FORM U-13-60
MUTUAL AND SUBSIDIARY SERVICE COMPANIES
REVISED FEBRUARY 7, 1980
ANNUAL REPORT
FOR THE PERIOD
BEGINNING January 1, 1996 AND ENDING December 31, 1996
TO THE
U.S. SECURITIES AND EXCHANGE COMMISSION
OF
North Atlantic Energy Service Corporation
A Subsidiary SERVICE COMPANY
DATE OF INCORPORATION: April 1, 1992
STATE OR SOVEREIGN POWER UNDER WHICH INCORPORATED OR ORGANIZED: New Hampshire
LOCATION OF PRINCIPAL EXECUTIVE OFFICES OF REPORTING COMPANY:
Route 1, Lafayette Rd., Seabrook, NH, 03874
NAME, TITLE AND ADDRESS OF OFFICER TO WHOM CORRESPONDENCE CONCERNING THIS REPORT
SHOULD BE ADDRESSED:
John J. Roman V.P. & Controller P.O. Box 270, Hartford, Ct. 06141-
0270
NAME OF PRINCIPAL HOLDING COMPANY WHOSE SUBSIDIARIES ARE SERVED BY REPORTING
COMPANY:
Northeast Utilities
INSTRUCTIONS FOR USE OF FORM U-13-60
1. Time of Filing. Rule 94 provides that on or before the first day of May
in each calendar year, each mutual service company and each subsidiary service
company as to which the Commission shall have made a favorable finding pursuant
to Rule 88, and every service company whose application for approval or
declaration pursuant to Rule 88 is pending shall file with the Commission an
annual report on Form U-13-60 and in accordance with the Instructions for that
form.
2. Number of Copies. Each annual report shall be filed in duplicate. The
company should prepare and retain at least one extra copy for itself in case
correspondence with reference to the report becomes necessary.
3. Period Covered by Report. The first report filed by any company shall
cover the period from the date the Uniform System of Accounts was required to be
made effective as to that company under Rules 82 and 93 to the end of that
calendar year. Subsequent reports should cover a calendar year.
4. Report Format. Reports shall be submitted on the forms prepared by the
Commission. If the space provided on any sheet of such form is inadequate,
additional sheets may be inserted of the same size as a sheet of the form or
folded to such size.
5. Money Amounts Displayed. All money amounts required to be shown in
financial statements may be expressed in whole dollars, in thousands of dollars
or in hundred thousands of dollars, as appropriate and subject to provisions of
Regulation S-X ('210.3-01(b)).
6. Deficits Displayed. Deficits and other like entries shall be indicated by
the use of either brackets or a parenthesis with corresponding reference in
footnotes. (Regulation S-X. '210.3-01(c))
7. Major Amendments or Corrections. Any company desiring to amend or correct
a major omission or error in a report after it has been filed with the
Commission shall submit an amended report including only those pages, schedules,
and entries that are to be amended or corrected. A cover letter shall be
submitted requesting the Commission to incorporate the amended report changes
and shall be signed by a duly authorized officer of the company.
8. Definitions. Definitions contained in Instruction 01-8 to the Uniform
System of Accounts for Mutual Service Companies and Subsidiary Service
Companies, Public Utility Holding Company Act of 1935, as amended February 2,
1979 shall be applicable to words or terms used specifically within this Form U-
13-60.
9. Organization Chart. The service company shall submit with each annual
report a copy of its current organization chart.
10. Methods of Allocation. The service company shall submit with each annual
report a listing of the currently effective methods of allocation being used by
the service company and on file with the Securities and Exchange Commission
pursuant to the Public Utility Holding Company Act of 1935.
11. Annual Statement of Compensation for Use of Capital Billed. The service
company shall submit with each annual report a copy of the annual statement
supplied to each associate company in support of the amount of compensation for
use of capital billed during the calendar year.
LISTING OF SCHEDULES AND ANALYSIS OF ACCOUNTS
Schedule or Page
Description of Schedules and Accounts Acct. No. No.
Comparative Balance Sheet Schedule I 4 - 5
Service Company Property Schedule II 6 - 7
Accumulated Provision for Depreciation and Amortization
of Service Company Property Schedule III 8
Investments Schedule IV 9
Accounts Receivable from Associate Companies Schedule V 10
Fuel Stock Expenses Undistributed Schedule VI 11
Stores Expense Undistributed Schedule VII 12
Miscellaneous Current and Accrued Assets Schedule VIII 13
Miscellaneous Deferred Debits Schedule IX 14
Research, Development, or Demonstration
Expenditures Schedule X 15
Proprietary Capital Schedule XI 16
Long Term Debt Schedule XII 17
Current and Accrued Liabilities Schedule XIII 18
Notes to Financial Statements Schedule XIV 19
Comparative Income Statement Schedule XV 20
Analysis of Billing - Associate Companies Account 457 21
Analysis of Billing - Non-Associate Companies Account 458 22
Analysis of Charges for Service - Associate
and Non-Associate Companies Schedule XVI 23
Schedule of Expense by Department or Service
Function Schedule XVII 24 - 25
Departmental Analysis of Salaries Account 920 26
Outside Services Employed Account 923 27
Employee Pensions and Benefits Account 926 28
General Advertising Expenses Account 930.1 29
Miscellaneous General Expenses Account 930.2 30
Rents Account 931 31
Taxes Other Than Income Taxes Account 408 32
Donations Account 426.1 33
Other Deductions Account 426.5 34
Notes to Statement of Income Schedule XVIII 35
Description of Reports or Statements
Organization Chart 36
Methods of Allocation 37
Annual Statement of Compensation for
Use of Capital Billed 38
Signature Page 39
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
SCHEDULE I - COMPARATIVE BALANCE SHEET
Give balance sheet of the Company as of December 31 of the current and prior year.
- ---------------------------------------------------------------------------------------------
ACCT ASSETS AND OTHER DEBITS AS OF DECEMBER 31
- ---------------------------------------------------------------------------------------------
1996 1995
SERVICE COMPANY PROPERTY (Thousands of Dollars)
------------------------
<S> <S> <C> <C>
101 Service company property (Schedule II) $ 0 $ 0
107 Construction work in progress (Schedule II) 0 0
---------- ----------
Total Service Company Property $ 0 $ 0
---------- ----------
108 Less accumulated provision for depreciation and
amortization of service company property (Schedule III) $ 0 $ 0
---------- ----------
Net Service Company Property $ 0 $ 0
---------- ----------
INVESTMENTS
-----------
123 Investments in associate companies (Schedule IV) $ 0 $ 0
124 Other investments (Schedule IV) 0 37
---------- ----------
Total Investments $ 0 $ 37
---------- ----------
CURRENT AND ACCRUED ASSETS
--------------------------
131 Cash $ 725 $ 740
134 Special deposits 0 0
135 Working funds 0 21
136 Temporary cash investments (Schedule IV) 14 11
141 Notes receivable 0 0
143 Accounts receivable 51,111 25,430
144 Accumulated provision of uncollectible accounts 0 0
146 Accounts receivable from associate companies (Schedule V) 523 147
152 Fuel stock expenses undistributed (Schedule VI) 0 0
154 Materials and supplies 0 0
163 Stores expense undistributed (Schedule VII) 298 0
165 Prepayments 3,024 2,980
174 Miscellaneous current and accrued assets (Schedule VIII) 0 0
---------- ----------
Total Current and Accrued Assets $ 55,695 $ 29,329
DEFERRED DEBITS
---------------
181 Unamortized Debt Expense $ 0 $ 0
184 Clearing accounts 0 0
186 Miscellaneous deferred debits (Schedule IX) 20,348 19,292
188 Research, development, or demonstration
expenditures (Schedule X) 0 0
190 Accumulated deferred income taxes 313 0
---------- ----------
Total Deferred Debits $ 20,661 $ 19,292
---------- ----------
TOTAL ASSETS AND OTHER DEBITS $ 76,356 $ 48,658
========== ==========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
SCHEDULE I - COMPARATIVE BALANCE SHEET
Give balance sheet of the Company as of December 31 of the current and prior year.
- ---------------------------------------------------------------------------------------------
ACCT LIABILITIES AND PROPRIETARY CAPITAL AS OF DECEMBER 31
- ---------------------------------------------------------------------------------------------
1996 1995
(Thousands of Dollars)
<S> <S> <C> <C>
PROPRIETARY CAPITAL
-------------------
201 Common stock issued (Schedule XI) $ 1 $ 1
211 Miscellaneous paid-in-capital (Schedule XI) 9 9
215 Appropriated retained earnings (Schedule XI) 0 0
216 Unappropriated retained earnings (Schedule XI) 1 1
---------- ----------
Total Proprietary Capital $ 11 $ 11
---------- ----------
LONG-TERM DEBT
--------------
223 Advances from associate companies (ScheduleXII) $ 0 $ 0
224 Other long-term debt (Schedule XII) 0 0
225 Unamortized premium on long-term debt 0 0
226 Unamortized discount on long-term debt 0 0
---------- ----------
Total Long-Term Debt $ 0 $ 0
---------- ----------
CURRENT AND ACCRUED LIABILITIES
-------------------------------
231 Notes payable $ 0 $ 0
232 Accounts payable 41,425 14,192
233 Notes payable to associate companies (Schedule XIII) 0 0
234 Accounts payable to associate companies (Schedule XIII) 1,994 2,623
236 Taxes accrued 376 662
237 Interest accrued 0 0
238 Dividends declared 0 0
241 Tax collections payable (56) 53
242 Miscellaneous current and accrued
liabilities (Schedule XIII) 29,483 27,438
---------- ----------
Total Current and Accrued Liabilities $ 73,222 $ 44,968
---------- ----------
DEFERRED CREDITS
----------------
253 Other deferred credits $ 3,123 $ 3,679
255 Accumulated deferred investment tax credits 0 0
---------- ----------
Total Deferred Credits $ 3,123 $ 3,679
---------- ----------
282 ACCUMULATED DEFERRED INCOME TAXES $ 0 $ 0
--------------------------------- ---------- ----------
TOTAL LIABILITIES AND PROPRIETARY CAPITAL $ 76,356 $ 48,658
========== ==========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE II - SERVICE COMPANY PROPERTY
- ---------------------------------------------------------------------------------------------
BALANCE AT RETIREMENTS BALANCE
BEGINNING OR OTHER AT CLOSE
ACCT DESCRIPTION OF YEAR ADDITIONS SALES CHANGES OF YEAR
- ---------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C>
SERVICE COMPANY PROPERTY
301 ORGANIZATION
303 MISCELLANEOUS INTANGIBLE PLANT
304 LAND AND LAND RIGHTS
305 STRUCTURES AND IMPROVEMENTS
306 LEASEHOLD IMPROVEMENTS
307 EQUIPMENT (2) NONE
308 OFFICE FURNITURE AND EQUIPMENT
309 AUTOMOBILES, OTHER VEHICLES
AND RELATED GARAGE EQUIPMENT
310 AIRCRAFT AND AIRPORT EQUIPMENT
311 OTHER SERVICE COMPANY
PROPERTY (3)
(1) PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
NONE
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE II - CONTINUED
- -----------------------
(2) SUBACCOUNTS ARE REQUIRED FOR EACH CLASS OF EQUIPMENT OWNED. THE SERVICE
COMPANY SHALL PROVIDE A LISTING BY SUBACCOUNT OF EQUIPMENT ADDITIONS DURING THE
YEAR AND THE BALANCE AT THE CLOSE OF THE YEAR:
- ---------------------------------------------------------------------------------------------
BALANCE
AT CLOSE
SUBACCOUNT DESCRIPTION ADDITIONS OF YEAR
- ---------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C>
NONE
(3) DESCRIBE OTHER SERVICE COMPANY PROPERTY:
NONE
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE III
ACCUMULATED PROVISION FOR DEPRECIATION AND
AMORTIZATION OF SERVICE COMPANY PROPERTY
- ------------------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED CHANGES BALANCE
BEGINNING TO ADD/ AT CLOSE
DESCRIPTION OF YEAR ACCT 403 RETIREMENT(DEDUCT)(1) OF YEAR
- ------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C>
Account
- -------
301 ORGANIZATION
303 MISCELLANEOUS INTANGIBLE PLANT
304 LAND AND LAND RIGHTS
305 STRUCTURES AND IMPROVEMENTS
306 LEASEHOLD IMPROVEMENTS
307 EQUIPMENT NONE
308 OFFICE FURNITURE AND FIXTURES
309 AUTOMOBILES, OTHER VEHICLES
AND RELATED GARAGE EQUIPMENT
310 AIRCRAFT AND AIRPORT EQUIPMENT
311 OTHER SERVICE COMPANY
PROPERTY
AMORTIZATION OF SERVICE COMPANY
PROPERTY
- ------------------------------------------------------------------------------------------
(1) PROVIDE AN EXPLANATION OF THOSE CHANGES CONSIDERED MATERIAL:
NONE
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE IV - INVESTMENTS
INSTRUCTIONS: Complete the following schedule concerning investments.
Under Account 124, "Other Investments," state each
investment separately, with description, including the
name of issuing company, number of shares or principal
amount, etc.
Under Account 136, "Temporary Cash Investments," list each
investment separately.
- --------------------------------------------------------------------------
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
- --------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ACCOUNT 123 - INVESTMENT IN ASSOCIATE COMPANIES $ 0 $ 0
ACCOUNT 124 - OTHER INVESTMENTS
Fleet Bank - Rabbi Trust Fund 37 0
ACCOUNT 136 - TEMPORARY CASH INVESTMENTS
Fidelity Institute Tax Exempt Cash
Portfolio 11 11
Citizens Bank Certificate of Deposit 0 3
---------- ----------
TOTAL $ 48 $ 14
========== ==========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE V - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
INSTRUCTIONS:Complete the following schedule listing accounts receivable from each
associate company. Where the service company has provided accommoda-
tion or convenience payments for associate companies, a separate listing of
total payments for each associate company by subaccount should be
provided.
- -----------------------------------------------------------------------------
BALANCE ATBALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
- -----------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ACCOUNT 146 - ACCOUNTS RECEIVABLE FROM ASSOCIATE COMPANIES
Northeast Utilities Service Company $ 109 $ 364
Northeast Nuclear Energy Company 16 155
North Atlantic Energy Corporation 8 3
Public Service Company of New Hampshire 14 1
-------- ----------
TOTAL $ 147 $ 523
======== ==========
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS:
NONE
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE VI - FUEL STOCK EXPENSES UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to fuel
stock expenses during the year and indicate amount attributable to each
associate company. Under the section headed "Summary" listed below, give
an overall report of the fuel functions performed by the service
company.
- --------------------------------------------------------------------------
DESCRIPTION LABOR EXPENSES TOTAL
- --------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C>
ACCOUNT 152 - FUEL STOCK EXPENSES NONE
UNDISTRIBUTED
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE VII - STORES EXPENSE UNDISTRIBUTED
INSTRUCTIONS: Report the amount of labor and expenses incurred with respect to stores
expense during the year and indicate amount attributable to each
associate company.
- ---------------------------------------------------------------------------------
DESCRIPTION LABOR EXPENSES TOTAL
- --------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
ACCOUNT 163 - STORES EXPENSE
UNDISTRIBUTED
Balance at prior year end $ 0 $ 0 $ 0
Amount incurred during the year 1,794 126 1,920
The above stores expenses are billed back to each
of the companies listed below:
Associate Companies:
The Connecticut Light and
Power Company (61) (5) (66)
North Atlantic Energy Corporation (543) (41) (584)
Non-Associate Companies (904) (68) (972)
--------- --------- ---------
TOTAL $ 286 $ 12 $ 298
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE VIII
MISCELLANEOUS CURRENT AND ACCRUED ASSETS
INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be
grouped, showing the number of items in each group.
- -------------------------------------------------------------------------------
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
- ------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C>
ACCOUNT 174 - MISCELLANEOUS CURRENT NONE
AND ACCRUED ASSETS
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE IX
MISCELLANEOUS DEFERRED DEBITS
INSTRUCTIONS: Provide detail of items in this account. Items less than $10,000 may be
grouped, showing the number of items in each group.
- ---------------------------------------------------------------------------------
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
- ---------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
ACCOUNT 186 - MISCELLANEOUS DEFERRED DEBITS
Noncurrent receivable from Joint Owner funding $ 15,161 $ 19,075
Accrued construction period Worker's Compensation claims 2,022 0
Westinghouse Reactor Coolant Pump Settlement 1,434 987
North Atlantic Energy Service Corporation Organization Cost 56 19
Accounting Treatment Change for Payroll 388 358
Required bank deposit 3 0
Miscellaneous (>100 items) 0 (251)
Preliminary Engineering for:
Equipment hatch barrier 36 0
Telephone switch replacement 16 0
Secondary control system modifications 17 0
Security system replacement 0 10
Administration building addition 0 11
Spent fuel pool upgrades 86 0
Hotwell level control 58 0
Service water improvements 0 59
Integrated reactor vessel head 0 40
Steam generator blowdown 0 30
Miscellaneous (4 items 1995, 4 items 1996) 15 10
-------- --------
TOTAL $ 19,292 $ 20,348
======== ========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE X
RESEARCH, DEVELOPMENT, OR DEMONSTRATION EXPENDITURES
INSTRUCTIONS: Provide a description of each material research, development, or
demonstration project which incurred costs by the service corporation
during the year.
- -------------------------------------------------------------------------------
DESCRIPTION AMOUNT
- -------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C>
ACCOUNT 188 - RESEARCH, DEVELOPMENT OR NONE
DEMONSTRATION EXPENDITURES
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE XI
PROPRIETARY CAPITAL
- -------------------------------------------------------------------------------------------------
NUMBER OF PAR OR STATED OUTSTANDING CLOSE OF PERIOD
ACCOUNT SHARES VALUE ---------------------------
NUMBER CLASS OF STOCK AUTHORIZED PER SHARE NO. OF SHARES TOTAL AMOUNT
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
201 COMMON STOCK ISSUED 1,000 $ 1.00 1,000 $ 1
INSTRUCTIONS: Classify amounts in each account with brief explanation, disclosing the
general nature of transactions which give rise to the reported amounts.
- --------------------------------------------------------------------------------------------------
DESCRIPTION AMOUNT
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ACCOUNT 211 - MISCELLANEOUS PAID-IN-CAPITAL $ 9
ACCOUNT 215 - APPROPRIATED RETAINED EARNINGS 0
---------
TOTAL $ 9
=========
- --------------------------------------------------------------------------------------------------
INSTRUCTIONS: Give particulars concerning net income or (loss) during the year, distinguishing
between compensation for the use of capital owed or net loss remaining from
servicing nonassociated per the General Instructions of the Uniform Systems of
Accounts. For dividends paid during the year in cash or otherwise, provide rate
percentage, amount of dividend, date declared and date paid.
- --------------------------------------------------------------------------------------------------
BALANCE AT NET INCOME BALANCE
BEGINNING OR DIVIDENDS AT CLOSE
DESCRIPTION OF YEAR (LOSS) PAID OF YEAR
- --------------------------------------------------------------------------------------------------
(Thousands of Dollars)
ACCOUNT 216-UNAPPROPRIATED RETAINED
EARNINGS
$ 1 0 * $ 0 $ 1
* Miscellaneous adjustment to retained earnings offset net income
which resulted in a net zero dollar
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE XII
LONG-TERM DEBT
INSTRUCTIONS: Advances from associate companies should be reported separately for advances on notes, and
advances on open account. Names of associate companies from which advances were received shall be
shown under the class and series of obligation column. For Account 224 -- Other long-term debt
provide the name of creditor company or organization, terms of obligation, date of maturity,
interest rate, and the amount authorized and outstanding.
- ------------------------------------------------------------------------------------------------------------------
TERMS OF OBLIG. DATE BALANCE AT BALANCE AT
CLASS & SERIES OF INTEREST AMOUNT BEGINNING DEDUCTIONS CLOSE
NAME OF CREDITOR OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS (1) OF YEAR
- ------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <S>
ACCOUNT 223-ADVANCES FROM
ASSOCIATE COMPANIES
TOTAL ADVANCES FROM ASSOCIATES NONE
ACCOUNT 224-OTHER
LONG-TERM DEBT
TOTAL OTHER LONG-TERM DEBT NONE
(1) GIVE AN EXPLANATION OF DEDUCTIONS:
NONE
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE XIII - CURRENT AND ACCRUED LIABILITIES
INSTRUCTIONS: Provide balance of notes and accounts payable to each associate company.
Give description and amount of miscellaneous current and accrued
liabilities. Items less than $10,000 may be grouped, showing the number of
items in each group.
- ------------------------------------------------------------------------------------------
BALANCE AT BALANCE AT
BEGINNING CLOSE
DESCRIPTION OF YEAR OF YEAR
- ------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S>
ACCOUNT 233 - NOTES PAYABLE TO ASSOCIATE COMPANIES <C> <C>
NONE
- ------------------------------------------------------------------------------------------
ACCOUNT 234 - ACCOUNTS PAYABLE TO ASSOCIATE COMPANIES
Northeast Utilities Service Company $ 1,773 $ 1,588
Northeast Nuclear Electric Company 174 0
Public Service Company of New Hampshire 675 173
The Connecticut Light & Power Company 0 233
Miscellaneous (1 item) 1 0
-------- ----------
TOTAL $ 2,623 $ 1,994
======== ==========
- ------------------------------------------------------------------------------------------
ACCOUNT 242 - MISCELLANEOUS CURRENT AND ACCRUED LIABILITIES
Accrued payroll and other employee payables $ 7,455 $ 6,714
Accrued Pension Cost 13,390 17,028
On-hand operations funding from associate companies:
North Atlantic Energy Corporation 2,372 2,066
The Connecticut Light & Power Company 268 233
On-hand operations funding from non-associate companies 3,953 3,442
-------- ----------
TOTAL $ 27,438 $ 29,483
======== ==========
</TABLE>
NORTH ATLANTIC ENERGY SERVICE CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
INSTRUCTIONS: The space below is provided for important notes regarding the
financial statements or any account thereof. Furnish particulars
as to any significant contingent assets or liabilities existing
at the end of the year. Notes relating to financial statements
shown elsewhere in this report may be indicated here by
reference.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General: North Atlantic Energy Service Corporation (the company or NAESCO) is a
wholly owned subsidiary of Northeast Utilities (NU). The Connecticut Light and
Power Company (CL&P), Public Service Company of New Hampshire (PSNH), Western
Massachusetts Electric Company (WMECO), North Atlantic Energy Corporation
(NAEC), and Holyoke Water Power Company (HWP) are operating subsidiaries
comprising the Northeast Utilities System (the system) and are wholly owned by
NU.
The system furnishes retail electric service in Connecticut, New Hampshire, and
western Massachusetts through CL&P, PSNH, WMECO, and HWP. NAEC sells all of its
capacity to PSNH. In addition to its retail service, the system furnishes firm
and other wholesale electric services to various municipalities and other
utilities. The system serves about 30 percent of New England's electric needs
and is one of the 20 largest electric utility systems in the country as measured
by revenues.
The company acts as agent in operating the Seabrook Nuclear Power Project (the
Project or Seabrook) pursuant to the Seabrook Project Managing Agent
Operating Agreement (the Managing Agent Agreement). The Project is owned jointly
by NAEC and CL&P, both wholly owned subsidiaries of NU and nine nonaffiliated
New England utility companies as tenants in common with undivided interests (the
Seabrook Joint Owners). The cost of the Project is recorded on the books of the
Joint Owners based upon their proportionate ownership share of the Project. The
company does not have an ownership interest in the Project. The company is only
liable for payroll related expenditures and liabilities. The Seabrook Joint
Owners are severally responsible for their respective share of the costs of
operating and maintaining the Project.
Ownership percentages of the Project as of December 31, 1996 were as follows:
OWNERSHIP
PARTICIPANTS SHARE
Canal Electric Company 3.52317%
The Connecticut Light and Power Company 4.05985
Great Bay Power Corporation 12.13240
Hudson Light & Power Department .07737
Massachusetts Municipal Wholesale Electric Company 11.59340
Montaup Electric Company 2.89989
New England Power Company 9.95766
New Hampshire Electric Cooperative, Inc. 2.17391
North Atlantic Energy Corporation 35.98201
Taunton Municipal Lighting Plant .10034
The United Illuminating Company 17.50000
100.00000%
Other wholly owned subsidiaries of NU provide support services to the company.
Northeast Utilities Service Company (NUSCO) provides certain administrative
support to the company, pursuant to the Service Agreement between NUSCO and
NAESCO acting as agent for the Joint Owners of Seabrook, as amended, and to
other system companies. Billings from NUSCO recorded by the company approximated
$8,937,000 and $4,389,000 in 1996 and 1995, respectively. PSNH provides certain
services to the company pursuant to the Service Agreement between PSNH and
NAESCO acting as agent for the Joint Owners of Seabrook, as amended. Billings
from PSNH recorded by the company were approximately $369,000 and $409,000 in
1996 and 1995, respectively.
Yankee Atomic Electric Company (YAEC) provides services to the company pursuant
to the Nuclear Support Services Agreement between YAEC and NAESCO acting as
agent for the Joint Owners of Seabrook, as amended. Billings from YAEC recorded
by the company approximated $5,029,000 and $5,664,000 in 1996 and 1995,
respectively.
All transactions among affiliated companies, and between YAEC and the company,
are on a recovery of cost basis which may include amounts representing a return
on equity, and are subject to approval of various federal and state regulatory
agencies.
Method Of Accounting: The accompanying financial statements were prepared in
accordance with the Uniform System of Accounts for Mutual and Subsidiary Service
Companies, promulgated pursuant to the Public Utility Holding Company Act
of 1935, as modified (1935 Act). This system of accounts follows, with
modifications, the Federal Energy Regulatory Commission's (the FERC) Uniform
System of Accounts and the Managing Agent Agreement. The financial statements
reflect expenses associated with managing, operating, and maintaining the
Project, excluding decommissioning costs, property taxes, amortization of
nuclear fuel, reserves, and book depreciation. Pursuant to the Managing Agent
Agreement, NAESCO does not earn a return on capital and therefore, revenues
represent the sum of the company's operating expenses.
The preparation of financial statements 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. Estimates also affect the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Public Utility Regulation: NU is registered with the Securities and Exchange
Commission as a holding company under the 1935 Act, and it and its subsidiaries,
including the company, are subject to the provisions of the 1935 Act. The
company is a registered utility company in the state of New Hampshire and is
subject to appropriate regulation by the New Hampshire Public Utilities
Commission (NHPUC). The Joint Owners, whom the company represents as agent, are
subject to further regulation by the FERC. The company therefore follows the
accounting policies prescribed by the FERC.
2. PENSION AND POSTRETIREMENT BENEFITS
Pensions: Employees of NAESCO are covered by the NU system's uniform
noncontributory-defined benefit plan covering all of its regular employees.
Benefits are based on years of service and employees' highest compensation
during five consecutive years of employment. The company's allocated portion of
the system's pension cost for 1996 and 1995, part of which was capitalized and
billed as utility plant, approximated $3,638,000 and $2,596,000, respectively.
Currently, the system funds annually an amount at least equal to that which will
satisfy the requirements of the Employee Retirement Income Security Act and the
Internal Revenue Code. Pension costs are determined using market-related values
of pension assets. Pension assets are invested primarily in domestic and
international equity securities and bonds.
The components of net pension cost for the company (in thousands) are:
For the Years Ended
December 31,
1996 1995
Service cost $ 3,749 $3,597
Interest cost 3,567 2,759
Return on plan assets (6,708) (8,703)
Net amortization 3,030 4,943
Net pension cost $3,638 $2,596
For calculating pension cost, the following actuarial assumptions were used:
For the Years Ended
December 31,
1996 1995
Discount rate 7.50% 8.25%
Expected long-term rate of return 8.75 8.50
Compensation/progression rate 4.75 5.00
The following table represents the plan's funded status for the company at
December 31 (in thousands):
1996 1995
Accumulated benefit obligation,
including vested benefits at
December 31, 1996 and 1995 of
$23,047,000 and $20,213,000, $29,877 $26,084
respectively
Projected benefit obligation
(PBO) 52,049 45,334
Less: Market value of plan
assets 48,656 42,904
PBO in excess of market value (3,393) (2,430)
Unrecognized transition amount 819 882
Unrecognized prior service costs 6,146 3,184
Unrecognized net gain (20,600) (15,026)
Accrued pension liability $ (17,028) (13,390)
The following actuarial assumptions were used in calculating the plan's year end
funded status:
1996 1995
Discount Rate 7.75% 7.50%
Compensation/progression rate 4.75 4.75
Postretirement Benefits: The company provides certain health care benefits,
primarily medical and dental, and life insurance benefits through a benefit plan
to retired employees. These benefits are available for employees leaving the
company who are otherwise eligible to retire and have met specified service
requirements. The expected cost of postretirement benefits, primarily health
and life insurance benefits are charged to expense during the years that
eligible employees render service. Actuarially determined total health care and
life insurance costs, part of which were capitalized and billed as utility
plant, approximated $1,036,000 in 1996 and $1,144,000 in 1995.
The accumulated postretirement benefit obligation (APBO) represents the
company's prior service obligation upon the adoption of Statement of Financial
Accounting Standards 106 (SFAS 106) on January 1, 1993. As allowed by SFAS 106,
the company is amortizing its APBO of approximately $3 million over a 20-year
period. For current employees and certain retirees, the total
postretirement benefit is limited to two times the 1993 per-retiree health care
costs. The postretirement benefit obligation has been calculated based on this
assumption.
The company funds its postretirement benefit costs through investments in
external trusts. The trust assets are invested primarily in equity securities
and bonds.
The following table represents the plan's funded status at December 31 (in
thousands):
1996 1995
Accumulated postretirement benefit obligation of:
Retirees $ 2,836 $ 2,360
Active employees fully eligible to retire 28 0
Active employees not eligible to retire 4,788 5,449
Total accumulated postretirement benefit obligation 7,652 7,809
Less: Market value of plan assets 5,143 3,690
Accumulated postretirement benefit obligation in
excess of plan assets (2,509) (4,119)
Unrecognized transition amount 2,525 2,682
Unrecognized net loss 233 1,437
Prepaid postretirement benefit $ 249 $ 0
The following actuarial assumptions were used in calculating the plan's year end
funded status:
1996 1995
Discount Rate 7.75% 7.50%
Health Care Cost Trend Rate(a) 7.23 8.40
(a) The per capita cost of covered health care benefits was assumed to
decrease to 4.9 percent by 2001.
The components of health care and life insurance costs for the years ended
December 31 (in thousands) are:
1996 1995
Service cost $ 588 $ 605
Interest cost 561 545
Return on plan assets (500) (566)
Net amortization 387 560
Net health care and life insurance cost $ 1,036 $ 1,144
The following actuarial assumptions were used in calculating SFAS 106 benefit
costs:
1996 1995
Discount rate 7.50% 8.00%
Long term rate of return -Health assets, 5.25 5.00
net of tax
Long term rate of return - Life assets 8.75 8.50
The effect of increasing the assumed health care cost trend rates by one
percentage point in each year would increase the accumulated postretirement
benefit obligation as of December 31, 1996 by $295,000 and the aggregate of the
service and interest cost components of net periodic postretirement benefit cost
for the year then ended by $43,000. The trust holding the plan assets is
subject to federal income taxes at a 35-percent tax rate.
3. LEASES
The company, on behalf of the Seabrook Joint Owners, has entered into operating
lease agreements for certain data processing equipment, office equipment,
vehicles and offsite facilities. The company does not enter into capital
leases. Operating lease costs charged to expense approximated $1,392,000 and
$2,049,000 in 1996 and 1995, respectively.
The provisions of these lease agreements generally provide for renewal options.
The company has no noncancelable leases.
4. FINANCING
Each of the Seabrook Joint Owners is responsible for financing its cost of
participation in the Project in proportion to its respective ownership share.
Such financing is provided to the Project in advance of such costs being
incurred. Therefore, the company has no long-term or short-term debt
obligations.
5. INCOME TAX EXPENSE
The components of the federal and state income tax provisions for the year ended
December 31, 1996 (in thousands) are:
Current income taxes:
Federal $325
State (95)
Total current 230
Deferred income taxes, net:
Federal (284)
State (29)
Total deferred (313)
Total income tax expense $ (83)
The components of total income tax expense for the year ended December 31, 1996
are classified as follows:
Income taxes charged to operating expenses $ (83)
Other income taxes -
Total income tax expense $ (83)
Deferred income taxes at December 31, 1996 are comprised of the tax effects of
temporary differences as follows:
Software amortization $(596)
Workforce reduction (138)
Injuries and damages reserve 351
Accrued vacation 51
Other 19
Deferred income taxes, net $(313)
A reconciliation between income tax expense and the expected tax expense at the
applicable statutory rate for the year ended December 31, 1996 (in thousands) is
as follows:
Expected federal income tax at 35 percent of pretax income $(29)
Tax effect of differences:
State income taxes, net of federal benefit (81)
Other, net 27
Total income tax expense $(83)
The company, as a wholly-owned subsidiary of NU is included in NU's consolidated
return. Income tax expense is determined on a separate company basis. On
January 1, 1996, a retroactive adjustment was made to accrue income taxes from
inception to December 31, 1995 and is included in the 1996 tax provision. This
retroactive adjustment did not have a material impact on NAESCO's financial
position or results of operations.
6. NRC ACTIVITIES
Northeast Nuclear Energy Company, another NU subsidiary, acts as agent for CL&P,
PSNH and WMECO in managing and operating the three Millstone generating
facilities in Connecticut. Millstone 1, 2, and 3 have been out of service since
November 4, 1995, February 21, 1996 and March 30, 1996, respectively, and are on
the NRC's watch list. NU has restructured its nuclear organization and is
currently implementing comprehensive plans to restart the units.
On October 9, 1996, the NRC issued a request for information concerning all
nuclear plants in the United States, excluding the three Millstone units which
had previously received such requests. Such information will be used to
verify that these facilities are being operated and maintained in accordance
with NRC regulations and the unit's specific licenses. The NRC has indicated
that the information will be used to determine whether future inspection or
enforcement activities are warranted for any plant. NAESCO has submitted its
response to the NRC's request with respect to Seabrook. Seabrook's operations
have not been restricted by the request. The NRC's April 1996 comprehensive
review found Seabrook to be a well-operated facility without any major safety
issues or weaknesses and noted that it would reduce its future inspections in a
number of areas as a result of its findings.
7. SUBSEQUENT EVENT
On February 28, 1997, the NHPUC issued its decision related to restructuring the
state's electric utility industry and setting interim stranded cost charges for
PSNH pursuant to legislation enacted in New Hampshire in 1996.
In the decision, the NHPUC announced a departure from cost-based ratemaking and
instead adopted a market-priced approach to ratemaking and stranded cost
recovery as advocated by the NHPUC's consultants. Accordingly, unless the
litigation described below results in a stay, or necessary modifications to
the final plan are made, that leads management to conclude that the rates in the
NHPUC's restructuring decision will not go into effect, PSNH will be required to
discontinue accounting under SFAS 71. That would result in PSNH writing off
from its balance sheet, as early as the quarter ending March 31, 1997,
substantially all of its regulatory assets. The amount of the potential write-
off which is triggered by the order is currently estimated at over $400
million, after taxes.
The decision also contains rulings on numerous other issues that may have a
substantial effect on the operations of PSNH. Included among these rulings are
assertions that the Rate Agreement by and between PSNH's parent company, NU and
the state of New Hampshire, which was an integral part of NU's acquisition of
PSNH in 1992, is not binding on the state and the requirement that PSNH divest
within two years from the inception of competition all of its owned-generation
and all of its wholesale power contracts (including its contracts with NAEC for
Seabrook output).
On March 3, 1997, PSNH, NU, NAEC and NUSCO filed for a temporary restraining
order, preliminary and permanent injunctive relief, and for declaratory judgment
in the Federal District Court for New Hampshire. The case was subsequently
transferred to Rhode Island. On March 10, 1997, the Chief Judge of the Rhode
Island federal court issued a temporary restraining order which stayed the
NHPUC's February 28, 1997, decision to the extent it established a rate setting
methodology that is not designed to recover PSNH's costs of providing service
and would require PSNH to write off any regulatory assets. A hearing regarding
the system plaintiffs' request for a preliminary injunction will be held in the
same court on March 20, 1997.
PSNH and NAEC are parties to a variety of financing agreements providing that
the credit thereunder can be terminated or accelerated if they do not maintain
specified minimum ratios of common equity to capitalization (as defined in each
agreement). In addition, PSNH and NAEC are parties to a variety of financing
agreements providing in effect that the credit thereunder can be terminated or
accelerated if there are actions taken, either by PSNH or NAEC or by the state
of New Hampshire, that deprive PSNH and/or NAEC of the benefits of the Rate
Agreement and/or the Seabrook Power Contracts.
If the NHPUC's February 28, 1997 decision becomes effective, it would result in
(i) write-offs that would cause PSNH's common equity to fall below the
contractual minimums, (ii) reductions in income that would cause PSNH's income
to fall below the contractual minimums, (iii) potential violation of the
contractual provisions with respect to actions depriving PSNH and NAEC of the
benefits of the Rate Agreement, and unless waived by the respective lenders,
(iv) the potential for cross defaults to other PSNH and NAEC financing
documents. Substantially all of PSNH's and NAEC's debt obligations ($686
million of PSNH debt and $515 million of NAEC debt) would be affected. For
these actions to be avoided, management believes that it is essential that the
March 10, 1997, temporary restraining order issued by a federal court judge be
extended and made applicable to the foregoing issues.
If these events transpired and the requested court relief is not forthcoming,
and if the creditors holding PSNH and NAEC debt obligations decide to exercise
their rights to demand payment and not to forebear while the litigation is
pending, then either creditors or PSNH and NAEC could initiate proceedings
under Chapter 11 of the bankruptcy laws.
As a result of the NHPUC decision and the potential consequences discussed
above, the reports of the auditors on the individual financial statements of
PSNH and NAEC contain explanatory paragraphs. Those explanatory paragraphs
indicate that a substantial doubt exists currently about the ability of
PSNH and NAEC to continue as going concerns. The accounts of PSNH and NAEC are
included in the consolidated financial statements of NU on the basis of a going
concern. While the effect of the implementation of that decision would have a
material adverse impact on NU's financial position, results of operations and
cash flows, it would not result in defaults under borrowing or other financial
agreements of NU or its other subsidiaries.
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
FOR THE YEAR ENDED DECEMBER 31, 1996
SCHEDULE XV
COMPARATIVE INCOME STATEMENT
- --------------------------------------------------------------------------------
ACCT DESCRIPTION 1996 1995
- --------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
INCOME
------
457 Services Rendered to Associate Companies $ 51,541 $ 58,755
458 Services Rendered to Nonassociate Companies 77,177 87,980
421 Miscellaneous Income or (Loss) 35 3
--------- ----------
Total Income $ 128,753 $ 146,738
--------- ----------
EXPENSE
-------
Nuclear Power Expenses
- ------------------------
517 Operation Supervision and Engineering $ 19,547 $ 20,262
518 Nuclear Fuel Expense 9,297 7,904
519 Coolants and Water 906 671
520 Steam Expenses 9,007 11,367
523 Electric Expenses 1,872 160
524 Miscellaneous Nuclear Power Expenses 23,009 28,634
528 Maintenance Supervision and Engineering 11,508 11,096
529 Maintenance of Structures 4,181 3,648
530 Maintenance of Reactor Plant Equipment 3,867 11,231
531 Maintenance of Electric Plant 4,605 5,421
532 Maintenance of Miscellaneous Nuclear Plant 3,899 7,564
Transmission Expenses
- -----------------------
570 Maintenance of Station Equipment 25 91
Administrative and General Expenses
- -------------------------------------
920 Salaries and Wages 3,175 4,654
921 Office Supplies and Expenses 1,560 2,375
922 Administrative Expense Transferred-Credit (280) (278)
923 Outside Services Employed 5,250 4,208
924 Property Insurance 3,663 4,250
925 Injuries and Damages 1,817 629
926 Employee Pensions and Benefits 14,897 13,663
928 Regulatory Commission Expense 2,422 3,595
930.1 General Advertising Expenses 182 269
930.2 Miscellaneous General Expenses 626 888
935 Maintenance of General Plant 8 0
All Other Expenses
- --------------------
408 Taxes Other Than Income Taxes 3,656 4,298
409 Income Taxes 230 (22)
410 Provision for Deferred Income Taxes 41 0
411 Provision for Deferred Income Taxes (354) 0
426.1 Donations 74 84
426.5 Other Deductions 10 74
431 Other Interest Expense 52 1
--------- ----------
Total Expense $ 128,752 $ 146,737
--------- ----------
Net Income or (Loss) $ 1 $ 1
========= ==========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
ANALYSIS OF BILLING
ASSOCIATE COMPANIES
ACCOUNT 457
- -----------------------------------------------------------------------------
DIRECT INDIRECT COMPENSATION TOTAL
COSTS COSTS FOR USE AMOUNT
NAME OF ASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL BILLED
- -----------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
457-1 457-2 457-3
The Connecticut Light and Power $ 5,226 $ $ $ 5,226
Company
North Atlantic Energy Corporation 46,315 46,315
------- ------ ------ -------
TOTAL $ 51,541 $ 0 $ 0 $ 51,541
======= ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
ANALYSIS OF BILLING
NONASSOCIATE COMPANIES
ACCOUNT 458
DIRECT INDIRECT COMPENSATION EXCESS TOTAL
NAME OF COSTS COSTS FOR USE TOTAL OR AMOUNT
NONASSOCIATE COMPANY CHARGED CHARGED OF CAPITAL COSTS DEFICIENCY BILLED
(Thousands of Dollars)
458-1 458-2 458-3 458-4
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Canal Electric Company $ 4,535 $ $ $ 4,535 $ $ 4,535
Great Bay Power Corporation 15,617 15,617 15,617
Hudson Light & Power Dept. 100 100 100
Massachusetts Municipal Wholesale
Electric Company 14,923 14,923 14,923
Montaup Electric Company 3,733 3,733 3,733
New England Power Company 12,817 12,817 12,817
New Hampshire Electric Coop. 2,798 2,798 2,798
Taunton Municipal Lighting Plant 129 129 129
United Illuminating Company 22,525 22,525 22,525
------- -------- ----- ------- ----- -------
$ 77,177 $ 0 $ 0 $ 77,177 $ 0 $ 77,177
======= ======== ===== ======= ===== =======
INSTRUCTIONS: Provide a brief description of the services rendered to each nonassociate company
The Company acts as agent in operating Seabrook Station for the nonassociate companies.
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE XVI
ANALYSIS OF CHARGES FOR SERVICE
ASSOCIATE AND NONASSOCIATE COMPANIES
- ------------------------------------------------------------------------------
ASSOCIATE COMPANY CHARGES
ACCOUNT DIRECT INDIRECT
NUMBER DESCRIPTION OF ITEMS COST COST TOTAL
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Nuclear Power Expenses
----------------------
517 Operation Supervision and Engineering $ 7,827 $ $ 7,827
518 Nuclear Fuel Disposal 3,723 3,723
519 Coolants and Water 363 363
520 Steam Expenses 3,607 3,607
523 Electric Expenses 750 750
524 Miscellaneous Nuclear Power Expenses 9,212 9,212
528 Maintenance Supervision and Engineering 4,608 4,608
529 Maintenance of Structures 1,674 1,674
530 Maintenance of Reactor Plant Equipment 1,548 1,548
531 Maintenance of Electric Plant 1,844 1,844
532 Maintenance of Miscellaneous Nuclear Plant 1,561 1,561
Transmission Expenses
---------------------
570 Maintenance of Station Equipment 10 10
Administrative and General Expenses
-----------------------------------
920 Salaries and Wages 1,271 1,271
921 Office Supplies and Expenses 625 625
922 Administrative Expense Transferred-Credit (112) (112)
923 Outside Services Employed 2,102 2,102
924 Property Insurance 1,467 1,467
925 Injuries and Damages 728 728
926 Employee Pensions and Benefits 5,965 5,965
928 Regulatory Commission Expense 970 970
930.1 General Advertising Expenses 73 73
930.2 Miscellaneous General Expenses 251 251
935 Maintenance of General Plant 3 3
All Other Expenses
------------------
408 Taxes Other Than Income Taxes 1,464 1,464
409 Income Taxes 92 92
410 Provision for Deferred Income Tax 16 16
411 Provision for Deferred Income Tax (142) (142)
426.1 Donations 30 30
426.5 Other Deductions 4 4
431 Other Interest Expense 21 21
------------------------
TOTAL EXPENSES = $ 51,555 $ $ 51,555
421 Miscellaneous Non-Operating Income (15) (15)
Net Income 1 1
------------------------
TOTAL COST OF SERVICE = $ 51,541 $ $ 51,541
========================
INSTRUCTION: Total cost of service will equal for
associate and nonassociate companies the total
amount billed under their separate analysis of
billing schedules.
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE XVI
ANALYSIS OF CHARGES FOR SERVICE
ASSOCIATE AND NONASSOCIATE COMPANIES
- -------------------------------------------------------------------------------
NONASSOCIATE COMPANY CHARGES
ACCOUNT DIRECT INDIRECT
NUMBER DESCRIPTION OF ITEMS COST COST TOTAL
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Nuclear Power Expenses
----------------------
517 Operation Supervision and Engineering $ 11,720 $ $ 11,720
518 Nuclear Fuel Disposal 5,574 5,574
519 Coolants and Water 543 543
520 Steam Expenses 5,400 5,400
523 Electric Expenses 1,122 1,122
524 Miscellaneous Nuclear Power Expenses 13,797 13,797
528 Maintenance Supervision and Engineering 6,900 6,900
529 Maintenance of Structures 2,507 2,507
530 Maintenance of Reactor Plant Equipment 2,319 2,319
531 Maintenance of Electric Plant 2,761 2,761
532 Maintenance of Miscellaneous Nuclear Plant 2,338 2,338
Transmission Expenses
---------------------
570 Maintenance of Station Equipment 15 15
Administrative and General Expenses
-----------------------------------
920 Salaries and Wages 1,904 1,904
921 Office Supplies and Expenses 935 935
922 Administrative Expense Transferred-Credit (168) (168)
923 Outside Services Employed 3,148 3,148
924 Property Insurance 2,196 2,196
925 Injuries and Damages 1,089 1,089
926 Employee Pensions and Benefits 8,932 8,932
928 Regulatory Commission Expense 1,452 1,452
930.1 General Advertising Expenses 109 109
930.2 Miscellaneous General Expenses 375 375
935 Maintenance of General Plant 5 5
All Other Expenses
------------------
408 Taxes Other Than Income Taxes 2,192 2,192
409 Income Taxes 138 138
410 Provision for Deferred Income Tax 25 25
411 Provision for Deferred Income Tax (212) (212)
426.1 Donations 44 44
426.5 Other Deductions 6 6
431 Other Interest Expense 31 31
---------------------------
TOTAL EXPENSES = $ 77,197 $ $ 77,197
421 Miscellaneous Non-Operating Income (20) (20)
Net Income 0 0
---------------------------
TOTAL COST OF SERVICE = $ 77,177 $ $ 77,177
===========================
INSTRUCTION: Total cost of service will equal for
associate and nonassociate companies the total
amount billed under their separate analysis of
billing schedules.
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE XVI
ANALYSIS OF CHARGES FOR SERVICE
ASSOCIATE AND NONASSOCIATE COMPANIES
- --------------------------------------------------------------------------------
TOTAL CHARGES FOR SERVICE
ACCOUNT DIRECT INDIRECT
NUMBER DESCRIPTION OF ITEMS COST COST TOTAL
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Nuclear Power Expenses
----------------------
517 Operation Supervision and Engineering 19,547 $ $ 19,547
518 Nuclear Fuel Disposal 9,297 9,297
519 Coolants and Water 906 906
520 Steam Expenses 9,007 9,007
523 Electric Expenses 1,872 1,872
524 Miscellaneous Nuclear Power Expenses 23,009 23,009
528 Maintenance Supervision and Engineering 11,508 11,508
529 Maintenance of Structures 4,181 4,181
530 Maintenance of Reactor Plant Equipment 3,867 3,867
531 Maintenance of Electric Plant 4,605 4,605
532 Maintenance of Miscellaneous Nuclear Plant 3,899 3,899
Transmission Expenses
---------------------
570 Maintenance of Station Equipment 25 25
Administrative and General Expenses
-----------------------------------
920 Salaries and Wages 3,175 3,175
921 Office Supplies and Expenses 1,560 1,560
922 Administrative Expense Transferred-Credit (280) (280)
923 Outside Services Employed 5,250 5,250
924 Property Insurance 3,663 3,663
925 Injuries and Damages 1,817 1,817
926 Employee Pensions and Benefits 14,897 14,897
928 Regulatory Commission Expense 2,422 2,422
930.1 General Advertising Expenses 182 182
930.2 Miscellaneous General Expenses 626 626
935 Maintenance of General Plant 8 8
All Other Expenses
------------------
408 Taxes Other Than Income Taxes 3,656 3,656
409 Income Taxes 230 230
410 Provision for Deferred Income Tax 41 41
411 Provision for Deferred Income Tax (354) (354)
426.1 Donations 74 74
426.5 Other Deductions 10 10
431 Other Interest Expense 52 52
--------------------------
TOTAL EXPENSES = 128,752 $ $ 128,752
421 Miscellaneous Non-Operating Income (35) (35)
Net Income 1 1
--------------------------
TOTAL COST OF SERVICE = 128,718 $ $ 128,718
==========================
INSTRUCTION: Total cost of service will equal for
associate and nonassociate companies the total
amount billed under their separate analysis of
billing schedules.
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE XVII
SCHEDULE OF EXPENSE DISTRIBUTION BY
DEPARTMENT OR SERVICE FUNCTION
- --------------------------------------------------------------------------------
ACCOUNT SERVICE
FUNCTION
----------
TOTAL SEABROOK
NUMBER DESCRIPTION OF ITEMS AMOUNT OVERHEAD STATION
- --------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C>
Nuclear Power Expenses
----------------------
517 Operation Supervision and Engineering $ 19,547 $ $ 19,547
518 Nuclear Fuel Disposal 9,297 9,297
519 Coolants and Water 906 906
520 Steam Expenses 9,007 9,007
523 Electric Expenses 1,872 1,872
524 Miscellaneous Nuclear Power Expenses 23,009 23,009
528 Maintenance Supervision and Engineering 11,508 11,508
529 Maintenance of Structures 4,181 4,181
530 Maintenance of Reactor Plant Equipment 3,867 3,867
531 Maintenance of Electric Plant 4,605 4,605
532 Maintenance of Miscellaneous Nuclear Plant 3,899 3,899
Transmission Expenses
---------------------
570 Maintenance of Station Equipment 25 25
Administrative and General Expenses
-----------------------------------
920 Salaries and Wages 3,175 3,175
921 Office Supplies and Expenses 1,560 1,560
922 Administrative Expense Transferred-Credit (280) (280)
923 Outside Services Employed 5,250 5,250
924 Property Insurance 3,663 3,663
925 Injuries and Damages 1,817 1,817
926 Employee Pensions and Benefits 14,897 14,897
928 Regulatory Commission Expense 2,422 2,422
930.1 General Advertising Expenses 182 182
930.2 Miscellaneous General Expenses 626 626
935 Maintenance of General Plant 8 8
All Other Expenses
------------------
408 Taxes Other Than Income Taxes 3,656 3,656
409 Income Taxes 230 230
410 Provision for Deferred Taxes 41 41
411 Provision for Deferred Taxes (354) (354)
426.1 Donations 74 74
426.5 Other Deductions 10 10
431 Other Interest Expense 52 52
-------- ------- --------
TOTAL EXPENSES $ 128,752 $ 0 $ 128,752
======== ======= ========
INSTRUCTIONS: Indicate each department or service function. (See Instruction 01-3,
General Structure of Accounting System: Uniform System of Accounts)
</TABLE>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE XVII
KEYS FOR SERVICE FUNCTIONS
KEYS SERVICE FUNCTION
The individual unit for which NAESCO provides service is listed
separately on Page 24.
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
DEPARTMENTAL ANALYSIS OF SALARIES
NAME OF DEPARTMENT DEPARTMENTAL SALARY EXPENSE
- ------------------ INCLUDED IN AMOUNTS BILLED TO NUMBER OF
----------------------------------PERSONNEL
Indicate each department TOTAL PARENT OTHER NON END
or service function. AMOUNT COMPANY ASSOCIATES ASSOCIATES OF YEAR
- --------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C>
Seabrook Station $ 48,581 $ $ 19,453 $ 29,128 814
------- ------- ------- ------- ---------
$ 48,581 $ 0 $ 19,453 $ 29,128 814
======= ======= ======= ======= =========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
OUTSIDE SERVICES EMPLOYED
INSTRUCTIONS: Provide a breakdown by subaccount of outside services employed. If the
aggregate amounts paid to any one payee and included within one subaccount is less
than $100,000, only the aggregate number and amount of all such payments included
within the subaccount need be shown. Provide a subtotal for each type of service.
- -----------------------------------------------------------------------------------------------------
RELATIONSHIP
"A"-ASSOCIATE
"NA"-NON
FROM WHOM PURCHASED ASSOCIATE AMOUNT
- -----------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
COMPUTER AND COMMUNICATION SERVICES
IBM NA $ 114
The INDUS Group NA 221
Northeast Utilities Service Company A 3,019
Miscellaneous (17 payees) NA 204
----------
TOTAL COMPUTER SERVICES $ 3,558
----------
ENGINEERING SERVICES
Normandeau Associates NA $ 1,091
Northeast Utilities Service Company A 2,188
Raytheon Engineers & Constructors NA 1,371
Yankee Atomic Electric Co. NA 4,029
Miscellaneous (20 payees) NA 96
----------
TOTAL ENGINEERING SERVICES $ 8,775
----------
LEGAL SERVICES
Miscellaneous (15 payees) NA $ 145
----------
TOTAL LEGAL SERVICES $ 145
----------
SECURITY SERVICES
Green Mountain Security Service of NH NA $ 2,084
Miscellaneous (1 payee) NA 7
----------
TOTAL SECURITY SERVICES $ 2,091
----------
OTHER SERVICES
Business Health Management NA $ 133
Massachussetts Emergency Management Agency NA 447
Northeast Utilities Service Company A 3,252
Public Service Company of New Hampshire A 369
Republic Management NA 109
State of New Hampshire NA 1,374
Miscellaneous (448 payees) NA 1,122
----------
TOTAL OTHER SERVICES $ 6,806
----------
GRAND TOTAL OUTSIDE SERVICES EMPLOYED $ 21,375
----------
- --------------------------------------------------------------------------
FROM WHOM PURCHASED DESCRIPTION OF SERVICES
- --------------------------------------------------------------------------
COMPUTER AND COMMUNICATION SERVICES
IBM Provide maintenance and operations
support for mainframe and personal
computers and systems.
The INDUS Group Provide integrated software application
solutions.
Northeast Utilities See note below
Service Company
ENGINEERING SERVICES
Normandeau Associates Provides environmental monitoring
services as requested.
Northeast Utilities
Service Company See note below
Raytheon Engineers & Constructors Provides engineering and administrative
services as requested.
Yankee Atomic Electric Co. Provides engineering, emergency plan-
ning, environmental monitoring, and
other services.
SECURITY SERVICES
Green Mountain Security Service of NH Provides security services for baseline
security support.
OTHER SERVICES
Business Health Management Provides site medical officer and review
of site medical records and issues.
Massachussetts Emergency Management
Agency Provides administration of state
emergency management agency.
Northeast Utilities
Service Company See note below
Public Service Company of
New Hampshire Provides worker's compensation
administration, facilities and
miscellaneous service.
Republic Management Provides food service for site.
State of New Hampshire Provides administration of state
emergency management agency.
NOTE: Provides centralized accounting, administrative, data processing, engineering,
financial, legal, operational, planning, purchasing and other services.
</TABLE>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
EMPLOYEE PENSIONS AND BENEFITS
ACCOUNT 926
INSTRUCTIONS: Provide a listing of each pension plan and benefit program
provided by the service company. Such listing should be
limited to $25,000.
- ------------------------------------------------------------------------
DESCRIPTION AMOUNT
- ------------------------------------------------------------------------
(Thousands
of Dollars)
Pension Plan $ 3,881
Incentive Goals Plan 4,059
Group Life, Long-term Disability, Hospital
and Medical Insurance Expenses 3,985
FAS 106 VEBA Funding 1,241
Supplemental and Early Retirement Plans 1,112
Employee Stock Option Plan 416
Employee Assistance Program 87
Educational Activities 74
Other Employee Benefits Expenses 42
-------
TOTAL $ 14,897
=======
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
GENERAL ADVERTISING EXPENSES
ACCOUNT 930.1
INSTRUCTIONS:Provide a listing of the amount included in Account 930.1,
"General Advertising Expenses," classifying the items
according to the nature of the advertising and as defined in
the account definition. If a particular class includes an
amount in excess of $3,000 applicable to a single payee,
show separately the name of the payee and the aggregate
amount applicable thereto.
- --------------------------------------------------------------------------
DESCRIPTION AMOUNT
- --------------------------------------------------------------------------
(Thousands
of Dollars)
Advertising Associated Press $ 9
Yankee Printer 5
Science & Nature Center Barker Specialty 5
Exeter Land Contractor 10
NUCON Engineering 14
Walmart 3
Various (22 items) 136
---------
TOTAL $ 182
=========
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
MISCELLANEOUS GENERAL EXPENSES
ACCOUNT 930.2
INSTRUCTIONS: Provide a listing of the amount included in Account 930.2,
"Miscellaneous General Expenses," classifying such expenses
according to their nature. Payments and expenses permitted
by Sections 321 (b)(2) of the Federal Election Campaign
Act, as amended by Public Law 94-283 in 1976 (2 U.S.C.
441(b)(2)) shall be separately classified.
- --------------------------------------------------------------------------
DESCRIPTION AMOUNT
- --------------------------------------------------------------------------
(Thousands
of Dollars)
Industry association dues $ 355
Miscellaneous Payroll Expense 136
Employee Functions 35
Various 100
---------
TOTAL $ 626
=========
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
RENTS
INSTRUCTIONS: Provide a listing of the amount included in accounts
entitled "Rents," classifying such expenses by major
groupings of property, as defined in the account definition
of the Uniform System of Accounts.
- ---------------------------------------------------------------------------
TYPE OF PROPERTY AMOUNT
- ---------------------------------------------------------------------------
(Thousands
of Dollars)
$ 731
Computers/Data processing equipment 319
Communications equipment 117
Vehicles 78
Buildings 147
Equipment and other ---------
TOTAL $ 1,392
=========
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
TAXES OTHER THAN INCOME TAXES
ACCOUNT 408
INSTRUCTIONS: Provide an analysis of Account 408, "Taxes Other Than
Income Taxes." Separate the analysis into two groups:
(1)Other than U.S. Government taxes, and (2) U.S.
Government taxes. Specify each of the various kinds of
taxes and show the amounts thereof. Provide a subtotal for
each class of tax.
- -------------------------------------------------------------------------
KIND OF TAX AMOUNT
- -------------------------------------------------------------------------
(Thousands of Dollars)
(1) Other Than U.S. Government Taxes:
State Unemployment Tax $ 115
State Business Tax 140
---------
Sub-Total $ 255
---------
(2) U.S. Government Taxes:
Federal Unemployment Tax $ 63
Federal Insurance Contribution Act 3,338
---------
Sub-Total $ 3,401
---------
TOTAL $ 3,656
=========
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
DONATIONS
ACCOUNT 426.1
INSTRUCTIONS: Provide a listing of the amount included in Account 426.1, "Donations,"
classifying such expenses by its purpose. The aggregate number and amount
of all items of less than $3,000 may be shown in lieu of details.
- --------------------------------------------------------------------------
NAME OF RECIPIENT PURPOSE OF DONATION AMOUNT
- --------------------------------------------------------------------------
(Thousands
of Dollars)
<S> <C>
New Hampshire Seacoast United Way Charitable Contributions $ 27
Seacoast Repertory Theater Charitable Contributions 11
Seabrook Employee Fund Charitable Contributions 6
Portsmouth Chamber of Commerce Charitable Contributions 4
Miscellaneous (57 items) Charitable Contributions 26
--------
TOTAL $ 74
========
</TABLE>
<TABLE>
<Caption
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
OTHER DEDUCTIONS
ACCOUNT 426.5
INSTRUCTIONS: Provide a listing of the amount included in Account 426.5, "Other Deductions,"
classifying such expenses according to their nature.
- ---------------------------------------------------------------------------
DESCRIPTION NAME OF PAYEE AMOUNT
- ---------------------------------------------------------------------------
(Thousands
of Dollars)
<S> <C>
Advertising Various $ 5
Local Business Events MEMA 1
Political activities Murphy, S&H 40
Luka's Greenhouse Restaurant 9
Executive Incentive Compensation Adjustments to long term plan (45)
--------
TOTAL $ 10
========
</TABLE>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
SCHEDULE XVIII
NOTES TO STATEMENTS OF INCOME
INSTRUCTIONS: The space below is provided for important notes regarding the
financial statements of income or any account thereof. Furnish
particulars as to any significant increases in services rendered
or expenses incurred during the year. Notes relating to
financial statements shown elsewhere in this report may be
indicated here by reference.
See Notes to Financial Statements on pages 19 through 19H.
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
ORGANIZATION CHART (AS OF DECEMBER 31, 1996)
Executive Vice President and Chief Nuclear Officer Seabrook
- Executive Director, Services
- Station Director
- Director, Nuclear Engineering
- Director, Support Services
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1996
Methods of Allocation
All costs are specific to Seabrook Station and are direct charged.
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
ANNUAL STATEMENT OF COMPENSATION FOR USE OF CAPITAL BILLED
For the Year Ended December 31, 1996
Expenses of Seabrook Station are funded in advance therefore there are no
charges for use of capital.
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
SIGNATURE CLAUSE
Pursuant to the requirements of the Public Utility Holding Company Act of 1935
and the rules and regulations of the Securities and Exchange Conmmission issued
thereunder, the undersigned company has duly caused this report to be signed on
its behalf by the undersigned office thereunto duly authorized.
NORTH ATLANTIC ENERGY SERVICE CORPORATION
-------------------------------------------
(Name of Reporting Company)
By: /s/ John J. Roman
-------------------------------------------
(Signature of Signing Officer)
John J. Roman - Vice President and Controller
-------------------------------------------
(Printed Name and Title of Signing Officer)
April 25, 2997
Date: -------------------------------------------
<TABLE> <S> <C>
<ARTICLE>OPUR2
<CIK>0000906631
<NAME>NORTH ATLANTIC ENERGY SERVICE CORPORATION
<MULTIPLIER>1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<BOOK-VALUE> PER-BOOK PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 0 0
<TOTAL-INVESTMENTS> 0 37
<TOTAL-CURRENT-ASSETS> 55,695 29,329
<TOTAL-DEFERRED-DEBITS> 20,661 19,292
<OTHER-ASSETS-AND-DEBITS> 0 0
<TOTAL-ASSETS-AND-DEBITS> 76,356 48,658
<TOTAL-PROPRIETARY-CAPITAL> 11 11
<TOTAL-LONG-TERM-DEBT> 0 0
<NOTES-PAYABLE> 0 0
<NOTES-PAYABLE-ASSOCIATE-COMP> 0 0
<OTHER-CURR-AND-ACCRUED-LIAB> 73,222 44,968
<TOTAL-DEFERRED-CREDITS> 3,123 3,679
<DEFERRED-INCOME-TAX> 0 0
<TOT-LIABIL-AND-PROPRIET-CAP> 76,356 48,658
<SERVICES-ASSOCIATE-COMPANIES> 51,541 58,755
<SERVICES-NON-ASSOCIATE-COMP> 77,177 87,980
<MISC-INCOME-OR-LOSS> 35 3
<TOTAL-INCOME> 128,753 146,738
<SALARIES-AND-WAGES> 48,581 57,530
<EMPLOYEE-PENSION-AND-BENEFIT> 14,897 13,663
<OTHER-EXPENSES> 65,274 75,544
<TOTAL-EXPENSES> 128,752 146,737
<NET-INCOME> 1 1
<TOTAL-EXPENSES-DIRECT-COST> 128,752 146,737
<TOTAL-EXPENSES-INDIRECT-COST> 0 0
<TOT-EXP-DIRECT-AND-INDIRECT> 128,752 146,737
<PERSONNEL-END-OF-YEAR> 814 871
</TABLE>
