Form U-13-60 PRIVATE
Mutual and Subsidiary Service Companies
Revised February 7, 1980
ANNUAL REPORT
FOR THE PERIOD
Beginning January 1, 1998 and ending December 31, 1998
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 ncessary.
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
- ----------------------------------------------------------------------------------------
1998 1997
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) 680 680
--------- ----------
Total Investments $ 680 $ 680
--------- ----------
CURRENT AND ACCRUED ASSETS
--------------------------
131 Cash $ 1,799 $ 1,675
134 Special deposits 0 0
135 Working funds 0 0
136 Temporary cash investments (Schedule IV) 16 15
141 Notes receivable 0 0
143 Accounts receivable 14,160 17,475
144 Accumulated provision of uncollectible accounts 0 0
146 Accounts receivable from associate companies (Schedule V) 12 54
152 Fuel stock expenses undistributed (Schedule VI) 0 0
154 Materials and supplies 0 0
163 Stores expense undistributed (Schedule VII) 24 (476)
165 Prepayments 1,221 2,593
174 Miscellaneous current and accrued assets (Schedule VIII) 0 0
--------- ----------
Total Current and Accrued Assets $ 17,232 $ 21,336
--------- ----------
DEFERRED DEBITS
---------------
181 Unamortized Debt Expense $ 0 $ 0
184 Clearing accounts 0 0
186 Miscellaneous deferred debits (Schedule IX) 26,769 24,328
188 Research, development, or demonstration
expenditures (Schedule X) 0 0
190 Accumulated deferred income taxes 0 0
--------- ----------
Total Deferred Debits $ 26,769 $ 24,328
--------- ----------
TOTAL ASSETS AND OTHER DEBITS $ 44,681 $ 46,344
========= ==========
</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
- ----------------------------------------------------------------------------------------
1998 1997
(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) 2 2
--------- ----------
Total Proprietary Capital $ 12 $ 12
--------- ----------
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 9,523 10,352
233 Notes payable to associate companies (Schedule XIII) 0 0
234 Accounts payable to associate companies (Schedule XIII) 1,894 3,807
236 Taxes accrued 594 71
237 Interest accrued 0 0
238 Dividends declared 0 0
241 Tax collections payable 0 0
242 Miscellaneous current and accrued
liabilities (Schedule XIII) 28,088 27,912
--------- ----------
Total Current and Accrued Liabilities $ 40,099 $ 42,142
--------- ----------
DEFERRED CREDITS
----------------
253 Other deferred credits $ 4,371 $ 4,081
255 Accumulated deferred investment tax credits 0 0
--------- ----------
Total Deferred Credits $ 4,371 $ 4,081
--------- ----------
282 ACCUMULATED DEFERRED INCOME TAXES $ 199 $ 109
--------------------------------- --------- ----------
TOTAL LIABILITIES AND PROPRIETARY CAPITAL $ 44,681 $ 46,344
========= ==========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
SCHEDULE II - SERVICE COMPANY PROPERTY
- ---------------------------------------------------------------------------------------------
BALANCE AT RETIREMENTS BALANCE
BEGINNING OR OTHER AT CLOSE
ACCT DESCRIPTION OF YEAR ADDITIONS SALES CHANGES(1) 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, 1998
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, 1998
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
Reliance Assurance - Workmen's
Compensation Bond 680 680
ACCOUNT 136 - TEMPORARY CASH INVESTMENTS
Fidelity Institute Tax Exempt Cash
Portfolio 12 13
Citizens Bank Certificate of Deposit 3 3
-------- --------
15 16
-------- --------
-------- --------
TOTAL $ 695 $ 696
======== ========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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 AT BALANCE 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 $ 10 $ 5
Northeast Nuclear Energy Company 41 5
North Atlantic Energy Corporation 2 1
Public Service Company of New Hampshire 1 1
------ -------
TOTAL $ 54 $ 12
====== =======
ANALYSIS OF CONVENIENCE OR ACCOMMODATION PAYMENTS:
NONE
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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, 1998
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
Beginning Balance as of January 1, 1998 $ (476)
Activity for the year:
Stores expense undistributed $ 2,775 $ 269 3,044
The above stores expenses are billed back to
each of the companies listed below:
The Connecticut Light and Power Company (94) (9) (103)
North Atlantic Energy Corporation (835) (80) (915)
Non-Associate Companies (see page 22
for list of the companies) (1,393) (133) (1,526)
--------- --------- ---------
Stores expense distributed ($2,322) ($222) ($2,544)
--------- --------- ---------
Net activity for the year $ 453 $ 47 500
========= ========= ---------
Ending Balance as of December 31, 1998 $ 24
=========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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, 1998
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 $ 23,189 $ 25,900
Westinghouse Reactor Coolant Pump Settlement 682 600
Accounting Treatment Change for Payroll 328 299
Miscellaneous (>100 items) 88 (64)
Preliminary Engineering for:
Steam generator blowdown 30 30
Miscellaneous (4 items 1997, 3 items 1998) 11 4
-------- --------
TOTAL $ 24,328 $ 26,769
======== ========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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, 1998
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
$ 2 $ 0 $ 0 $ 2
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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
CLASS & SERIES OF INTEREST AMOUNT BEGINNING DEDUCTIONS AT CLOSE
NAME OF CREDITOR OF OBLIGATION MATURITY RATE AUTHORIZED OF YEAR ADDITIONS (1) OF YEAR
- -----------------------------------------------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C>
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, 1998
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> <C> <C>
ACCOUNT 233 - NOTES PAYABLE TO ASSOCIATE COMPANIES
NONE
- --------------------------------------------------------------------------------
ACCOUNT 234 - ACCOUNTS PAYABLE TO ASSOCIATE COMPANIES
Northeast Utilities Service Company $ 2,022 $ 1,767
Northeast Nuclear Electric Company 6 92
Public Service Company of New Hampshire 1,774 34
The Connecticut Light & Power Company 1 0
Miscellaneous (1 item) 4 1
-------- ----------
TOTAL $ 3,807 $ 1,894
======== ==========
- --------------------------------------------------------------------------------
ACCOUNT 242 - MISCELLANEOUS CURRENT AND ACCRUED LIABILITIES
Accrued payroll and other employee payables $ 3,751 $ 2,149
Accrued Pension Cost 20,142 23,144
On-hand operations funding from associate companies:
North Atlantic Energy Corporation 1,446 1,006
The Connecticut Light & Power Company 163 113
On-hand operations funding from non-associate companies 2,410 1,676
-------- ----------
TOTAL $ 27,912 $ 28,088
======== ==========
</TABLE>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
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 which comprise in part, the Northeast Utilities System (the NU
system) and are wholly owned by NU.
The NU system furnishes franchised retail electric service in Connecticut, New
Hampshire, and western Massachusetts through three wholly owned subsidiaries:
CL&P, PSNH, and WMECO. NAEC sells all of its entitlement to the capacity and
output of the Seabrook Nuclear Power Project (the Project or Seabrook) to PSNH
under two life-of-unit, full cost recovery contracts. In addition to its retail
service, the NU system furnishes firm and other wholesale electric services to
various municipalities and other utilities, and participates in limited retail
access programs, which provide off-system retail electric service. The NU
system serves in excess of 30 percent of New England's electric needs and is
one of the 24 largest electric utility systems in the country as measured by
revenues.
The Company acts as agent in operating the Project pursuant to the Seabrook
Project Managing Agent Operating Agreement (the Managing Agent Agreement)
and the Seabrook Project Disbursing Agent Agreement (the Disbursing Agent
Agreement). The Project is owned jointly by NAEC and CL&P, both wholly owned
subsidiaries of NU, and nine non-affiliated 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 Seabrook 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, 1998 were as follows:
OWNERSHIP
PARTICIPANTS SHARE
Canal Electric Company 3.52317%
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 Connecticut Light and Power Company 4.05985
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 Seabrook Joint Owners, as amended, and to other
NU system companies. Billings from NUSCO recorded by the Company approximated
$6,281,000 and $9,405,000 in 1998 and 1997, respectively. PSNH provides certain
services to the Company pursuant to the Service Agreement between PSNH and
NAESCO acting as agent for the Seabrook Joint Owners, as amended. Billings
from PSNH recorded by the Company were approximately $358,000 and $971,000 in
1998 and 1997, respectively.
All transactions among affiliated companies 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 and its subsidiaries, including the Company,
are 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 Seabrook 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
Pension: 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 60 consecutive months of employment. The Company's allocated
portion of the NU system's pension cost for 1998 and 1997, part of which
was capitalized and billed as utility plant, approximated $3,003,000 and
$3,129,000, respectively.
Currently, the NU 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.
Postretirement Benefits: The Company also provides certain health care
benefits, primarily medical and dental, and life insurance benefits through
a benefit plan to retired employees (referred to as SFAS 106 benefits).
These benefits are available for employees retiring from the Company who
have met specified service requirements. For current employees and certain
retirees, the total postretirement benefit is limited to two times the 1993
per-retiree health care cost. The postretirement benefit obligation has been
calculated based on this assumption. The expected cost of postretirement
benefits, primarily health and life insurance benefits are charged to expense
during the years that eligible employees render service. The Company is
funding its postretirement benefit costs through external trusts. The annually
funded amounts are tax deductible under the Internal Revenue Code. Actuarially
determined total SFAS 106 benefits, part of which were capitalized and billed
as utility plant, approximated $704,000 in 1998 and $674,000 in 1997.
Pension and postretirement benefit assets are invested primarily in domestic
and international equity securities and bonds.
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
2. PENSION AND POSTRETIREMENT BENEFITS (continued)
The components of net cost for the Company (in thousands) are:
As of December 31,
Pension Benefits Postretirement Benefits
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $ (59,416) $ (52,049) $ (7,599) $ (7,652)
Service Cost (3,888) (3,512) (551) (475)
Interest Cost (4,438) (4,067) (582) (531)
Transfers (437) 439 - -
Actuarial gain/(loss) (5,307) (994) (318) 803
Benefits paid 724 767 304 256
----------- ----------- ----------- -----------
Benefit obligation at end of year (72,762) (59,416) (8,746) (7,599)
Change in plan assets:
Fair value of plan assets at beginning of year 57,396 48,656 6,447 5,143
Actual return on plan assets 8,154 9,946 825 1,036
Employer contribution - - 606 524
Benefits paid (724) (767) (304) (256)
Transfers 437 (439) - -
----------- ----------- ----------- -----------
Fair value of plan assets at end of year 65,263 57,396 7,574 6,447
Funded status at year end (7,499) (2,020) (1,172) (1,152)
Unrecognized transition amount 693 756 2,209 2,367
Unrecognized prior service cost 5,386 5,766 - -
Unrecognized net gain (21,724) (24,659) (1,037) (1,116)
----------- ----------- ----------- -----------
(Accrued)/Prepaid Benefit Cost $ (23,144) $ (20,157) $ - $ 99
=========== =========== =========== ===========
The following actuarial assumptions were used in calculating the plan's year-end funded status:
As of December 31,
Pension Benefits Postretirement Benefits
1998 1997 1998 1997
----------- ----------- ----------- -----------
Discount rate 7.00% 7.25% 7.00% 7.25%
Compensation/progression rate 4.25 4.25 4.25 4.25
Health care cost trend rate (a) N/A N/A 5.22 5.76
(a) The annual growth in per capita cost of covered health care benefits was assumed
to decrease to 4.40 percent by 2001.
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
2. PENSION AND POSTRETIREMENT BENEFITS (continued)
The components of net cost for the Company (in thousands) are:
As of December 31,
Pension Benefits Postretirement Benefits
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Service cost $ 3,888 $ 3,512 $ 551 $ 475
Interest cost 4,438 4,067 582 531
Expected return on plan assets (4,721) (3,991) (478) (362)
Amortization of unrecognized transition
obligation 63 63 158 158
Amortization of prior service cost 380 380 - -
Amortization of actuarial gain (1,045) (902) - -
Other amorization, net - - (109) (128)
----------- ----------- ----------- -----------
Net periodic cost $ 3,003 $ 3,129 $ 704 $ 674
=========== =========== =========== ===========
For calculating pension and postretirement benefit costs, the following assumptions were used:
As of December 31,
Pension Benefits Postretirement Benefits
1998 1997 1998 1997
----------- ----------- ----------- -----------
Discount Rate 7.25% 7.75% 7.25% 7.75%
Expected long-term rate of return 9.50 9.25 N/A N/A
Compensation/progression rate 4.25 4.75 4.25 4.75
Long term rate of return
Health assets, net of tax N/A N/A 7.75 7.50
Life assets N/A N/A 9.50 9.25
Assumed health care cost trend rates have a significant effect on the amounts reported for
the health care plans. The effect of changing the assumed health care cost trend rate by
one percentage point in each year would have the following effects (in thousands):
One Percentage One Percentage
Point Increase Point Decrease
Effect on total service and interest
cost components $ 39 $ (42)
Effect on postretirement benefit obligation 304 (331)
The trust holding the health plan assets is subject to federal income taxes at a 39.6 percent
tax rate.
</TABLE>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
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 $1,753,000 and
$1,498,000 in 1998 and 1997, 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. The Company, therefore, has no long-term or short-term debt
obligations.
5. OTHER INVESTMENTS
In order to be self-insured for basic worker's compensation coverage in the
State of New Hampshire, financial assurance is required. Funds have been set
aside in an interest bearing collateral account for such purpose. The balance
at December 31, 1998 and 1997 was approximately $680,000.
6. INCOME TAX EXPENSE
The components of the Federal and state income tax provisions (in thousands)
are:
<TABLE>
<CAPTION>
For the Years Ended
December 31,
1998 1997
--------- ---------
<S> <C> <C>
Current income taxes:
Federal $ 357 $ (386)
State - (112)
--------- ---------
Total current $ 357 $ (498)
Deferred Income taxes, net:
Federal $ 103 $ 459
State (13) 47
--------- ---------
Total deferred $ 90 $ 506
Total income tax expense $ 447 $ 8
========= =========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
SCHEDULE XIV
NOTES TO FINANCIAL STATEMENTS
6. INCOME TAX EXPENSE (continued)
The components of total income tax expense (in thousands) are classified as follows:
For the Years Ended
December 31,
1998 1997
--------- ---------
<S> <C> <C>
Income taxes charged to operating expenses $ 447 $ 8
Other income taxes - -
--------- ---------
Total income tax expense $ 447 $ 8
========= =========
Deferred income taxes (in thousands) are comprised of the tax effects of temporary
differences as follows:
For the Years Ended
December 31,
1998 1997
--------- ---------
Software amortization $ 216 $ 455
Workforce reduction - 17
Injuries and damages reserve (51) 94
Accrued vacation 11 (20)
Other (86) (40)
--------- ---------
Deferred income taxes, net $ 90 $ 506
========= =========
A reconciliation between income tax expense and the expected tax expense at the
applicable statutory rate (in thousands) is as follows:
For the Years Ended
December 31,
1998 1997
--------- ---------
Expected Federal income tax at 35 percent of
pretax income $ 157 $ 3
Tax effect of differences:
State income taxes, net of Federal benefit - (11)
Adjustment for prior years taxes 266 (12)
Other, net 24 28
--------- ---------
Total income tax expense $ 447 $ 8
========= =========
The company, as a wholly-owned subsidiary of NU is included in NU's consolidated
return. Income tax expense is determined on a seperate company basis.
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
SCHEDULE XV
COMPARATIVE INCOME STATEMENT
- --------------------------------------------------------------------------------
ACCT DESCRIPTION 1998 1997
- --------------------------------------------------------------------------------
(Thousands of Dollars)
<S> <C> <C>
INCOME
------
457 Services Rendered to Associate Companies $ 57,982 $ 71,130
458 Services Rendered to Nonassociate Companies 86,821 106,509
421 Miscellaneous Income or Loss 39 19
--------- ----------
Total Income $ 144,842 $ 177,658
--------- ----------
EXPENSE
-------
Nuclear Power Expenses
517 Operation Supervision and Engineering $ 24,572 $ 20,694
518 Nuclear Fuel Expense 7,927 7,504
519 Coolants and Water 2,011 2,236
520 Steam Expenses 12,385 15,613
523 Electric Expenses 4,138 4,838
524 Miscellaneous Nuclear Power Expenses 26,858 25,906
528 Maintenance Supervision and Engineering 10,098 19,772
529 Maintenance of Structures 7,899 5,155
530 Maintenance of Reactor Plant Equipment 9,704 22,104
531 Maintenance of Electric Plant 10,920 19,221
532 Maintenance of Miscellaneous Nuclear Plant 590 758
Transmission Expenses
570 Maintenance of Station Equipment 15 28
Administrative and General Expenses
920 Salaries and Wages 3,609 4,717
921 Office Supplies and Expenses 1,100 1,620
922 Administrative Expense Transferred-Credit 0 (9)
923 Outside Services Employed 2,495 2,730
924 Property Insurance 1,886 3,729
925 Injuries and Damages 1,504 1,906
926 Employee Pensions and Benefits 10,861 13,152
928 Regulatory Commission Expense 1 6
930.1 General Advertising Expenses 186 203
930.2 Miscellaneous General Expenses 275 56
931 Rents 456 794
935 Maintenance of General Plant 15 64
All Other Expenses
408 Taxes Other Than Income Taxes 4,412 4,550
409 Income Taxes 358 (498)
410 Provision for Deferred Income Taxes 435 704
411 Provision for Deferred Income Taxes (345) (197)
426.1 Donations 75 53
426.5 Other Deductions 319 135
431 Other Interest Expense 83 113
--------- ----------
Total Expense $ 144,842 $ 177,657
--------- ----------
Net Income $ 0 $ 1
========= ==========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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)
457-1 457-2 457-3
--------------------------------------------
<S> <C> <C> <C> <C>
The Connecticut Light and Power $ 5,879 $ $ $ 5,879
Company
North Atlantic Energy Corporation 52,103 52,103
------- ------ ------ -------
TOTAL $ 57,982 $ 0 $ 0 $ 57,982
======= ====== ====== =======
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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 $ 5,102 $ $ $ 5,102 $ $ 5,102
Great Bay Power Corporation 17,568 17,568 17,568
Hudson Light & Power Dept. 112 112 112
Massachusetts Municipal Wholesale
Electric Company 16,788 16,788 16,788
Montaup Electric Company 4,199 4,199 4,199
New England Power Company 14,419 14,419 14,419
New Hampshire Electric Coop. 3,148 3,148 3,148
Taunton Municipal Lighting Plant 145 145 145
United Illuminating Company 25,340 25,340 25,340
-------- -------- ------ -------- ----- --------
$ 86,821 $ 0 $ 0 $ 86,821 $ 0 $ 86,821
======== ======== ====== ======== ===== ========
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, 1998
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 $ 9,840 $ $ 9,840
518 Nuclear Fuel Disposal 3,174 3,174
519 Coolants and Water 805 805
520 Steam Expenses 4,959 4,959
523 Electric Expenses 1,657 1,657
524 Miscellaneous Nuclear Power Expenses 10,756 10,756
528 Maintenance Supervision and Engineering 4,043 4,043
529 Maintenance of Structures 3,163 3,163
530 Maintenance of Reactor Plant Equipment 3,886 3,886
531 Maintenance of Electric Plant 4,373 4,373
532 Maintenance of Miscellaneous Nuclear Plant 236 236
Transmission Expenses
570 Maintenance of Station Equipment 6 6
Administrative and General Expenses
920 Salaries and Wages 1,445 1,445
921 Office Supplies and Expenses 440 440
922 Administrative Expense Transferred-Credit 0 0
923 Outside Services Employed 999 999
924 Property Insurance 755 755
925 Injuries and Damages 602 602
926 Employee Pensions and Benefits 4,349 4,349
928 Regulatory Commission Expense 0 0
930.1 General Advertising Expenses 74 74
930.2 Miscellaneous General Expenses 110 110
931 Rents 183 183
935 Maintenance of General Plant 6 6
All Other Expenses
408 Taxes Other Than Income Taxes 1,767 1,767
409 Income Taxes 143 143
410 Provision for Deferred Income Tax 174 174
411 Provision for Deferred Income Tax (138) (138)
426.1 Donations 30 30
426.5 Other Deductions 128 128
431 Other Interest Expense 33 33
-------------------------
TOTAL EXPENSES = $ 57,998 $ 0 $ 57,998
421 Miscellaneous Non-Operating Income (16) (16)
Net Income 0 0
-------------------------
TOTAL COST OF SERVICE = $ 57,982 $ 0 $ 57,982
=========================
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, 1998
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 $ 14,732 $ $ 14,732
518 Nuclear Fuel Disposal 4,753 4,753
519 Coolants and Water 1,206 1,206
520 Steam Expenses 7,426 7,426
523 Electric Expenses 2,481 2,481
524 Miscellaneous Nuclear Power Expenses 16,102 16,102
528 Maintenance Supervision and Engineering 6,055 6,055
529 Maintenance of Structures 4,736 4,736
530 Maintenance of Reactor Plant Equipment 5,818 5,818
531 Maintenance of Electric Plant 6,547 6,547
532 Maintenance of Miscellaneous Nuclear Plant 354 354
Transmission Expenses
570 Maintenance of Station Equipment 9 9
Administrative and General Expenses
920 Salaries and Wages 2,164 2,164
921 Office Supplies and Expenses 660 660
922 Administrative Expense Transferred-Credit 0 0
923 Outside Services Employed 1,496 1,496
924 Property Insurance 1,131 1,131
925 Injuries and Damages 902 902
926 Employee Pensions and Benefits 6,512 6,512
928 Regulatory Commission Expense 1 1
930.1 General Advertising Expenses 112 112
930.2 Miscellaneous General Expenses 165 165
931 Rents 273 273
935 Maintenance of General Plant 9 9
All Other Expenses
408 Taxes Other Than Income Taxes 2,645 2,645
409 Income Taxes 215 215
410 Provision for Deferred Income Tax 261 261
411 Provision for Deferred Income Tax (207) (207)
426.1 Donations 45 45
426.5 Other Deductions 191 191
431 Other Interest Expense 50 50
-----------------------------
TOTAL EXPENSES = $ 86,844 $ 0 $ 86,844
421 Miscellaneous Non-Operating Income (23) (23)
Net Income 0 0
-----------------------------
TOTAL COST OF SERVICE = $ 86,821 $ 0 $ 86,821
=============================
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, 1998
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 $ 24,572 $ $ 24,572
518 Nuclear Fuel Disposal 7,927 7,927
519 Coolants and Water 2,011 2,011
520 Steam Expenses 12,385 12,385
523 Electric Expenses 4,138 4,138
524 Miscellaneous Nuclear Power Expenses 26,858 26,858
528 Maintenance Supervision and Engineering 10,098 10,098
529 Maintenance of Structures 7,899 7,899
530 Maintenance of Reactor Plant Equipment 9,704 9,704
531 Maintenance of Electric Plant 10,920 10,920
532 Maintenance of Miscellaneous Nuclear Plant 590 590
Transmission Expenses
570 Maintenance of Station Equipment 15 15
Administrative and General Expenses
920 Salaries and Wages 3,609 3,609
921 Office Supplies and Expenses 1,100 1,100
922 Administrative Expense Transferred-Credit 0 0
923 Outside Services Employed 2,495 2,495
924 Property Insurance 1,886 1,886
925 Injuries and Damages 1,504 1,504
926 Employee Pensions and Benefits 10,861 10,861
928 Regulatory Commission Expense 1 1
930.1 General Advertising Expenses 186 186
930.2 Miscellaneous General Expenses 275 275
931 Rents 456 456
935 Maintenance of General Plant 15 15
All Other Expenses
408 Taxes Other Than Income Taxes 4,412 4,412
409 Income Taxes 358 358
410 Provision for Deferred Income Tax 435 435
411 Provision for Deferred Income Tax (345) (345)
426.1 Donations 75 75
426.5 Other Deductions 319 319
431 Other Interest Expense 83 83
-----------------------------
TOTAL EXPENSES = $ 144,842 $ 0 $ 144,842
421 Miscellaneous Non-Operating Income (39) (39)
Net Income 0 0
----------------------------
TOTAL COST OF SERVICE = $ 144,803 $ 0 $ 144,803
============================
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, 1998
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 $ 24,572 $ $ 24,572
518 Nuclear Fuel Disposal 7,927 7,927
519 Coolants and Water 2,011 2,011
520 Steam Expenses 12,385 12,385
523 Electric Expenses 4,138 4,138
524 Miscellaneous Nuclear Power Expenses 26,858 26,858
528 Maintenance Supervision and Engineering 10,098 10,098
529 Maintenance of Structures 7,899 7,899
530 Maintenance of Reactor Plant Equipment 9,704 9,704
531 Maintenance of Electric Plant 10,920 10,920
532 Maintenance of Miscellaneous Nuclear Plant 590 590
Transmission Expenses
570 Maintenance of Station Equipment 15 15
Administrative and General Expenses
920 Salaries and Wages 3,609 3,609
921 Office Supplies and Expenses 1,100 1,100
922 Administrative Expense Transferred Credit 0 0
923 Outside Services Employed 2,495 2,495
924 Property Insurance 1,886 1,886
925 Injuries and Damages 1,504 1,504
926 Employee Pensions and Benefits 10,861 10,861
928 Regulatory Commission Expense 1 1
930.1 General Advertising Expenses 186 186
930.2 Miscellaneous General Expenses 275 275
931 Rents 456 456
935 Maintenance of General Plant 15 15
All Other Expenses
408 Taxes Other Than Income Taxes 4,412 4,412
409 Income Taxes 358 358
410 Provision for Deferred Taxes 435 435
411 Provision for Deferred Taxes (345) (345)
426.1 Donations 75 75
426.5 Other Deductions 319 319
431 Other Interest Expense 83 83
-------- ------- ----------
TOTAL EXPENSES $ 144,842 $ 0 $ 144,842
======== ======= ==========
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, 1998
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, 1998
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 $ 59,569 $ $ 23,853 $ 35,716 845
------- ------- ------- ------- ---------
$ 59,569 $ 0 $ 23,853 $ 35,716 845
======= ======= ======= ======= =========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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
Alpine Computer Systems NA $ 157
Ambit Technology NA 179
Creative Sysems, Inc. NA 228
IBM NA 433
Northeast Utilities Service Company A 2,422
SCS Systems NA 132
Miscellaneous (51 payees) NA 897
--------
TOTAL COMPUTER SERVICES $ 4,448
--------
ENGINEERING SERVICES
Days International, Inc. NA $ 134
Duke Engineering NA 3,359
Excel Services, Inc. NA 165
Northeast Utilities Service Company A 564
Raytheon Nuclear Inc. NA 160
Stone & Webster Engineering NA 122
Tekton Resources NA 303
Miscellaneous (19 payees) NA 395
--------
TOTAL ENGINEERING SERVICES $ 5,202
--------
LEGAL SERVICES
Northeast Utilities Service Company A $ 226
Miscellaneous (15 payees) NA 369
--------
TOTAL LEGAL SERVICES $ 595
--------
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
OUTSIDE SERVICES EMPLOYED
SECURITY SERVICES
Green Mountain Security Service of NH NA $ 3,815
--------
TOTAL SECURITY SERVICES $ 3,815
--------
OTHER SERVICES
Entor Corp NA $ 327
Gilbert Consulting Services NA 165
Kelley Services, Inc. NA 178
Normandeau Associates, Inc. NA 1,002
Northeast Utilities Service Company A 3,069
NUCON Engineering Associates, Inc. NA 607
NUMANCO L.L.P. NA 472
Performance Improvement International NA 125
Public Service Company of New Hampshire A 358
RCS Corp NA 131
Sequoia Consulting Group, Inc. NA 184
Spec Group Holdings, Inc. NA 128
Miscellaneous (1,080 payees) NA 4,418
--------
TOTAL OTHER SERVICES $ 11,164
--------
GRAND TOTAL OUTSIDE SERVICES EMPLOYED $ 25,224
========
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
OUTSIDE SERVICES EMPLOYED
FROM WHOM
PURCHASED DESCRIPTION OF SERVICES
- ------------------------------------------------------------------------------------
COMPUTER AND COMMUNICATION SERVICES
Alpine Computer Systems Provides consulting and administrative support for PC
network environment.
Ambit Technology Provides PC software evaluation services.
Creative Systems, Inc. Provides Y2K assessment services.
IBM Provides support for mainframe operating environment and
software upgrades.
Northeast Utilities
Service Company See note below
SCS Systems Provides contract mainframe programming.
ENGINEERING SERVICES
Days International, Inc. Provides software engineer for simulator project.
Duke Engineering Provides engineering, emergency planning, environmental
monitoring, and other services.
Excel Services, Inc. Provides engineering for technical specification project.
Northeast Utilities
Service Company See note below
Raytheon Engineers &
Constructors Provides engineering and administrative services as requested.
Stone & Webster
Engineering Provides engineering services as requested.
Tekton Resources Provides engineering services as requested.
LEGAL SERVICES
Northeast Utilities
Service Company See note on page 27C
SECURITY SERVICES
Green Mountain Security
Service of NH Provides security services for baseline security support.
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
OUTSIDE SERVICES EMPLOYED
OTHER SERVICES
Entor Corp. Provide contract operations instructors.
Gilbert Consulting
Services Provide contract operations instructors.
Kelley Services, Inc. Provide temporary manpower as needed.
Normandeau Associates Provides environmental monitoring services as requested.
Northeast Utilities
Service Company See note below
NUCON Engineering
Associates, Inc. Provides engineering services as requested.
NUMANCO L.L.P. Provides temporary, technical manpower as needed.
Performance Improvement
International Provides performance monitoring, trending and improvement
services as requested.
Public Service Company
of New Hampshire Provides worker's compensation administration, facilities and
miscellaneous service.
RCS Corp. Provides temporary, technical manpower as needed.
Sequoia Consulting
Group, Inc. Provides temporary, technical manpower as needed.
Spec Group Holdings,
Inc. Provides temporary, technical manpower as needed.
Note: Northeast Utilities Service Company provides centralized
accounting, administrative, data processing, engineering,
financial, legal, operational, planning, purchasing and
other services.
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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)
<S> <C>
Pension Plan $ 2,920
Employees Incentive Plan 1,428
Group Life, Long-term Disability, Hospital
and Medical Insurance Expenses 4,167
FAS 106 VEBA Funding 701
Supplemental and Early Retirement Plans 638
Employee Stock Ownership Plan 966
Other Employee Benefits Expenses 41
-------
TOTAL $ 10,861
=======
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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)
<S> <C>
Science & Nature Center ADECCO/TAD $ 45
Barker Specialty 24
Hartford Office Supplies 5
New England Aquarium 13
Various (46 items) 99
---------
TOTAL $ 186
=========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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)
<S> <C>
Industry and association dues $ 6
Information Technology / Communication Services 59
Medical Services 185
Shareholder Services 11
Various (26 items) 14
---------
TOTAL $ 275
=========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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)
<S> <C>
Computers/Data processing equipment $ 628
Communications equipment 112
Vehicles 104
Buildings 126
Equipment and other 783
---------
TOTAL $ 1,753
=========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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)
<S> <C>
(1) Other Than U.S. Government Taxes:
Insurance Premium Excise Tax $ 74
Property Tax 25
State Unemployment Tax 32
State Business Tax 162
---------
Sub-Total $ 293
---------
(2) U.S. Government Taxes:
Federal Unemployment Tax $ 18
Federal Insurance Contribution Act 4,101
---------
Sub-Total $ 4,119
---------
TOTAL $ 4,412
=========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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 $ 22
New England Aquarium Charitable Contributions 5
Seacoast Repertory Theater Charitable Contributions 5
Miscellaneous (87 items) Charitable Contributions 43
--------
TOTAL $ 75
========
</TABLE>
<TABLE>
<CAPTION>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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>
Political activities Murphy, S&H $ 40
279
Executive Incentive Compensation Various --------
TOTAL $ 319
========
</TABLE>
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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 19A through 19F.
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
ORGANIZATION CHART (AS OF DECEMBER 31, 1998)
Executive Vice President and Chief Nuclear Officer Seabrook
- Director of Services
- Station Director
- Director, Nuclear Engineering
- Director, Site Support
- Lead Human Resources Coordinator
ANNUAL REPORT OF NORTH ATLANTIC ENERGY SERVICE CORPORATION
For the Year Ended December 31, 1998
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, 1998
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)
Date: April 23, 1999
--------------
<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-31-1998 DEC-31-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<BOOK-VALUE> PER-BOOK PER-BOOK
<NET-SERVICE-COMPANY-PROPERTY> 0 0
<TOTAL-INVESTMENTS> 680 680
<TOTAL-CURRENT-ASSETS> 17,232 21,336
<TOTAL-DEFERRED-DEBITS> 26,769 24,328
<OTHER-ASSETS-AND-DEBITS> 0 0
<TOTAL-ASSETS-AND-DEBITS> 44,681 46,344
<TOTAL-PROPRIETARY-CAPITAL> 12 12
<TOTAL-LONG-TERM-DEBT> 0 0
<NOTES-PAYABLE> 0 0
<NOTES-PAYABLE-ASSOCIATE-COMP> 0 0
<OTHER-CURR-AND-ACCRUED-LIAB> 40,099 42,142
<TOTAL-DEFERRED-CREDITS> 4,371 4,081
<DEFERRED-INCOME-TAX> 199 109
<TOT-LIABIL-AND-PROPRIET-CAP> 44,681 46,344
<SERVICES-ASSOCIATE-COMPANIES> 57,982 71,130
<SERVICES-NON-ASSOCIATE-COMP> 86,821 106,509
<MISC-INCOME-OR-LOSS> 39 19
<TOTAL-INCOME> 144,842 177,658
<SALARIES-AND-WAGES> 59,569 61,715
<EMPLOYEE-PENSION-AND-BENEFIT> 10,861 13,152
<OTHER-EXPENSES> 74,412 102,790
<TOTAL-EXPENSES> 144,842 177,657
<NET-INCOME> 0 1
<TOTAL-EXPENSES-DIRECT-COST> 144,842 177,657
<TOTAL-EXPENSES-INDIRECT-COST> 0 0
<TOT-EXP-DIRECT-AND-INDIRECT> 144,842 177,657
<PERSONNEL-END-OF-YEAR> 845 837
</TABLE>
