anderson Act provides, among other things, that the liability for
damages resulting from a nuclear incident would not exceed an amount which at
present is about $9.2 billion. Under the Price-Anderson Act, prior to operation
of a nuclear reactor, the licensee is required to insure against this liability
by purchasing the maximum amount of insurance available from private sources
(currently $200 million) and to maintain the insurance available under a
mandatory industry-wide retrospective rating program. Should an individual
licensee's liability for an incident exceed $200 million, the difference between
such liability and the overall maximum liability, currently about $9.2 billion,
will be made up by the retrospective rating program. Under such a program, each
owner of an operating nuclear facility may be assessed a retrospective premium
of up to a limit of $79.3 million (which shall be adjusted for inflation at
least every five years) for each reactor owned in the event of any one nuclear
incident occurring at any reactor in the United States, with provision for
payment of such assessment to be made over time as necessary to limit the
payment in any one year to no more than $10 million per reactor owned. The
Company would be obligated to pay its proportionate share of any such
assessment.

Joint owners of nuclear projects are also subject to the risk that one of
their number may be unable or unwilling to finance its share of the project's
costs, thus jeopardizing continuation of the project. On May 6, 1991, New
Hampshire Electric Cooperative, Inc., a 2.2% owner of the Seabrook Project,
announced that it had filed for Chapter 11 bankruptcy protection. A
reorganization plan, filed by the New Hampshire Electric Cooperative with the
Bankruptcy Court in September, 1991 and revised in January, 1992 was approved by
the Bankruptcy Court in March 1992 and approved by the NHPUC on October 5, 1992.
All appeals of the NHPUC order approving the reorganization have been resolved
in NHEC's favor and the effective date of the plan occurred on December 1, 1993.

NUCLEAR FUEL AND NUCLEAR PLANT DECOMMISSIONING:

The Seabrook Project joint owners have made, or expect to make, various
arrangements for the acquisition of uranium concentrate, the conversion,
enrichment, fabrication and utilization of nuclear fuel and the disposition of
that fuel after use. The owners and lead participants of United States nuclear
units have

F-31
<PAGE> 52

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993

entered into contracts with the DOE for disposal of spent nuclear fuel in
accordance with the NWPA. The NWPA requires (subject to various contingencies)
that the federal government design, license, construct and operate a permanent
repository for high level radioactive wastes and spent nuclear fuel and
establish prescribed fees for the disposal of such wastes and fuel. The NWPA
specifies that the DOE provide for the disposal of such wastes and spent nuclear
fuel starting in 1998. Objections on environmental and other grounds have been
asserted against proposals for storage as well as disposal of spent fuel. The
DOE anticipates that a permanent disposal site for spent fuel will be ready to
accept fuel for storage on or before 2010. However, the NRC, which must license
the site, stated only that a permanent repository will become available by the
year 2025. At the Seabrook Project there is on-site storage capacity which, with
minimal capital expenditures, should be sufficient for twenty years or until the
year 2010. No near-term capital expenditures are anticipated to deal with any
increase in storage requirements after 2010.

The estimated cost to decommission Seabrook Unit 1, based on a study by the
New Hampshire Yankee Division of the Public Service Company of New Hampshire, is
approximately $351 million in 1993 dollars: The Company's share of that amount
is approximately $42.5 million, or 12.1%. In 1993, the Company paid
approximately $895,000 in decommissioning expenses.

The agreements of purchase and sale under which the Company purchased its
Seabrook interest required the Company to establish a fund of $10 million to
secure payment of part of its share of decommissioning costs of Seabrook Unit 1
and any costs of cancellation of Seabrook Unit 1 or Unit 2. In May 1990, EUA
guaranteed this obligation and the entire fund was released to EUA Power. Under
the Settlement Agreement, EUA reaffirmed this guaranty.

Seabrook Unit 2:

The Company also has a 12.1% ownership interest in Seabrook Unit 2 in which
it has assigned no value. On November 6, 1986, the joint owners of the Seabrook
Project, recognizing that Seabrook Unit 2 had been canceled, voted to dispose of
the Unit. Certain assets of Seabrook Unit 2 have been and are being sold from
time to time to third parties. Plans regarding disposition of Seabrook Unit 2
are now under consideration, but have not been finalized and approved. The
Company is unable, therefore, to estimate the costs for which it would be
responsible in connection with the disposition of Seabrook Unit 2. Monthly
charges are required to be paid by the Company with respect to Seabrook Unit 2
in order to preserve and protect its components and various warranties.

CONSTRUCTION EXPENDITURES

Great Bay Power's cash construction expenditures, including nuclear fuel,
are estimated to be approximately $4.3 million in 1994 and aggregate
approximately $23.4 million for the years 1995 through 1998.

OTHER PROCEEDINGS

In June 1991, the State of New Hampshire imposed a Nuclear Station Property
Tax applicable only to the Seabrook Project. The Company paid its share of the
tax, aggregating $4.2 million through December 31, 1992. In October 1991 the
Attorneys General of Connecticut, Massachusetts and Rhode Island petitioned the
United States Supreme Court in an original jurisdiction case for a determination
of the legality of the tax, and in January 1992 the Supreme Court agreed to take
the case. The parties to the litigation and other Joint Owners of Seabrook
entered into a Settlement Agreement on April 13, 1993. In general, the terms of
the Settlement Agreement are expected to result in a significant reduction in
annual state taxes paid by the Company. In addition, under the terms of the
Settlement Agreement, certain of the prior payments of the tax by the Company
will be permitted to be credited against future taxes due. The Bankruptcy Court
has approved the Settlement Agreement with respect to the Company.

F-32
<PAGE> 53

GREAT BAY POWER CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993

NOTE H -- SUBSEQUENT EVENT

On November 23, 1994, the Company emerged from Bankruptcy and adopted a new
basis of accounting as required by Statement of Position 90-7 "Financial
Reporting by Entities in Reorganization Under the Bankruptcy Code" issued by the
American Institute of Certified Public Accountants. Accordingly, the information
contained in these financial statements is not comparable to the financial
statements for periods beginning on or after November 23, 1994. The accompanying
financial statements are not indicative of the financial position or the
expected results of operations for periods beginning on or after November 23,
1994.

F-33
<PAGE> 54

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

GREAT BAY POWER CORPORATION

March 22, 1996 JOHN A. TILLINGHAST
By:
--------------------------------------

John A. Tillinghast
President and
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------- ---------------
<C> <S> <C>
JOHN A. TILLINGHAST Chairman of the Board, March 22, 1996
- ------------------------------------------ President and Chief Executive
John A. Tillinghast Officer (Principal Executive
Officer and Principal
Accounting Officer)
KENNETH A. BUCKFIRE Director March 22, 1996
- ------------------------------------------
Kenneth A. Buckfire
WALTER GOODENOUGH Director March 22, 1996
- ------------------------------------------
Walter Goodenough
ANDREW J. KURTZ Director March 22, 1996
- ------------------------------------------
Andrew J. Kurtz
CHARLES A. LEEDS, JR. Director March 22, 1996
- ------------------------------------------
Charles A. Leeds, Jr.
</TABLE>
<PAGE> 55

EXHIBIT INDEX

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------ ------------
<C> <S> <C>
2 First Modification to Bondholders' Committee's Fifth Amended Plan of
Reorganization dated February 11, 1994 as amended by First Amendment to
Modified Plan dated September 9, 1994.(2)...............................
3.1 Restated Articles of Incorporation of the Registrant as amended to
date.(1)................................................................
3.2 Amended and Restated By-laws of the Registrant adopted on November 23,
1994.(2)................................................................
10.1 Agreement Between Bangor Hydro-Electric Company, Central Maine Power
Company, Central Vermont Public Service Corporation, Fitchburg Gas and
Electric Light Company, Maine Public Service Company and EUA Power
Corporation relating to use of certain transmission facilities dated
October 20, 1986.(2)....................................................
10.2 Limited Guaranty by Eastern Utilities Associates of Decommissioning
Costs in favor of Joint Owners of the Seabrook Project dated May 5,
1990.(2)................................................................
10.3 Composite Agreement for Joint Ownership, Construction and Operation of
New Hampshire Nuclear Units, as amended, dated November 1, 1990.(2).....
10.4 Seventh Amendment to and Restated Agreement for Seabrook Project
Disbursing Agent as amended through and including the Second Amendment,
by and among North Atlantic Energy Service Corporation, the Registrant
and other Seabrook Project owners dated November 1, 1990.(2)............
10.5 Seabrook Project Managing Agent Operating Agreement by and among the
North Atlantic Energy Service Corporation, the Registrant and parties to
the Joint Ownership Agreement, dated June 29, 1992.(2)..................
10.6 Settlement Agreement by and among EUA Power Corporation, Eastern
Utilities Associates and the Official Bondholders' Committee dated
November 18,
1992.(2)................................................................
10.7 Marketing Agent Agreement between UNITIL Corporation and the Registrant
dated April 1, 1993.(2).................................................
10.8 Purchased Power Agreement between UNITIL Power Corporation and the
Registrant dated April 26, 1993.(2).....................................
10.9 Power Purchase Option Agreement between UNITIL Power Corporation and the
Registrant dated April 26, 1993.(2).....................................
10.10 Second Mortgage and Security Agreement between UNITIL Power Corporation
and the Registrant dated December 22, 1993.(2)..........................
10.11 Third Mortgage and Security Agreement between UNITIL Power Corporation
and the Registrant dated December 22, 1993.(2)..........................
10.12 Registration Rights Agreement between the Registrant and the Selling
Stockholders dated April 7, 1994 (the "Registration Rights
Agreement").(2).........................................................
10.13 Amendment to Registration Rights Agreement between the Registrant and
the Selling Stockholders dated November 23, 1994.(2)....................
10.14 Stock and Subscription Agreement among the Registrant and the Selling
Stockholders dated April 7, 1994.(2)....................................
10.15 Acknowledgment and Amendment to Stock and Subscription Agreement, dated
November 23, 1994.(2)...................................................
10.16 Settlement Agreement by and among the Registrant, the Official
Bondholders' Committee and the Selling Stockholders dated September 9,
1994.(2)................................................................
10.17 Management and Administrative Services Agreement between UNITIL
Resources, Inc. and the Registrant dated November 23, 1994.(2)..........
</TABLE>
<PAGE> 56

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------ ------------
<C> <S> <C>
10.18 Employment Agreement between John A. Tillinghast and the Registrant
dated November 23, 1994.(2)(7)..........................................
10.19 Expense Sharing Agreement between Tillinghast Technology Interests, Inc.
and the Registrant dated November 23, 1994.(2)..........................
10.20 Purchased Power Agreement between Freedom Electric Power Company and the
Registrant dated March 2, 1995.(2)......................................
10.21 Letter Agreement, dated December 20, 1994, between the Registrant and
the Selling Stockholders amending Registration Rights Agreement, as
previously amended on November 23, 1994.(2).............................
10.22 Letter Agreement, dated March 28, 1995, between the Registrant and the
Selling Stockholders amending Registration Rights Agreement, as
previously amended on November 23, 1994 and December 20, 1994.(2).......
10.23 Employment Agreement between John A. Tillinghast and the Registrant
dated April 24, 1995.(3)(7).............................................
10.24 Incentive Stock Option Agreement, dated as of April 24, 1995, by and
between John A. Tillinghast and the Registrant.(3)(7)...................
10.25 New Expense Sharing Agreement between Tillinghast Technology Interest,
Inc. and the Registrant dated April 24, 1995.(3)........................
10.26 Employment Agreement between Frank W. Getman Jr. and the Registrant
dated August 1, 1995.(4)(7).............................................
10.24 Incentive Stock Option Agreement, dated as of August 1, 1995, by and
between Frank W. Getman Jr. and the Registrant.(4)(7)...................
10.28 Services Agreement between PECO Energy Company and the Registrant dated
November 3, 1995.(5)(6).................................................
10.29 Warrant Purchase Agreement between PECO Energy Company and the
Registrant dated November 3, 1995.(5)...................................
10.30 Warrant, dated February 14, 1995, issued by the Registrant to PECO
pursuant to the provisions of a Warrant Purchase Agreement.(1)..........
10.31 Great Bay Power Corporation 1995 Stock Option Plan, as amended.(1)(7)...
16 Letter regarding Change in Certifying Accountant dated March 29,
1995.(2)................................................................
</TABLE>

- ---------------
(1) Filed as an exhibit to this Annual Report on Form 10-K.

(2) Filed as an exhibit to the Company's Registration Statement on Form S-1
(Registration No. 33-88232) declared effective on April 17, 1995 and
incorporated herein by reference.

(3) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995 (File No. 0-25748) on May 9, 1995 and
incorporated herein by reference.

(4) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 (File No. 0-25748) on August 14, 1995 and
incorporated herein by reference.

(5) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995 (File No. 0-25748) on November 14, 1995 and
incorporated herein by reference.

(6) Confidential treatment granted as to certain portions.

(7) Management contract or compensation plan or arrangement required to be filed
as an exhibit pursuant to Item 14(c) of Form 10-K.

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GREAT BAY POWER CORPORATION FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 8,874
<SECURITIES> 7,595
<RECEIVABLES> 1,535
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,483
<PP&E> 114,621
<DEPRECIATION> 3,339
<TOTAL-ASSETS> 138,771
<CURRENT-LIABILITIES> 2,967
<BONDS> 0
<COMMON> 80
0
0
<OTHER-SE> 82,153
<TOTAL-LIABILITY-AND-EQUITY> 138,771
<SALES> 24,524
<TOTAL-REVENUES> 24,524
<CGS> 21,849
<TOTAL-COSTS> 32,381
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,113)
<INCOME-TAX> (54)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,059)
<EPS-PRIMARY> (.76)
<EPS-DILUTED> (.76)

</TABLE>