-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TJHulfj3oKS8EXfnBBnso+gMVJVirYRlzfeioO6tz7ajUJ3hllxl1eIjz/AIYyhP 4WIA4pVvxBfZIX7NUIrsIg== 0000023426-99-000003.txt : 19990412 0000023426-99-000003.hdr.sgml : 19990412 ACCESSION NUMBER: 0000023426-99-000003 CONFORMED SUBMISSION TYPE: POS AMC PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19990408 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONNECTICUT LIGHT & POWER CO CENTRAL INDEX KEY: 0000023426 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 060303850 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMC SEC ACT: SEC FILE NUMBER: 070-07875 FILM NUMBER: 99589954 BUSINESS ADDRESS: STREET 1: SELDEN STREET CITY: BERLIN STATE: CT ZIP: 06037-1616 BUSINESS PHONE: 8606655000 POS AMC 1 POST-EFF. AMENDMENT TO FORM U-1 File No. 70-7875 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 POST-EFFECTIVE AMENDMENT NO.1 (Amendment No. 3) to FORM U-1 Under THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 THE CONNECTICUT LIGHT AND POWER COMPANY 107 Selden Street Berlin, Connecticut 06037 WESTERN MASSACHUSETTS ELECTRIC COMPANY 174 Brush Hill Avenue West Springfield, Massachusetts 01089 (Name of companies filing this statement and address of principal executive offices) NORTHEAST UTILITIES (Name of top registered holding company) Cheryl W. Grise, Esq. Vice President, Secretary and General Counsel Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141-0270 (Name and address of agent for service) The Commission is requested to mail signed copies of all orders, notices and communications to: Randy A. Shoop Jeffrey C. Miller, Esq. Assistant Treasurer-Finance Assistant General Counsel Northeast Utilities Service Company Northeast Utilities Service Company P.O. Box 270 P.O. Box 270 Hartford, Connecticut 06141-0270 Hartford, Connecticut 06141-0270 ITEM 1. DESCRIPTION OF NIANTIC BAY FUEL TRUST FINANCING ARRANGEMENTS AND PROPOSED MODIFICATIONS 1. The Connecticut Light and Power Company ("CL&P") and Western Massachusetts Electric Company ("WMECO", collectively, the "Applicants" or "Lessees"), each an electric utility subsidiary of Northeast Utilities ("NU"), a registered holding company under the Public Utility Holding Company Act of 1935 (the "Act"), hereby supplement and amend their Application/Declaration in this proceeding, as heretofore amended ("Application"), in order to seek the Commission's approval for certain proposed modifications to existing nuclear fuel financing arrangements (the "Nuclear Fuel Financing Arrangements"), all as hereinafter described. A. BACKGROUND 2. The Applicants hereby submit this Post-Effective Amendment No. 1 to the Application to the Commission in File No. 70-7875, with respect to a proposed modification of and amendment to (the "Modification") the Nuclear Fuel Lease Agreement (the "Lease"), dated as of January 4, 1982, as amended and restated as of February 11, 1992, between the Lessees and Bankers Trust Company, in its capacity as Lessor (the "Lessor"). The Lease and certain amendments thereto were previously approved by the Commission in its orders dated December 30, 1981 (HCA Release No. 35-22342) and May 19, 1982 (HCA Release No. 35-22501) in File No. 70-6639, January 23, 1992 in File No. 70- 7875 (HCA Release No. 35-25458) and March 4, 1998 (HCA Release No. 35-26836) in this File. 3. The Applicants have joint ownership interests in three nuclear electric generating units located at Millstone Point in Waterford, Connecticut. CL&P and WMECO have approximately an 81.221% and 18.779% (aggregating 100%) ownership interest, respectively, in Millstone Unit 1 and Millstone Unit 2 ("Unit 1" and "Unit 2"). CL&P and WMECO have a 52.933% and 12.239% (aggregating 65.172%) ownership interest, respectively, in Millstone Unit 3 ("Unit 3"). The Applicants are responsible for a like percentage of the fuel costs for each unit. 4. In order to provide a single comprehensive and efficient framework for the financing of nuclear fuel through the burn-up stage of the nuclear fuel cycle for Unit 1 and Unit 2, as well as the Applicants' approximately 65.172% ownership interest in the nuclear fuel for Unit 3, the Applicants entered into arrangements in July 1982 with Bankers Trust Company, not in its individual capacity but solely as Trustee (the "Trustee") of the Niantic Bay Fuel Trust (the "Trust") for the purpose of nuclear fuel financing. 5. Upon making a payment with respect to nuclear fuel, the Trust acquires title to such nuclear fuel and the related nuclear fuel contract rights. Pursuant to the Lease, the Trust then leases the nuclear fuel to the Applicants and utilizes the Applicants' lease payments to service the credit financing. 6. In July 1998, the Applicants announced their intention to permanently cease operations at Unit 1 and notified the Nuclear Regulatory Commission ("NRC") of that decision. The Applicants subsequently caused all nuclear fuel to be permanently removed from the reactor vessel of Unit 1 and so notified the NRC. Consequently, they are no longer authorized to operate Unit 1 or retain nuclear fuel in its reactor. Under Section 23(a)(ix) of the Lease, the foregoing events could constitute an Event of Termination. Although Events of Termination may trigger termination of the Lease and certain payments by the Applicants to the Trust, Section 23(a)(ix) of the Lease provides for a partial termination with respect only to the affected unit (in this case, Unit 1) unless the triggering event does, or will have, a material adverse effect on the financial condition or business prospects of CL&P or WMECO, as determined by the Lessor and The First National Bank of Chicago, in its capacity as Collateral Agent (the "Collateral Agent") under a security agreement between the Trustee and the Collateral Agent. The Applicants do not believe the cessation of operations at Unit 1 has had such an effect, nor have they received any notice from the Collateral Agent that this has occurred. Accordingly, the Applicants propose to treat the cessation of operations by Unit 1 as causing a partial termination of the Lease. 7. In the event of a partial termination of the Lease, the Lessees are currently required to obtain the release of the nuclear fuel located at or intended to be used in the unit (in this case, Unit 1) to which partial termination applies (in this case, defined as "Unit 1 Nuclear Fuel"). To obtain the release of the Unit 1 Nuclear Fuel from the Lease, the Lessees are required to pay to the Lessor an amount equal to the stipulated loss value of the Unit 1 Nuclear Fuel, which is defined for these purposes as certain unamortized costs allocable to the Unit 1 Nuclear Fuel, currently approximately $80 million. The Applicants propose to amend the Lease so as to terminate it as to Unit 1 and the Unit 1 Nuclear Fuel in return for the Applicants depositing with the Trustee an aggregate principal amount of $80.2 million of new first mortgage bonds approximately ratably with their respective interests in Unit 1 for the benefit of the investors. 8. Except as otherwise set forth in Section 24(c)(v) of the Lease, as amended by the Modification, which provides for certain conforming definitions under the Lease, the proposed amendment to the Lease will be applicable only to the partial termination of the Lease in connection with the permanent cessation of operations at Unit 1, and in no event shall be applicable to any other Event of Termination. 9. As required by the Lease, written consent for the proposed Modification has been received from the holders of at least 66 2/3% in principal amount of the Series G Intermediate Term Secured Notes (the "Series G Noteholders"). B. AMENDMENT TO APPLICATION 10. Paragraph 6 of the Application is hereby amended by adding the following language to the end thereof to reflect the proposed modifications to the Nuclear Fuel Financing Arrangements: "The Trustee and the Collateral Agent have consented to a modification of and amendment to the Lease Agreement (the "Modification") and a Second Supplement and Amendment to the Security Agreement (the "Second Supplement"). The Modification will effect a partial termination of the Lease with respect to Millstone 1, and a release and conveyance back to the Lessees, on a pro rata basis according to their respective ownership interests in Millstone 1, of the Nuclear Fuel intended to be used in Millstone 1 ("Millstone 1 Nuclear Fuel") upon the issuance by the Applicants to the Trustee of an aggregate principal amount of $80.2 million of collateral first mortgage bonds (the "1999 Collateral Bonds"). This arrangement is in lieu of the Applicants providing the Trustee and the Collateral Agent with an amount of cash equal to the stipulated loss value of the Millstone 1 Nuclear Fuel, or $80 million. Of the $80.2 million aggregate principal amount of the 1999 Collateral Bonds to be issued, approximately 81%, or a maximum of $64.8 million, will be issued by CL&P and approximately 19%, or a maximum of $15.4 million, will be issued by WMECO. The Trustee will then pledge the 1999 Collateral Bonds to the Collateral Agent pursuant to the Second Supplement. The Applicants are seeking approval of their respective state utility regulators for issuance of their respective 1999 Collateral Bonds; if these approvals are received, such issuances will be exempted from Commission review pursuant to Rule 52 under the Act." 11. The Applicants hereby further amend and supplement the Application by adding the following paragraph: 19A. "The Applicants believe that Sections 6(a), 7 and 12 of the Act and Rule 52 thereunder are, or may be, applicable to the transactions proposed herein, and by virtue of Rule 52, CL&P and WMECO are exempt from the provisions of Section 6(a) as it relates to their issuance of the 1999 Collateral Bonds, as required to secure their obligations under the Lease." C. OTHER MATTERS 12. Except in accordance with the Act, neither NU nor any subsidiary thereof (a) has acquired an ownership interest in an exempt wholesale generator ("EWG") or a foreign utility company ("FUCO") as defined in Sections 32 and 33 of the Act, or (b) now is or as a consequence of the transactions proposed herein will become a party to, or has or will as a consequence of the transactions proposed herein have a right under, a service, sales, or construction contract with an EWG or a FUCO. None of the proceeds from the transactions proposed herein will be used by NU and its subsidiaries to acquire any securities of, or any interest in, an EWG or a FUCO. NU and its subsidiaries are in compliance with Rule 53(a), (b), and (c), as demonstrated by the following determinations: (i) NU's aggregate investment in EWGs and FUCOs (i.e., amounts invested in or committed to be invested in EWGs and FUCOs, for which there is recourse to NU) does not exceed 50% of NU's and its subsidiaries' consolidated retained earnings as reported for the four most recent quarterly periods on NU's Form 10-K and 10-Qs. At December 31, 1998, the ratio of such investment ($ 51 million) to such consolidated retained earnings ($606 million) was 8.5 percent. (ii) Ave Fenix (NU's only EWG or FUCO at this time) maintains books and records, and prepares financial statements in accordance with Rule 53(a)(2). Furthermore, NU has undertaken to provide the Commission access to such books and records and financial statements, as it may request. (iii) No employees of NU's public utility subsidiaries have rendered services to the EWGs/FUCOs. (iv) NU has submitted (a) a copy of each Form U-1 and Rule 24 certificate that has been filed with the Commission under Rule 53 and (b) a copy of Item 9 of the Form U5S and Exhibits G and H thereof to each state regulator having jurisdiction over the retail rates of NU's public utility subsidiaries. (v) Neither NU nor any NU subsidiary has been the subject of a bankruptcy or similar proceeding unless a plan of reorganization has been confirmed in such proceeding. In addition, although NU's average consolidated retained earnings ("CREs") for the four most recent quarterly periods have decreased by 10% or more from the average for the previous four quarterly periods (at December 31, 1997, NU's CREs were $ 733 million; at December 31, 1998 NU's CREs were $606 million), NU's aggregate investment in EWGs/FUCOs at such date ($51 million) did not exceed two percent of NU's consolidated capital invested in utility operations ($125.7 million). (vi) In the previous fiscal year, NU did not report operating losses attributable to its investment in EWGs/FUCOs, unless such losses did not exceed 3 percent of NU's consolidated retained earnings. ITEM 2. FEES, COMMISSIONS AND EXPENSES 13. Estimated fees are filed as Exhibit G.4. ITEM 4. REGULATORY APPROVAL 14. CL&P has applied to the Connecticut Department of Public Utility Control ("DPUC") for approval of the transactions proposed herein, including the issuance of the 1999 Collateral Bonds. WMECO has filed a petition with the Massachusetts Department of Telecommunications & Energy ("DTE") for approval of the transactions proposed herein, including the issuance of the 1999 Collateral Bonds, and an application with the DPUC seeking a waiver of approval for the proposed transactions. A copy of the applications to the DPUC and the petition to the DTE are filed herewith as exhibits. A copy of the respective orders issued by the DPUC and the DTE will be filed by amendment. ITEM 5. PROCEDURE 15. The Applicants respectfully request that the Commission issue its order permitting this post-effective amendment to become effective as soon as practicable, and in any event no later than May 12, 1999. The Applicants hereby waive any recommended decision by a hearing officer or by any other responsible officer of the Commission and waive the 30-day waiting period between issuance of the Commission's order and the date on which it is to become effective, since it is desired that the Commission's order, when issued, become effective immediately. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS 16. The list of exhibits in Item 6 is amended by adding the following: (a) Exhibits B.7. Proposed Modification and Amendment of Nuclear Fuel Lease B.8. Proposed Second Supplement and Amendment to the Security Agreement D.5. Application of CL&P to the Connecticut Department of Public Utility Control for Approval of Certain Modifications to Nuclear Fuel Financing Arrangements D.6. Petition of WMECO to the Massachusetts Department of Telecommunications and Energy for Approval of Proposed Modifications to Nuclear Fuel Financing Arrangements D.7. Application of WMECO to Connecticut Department of Public Utility Control for Waiver of Approval of Certain Modifications to Nuclear Fuel Financing Arrangements D.8. Order of the Connecticut Department of Public Utility Control Approving Certain Modifications to Nuclear Fuel Financing Arrangements (To be filed by amendment) D.9. Order of the Massachusetts Department of Telecommunications and Energy Approving Certain Modifications to Nuclear Fuel Financing Arrangements (To be filed by amendment) D.10. Order of the Connecticut Department of Public Utility Control Granting Waiver of Approval of Certain Modifications to Nuclear Fuel Financing Arrangements (To be filed by amendment) G.4. Schedule of Fees, Commissions and Expenses H.2. Form of Notice I. Financial Data Schedules a) The Connecticut Light and Power Company and Subsidiaries b) Western Massachusetts Electric Company and Subsidiaries c) Northeast Utilities and Subsidiaries (b) Financial Statements 1a. The Connecticut Light and Power Company and Subsidiaries 1.1a Balance Sheet, per books and pro forma, as of December 31, 1998 1.2a Statement of Income and Surplus, per books and pro forma, 12 months ended December 31, 1998 2a. Western Massachusetts Electric Company and Subsidiaries 2.1a Balance Sheet, per books and pro forma, as of December 31, 1998 2.2a Statement of Income and Surplus, per books and pro forma, 12 months ended December 31, 1998 3a. Northeast Utilities and Subsidiaries 3.1a Consolidated Balance Sheet, per books and pro forma, as of December 31, 1998 3.2a Consolidated Statement of Income and Surplus, per books and pro forma, 12 months ended December 31, 1998 There has been no material change, not in the ordinary course of business, in any of the balance sheets listed above since the date thereof. 17. The Applicants respectfully request the Commission's approval of all transactions described herein, whether under the sections of the Act and rules thereunder enumerated herein or otherwise. ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS 18. (a) The financial transactions described herein do not involve a major Federal action significantly affecting the quality of the human environment. (b) No Federal agency has prepared or is preparing an environmental impact statement with respect to the subject transactions. SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, as amended, the undersigned Applicants have duly caused this Post- Effective Amendment to the Application/Declaration to be signed on their behalf by their undersigned officer thereunto duly authorized. Dated this 8th day of April, 1999 NORTHEAST UTILITIES THE CONNECTICUT LIGHT AND POWER COMPANY WESTERN MASSACHUSETTS ELECTRIC COMPANY By: /s/ Randy A. Shoop Assistant Treasurer-Finance EX-10.1 2 LEASE EXHIBIT B.7 MODIFICATION AND AMENDMENT OF NUCLEAR FUEL LEASE This Modification and Amendment is to the Nuclear Fuel Lease dated as of January 4, 1982, as amended and restated as of February 11, 1992, between BANKERS TRUST COMPANY, not in its individual capacity but solely as Trustee (herein in such capacity called "Lessor") under the Trust Agreement dated as of January 4, 1982, as amended and restated as of February 11, 1992, between it and State Street Bank and Trust Company of Connecticut, N.A., as Trustor, and The Connecticut Light and Power Company and Western Massachusetts Electric Company, as beneficiaries, and THE CONNECTICUT LIGHT AND POWER COMPANY and WESTERN MASSACHUSETTS ELECTRIC COMPANY, as lessees (herein collectively called "Lessees"). W I T N E S S E T H : WHEREAS, Lessor and Lessees entered into a Nuclear Fuel Lease Agreement dated as of January 4, 1982 which was amended as of March 1, 1983 (the "Original Nuclear Fuel Lease"); and WHEREAS, Lessor and Lessees amended and restated the Original Nuclear Fuel Lease effective as of February 11, 1992 (as so amended and restated, the "Lease"); and WHEREAS, the Lessees announced as of July 17, 1998 their intention to permanently cease operations at Millstone Unit No. 1 ("Unit 1") and on July 21, 1998 gave certification of such decision to the U.S. Nuclear Regulatory Commission (the "NRC"); and WHEREAS, the Lessees have also given certification to the NRC that fuel has been permanently removed from the reactor vessel of Unit 1; and WHEREAS, upon docketing of such certifications by the NRC, the Unit 1 license from the NRC no longer authorizes operation of the reactor or emplacement of or retention of fuel in the reactor vessel; and WHEREAS, Section 23(a)(ix) of the Lease provides, inter alia, (i) that it shall be an Event of Termination under the Lease if any license, approval or consent granted to any Lessee and required for the operation of any Unit shall be revoked, withdrawn or withheld and such revocation, withdrawal or withholding shall remain effective, or in Lessees' reasonable judgment which shall be exercised within ninety days following such revocation, withdrawal or withholding, is likely to remain effective for a period of eighteen consecutive calendar months after its date of issuance, and Lessor shall have given notice to Lessees that Lessor desires to terminate the Lease, and (ii) that unless Lessor and the Collateral Agent shall have determined in their reasonable judgment that such revocation, withdrawal or withholding does or will have a material adverse affect on the financial condition or business prospects of any Lessee, Lessor may only give notice to Lessees that it wishes to partially terminate the Lease in accordance with Section 24(a)(vi) thereof as it applies only to the Unit or Units affected by such revocation, withdrawal or withholding; and WHEREAS, the Lessor, the Collateral Agent and Lessees have determined in their reasonable judgment that it is appropriate that the Lease be partially terminated pursuant to Section 24(a)(vi) thereof with respect to Unit 1 only; and WHEREAS, pursuant to Section 24(a)(vi) of the Lease the Lessees are required on the Final Settlement Date established pursuant to Section 24(a)(ii) of the Lease to obtain the release pursuant to Section 12(b) of all Nuclear Fuel located at or intended to be used in the Unit or Units as to which any partial termination applies; and WHEREAS, pursuant to Section 12(b) of the Lease the Lessees are required, inter alia, in order to obtain the release from the Lease of a portion (but not all) of the Nuclear Fuel, to pay to Lessor an amount equal to the SLV for such portion of the Nuclear Fuel to be released; and WHEREAS, the Majority Lenders (which also constitute the holders of 66 2/3% in aggregate principal amount of all IT Notes outstanding) and the Collateral Agent have consented to the modification and amendment of the terms of the Lease to provide for the partial termination of the Lease with respect to the Unit 1 Nuclear Fuel (as defined below) and the release of such Unit 1 Nuclear Fuel from the Lease upon alternative terms as set forth below. NOW THEREFORE, in consideration of the premises and other good and valuable consideration, receipt of which is hereby acknowledged, Lessor and Lessees hereby agree as follows: 1. Unless the context otherwise requires, all capitalized terms used in this Agreement and not defined herein shall have the meanings specified therefor in the Lease. 2. Subject to receipt of required regulatory approvals, effective as of July 17, 1998, the Lease is hereby modified and amended by adding to Section 24 thereof the following new provision: (c) Special Partial Termination with Respect to Unit 1. Notwithstanding any provision to the contrary included in this Lease including, without limitation, any provision included in Section 12(b), Section 23(a)(ix), Section 24(a)(ii) or Section 24(a)(vi), this Lease may be partially terminated with respect to the Nuclear Fuel located at or intended to be used at Unit 1 (the "Unit 1 Nuclear Fuel") pursuant to Section 23(a)(ix) upon the following terms: (i) The Lease may be partially terminated with respect to Unit 1 (the "Unit 1 Partial Termination") in accordance with the provisions of Section 23(a)(ix) upon the issuance by The Connecticut Light and Power Company of Sixty-Four Million Eight Hundred Thousand Dollars ($64,800,000) of collateral first mortgage bonds (the "CL&P Collateral First Mortgage Bonds) to the Trustee, which CL&P Collateral First Mortgage Bonds shall be substantially in the form of Exhibit A-1 hereto, and the issuance by Western Massachusetts Electric Company of Fifteen Million Four Hundred Thousand Dollars ($15,400,000) of collateral first mortgage bonds (the "WMECO Collateral First Mortgage Bonds" and, together with the CL&P Collateral First Mortgage Bonds, the "Collateral First Mortgage Bonds") to the Trustee, which WMECO Collateral First Mortgage Bonds shall be substantially in the form of Exhibit A-2 hereto; (ii) The Final Settlement Date with respect to the Unit 1 Partial Termination shall be the date of the issuance of the Collateral First Mortgage Bonds, and no amount shall be required to be paid to the Lessor pursuant to Section 24(a)(iii) on such date; (iii) On the Final Settlement Date, the Unit 1 Nuclear Fuel shall be released from this Lease pursuant to the provisions of Section 12(b) without the receipt by the Lessor of any payment with respect to such Unit 1 Nuclear Fuel; (iv) Except as set forth in Section 24(c)(v), this Section 24(c) shall be applicable only to the partial termination of this Lease in connection with the permanent cessation of operations at Unit 1 and in no event shall be applicable to any other Event of Termination occurring hereunder; (v) (A) for purposes only of certain calculations required under this Lease, "SLV" or "Stipulated Loss Value" shall include Deferred Unit 1 SLV, if any, and (B) for purposes only of presentation of certain calculations required under this Lease, the term "Batch" shall be deemed to include an entry which identifies the amount of Deferred Unit 1 SLV, if any. 3. Subject to the receipt of required regulatory approvals, effective as of July 17, 1998, the Lease is hereby further modified and amended as follows: (a) Annex 1 to Schedule F to the Lease is deleted in its entirety and the amended Annex 1 to Schedule F attached hereto as Attachment 1 is substituted in lieu thereof. (b) The definition of "Batch" in Section 1(a) is amended by adding the following sentence immediately following the last sentence thereof: "For purposes only of presentation of certain computations under this Lease, the Deferred Unit 1 SLV shall be deemed to constitute a "Batch"; provided, however, that no allocation of Fuel Cost or Additional Rent shall be made pursuant to Section 7 of this Lease to such a Batch which consists of Deferred Unit 1 SLV." (c) The definition of "SLV" or "Stipulated Loss Value" in Section 1(a) of the Lease is amended by adding thereto the following sentence: "In addition, SLV or Stipulated Loss Value shall include for any date as of which the same is required to be determined the Deferred Unit 1 SLV as of such date, if any." (d) Section 1(a) of the Lease shall be further amended by adding thereto the following additional definitions: "Deferred Unit 1 SLV" shall mean for any date on or after July 17, 1998 as of which the same is required to be determined an amount equal to Original Deferred Unit 1 SLV less the aggregate amount, if any, of Deferred Unit 1 SLV Payments received by the Lessor as of such date. "Deferred Unit 1 SLV Payment" shall mean any amount paid by a Lessee as Additional Rent (i) in order to discharge, fully or in part, its payment obligation under this Lease, and (ii) which relates to or is allocable to the Nuclear Fuel which was located at or intended for use in Unit 1 as of July 17, 1998 and the SLV of which is included in Original Deferred Unit 1 SLV. "Original Deferred Unit 1 SLV" shall mean an amount equal to $81,065,950.68, which represents the aggregate SLV of all Nuclear Fuel which as of July 17, 1998 was located at or intended to be used at Unit 1. 4. This Agreement of Modification and Amendment shall be governed by, and construed in accordance with, the laws of the State of Connecticut. 5. Except as specifically modified and amended by this Agreement of Modification and Amendment, the Lease shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Modification and Amendment to be duly executed by their duly authorized officers as of the day of , 1999. THE CONNECTICUT LIGHT AND POWER COMPANY By:/s/ Its: WESTERN MASSACHUSETTS ELECTRIC COMPANY By:/s/ Its: BANKERS TRUST COMPANY, not in its individual capacity, but solely as Trustee of the Niantic Bay Fuel Trust under Trust Agreement dated as of January 4, 1982, as amended and restated by an Amendment to and Restatement of Trust Agreement dated as of February 11, 1992, between it and the Trustor and the beneficiaries named therein By:/s/ Its: Attachment 1 Amended Annex 1 to Schedule F ANNEX 1 TO SLV CONFIRMATION SCHEDULE BASIC RENT PERIOD ENDING , 19 1. Batch Identification Unit 1&2 UF6 Pool Unit 3 UF6 Pool Unit 1&2 U308 Pool Unit 3 U308 Pool Deferred Unit 1 SLV Batch Batch No. Aggregate For All Batches 2. Description of Nuclear Fuel State 3. Physical Location of Fuel 4. Person in Possession 5. Contract for Possession 6. SLV of each Batch as of the end of the prior Basic Rent Period (Item 13 on Annex 1 to last previous SLV Confirmation Schedule) Unit 1&2 $ Aggregate For All Batches $ 7. Add: Fuel Cost Incurred or paid by or on behalf of Lessor for each Batch during this Basic Rent Period (exclusive of capitalized Quarterly Lease Charges and Additional Rent) Unit 1&2 $ Aggregate For All Batches $ 7a. Add: Fuel Costs (transferred and assigned to new Batch) Unit 1&2 $ Aggregate For All Batches $ 8. Add: Capitalized Quarterly Lease Charges for each Batch (amounts allocated to Fuel Cost pursuant to Section 7(b) of the Fuel Lease) Unit 1&2 $ Aggregate For All Batches $ 9. (a) Add: Additional Rent for each Batch (amounts allocated to Fuel Cost pursuant to Section 7(b) of the Fuel Lease) Unit 1&2 $ Aggregate For All Batches $ (b) Add: Original Deferred Unit 1 SLV Unit 1&2 $ (c) Less: Deferred Unit 1 SLV Payment during the Basic Rent Period Unit 1&2 $ (d) Deferred Unit 1 SLV (Item 9(b)-Item 9(c)) Unit 1&2 $ 10. Item 6 + Item 7 + Item 8 + Item 9(a) + Item 9(d) Unit 1&2 $ Aggregate For All Batches $ 11. Less: Burn-up Charge for each Batch for this Basic Rent Period Unit 1&2 $ Aggregate For All Batches $ 12. Less: SLV of Nuclear Fuel removed from the Fuel Lease pursuant to Section 12(b) thereof during this Basic Rent Period Unit 1&2 $ Aggregate For All Batches $ 13. SLV of each Batch at the end of this Basic Rent Period (Item 10 - Item 11 - Item 12) Unit 1&2 $ Aggregate For All Batches $ Notes: Items 1, 6, 7, 9, 11 and 12 are to be inserted by Lessor. All other items are to be inserted by Lessees. Item 2 is to include whether the Batch was in Heat Production during the Basic Rent Period. Item 8 is to be taken from Line 1, Column 3 and Line 2, Column 2 of Annex 2 to the Basic Rent Schedule. Item 11 is to be taken from Item 12 of Annex 1 to the Basic Rent Schedule. EXHIBIT A-1 FORM OF CL&P COLLATERAL FIRST MORTGAGE BOND EXHIBIT A-2 FORM OF WMECO COLLATERAL FIRST MORTGAGE BOND EX-10.2 3 MATERIAL CONTRACT EXHIBIT B.8 SECOND SUPPLEMENT AND AMENDMENT This Second Supplement and Amendment dated as of [ , 1999] (this "Second Supplement") is between Bankers Trust Company, not in its individual capacity but solely as trustee of the Niantic Bay Fuel Trust (in such capacity, the "Trustee") under the Trust Agreement dated as of January 4, 1982, as amended and restated by the Amendment to and Restatement of Trust Agreement dated as of February 11, 1992, between it, State Street Bank and Trust Company of Connecticut, National Association (which is the successor trustor to The New Connecticut Bank and Trust Company, National Association, as assignee of the Federal Deposit Insurance Corporation, as receiver of The Connecticut Bank and Trust Company, National Association), as Trustor, and The Connecticut Light and Power Company ("CL&P"), and Western Massachusetts Electric Company ("WMECO"), as Beneficiaries, and The First National Bank of Chicago, as Collateral Agent (in such capacity, the "Collateral Agent") for the ratable benefit of the secured parties referred to therein. W I T N E S S E T H: WHEREAS, the Trustee and the Collateral Agent entered into that certain Security Agreement and Assignment of Contracts dated as of January 4, 1982, as amended and restated by the Amendment to and Restatement of Security Agreement and Assignment of Contracts dated as of February 11, 1992, and as further supplemented and amended by the First Supplement and Amendment (the "First Supplement") dated as of May 1, 1998 (as so amended and supplemented, the "Existing Security Agreement", and the Existing Security Agreement, as further supplemented and amended hereby, is hereinafter referred to as the "Security Agreement"); and WHEREAS, the Trustee, CL&P and WMECO are parties to a Nuclear Fuel Lease Agreement dated as of January 4, 1982, as amended and restated by the Amendment to and Restatement of Nuclear Fuel Lease Agreement dated as of February 11, 1992 (as so amended and restated, the "Existing Nuclear Fuel Lease Agreement"), between the Trustee, as Lessor (the "Lessor"), and CL&P and WMECO, as Lessees (the "Lessees"); and WHEREAS, the Lessor and the Lessees have entered into that certain Modification and Amendment of Nuclear Fuel Lease dated as of February __, 1999 (the "Modification and Amendment"), which Modification and Amendment amends the Existing Nuclear Fuel Lease Agreement to provide, inter alia, for the release of all Unit 1 Nuclear Fuel (as defined in the Modification and Amendment) in exchange for the issuance by CL&P and WMECO of $80,000,000 of collateral first mortgage bonds to the Trustee; and WHEREAS, CL&P (i) pursuant to the CL&P Indenture (as hereinafter defined), is securing its obligations under the Existing Nuclear Fuel Lease Agreement, as modified and amended by the Modification and Amendment, by issuing a $64,800,000 Collateral First Mortgage Bond, (ii) has agreed in the Lessees' Collateral Bond Consent (as hereinafter defined) to the Trustee's pledge to the Collateral Agent of all of the Trustee's rights under such Collateral First Mortgage Bond, and (iii) is making such Collateral First Mortgage Bond payable to the Collateral Agent in order to facilitate such pledge; and WHEREAS, WMECO (i) pursuant to the WMECO Indenture (as hereinafter defined), is securing its obligations under the Existing Nuclear Fuel Lease Agreement, as modified and amended by the Modification and Amendment, by issuing a $15,200,000 Collateral First Mortgage Bond, (ii) has agreed in the Lessees' Collateral Bond Consent (as hereinafter defined) to the Trustee's pledge to the Collateral Agent of all of the Trustee's rights under such Collateral First Mortgage Bond, and (iii) is making such Collateral First Mortgage Bond payable to the Collateral Agent in order to facilitate such pledge; and NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: Section 1. Definitions. (a) Unless the context otherwise requires, each term used herein which is defined in the Security Agreement shall have the meaning assigned to it in the Security Agreement. (b) Unless the context otherwise specifies or requires, each term defined in this Section 1(b) shall, when used in this Second Supplement, have the meaning indicated below. To the extent that certain of the terms defined in this Section 1(b) are defined by cross-reference to documents which may not be in full force and effect during the entire term of this Second Supplement and the Security Agreement, the definitions contained in such documents shall be and remain effective for purposes of implementing this Second Supplement and the Security Agreement during the entire term of the Security Agreement. "CL&P Indenture" shall mean that certain Indenture of Mortgage and Deed of Trust dated as of May 1, 1921 from CL&P to Bankers Trust Company, as trustee, as previously and hereafter amended and supplemented. "Collateral First Mortgage Bond" shall mean (i) with respect to CL&P, that certain $72,900,000 First and Refunding Mortgage Bond, 1998 Series A, issued by CL&P as of May 1, 1998 pursuant to the CL&P Indenture to the Collateral Agent for the benefit of the Lenders, in substantially the form of Exhibit "A" attached to the First Supplement, that certain $64,800,000 First and Refunding Mortgage Bond, 1999 Series A, issued by CL&P on the date hereof pursuant to the CL&P Indenture to the Collateral Agent for the benefit of the Lenders, in substantially the form of Exhibit "A" attached hereto, and such other collateral mortgage bonds as may be issued by CL&P from time to time pursuant to the CL&P Indenture to the Collateral Agent for the benefit of the Lenders, as the same may be amended, supplemented or otherwise modified from time to time, and (ii) with respect to WMECO, that certain $17,300,000 First Mortgage Bond, 1998 Series A, issued by WMECO as of May 1, 1998 pursuant to the WMECO Indenture to the Collateral Agent for the benefit of the Lenders in substantially the form of Exhibit "B" attached to the First Supplement, that certain $15,200,000 First Mortgage Bond, 1999 Series A, issued by WMECO on the date hereof pursuant to the WMECO Indenture to the Collateral Agent for the benefit of the Lenders, in substantially the form of Exhibit "B" attached hereto, and such other collateral mortgage bonds as may be issued by WMECO from time to time pursuant to the WMECO Indenture to the Collateral Agent for the benefit of the Lenders, as the same may be amended, supplemented or otherwise modified from time to time. "Lessees" Collateral Bond Consent" shall mean a Third Amended and Restated Lessees' Consent and Agreement duly executed and delivered by both of the Lessees in substantially the form of Exhibit "C" attached hereto, as it may be amended, supplemented or otherwise modified from time to time. "WMECO Indenture" shall mean that certain First Mortgage Indenture and Deed of Trust dated as of August 1, 1954 from WMECO to State Street Bank and Trust Company, as successor trustee, as previously and hereafter amended and supplemented. Section 2. Amendments to the Existing Security Agreement. Effective on the execution of this Second Supplement by the Trustee and the Collateral Agent and the execution and delivery by the Lessees to the Collateral Agent of the Lessees' Collateral Bond Consent, the Existing Security Agreement shall be amended as follows: A. The definition of "Collateral First Mortgage Bonds" set forth in Section 1 of the Existing Security Agreement shall be amended by deleting it in its entirety and substituting in lieu thereof the following new definition: "'Collateral First Mortgage Bonds' shall have the meaning specified in Section 1(b) of the Second Supplement." B. Section 1 of the Existing Security Agreement shall be amended by adding thereto between the existing definitions of "Ratable Loan" and "Secured Obligations" the following new definition of "Second Supplement": "'Second Supplement' shall mean the Second Supplement and Amendment dated as of [ , 1999] between the Trustee and the Collateral Agent which supplemented and amended this Security Agreement." Section 3. Concerning Trustee. (a) Bankers Trust Company, in its capacity as Trustee, is entering into this Second Supplement solely as trustee under the Trust Agreement and pursuant to instructions contained therein, and not in its individual capacity and in no case whatsoever shall Bankers Trust Company (or any entity acting as successor trustee, co-trustee or separate trustee under the Trust Agreement) be personally liable on, or for any loss in respect of, any of the statements, representations, warranties, agreements or obligations of the Trustee hereunder, or for any losses the Trust may suffer, as to all of which the Collateral Agent, on behalf of the Secured Parties, agrees to look solely to the Trust, except for any loss caused by the Trustee's willful misconduct or gross negligence (provided that this exception shall not be deemed to apply to the extent that the Trustee has followed instructions given to it, or which it is authorized to accept, pursuant to this Second Supplement, the Security Agreement and the Trust Agreement). (b) The Collateral Agent, on behalf of the Secured Parties, agrees that if a successor trustee is appointed in accordance with the terms of the Trust Agreement, such successor trustee shall, without further act, succeed to all the rights, duties, immunities and obligations of the Trustee hereunder and the predecessor trustee shall be released from all further duties and obligations hereunder, all without in any way altering the terms of this Second Supplement or the Trustee's obligations hereunder. Section 4. Notices. All notices and other communications provided to any party hereto under this Second Supplement shall be given as provided for in Section 15 of the Security Agreement. Section 5. Effect on the Existing Security Agreement. Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of the Existing Security Agreement (a) shall remain unaltered, (b) shall continue to be, and shall remain, in full force and effect in accordance with their respective terms, and (c) are hereby ratified and confirmed in all respects. Upon the effectiveness of this Second Supplement, all references in the Existing Security Agreement (including references in the Existing Security Agreement as amended by this Second Supplement) to "this Security Agreement" (and all indirect references such as "hereby", "herein", "hereof" and "hereunder") shall be deemed to be references to the Existing Security Agreement as supplemented and amended by this Second Supplement. Section 6. Expenses. The Trustee shall reimburse the Collateral Agent, solely from Trust funds, for any and all reasonable costs, internal charges and out-of-pocket expenses (including attorneys' fees and time charges of attorneys for the Collateral Agent, which attorneys may be employees of the Collateral Agent) paid or incurred by the Collateral Agent in connection with the preparation, review, execution and delivery of this Second Supplement. Section 7. Entire Agreement This Second Supplement and the Existing Security Agreement as supplemented and amended by this Second Supplement embody the entire agreement and understanding between the parties hereto and supersede any and all prior agreements and understandings between the parties hereto relating to the subject matter hereof. SECTION 8. GOVERNING LAW. THIS SECOND SUPPLEMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Section 9. Counterparts. This Second Supplement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Second Supplement by signing any such counterpart. IN WITNESS WHEREOF, each of the Trustee and the Collateral Agent have executed and delivered this Second Supplement and Amendment as of the date first set forth above. BANKERS TRUST COMPANY, not in its individual capacity but solely as trustee of the Niantic Bay Fuel Trust under the Trust Agreement dated as of January 4, 1982, as amended and restated by the Amendment to and Restatement of Trust Agreement dated as of February 11, 1992, between it and the Trustor and the beneficiaries named therein By: /s/ Title: /s/ THE FIRST NATIONAL BANK OF CHICAGO, as Collateral Agent By: /s/ Title: /s/ EX-99.1 4 APP TO DPUC EXHIBIT D.5 March 12, 1999 Ms. Louise Rickard Acting Executive Secretary Department of Public Utility Control 10 Franklin Square New Britain, CT 06051 Re: Docket No. 91-06-04: Application of The Connecticut Light and Power Company for Approval of Certain Modifications to Nuclear Fuel Financing Arrangements - Request For Reopening Dear Ms. Rickard: The Connecticut Light and Power Company ("CL&P"), an electric utility subsidiary of Northeast Utilities and a public service company as defined in Connecticut General Statutes ("Conn. Gen. Stat.") Section 16-1, hereby requests that the Department of Public Utility Control (the "Department") reopen the above-referenced docket for the limited purpose of approving certain proposed modifications to the terms of its nuclear fuel financing arrangements for the financing of its interest in the nuclear fuel for the Millstone nuclear units. More specifically, CL&P is seeking authority to: (i) modify certain terms of its (a) Nuclear Fuel Lease Agreement (the "Lease"), dated as of January 4, 1982, as amended and restated as of February 11, 1992, between Bankers Trust Company, in its capacity as Lessor (the "Lessor"), State Street Bank and Trust Company of Connecticut, N.A., as Trustor (the "Trustor"), and CL&P and Western Massachusetts Electric Company ("WMECO"), collectively as Lessees (the "Lessees"), and (b) Security Agreement and Assignment of Contracts (the "Security Agreement"), dated as of January 4, 1982, as amended and restated by the Amendment to and Restatement of Security Agreement and Assignment of Contracts dated February 11, 1992, and as further supplemented by the First Supplement and Amendment dated as of May 1, 1998 between Bankers Trust Company in its capacity as Trustee (the "Trustee") and The First National Bank of Chicago, as Collateral Agent (the "Collateral Agent"); (ii) issue up to an additional $64.8 million aggregate principal amount of its first mortgage bonds as collateral under the Lease (the "1999 CL&P Collateral Bonds"); and (iii) extend the term of the outstanding $72.9 million aggregate principal amount of the 1998 Series A first mortgage bonds, which were previously approved by the Department and issued as collateral under the Lease (the "1998 CL&P Collateral Bonds"). I. Overview CL&P and WMECO (collectively, the "Companies") have announced their intention to permanently cease operations at Millstone Unit 1 ("Unit 1") and have notified the Nuclear Regulatory Commission (the "NRC") of that decision. Under Section 23(a)(ix) of the Lease, the foregoing events could constitute an Event of Termination. Although Events of Termination may trigger termination of the Lease and certain payments by the Companies to the Niantic Bay Fuel Trust (the "Trust"), Section 23(a)(ix) of the Lease provides for a partial termination with respect only to the affected Unit (in this case, Unit 1) unless the Lessor under the Lease, and the Collateral Agent under the Security Agreement, shall have determined in their reasonable judgment that the triggering event does or will have a material adverse effect on the financial condition or business prospects of CL&P or WMECO. Such determination has not been made. In the event of a partial termination of the Lease, the Companies presently would be required to obtain the release of the nuclear fuel located at or intended to be used at Unit 1 (the "Unit 1 Nuclear Fuel"). In connection with such release of nuclear fuel from the Lease, the Companies would be required to pay to the Lessor an amount equal to the stipulated loss value of the Unit 1 Nuclear Fuel (the "SLV"), defined for these purposes as certain unamortized costs allocable to the Unit 1 Nuclear Fuel, currently approximately $80 million. II. Modification of Lease and Second Supplement and Amendment to Security Agreement The Companies have requested that the Lessor and the Collateral Agent consent to a Modification of and Amendment to the Lease (the "Modification"). The Modification will effect a partial termination of the Lease with respect to Unit 1, and a release of the Unit 1 Nuclear Fuel, upon terms different from those currently provided for in the Lease. The Modification will alter the partial termination provision of the Lease to effect the release of the Unit 1 Nuclear Fuel upon the issuance by the Companies to the Trustee of $80 million aggregate principal amount of collateral first mortgage bonds, rather than effecting the release of the Unit 1 Nuclear Fuel upon a payment by the Companies to the Lessor of the SLV. The Companies will be required to each issue a new series of first mortgage bonds in an aggregate principal amount not to exceed $80 million. Of this $80 million aggregate principal amount of new bonds to be issued, 81%, or a maximum of $64.8 million, will be issued by CL&P and 19%, or a maximum of $15.2 million, will be issued by WMECO (the "1999 WMECO Collateral Bonds"). The Trustee will then pledge such collateral first mortgage bonds to the Collateral Agent pursuant to a Second Supplement and Amendment to the Security Agreement and Assignment of Contracts between the Trust and the Collateral Agent (the "Second Supplement"). In accordance with the issuance of the 1999 CL&P Collateral Bonds, the definition of "Collateral First Mortgage Bond" will be amended in the Security Agreement to reflect the definition as will be specified in the Second Supplement, to include as collateral under such definition the 1999 CL&P Collateral Bonds, and any such other collateral mortgage bonds as may be issued by CL&P, from time to time in connection with the Trust. CL&P seeks Department approval for the Lease Modification, the amendment to the Security Agreement and for the related issuance of the 1999 CL&P Collateral Bonds, as discussed more fully below. By separate application, WMECO is requesting the Department's waiver pursuant to Conn. Gen. Stat. Section 16-246c(c) of the requirements of Conn. Gen. Stat. Section 16-43 with respect to the Lease Modification and the amendment to the Security Agreement. III. Issuance of New Series of Collateral Bonds The 1999 CL&P Collateral Bonds will be substantially similar to the $72.9 million in aggregate principal amount of the 1998 CL&P Collateral Bonds previously approved by the Department in its Decision dated April 23, 1998 in this docket. CL&P requests the Department's approval for the issuance of up to $64.8 million of the 1999 CL&P Collateral Bonds at a maximum interest rate of eleven percent (11%) per annum with a maturity date of June 1, 2000. By separate application, WMECO is requesting the Department's waiver pursuant to Conn. Gen. Stat. Section 16-246c(c) of the requirements of Conn. Gen. Stat. Section 16-43 with respect to the issuance of the 1999 WMECO Collateral Bonds. IV. Extension of Maturity Date of 1998 CL&P Collateral Bonds The terms of the Series G Intermediate Term Notes (the "Series G Notes"), the issuance of which was approved by the Department in its Decision dated May 27, 1998 in this docket, require the Trust's best efforts to extend the maturity date of the 1998 CL&P Collateral Bonds until such bonds are rated "Investment Grade" by either Moody's Investor Service, Inc. or Standard & Poor's Corporation. The 1998 CL&P Collateral Bonds are currently rated below Investment Grade. The terms of the Series G Notes further require the Trustee to provide notice to the Series G Noteholders, no later than sixty days prior to the stated maturity date of June 1, 1999, confirming that everything necessary for the maturity date's extension has been or will be satisfied by June 1, 1999. The failure of the Trust to provide such notice, or the inability to extend the term of maturity, may result in the Series G Noteholders' exercising their right to have the Trustee repurchase their Notes in full. CL&P therefore requests Department approval for a one year extension of the June 1, 1999 maturity date of the 1998 CL&P Collateral Bonds. By separate application, WMECO is requesting the Department's waiver pursuant to Conn. Gen. Stat. Section 16-246c(c) of the requirements of Conn. Gen. Stat. Section 16-43 with respect to the extension of the June 1, 1999 maturity date of its portion of the 1998 collateral bonds (the "1998 WMECO Collateral Bonds"), which is also required under the terms of the Notes. The consent of a majority of the Series G Noteholders is required to effect the proposed Modification and issuance of the 1999 CL&P Collateral Bonds, as described above. An accommodation fee of $64,800 will be paid by CL&P as consideration for the Series G Noteholders' consent. V. Additional Information In support of CL&P's requested approval for the proposed modifications to the nuclear fuel financing arrangements, CL&P submits the prepared testimony of Randy A. Shoop, Assistant Treasurer, attached hereto. In addition, the following information is supplied as part of this application: 1. The exact legal name of the applicant and its principal place of business is: The Connecticut Light & Power Company 107 Selden Street Berlin, CT 06037 CL&P is a corporation organized and existing under the laws of the State of Connecticut. 2. The name, title, address and telephone number of the attorneys and other persons to whom correspondence or communication in regard to this application are to be addressed: A. Jane P. Seidl, Esq. Senior Counsel Northeast Utilities Service Company P.O. Box 270 Hartford, CT 06141-0270 Telephone: (860) 665-5051 B. Randy A. Shoop Assistant Treasurer - Finance Northeast Utilities Service Company P.O. Box 270 Hartford, CT 06141-0270 Telephone: (860) 665-3258 C. Kenneth M. Burke Senior Regulatory Planning Analyst Northeast Utilities Service Company P.O. Box 270 Hartford, CT 06141-0270 Telephone: (860) 665-5558 3. The Department's attention is respectfully directed to the fact that the Companies must give notice to the Series G Noteholders no later than April 1, 1999, confirming that everything necessary for an extension of the maturity date of the 1998 CL&P Collateral Bonds and the 1998 WMECO Collateral Bonds has been or will be satisfied by June 1, 1999. The failure to provide such notice, or the inability to extend the term of maturity, may result in the Series G Noteholders exercising their right to have the Trustee repurchase their Notes in full. Under these conditions, time is of the essence and accordingly the Companies respectfully request that the Department grant the requested approvals at the earliest date it is able to do so, not later than May 1, 1999. Very truly yours, THE CONNECTICUT LIGHT AND POWER COMPANY By: /s/Randy A. Shoop Assistant Treasurer-Finance cc: Service List EX-99.2 5 APP TO DTE EXHIBIT D.6 COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF TELECOMMUNICATIONS AND ENERGY PETITION OF WESTERN ) MASSACHUSETTS ELECTRIC ) COMPANY FOR APPROVAL OF ) D.T.E. PROPOSED MODIFICATIONS ) TO NUCLEAR FUEL ) FINANCING ARRANGEMENTS ) A. INTRODUCTION 1. This is a petition by Western Massachusetts Electric Company ("WMECO" or "Petitioner"), a subsidiary of Northeast Utilities ("NU") and an electric utility company duly organized and existing under the laws of the Commonwealth of Massachusetts (the "Commonwealth"), subject to the jurisdiction of the Massachusetts Department of Telecommunications and Energy (the "Department") under Massachusetts General Laws Chapter 164. The Petitioner is seeking the Department's approval, under Section 14 of such Chapter and certain orders of the Department in prior dockets, identified below, of certain proposed modifications to the terms of its nuclear fuel financing arrangements for the financing of its interest in the nuclear fuel for the Millstone nuclear units. Specifically, WMECO is seeking authority to: (i) modify certain terms of (a) its Nuclear Fuel Lease Agreement (the "Lease"), dated as of January 4, 1982, as amended and restated as of February 11, 1992, between Bankers Trust Company, in its capacity as Lessor (the "Lessor"), and The Connecticut Light and Power Company ("CL&P") and WMECO, collectively as Lessees, and (b) the Security Agreement and Assignment of Contracts, dated as of January 4, 1982, as amended and restated by the Amendment to and Restatement of Security Agreement and Assignment of Contracts dated as of February 11, 1992, and as further supplemented by the First Supplement and Amendment dated as of May 1, 1998 (the "Security Agreement"), as related to the Niantic Bay Fuel Trust (the "Trust"), between Bankers Trust Company in its capacity as Trustee (the "Trustee"), and The First National Bank of Chicago, as Collateral Agent (the "Collateral Agent"); (ii) issue up to an additional $15.4 million aggregate principal amount of its first mortgage bonds as collateral under the Lease (the "1999 WMECO Collateral Bonds"); and (iii) extend the term of the outstanding $17.3 million aggregate principal amount of first mortgage bonds (the "1998 WMECO Collateral Bonds"), which were previously approved by the Department and issued as collateral under the Lease. B. BACKGROUND 2. The Petitioner is an electric company duly organized and existing under the laws of the Commonwealth. 3. The exact legal name of the Petitioner and its principal place of business are: Western Massachusetts Electric Company 174 Brush Hill Avenue West Springfield, Massachusetts 01089 4. The name, title, address and telephone number of the attorneys or other persons to whom correspondence or communications in regard to this application are to be addressed: A. Stephen Klionsky, Esq. Western Massachusetts Electric Company 260 Franklin Street Boston, Massachusetts 02110-3179 Telephone: (617) 345-4778 B. Jane P. Seidl, Esq. Western Massachusetts Electric Company c/o Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141 Telephone: (860) 665-5051 C. Randy A. Shoop Assistant Treasurer - Finance Western Massachusetts Electric Company c/o Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141 Telephone: (860) 665-3258 5. The Petitioner has issued and outstanding 1,072,471 shares of its Common Stock with a par value of $25 per share; 200,000 shares of 7.72% Preferred Stock, Series B, with a par value of $100 per share and 780,000 shares of 7.6% Class A Preferred Stock, 1987 Series, with a par value of $25 per share. 6. As of December 31, 1998, the Petitioner had issued and outstanding long- term debt and other long-term obligations in the aggregate principal amount of approximately $349,314,210: (a) first mortgage bonds in the aggregate principal amount of $255,000,000 (including current portion) consisting of five outstanding series: Series V through Y and the 1997 Series B, with maturity dates from 1999 to 2024 and interest rates ranging from 6.25 percent for the Series X bonds to 7.75 percent for the Series V and Y bonds; (b) pollution control notes in the aggregate principal amount of $53,800,000 due in 2028; (c) long term obligations of approximately $41,354,766 for spent fuel disposal costs; and (d) unamortized premium/discounts: ($840,556). C. OVERVIEW 7. The Petitioner and CL&P (collectively, the "Companies") own approximately 18.779% and 81.221% (aggregating 100%), respectively, of Millstone Unit 1 and Millstone Unit 2 ("Unit 1" and "Unit 2") and are responsible for the fuel costs of those units. The Petitioner and CL&P own approximately 12.239% and 52.933% (aggregating 65.172%), respectively, of Millstone Unit 3 ("Unit 3"). The Companies are responsible for a like percentage of the fuel costs of Unit 3. The other joint owners of Unit 3 are responsible for the remainder of the fuel costs for Unit 3. 8. The Trust was formed in order to provide an efficient framework for the financing of the Companies' interest in the nuclear fuel for the Millstone nuclear units. 9. On December 15, 1981, the Department issued an order in D.P.U. 873 (the "1981 Order") approving WMECO's participation in the Trust. The 1981 Order required WMECO to obtain the Department's prior approval of material amendments to the Trust's Lease arrangements before they become effective. Western Massachusetts Electric Company, D.P.U. 873, p. 15 (1981); Western Massachusetts Electric Company, D.P.U. 873-A, p. 1 (1982). 10. In July, 1998, the Companies announced their intention to permanently cease operations at Unit 1 and notified the Nuclear Regulatory Commission ("NRC") of that decision. The Companies have also notified the NRC that all nuclear fuel has been permanently removed from the reactor vessel of Unit 1. Consequently, they are no longer authorized to operate Unit 1 or retain nuclear fuel in its reactor. Under Section 23(a)(ix) of the Lease, the foregoing events could constitute an Event of Termination. Although Events of Termination may trigger termination of the Lease and certain payments by the Companies to the Trust, Section 23 (a)(ix) of the Lease provides for a partial termination with respect only to the affected Unit (in this case, Unit 1) unless the triggering event does, or will have, a material adverse effect on the financial condition or business prospects of WMECO or CL&P, as determined by the Lessor and the Collateral Agent. 11. In the event of a partial termination of the Lease, the Companies presently would be required to obtain the release of the nuclear fuel located at or intended to be used at Unit 1 (the "Unit 1 Nuclear Fuel"). In connection with such release of nuclear fuel from the Lease, the Companies would be required to pay to the Lessor an amount equal to the Unit 1 Nuclear Fuel Stipulated Loss Value (the "SLV"), defined for these purposes as certain unamortized costs allocable to the Unit 1 Nuclear Fuel. The current SLV is approximately $80 million. D. MODIFICATION OF LEASE AND SECOND SUPPLEMENT AND AMENDMENT OF SECURITY AGREEMENT 12. The Companies have requested that the Lessor and Collateral Agent consent to a modification of and amendment to the Lease (the "Modification"), which Modification will effect a partial termination of the Lease with respect to Unit 1, and a release of the Unit 1 Nuclear Fuel, upon the issuance by the Companies of an aggregate principal amount of $80.2 million of collateral first mortgage bonds (the "1999 Collateral Bonds") to the Trustee. The Trustee will pledge the bonds to the Collateral Agent pursuant to a Second Supplement and Amendment to the Security Agreement (the "Second Supplement") between the Trustee and the Collateral Agent. 13. Pursuant to the Modification, the Companies will each be required to issue a new series of first mortgage bonds in an aggregate principal amount not to exceed $80.2 million. Of the $80.2 million aggregate principal amount of the new bonds to be issued, approximately 19%, or $15.4 million, will be issued by WMECO (the "1999 WMECO Collateral Bonds"), and approximately 81%, or $64.8 million, will be issued by CL&P (the "1999 CL&P Collateral Bonds"). The proposed terms of the 1999 WMECO Collateral Bonds are addressed in Section E below. 14. In accordance with the issuance of the 1999 WMECO Collateral Bonds, the definition of "Collateral First Mortgage Bond" will be amended in the Security Agreement to reflect the definition as specified in Section 1(b) of the Second Supplement, which provides: "'Collateral First Mortgage Bond' shall mean (i) with respect to CL&P, certain $72,900,000 First and Refunding Mortgage Bond, 1998 Series A, issued by CL&P as of May 1, 1998 pursuant to the CL&P Indenture to the Collateral Agent for the benefit of the Lenders, in substantially the form of Exhibit 'A' attached to the First Supplement, that certain $64,800,000 First and Refunding Mortgage Bond, 1999 Series A, issued by CL&P on the date hereof pursuant to the CL&P Indenture to the Collateral Agent for the benefit of the Lenders, in substantially the form of Exhibit 'A' attached hereto, and such other collateral mortgage bonds as may be issued by CL&P from time to time pursuant to the CL&P Indenture to the Collateral Agent for the benefit of the Lenders, as the same may be amended, supplemented or otherwise modified from time to time; and (ii) with respect to WMECO, that certain $17,300,000 First Mortgage Bond, 1998 Series A, issued by WMECO as of May 1, 1998 pursuant to the WMECO Indenture to the Collateral Agent for the benefit of the Lenders in substantially the form of Exhibit 'B' attached to the First Supplement, that certain $15,400,000 First Mortgage Bond, 1999 Series A, issued by WMECO on the date hereof pursuant to the WMECO Indenture to the Collateral Agent for the benefit of the Lenders, in substantially the form of Exhibit 'B' attached hereto, and such other collateral mortgage bonds as may be issued by WMECO from time to time pursuant to the WMECO Indenture to the Collateral Agent for the benefit of the Lenders, as the same may be amended, supplemented or otherwise modified from time to time." 15. Except as expressly amended, all of the representations, warranties, terms, covenants and conditions contained in both the existing Lease and the existing Security Agreement shall remain unaltered and shall continue to be in full force and effect in accordance with their respective terms, as previously approved by the Department. 16. Furthermore, except as otherwise set forth in Section 24(c)(v) of the Lease, the proposed Modification shall be applicable only to the partial termination of the Lease in connection with the permanent cessation of operations at Unit 1, and in no event shall be applicable to any other Event of Termination. 17. The Companies believe that the issuance of the 1999 Collateral Bonds, is a more favorable approach than effecting the release of the Unit 1 Nuclear Fuel upon a payment by the Companies to the Lessor of the SLV, because a cash payment of this magnitude would adversely affect the Companies' liquidity position -- an integral part of their financial strategy as the restart of Unit 3 begins to improve their financial condition. Were the Companies required to pay the SLV of the Unit 1 Nuclear Fuel, they would have no immediate way to utilize the cash held by the Trust in light of both the non- call provisions of the outstanding $180 million Series G Intermediate Term Secured Notes due 2003 (the "Series G Notes") and the projected near-term nuclear fuel requirements for the Millstone units. 18. The Trustee has obtained the required consent from the holders of at least 66 2/3% in principal amount of the Series G Notes (the "Noteholders") for the proposed Modification. E. ISSUANCE OF NEW SERIES OF COLLATERAL BONDS 19. The Petitioner is also requesting approval to issue to the Collateral Agent a new series of first mortgage bonds in an aggregate principal amount of $15.4 million. WMECO's proposed new bond series, the 1999 WMECO Collateral Bonds, will be substantially similar to the outstanding 1998 WMECO Collateral Bonds, previously approved by the Department in its order dated April 29, 1998 in D.P.U 98-29. 20. The Petitioner plans to utilize some of its previously issued first mortgage bonds which have been retired by WMECO and are available for reissue as the basis for the issuance of the 1999 WMECO Collateral Bonds. The interest rate on the 1999 WMECO Collateral Bonds, which is based upon the rate of such retired first mortgage bonds, is expected to be a maximum of 6.25% per annum. The series of collateral bonds to be issued will be designated the "First Mortgage Bonds, 1999 Series A." The 1999 WMECO Collateral Bonds will be issued under and secured by the First Mortgage Indenture and Deed of Trust dated August 1, 1954, between WMECO and State Street Bank and Trust Company, as Trustee, as supplemented and amended by indentures supplemental thereto, and as to be further supplemented by a supplemental indenture setting out the terms of the 1999 WMECO Collateral Bonds (the "Indenture"). All outstanding bonds are secured equally and ratably by a direct first mortgage lien on substantially all of the properties and franchises owned by WMECO. The 1999 WMECO Collateral Bonds will rank pari passu with all other first mortgage bonds of WMECO and be entitled to all of the benefits of the Indenture. The 1999 WMECO Collateral Bonds will have a maturity date not later than June 1, 2000. 21. The 1999 WMECO Collateral Bonds are being issued to evidence and secure WMECO's obligations pursuant to the Lease, it being understood that the actual indebtedness evidenced by these bonds as of any time shall be limited to approximately 19% of the amount of outstanding debt less the aggregate outstanding principal amount of the 1998 WMECO Collateral Bonds, if any. 22. The structure of the arrangements existing among the Trust, the Collateral Agent and the Companies allows for a revolving credit facility to be established and a corresponding credit agreement to be entered into between the Companies and the Trustee. The most recent credit facility expired on July 31, 1998. To the extent that a credit agreement exists on some future date, all outstanding debt under such agreement, including the 1999 WMECO Collateral Bonds, will be secured equally and ratably, and will, under the Security Agreement and the Series G Intermediate Term Secured Note Agreement (the "Note Agreement"), rank pari passu with all the Trust's then outstanding obligations. Interest will accrue on the 1999 WMECO Collateral Bonds if, and to the extent that, WMECO fails to meet its obligations under any credit agreement or under the Note Agreement. 23. There will be no proceeds from the issuance of the 1999 WMECO Collateral Bonds. F. PROPOSED EXTENSION OF MATURITY DATE OF THE 1998 WMECO COLLATERAL BONDS 24. By Petition dated December 5, 1997 in D.P.U. 97-108, WMECO sought the Department's approval for proposed changes to the Trust's financing arrangements in connection with the extension of the then-existing credit facility, which was scheduled to expire on February 19, 1998. In order to induce the participating banks to extend the credit facility through July 31, 1998, the Companies were required to provide the banks with additional collateral in the form of first mortgage bonds by May 1, 1998. Specifically, the Companies were required to issue an aggregate principal amount of $50 million in first mortgage bonds to the banks, representing 50 percent of the banks' commitment under the credit facility, as collateral for the Companies' obligations under the Lease. Further, the holders of the Trust's then outstanding $80 million Series F Intermediate Term Secured Notes (the "Series F Notes") were contractually entitled to equal treatment with the banks. In order to satisfy this requirement, the Companies also provided an additional approximate $40 million aggregate principal amount of first mortgage bonds as collateral, representing 50 percent of the outstanding principal amount under the Series F Notes. WMECO issued approximately 19% of the approximate $90 million aggregate principal amount of such first mortgage bonds, or $17.3 million. CL&P issued the remaining approximate 81%, or $72.9 million (the "1998 CL&P Collateral Bonds"). 25. The 1998 WMECO Collateral Bonds have an interest rate of 6.89% per annum and are secured equally and ratably by a direct first mortgage lien on substantially all of the properties and franchises owned by WMECO. The 1998 WMECO Collateral Bonds have a maturity date of June 1, 1999, and interest will accrue on these collateral bonds only if, and to the extent, WMECO fails to meet its obligations under the Note Agreement or under any credit agreement that may exist in the future. 26. On June 2, 1998, the Department approved the issuance of the Series G Notes to replace the Series F Notes, which matured on June 5, 1998. The Series G Notes were issued on June 5, 1998 to allow the Companies to continue to finance their respective interests in the nuclear fuel for the Millstone units and to repay the (i) Series F Notes upon maturity and (ii) approximately $90 million outstanding on the existing bank credit facility. The Series G Notes rank pari passu with all obligations under any bank facility relating to nuclear fuel financing arrangements with respect to both payment priority and collateral. 27. The Petitioner is now seeking authority to extend the term of the 1998 WMECO Collateral Bonds beyond their June 1, 1999 maturity date due to two provisions of the Note Agreement: a) Section 7.28 of the Note Agreement states that until the 1998 CL&P Collateral Bonds are rated "investment grade" by either Moody's Investor Service, Inc. or Standard & Poor's Corporation, the Trustee shall use its best efforts and shall cause the Companies to use their best efforts, subject to the required regulatory approval, to have the maturity date of the 1998 WMECO Collateral Bonds and the 1998 CL&P Collateral Bonds extended or have the bonds themselves replaced, so that such bonds remain outstanding with the same effect as on the date of issuance; and b) Section 5.1.3 of the Note Agreement mandates that, if the term of the 1998 WMECO Collateral Bonds and the 1998 CL&P Collateral Bonds is required to be extended or the bonds are required to be replaced in accordance with Section 7.28 of the Note Agreement, the Trustee shall give notice to the Noteholders no later than sixty (60) days prior to the stated maturity date of the collateral bonds, confirming that everything necessary for such extension or replacement has been or will be satisfied by the date such extension or replacement is required. The failure to provide this notice, or the inability to extend the term of maturity, may result in the Noteholders exercising their right to have the Trustee repurchase their Series G Notes in full. 28. To date, the 1998 CL&P Collateral Bonds have not reached 'investment grade,' and thus WMECO respectfully seeks Department approval for a one year extension of the maturity date of the 1998 WMECO Collateral Bonds, from June 1, 1999 to June 1, 2000. G. NET PLANT TEST 29. The Petitioner believes that the net plant test does not apply because the 1999 WMECO Collateral Bonds are contingent obligations as to which the Petitioner will have no payment requirement unless the underlying debt to which they relate is not paid. Thus, the $15.4 million issuance of the 1999 WMECO Collateral Bonds will cause no change in the outstanding stock and long-term debt of WMECO. However, even if the net plant test were to apply to the issuance of the $15.4 million aggregate principal amount of collateral bonds referred to herein, the Petitioner would meet the net plant test as of December 31, 1998 because its net utility plant (utility plant less accumulated depreciation), which includes nuclear fuel and fossil inventories, is equal to or in excess of its total capitalization. Based on the Petitioner's December 31, 1998 financial statements, WMECO had a net utility plant of approximately $723.7 million. Including the proposed issuance of $15.4 million of collateral bonds would change WMECO's total capitalization to $622.5 million, which is less than WMECO's net utility plant. (see Exhibit 10). 30. WMECO will pay the following fees and expenses in connection with the proposed Modifications to the Lease and the issuance and extension of the term of its collateral mortgage bonds: (i) an accommodation fee of $15,200 as consideration for the consent of the Noteholders to effect the proposed Modification of the Lease and the amendment to the Security Agreement; (ii) legal fees of approximately $14,250; (iii) Northeast Utilities Service Company expenses of approximately $9,500; (iv) bond issuance expenses of $3,000; (v) distribution expenses of $3,800; (vi) trustees fees of $950; and (vii) miscellaneous expenses of $950 (see Exhibit 11). H. OTHER APPROVALS 31. The Petitioner is subject to the jurisdiction of the Securities and Exchange Commission ("SEC") under the Public Utility Holding Company Act of 1935, as amended ("1935 Act"). WMECO is filing a Post-Effective Amendment to its Application /Declaration on Form U-1 with the SEC for approval of the Modification to the Lease and the amendment to the Security Agreement. However, so long as the Petitioner complies with Rule 52 under the 1935 Act, which includes a requirement that the Department approve (i) the issuance of the 1999 WMECO Collateral Bonds and (ii) the extension of the term of the 1998 WMECO Collateral Bonds, no SEC approval relating to the 1998 WMECO Collateral Bonds or the 1999 WMECO Collateral Bonds is required under the 1935 Act. The Department's attention is respectfully directed to the fact that the practice of the SEC under the 1935 Act is to not issue its order until the SEC has received a certified copy of the decision of the Department approving the Modification of the Lease. 32. A copy of WMECO's annual report to the SEC on Form 10-K for the twelve months ended December 31, 1998 is filed as Exhibit 8. As the 1999 WMECO Collateral Bonds are not being sold publicly or privately, but are being issued solely as security for repayment of borrowings, no registration statement or private placement memorandum will be distributed in connection with the issuance of such bonds. 33. The Petitioner has also requested that the State of Connecticut Department of Public Utility Control reopen its Docket No. 91-06-04, in order to approve the proposed modifications to the nuclear fuel financing arrangements outlined herein. I. TESTIMONY, EXHIBITS AND FINANCIAL STATEMENTS 34. The Petitioner is filing, in support of this Petition, the exhibits, including the prepared testimony of Randy A. Shoop, Assistant Treasurer- Finance of WMECO, listed in Appendix I hereto. WHEREFORE, pursuant to Section 14 of Chapter 164 of the General Laws of Massachusetts, the Petitioner respectfully requests the Department to determine: A. That the proposed Modification to the Lease, the amendment to the Security Agreement, the issuance of the 1999 WMECO Collateral Bonds and the extension of maturity date of the 1998 WMECO Collateral Bonds are reasonably necessary to enable the Petitioner to further secure, and remain in compliance with, its obligations. The Department's attention is respectfully directed to the fact that the Trustee must give notice to Noteholders no later than April 1, 1999, confirming that everything necessary for an extension of the maturity date of the 1998 WMECO Collateral Bonds has been or will be satisfied by June 1, 1999. The Companies have directed the Trustee to give such notice and are therefore committed to extend the maturity date of the 1998 WMECO Collateral Bonds as of June 1, 1999. The inability to extend the term of maturity may result in the Noteholders exercising their right to have the Trustee repurchase their Notes in full. Under these conditions, time is of the essence and the WMECO respectfully requests that the Department grant the requested approvals at the earliest date it is able to do so, not later than May 3, 1999; and B. That the Department grant such other and further orders, approvals and consents as it shall deem proper. Dated this 30th day of March , 1999. Respectfully submitted, WESTERN MASSACHUSETTS ELECTRIC COMPANY By/s/ Stephen Klionsky, Esq. Senior Counsel Northeast Utilities Service Company Its Attorney APPENDIX I The following testimony and exhibits are being filed as part of the Petition of Western Massachusetts Electric Company ("WMECO") for the Department of Telecommunications and Energy's approval of the modifications to the nuclear fuel financing arrangements. 1. Testimony of Mr. Randy A. Shoop, Assistant Treasurer-Finance of WMECO. 2. Form of 1999 WMECO Collateral Bonds. 3. Draft of Supplemental Mortgage Indenture. 4. Proposed Modification and Amendment of Nuclear Fuel Lease. 5. Form of Second Supplement and Amendment to the Security Agreement. 6. Form of Resolutions of Board of Directors of Western Massachusetts Electric Company approving the proposed modification of its financing arrangements relating to the Niantic Bay Fuel Trust. 7. Financial Statements. a. Balance Sheet of Western Massachusetts Electric Company, per books and pro forma, as of December 31, 1998. b. Statement of Income and Statement of Retained Earnings of Western Massachusetts Electric Company, per books and pro forma, 12 months ended as of December 31, 1998. 8. The Annual Report on Form 10-K for 1998 for Northeast Utilities, Western Massachusetts Electric Company, The Connecticut Light and Power Company, Public Service Company of New Hampshire, and North Atlantic Energy Corporation. 9. Copy of Letter to the Connecticut Department of Public Utility Control, requesting the reopening of its Docket No. 91-06-04 and seeking approval of certain modifications to the nuclear fuel financing arrangements. 10. Calculation of Net Plant Test 11. Schedule of Fees and Expenses EX-99.3 6 WAIVER APP TO DPUC EXHIBIT D.7 March 12, 1999 Ms. Louise Rickard Acting Executive Secretary Department of Public Utility Control 10 Franklin Square New Britain, CT 06051 Re: Docket No. 91-06-04: Application of Western Massachusetts Electric Company for Waiver of Approval of Certain Modifications to Nuclear Fuel Financing Arrangements--Request for Reopening Dear Ms. Rickard: Western Massachusetts Electric Company ("WMECO"), a foreign electric company within the meaning of Section 16-246a of the Connecticut General Statutes ("Conn. Gen. Stat."), hereby requests that the Department of Public Utility Control (the "Department") reopen the above-referenced docket for the limited purpose of granting a waiver of approval of certain proposed modifications to the terms of its nuclear fuel financing arrangements. Specifically, WMECO is seeking, pursuant to Conn. Gen. Stat. Section 16- 246c(c), the Department's waiver of the requirements of Conn. Gen. Stat. Section 16-43 with respect to: (i) the modification of and amendment to the Nuclear Fuel Lease Agreement (the "Lease"), which modification will alter the partial termination provision of the Lease to effect the release of nuclear fuel used or intended to be used at Millstone Unit 1 (the "Unit 1 Nuclear Fuel") upon the issuance by WMECO and The Connecticut Light and Power Company (collectively, the "Companies") of $80 million aggregate principal amount of collateral first mortgage bonds, rather than effecting the release of the Unit 1 Nuclear Fuel upon a payment by the Companies of an amount equal to the stipulated loss value of such fuel, currently approximately $80 million; (ii) the amendment of the definition of "Collateral First Mortgage Bond" in the Security Agreement and Assignment of Contracts (the "Security Agreement"), dated as of January 4, 1982, as amended and restated by the Amendment to and Restatement of Security Agreement and Assignment of Contracts dated February 11, 1992 and as further supplemented by the First Supplement and Amendment dated as of May 1, 1998 between Bankers Trust Company and The First National Bank of Chicago, as Collateral Agent to reflect a new definition as will be specified in the Second Supplement and Amendment to the Security Agreement. The new definition will include as collateral the proposed issuance of a new series of collateral bonds (the "1999 WMECO Collateral Bonds") and any such other collateral mortgage bonds as may be issued by WMECO from time to time; (iii) the issuance by WMECO of up to $15.2 million in aggregate principal amount of the 1999 WMECO Collateral Bonds; and (iv) an extension of the June 1, 1999 maturity date of collateral bonds previously issued by WMECO in the aggregate principal amount of $17.3 million (the "1998 WMECO Collateral Bonds"). Both bond series are or will be issued as collateral security under certain financing arrangements of the Niantic Bay Fuel Trust (the "Trust"), through which WMECO finances its share of the nuclear fuel required for the Millstone nuclear generating units. Although WMECO believes that the proposed modifications to the nuclear fuel financing arrangements, as described above, may require Department approval under Conn. Gen. Stat. Section 16-43, Conn. Gen. Stat. Section 16-246c(c) provides that the Department may waive the requirements of Conn. Gen. Stat. Section 16-43 upon a determination that the authority over such issuance has been exercised by the Commonwealth of Massachusetts, the domicile of WMECO. In accordance with the requirements of Massachusetts law, WMECO is applying for the approval of the Massachusetts Department of Telecommunications and Energy (the "Massachusetts DTE") to modify the Lease, to amend the Security Agreement, to issue the 1999 WMECO Collateral Bonds and to extend the term of the 1998 WMECO Collateral Bonds. A copy of the Massachusetts DTE order relating to these applications will be forwarded to the Department as soon as it is received. This is the same procedure as was followed in connection with the issuance by WMECO of the 1998 WMECO Collateral Bonds earlier in this docket. The following information is supplied as part of this application: 1. The exact legal name of the applicant and its principal place of business is: Western Massachusetts Electric Company 174 Brush Hill Avenue West Springfield, MA 01090-0010 WMECO is a corporation organized and existing under the laws of the Commonwealth of Massachusetts. WMECO is a foreign electric company within the meaning of Connecticut General Statutes Section 16-246c. 2. The name, title, address and telephone number of the attorneys and other persons to whom correspondence or communication in regard to this application are to be addressed: A. Jane P. Seidl, Esq. Senior Counsel Northeast Utilities Service Company P.O. Box 270 Hartford, CT 06141-0270 Telephone: (860) 665-5051 B. Randy A. Shoop Assistant Treasurer - Finance Northeast Utilities Service Company P.O. Box 270 Hartford, CT 06141-0270 Telephone: (860) 665-3258 C. Kenneth M. Burke Senior Regulatory Planning Analyst Northeast Utilities Service Company P.O. Box 270 Hartford, CT 06141-0270 Telephone: (860) 665-5558 3. The Company believes that its request for waiver of approval from the Department as discussed above is reasonable, consistent with the way that the Department has acted on past applications by WMECO, and in the public interest in that (i) the waiver requested is subject to the condition that WMECO shall have obtained all necessary approvals from the Massachusetts DTE and as such the interests of the Department are protected; and (ii) approving the waiver will help alleviate the administrative burdens imposed on the Department. WMECO therefore respectfully requests that the Department reopen the above- referenced docket and issue an order not later than May 1, 1999, pursuant to Conn. Gen. Stat. Section 16-246c(c), waiving the requirements of Connecticut General Statutes Section 16-43 with respect to the proposed modifications to the nuclear fuel financing arrangements, as described herein, subject to compliance by WMECO with any orders issued by the Massachusetts DTE. Enclosed herewith are one (1) original and ten (10) copies of this application. Very truly yours, WESTERN MASSACHUSETTS ELECTRIC COMPANY By: /s/ Randy A. Shoop Assistant Treasurer-Finance cc: Service List EX-99.4 7 FEE SCHEDULE EXHIBIT G.4 SCHEDULE OF FEES, COMMISIONS AND EXPENSES Legal 75,000 Accommodation Fee* 80,000 Northeast Utilities Service Company Expenses 50,000 Distribution Expenses 10,000 Trustees Fees 5,000 Miscellaneous Fees 5,000 Filing Fees 2,910 Total Fees, Commissions and Expenses (est.) 227,910 *0.10% of approximately $80 million stipulated loss value of Unit 1 Nuclear Fuel to be offered as an accommodation fee to Series G Noteholders for consideration of the Modifications of the Nuclear Fuel Financing Arrangements EX-99.5 8 FORM OF NOTICE Exhibit H.2 PROPOSED FORM OF NOTICE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 Release No. 35- / , 1999 Filings Under the Public Utility Holding Company Act of 1935 ("Act") Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated thereunder. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) thereto is/are available for public inspection through the Commission's Office of Public Reference. Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by , 1999 to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in case of an attorney at law, by certificate) should be filed with the request. Any request for hearing shall identify specifically the issues of fact or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After said date, the application(s) and/or declaration(s), as filed, or as amended, may be granted and/or permitted to become effective. Northeast Utilities, et al. (70-7875) The Connecticut Light & Power Company ("CL&P"), 107 Selden Street, Berlin, Connecticut, 06037 and Western Massachusetts Electric Company ("WMECO"), 174 Brush Hill Road, West Springfield, Massachusetts, 01089 (collectively, the "Applicants"), each an electric utility subsidiary of Northeast Utilities, a registered holding company, have filed an amendment to their application/declaration in File No. 70-7875 (the "Application") with this Commission pursuant to Sections 6(a), 7 and 12(d) of the Public Utility Holding Company Act of 1935 (the "Act") and Rule 52 promulgated thereunder, in order to seek the Commission's approval for certain proposed modifications to existing nuclear fuel financing arrangements (the "Lease"). The Applicants have joint ownership interests in three nuclear electric generating units located at Millstone Point in Waterford, Connecticut and are responsible for the fuel costs for these units. In order to provide a single comprehensive and efficient framework for the financing of nuclear fuel for the units, the Applicants entered into arrangements in July of 1982 with Bankers Trust Company, as trustee of the Niantic Bay Fuel Trust (the "Trust") which was specially created for the purpose of such financing. Upon making a payment with respect to nuclear fuel, the Trust acquires title to such nuclear fuel and the related nuclear fuel contract rights. Pursuant to the Lease, the Trust then leases the nuclear fuel to the Applicants and utilizes the Applicants' lease payments to service the credit financing. By its orders dated December 30, 1981 (HCA Release No. 35-22342) and May 19, 1982 (HCA Release No. 35-22501), in File No. 70-6639, and January 23, 1992 in this File (HCA Release No. 35-25458), the Commission approved (i) the formation of the Trust for the purpose of financing the purchase of nuclear fuel under a trust agreement, (ii) the assignment of certain nuclear fuel and related contracts and (iii) financing for the acquisition of nuclear fuel. As a result of the Applicants' decision to permanently cease operations at one of the nuclear generating units ("Unit 1"), all nuclear fuel has been permanently removed from Unit 1's reactor vessel. Consequently, the Applicants are no longer authorized to operate Unit 1 or retain nuclear fuel in its reactor. The Applicants have proposed a modification of and amendment to the Lease, and an amendment to the related security agreement, which will effect partial termination of the Lease with respect to Unit 1 and a release of the Unit 1 nuclear fuel upon the issuance by the Applicants to the Trustee of an aggregate principal amount of $80.2 million of collateral first mortgage bonds, rather than effecting a release of the Unit 1 nuclear fuel upon a payment by the Applicants of an amount equal to the stipulated loss value of such fuel, as is currently required by the Lease. The Applicants, through the amendment to their Application, are seeking Commission approval for the amendment to the Lease. For the Commission, by the Division of Investment Management, pursuant to delegated authority. EX-27.1 9 EXHIBIT I.A TO POST-EFF. AMEND. TO FORM U-1 -CL&P & SUBS WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 1000 DEC-31-1998 DEC-31-1998 DEC-31-1998 DEC-31-1998 YEAR YEAR PER-BOOK PRO-FORMA 3,587,203 3,587,276 603,618 603,618 411,168 410,986 1,448,209 1,448,209 0 0 6,050,198 6,050,089 122,229 122,229 664,156 664,156 210,108 210,044 996,871 996,807 99,539 99,539 116,200 116,200 1,793,952 1,793,952 10,000 10,000 0 0 0 0 214,005 214,005 19,750 19,750 68,444 68,444 94,440 94,440 1,640,504 1,640,459 6,050,198 6,050,089 2,386,864 2,386,864 (170,347) (170,347) 142,093 142,157 2,358,610 2,358,674 28,254 28,190 (85,246) (85,246) (56,992) (57,056) 138,733 138,733 (195,725) (195,789) 14,139 14,139 (209,864) (209,864) 0 0 133,192 133,192 388,662 388,662 0.00 0 0.00 0
EX-27.2 10 EXHIBIT I.B TO POST-EFF. AMEND. TO FORM U-1 - WMECO & SUBS WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 1000 DEC-31-1998 DEC-31-1998 DEC-31-1998 DEC-31-1998 YEAR YEAR PER-BOOK PRO-FORMA 738,645 738,663 148,360 148,360 72,249 72,203 328,428 328,428 0 0 1,287,682 1,287,654 26,812 26,812 151,431 151,431 46,003 45,986 224,396 224,379 18,000 18,000 20,000 20,000 349,314 349,314 50,900 50,900 0 0 0 0 0 0 41,500 41,500 12,129 12,129 21,964 21,964 549,479 549,468 1,287,682 1,287,654 393,322 393,322 2,109 2,109 371,359 371,376 373,468 373,485 19,854 19,837 1,992 1,992 21,846 21,829 31,425 31,425 (9,579) (9,596) 3,026 3,026 (12,605) (12,605) 0 0 28,027 28,027 0 0 0 0 0 0
EX-27.3 11 EXHIBIT I.C TO POST-EFF. AMEND. TO FORM U-1 -NU & SUBS
OPUR1 1000 DEC-31-1998 DEC-31-1998 DEC-31-1998 DEC-31-1998 YEAR YEAR PER-BOOK PRO-FORMA 6,170,881 6,170,972 859,438 859,438 932,907 932,679 2,424,155 2,424,155 0 0 10,387,381 10,387,244 685,156 685,156 940,661 940,661 560,769 560,680 2,047,372 2,047,283 167,539 167,539 136,200 136,200 3,282,138 3,282,138 30,000 30,000 0 0 0 0 350,903 350,903 46,250 46,250 88,423 88,423 120,856 120,856 4,117,700 4,117,652 10,387,381 10,387,244 3,767,714 3,767,714 251,932 251,932 3,291,055 3,291,144 3,542,987 3,543,076 224,727 224,638 (75,951) (75,951) 148,776 148,687 269,089 269,089 (120,313) (120,402) 26,440 26,440 (146,753) (146,753) 0 0 133,192 133,192 388,662 388,662 0 0 0 0
EX-99.6 12 FINANCIAL STATEMENTS FINANCIAL STATEMENTS THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES 1.1a BALANCE SHEET AS OF DECEMBER 31, 1998
PRO FORMA GIVING EFFECT (THOUSANDS OF DOLLARS) PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION ASSETS UTILITY PLANT, AT COST: ELECTRIC 6,173,871 6,173,871 LESS: ACC. DEPREC. 2,758,012 2,758,012 ------------ ------------ ------------ 3,415,859 0 3,415,859 CONSTRUCTION WORK IN PROGRESS 83,477 83,477 NUCLEAR FUEL, NET 87,867 73 (a) 87,940 ------------ ------------ ------------ TOTAL NET UTILITY PLANT 3,587,203 73 3,587,276 ------------ ------------ ------------ OTHER PROP. AND INVEST.: NUC. DECOM. TRST, AT MARKET. 452,755 452,755 INV. REG. NUC. GEN. COS (EQTY) 56,999 56,999 OTHER, AT COST 93,864 93,864 ------------ ------------ ------------ TOTAL OTHER PROP. & INVEST 603,618 603,618 ------------ ------------ ------------ CURRENT ASSETS: CASH & CASH EQUIVALENTS 434 (182)(a) 252 NOTES REC., AFFIL. COMPANIES 6,600 6,600 SECURITIZABLE ASSETS 160,253 160,253 RECEIVABLES, NET 22,186 22,186 A/R AFFIL. COMPANIES 1,721 1,721 TAXES RECEIVABLE 26,478 26,478 ACCRUED UTILITY REVS FUEL, MATS & SUPP (AVG COST) 71,982 71,982 RECOV. ENRG. COST, NET -- CURR 0 0 PREPAYMENTS AND OTHER 121,514 121,514 ------------ ------------ ------------ TOTAL CURRENT ASSETS 411,168 (182) 410,986 ------------ ------------ ------------ DEFERRED CHARGES: REGULATORY ASSETS 1,415,838 1,415,838 UNAMORTIZED DEBT EXPENSE 19,603 19,603 OTHER 12,768 12,768 ------------ ------------ ------------ TOTAL DEF. CHARGES 1,448,209 0 1,448,209 ------------ ------------ ------------ TOTAL ASSETS 6,050,198 (109) 6,050,089 ========================= ============= CAPITALIZATION: COMMON SHARES 122,229 122,229 CAPITAL SURPLUS, PAID IN 664,156 664,156 RETAINED EARNINGS 210,108 (64) 210,044 ACCUM OTHER COMP INCOME 378 378 ------------ ------------ ------------ TOTAL COMMON EQUITY 996,871 (64) 996,807 PREF. STK NOT SUBJ MAND REDEM 116,200 116,200 PREF. STOCK SUBJ TO MAND REDEM 99,539 99,539 LONG-TERM DEBT 1,793,952 1,793,952 ------------ ------------ ------------ TOTAL CAPITALIZATION 3,006,562 (64) 3,006,498 ------------ ------------ ------------ MINOR. INT. IN CONS. SUBS 100,000 0 100,000 ------------ ------------ ------------ OBLIG. UNDER CAP. LEASES 68,444 0 68,444 ------------ ------------ ------------ CURRENT LIABILITIES: NOTES PAYABLE TO BANK 10,000 10,000 NOTES PAYABLE TO AFFIL. CO. 0 L-T DEBT AND PREF. STOCK, CUR 233,755 233,755 OBLIG. UNDER CAP. LEASES, CUR 94,440 94,440 ACCOUNTS PAYABLE 121,040 121,040 ACCOUNTS PAYABLE TO AFFIL. COS. 32,758 32,758 ACCRUED TAXES PAYABLE 19,396 (45)(b) 19,351 ACCRUED INTEREST 31,409 31,409 OTHER 34,872 34,872 ------------ ------------ ------------ TOT. CURRENT LIABILITIES 577,670 (45) 577,625 ------------ ------------ ------------ DEFERRED CREDITS: ACCUM. DEF. INCOME TAXES 1,194,722 1,194,722 ACC. DEF.INVEST.TAX CRDT. 114,457 114,457 DECOMMISIONING--UNIT 1 560,500 DEF. CONTRACT. OBLIG. 277,826 277,826 OTHER 150,017 150,017 ------------ ------------ ------------ TOTAL DEFERRED CREDITS 2,297,522 0 2,297,522 ------------ ------------ ------------ TOTAL CAPITALIZATION AND LIAB 6,050,198 (109) 6,050,089 ========================= =============
* See attached Pro Forma Adjustments FINANCIAL STATEMENTS THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES PRO FORMA ADJUSTMENTS TO FINANCIAL STATEMENTS (THOUSANDS OF DOLLARS) Debit Credit a)Nuclear Fuel, net 73 Operating Expenses: Fuel Costs 109 Cash $182 b)Accrued Income Taxes Payable 45 Federal and State Income Tax Expense 45 a)To record CL&P's pro rata expenses (approx. 81%) associated with the Modifications of the Nuclear Fuel Financing Arrangements. Approximately 40.0% of these costs will be capitalized. b)To record the reduction in income taxes associated with the Modifications ($109 X 41.11% = $45) FINANCIAL STATEMENTS THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES 1.2a INCOME STATEMENT AND SURPLUS 12 MONTHS ENDED DECEMBER 31, 1998
INCOME STATEMENT PRO FORMA (THOUSANDS OF DOLLARS) GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION OPERATING REVENUE 2,386,864 0 2,386,864 ---------- ---------- ---------- OPERATING EXPENSES: OPERATION-- FUEL, PURCH.& NET INTER PWR 887,224 109 (a) 887,333 OTHER 703,971 703,971 MAINTENANCE 271,317 271,317 DEPRECIATION 216,509 216,509 AMORT OF REG ASSETS, NET 120,884 120,884 FED/ STATE INCOME TAXES (11,642) (45)(b) (11,687) OTHER TAXES 170,347 170,347 ---------- ---------- ---------- TOTAL OPERATING EXPENSES 2,358,610 64 2,358,674 ---------- ---------- ---------- OPERATING LOSS 28,254 (64) 28,190 ---------- ---------- ---------- OTHER INCOME (LOSS): ERNGS OF REGNL NUCL & TRANS COS 6,241 6,241 MILLSTONE 1--UNRECOVERABLE COSTS (143,239) (143,239) OTHER, NET (6,075) (6,075) MIN. INT. IN INCOME OF SUB (9,300) (9,300) INCOME TAXES 67,127 67,127 ---------- ---------- ---------- OTHER INCOME, NET (85,246) 0 (85,246) ---------- ---------- ---------- LOSS BEF. INT. CHARGES (56,992) (64) (57,056) ---------- ---------- ---------- INTEREST CHARGES: INTEREST ON L-T DEBT 133,192 133,192 OTHER INTEREST 5,541 5,541 ---------- ---------- ---------- INTEREST CHARGES, NET 138,733 0 138,733 ---------- ---------- ---------- NET LOSS (195,725) (64) (195,789) =========== =========== =========== RETAINED EARNINGS PRO FORMA (THOUSANDS OF DOLLARS) GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION BAL. AT BEGINNING OF PERIOD 419,972 419,972 NET GAIN (LOSS) (195,725) (64) (195,789) CASH DIVIDENDS ON PREF. STOCK (14,139) (14,139) CASH DIVIDEND ON COMMON STOCK 0 0 ---------- ---------- ---------- BALANCE AT END OF PERIOD 210,108 (64) 210,044 =========== =========== =========== * See attached Pro Forma Adjustments FINANCIAL STATEMENTS THE CONNECTICUT LIGHT AND POWER COMPANY AND SUBSIDIARIES 1.2a INCOME STATEMENT AND SURPLUS 12 MONTHS ENDED DECEMBER 31, 1998 CAPITAL STRUCTURE PRO FORMA (THOUSANDS OF DOLLARS) GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK % ADJUSTMENTS TRANSACTION % LONG TERM DEBT 1,793,952 59.7 1,793,952 59.7 PREFERRED STOCK SUBJECT TO MANATORY REDEMPTION 99,539 3.3 99,539 3.3 PREFERRRED STOCK NOT SUBJ TO MAND REDEMPTION 116,200 3.9 116,200 3.9 COMMON STOCK EQUITY 996,871 33.2 (64) 996,807 33.2 ----------- ------------ ------------ 3,006,562 (64) 3,006,498 =========== ============ ============
FINANCIAL STATEMENTS WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARIES 2.1a BALANCE SHEET AS OF DECEMBER 31, 1998
PRO FORMA GIVING EFFECT (THOUSANDS OF DOLLARS) PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION ASSETS UTILITY PLANT, AT COST: ELECTRIC 1,221,257 1,221,257 LESS: ACC. DEPREC. 517,401 517,401 ------------ ------------ ------------ 703,856 0 703,856 CONSTRUCTION WORK IN PROGRESS 14,858 14,858 NUCLEAR FUEL, NET 19,931 18 (a) 19,949 ------------ ------------ ------------ TOTAL NET UTILITY PLANT 738,645 18 738,663 ------------ ------------ ------------ OTHER PROP. AND INVEST.: NUC. DECOM. TRST, AT MARKET. 125,598 125,598 INV. REG. NUC. GEN. COS (EQTY) 15,440 15,440 OTHER, AT COST 7,322 7,322 ------------ ------------ ------------ TOTAL OTHER PROP. & INVEST 148,360 148,360 ------------ ------------ ------------ CURRENT ASSETS: CASH & CASH EQUIVALENTS 106 (46)(a) 60 SECURITIZABLE ASSETS 21,865 21,865 RECEIVABLES, NET 862 862 A/R AFFIL. COMPANIES 4,188 4,188 TAXES RECEIVABLE 14,255 14,255 FUEL, MAT & SUP (AVG COST) 5,053 5,053 RECOV. ENRG. COST, NET -- CUR 1,924 1,924 PREPAYMENTS AND OTHER 23,996 23,996 ------------ ------------ ------------ TOTAL CURRENT ASSETS 72,249 (46) 72,203 ------------ ------------ ------------ DEFERRED CHARGES: REGULATORY ASSETS 322,435 322,435 UNAMORTIZED DEBT EXPENSE 2,298 2,298 OTHER 3,695 3,695 ------------ ------------ ------------ TOTAL DEF. CHARGES 328,428 0 328,428 ------------ ------------ ------------ TOTAL ASSETS 1,287,682 (28) 1,287,654 ============= ============= ============= CAPITALIZATION: COMMON SHARES 26,812 26,812 CAPITAL SURPLUS, PAID IN 151,431 151,431 RETAINED EARNINGS 46,003 (17) 45,986 ACCUM OTHER COMP INCOME 150 150 ------------ ------------ ------------ TOTAL COMMON EQUITY 224,396 (17) 224,379 PREF NOT SUBJ TO MAND REDEM 20,000 20,000 PREF SUBJECT TO MAND REDEM 18,000 18,000 LONG-TERM DEBT 349,314 349,314 ------------ ------------ ------------ TOTAL CAPITALIZATION 611,710 (17) 611,693 ------------ ------------ ------------ OBLIG. UNDER CAP. LEASES 12,129 0 12,129 ------------ ------------ ------------ CURRENT LIABILITIES: NOTES PAYABLE TO BANK 20,000 20,000 NOTES PAYABLE TO AFFIL. CO. 30,900 30,900 L-T DEBT AND PREF. STOCK, CUR 41,500 41,500 OBLIG. UNDER CAP. LEASES, CUR 21,964 21,964 ACCOUNTS PAYABLE 17,952 17,952 ACCOUNTS PAYABLE TO AFFIL. COS. 12,866 12,866 ACCRUED TAXES PAYABLE 1,264 (11)(b) 1,253 ACCRUED INTEREST 8,030 8,030 OTHER 6,831 6,831 ------------ ------------ ------------ TOT. CURRENT LIABILITIES 161,307 (11) 161,296 ------------ ------------ ------------ DEFERRED CREDITS: ACCUM. DEF. INCOME TAXES 248,985 248,985 ACC. DEF.INVEST.TAX CRDT. 21,895 21,895 DECOMMISIONING--UNIT 1 131,500 DEF. CONTRACT. OBLIG. 74,534 74,534 OTHER 25,622 25,622 ------------ ------------ ------------ TOTAL DEFERRED CREDITS 502,536 0 502,536 ------------ ------------ ------------ TOTAL CAPITALIZATION AND LIAB 1,287,682 (28) 1,287,654 ============= ============= ============= * See attached Pro Forma Adjustments
FINANCIAL STATEMENTS WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARIES PRO FORMA ADJUSTMENTS TO FINANCIAL STATEMENTS (THOUSANDS OF DOLLARS) Debit Credit a)Nuclear Fuel, net 18 Operating Expenses: Fuel Costs 28 Cash 46 b)Accrued Income Taxes Payable 11 Federal and State Income Tax Expense 11 a)To record WMECO's pro rata expenses (approx. 19%) associated with the Modification of the Nuclear Fuel Financing Arrangements. Approximately 40.0% of these costs will be capitalized. b)To record the reduction in income taxes associated with the Modifications ($28 X 39.0775% = $11) FINANCIAL STATEMENTS WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARIES 2.2a INCOME STATEMENT AND SURPLUS 12 MONTHS ENDED DECEMBER 31, 1998
INCOME STATEMENT PRO FORMA (THOUSANDS OF DOLLARS) GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION OPERATING REVENUE 393,322 0 393,322 ---------- ---------- ---------- OPERATING EXPENSES: OPERATION-- FUEL, PURCH. AND NET INTER 113,148 28 (a) 113,176 OTHER 134,916 134,916 MAINTENANCE 56,622 56,622 DEPRECIATION 40,901 40,901 AMORT OF REG ASSETS, NET 6,016 6,016 FED/ STATE INCOME TAXES 2,109 (11)(b) 2,098 OTHER TAXES 19,756 19,756 ---------- ---------- ---------- TOTAL OPERATING EXPENSES 373,468 17 373,485 ---------- ---------- ---------- OPERATING LOSS 19,854 (17) 19,837 ---------- ---------- ---------- OTHER INCOME (LOSS): ERNGS OF REGNL NUCL & TRANS COS 1,699 1,699 OTHER, NET (1,905) (1,905) INCOME TAXES 2,198 2,198 ---------- ---------- ---------- OTHER INCOME, NET 1,992 0 1,992 ---------- ---------- ---------- LOSS BEF. INT. CHARGES 21,846 (17) 21,829 ---------- ---------- ---------- INTEREST CHARGES: INTEREST ON L-T DEBT 28,027 28,027 OTHER INTEREST 3,398 3,398 ---------- ---------- ---------- INTEREST CHARGES, NET 31,425 0 31,425 ---------- ---------- ---------- NET LOSS (9,579) (17) (9,596) =========== =========== =========== RETAINED EARNINGS PRO FORMA (THOUSANDS OF DOLLARS) GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION BAL. AT BEGINNING OF PERIOD 58,608 58,608 NET GAIN (LOSS) (9,579) (17) (9,596) CASH DIVIDENDS ON PREF. STOCK (3,026) (3,026) CASH DIVIDEND ON COMMON STOCK 0 0 ---------- ---------- ---------- BALANCE AT END OF PERIOD 46,003 (17) 45,986 =========== =========== =========== * See attached Pro Forma Adjustments FINANCIAL STATEMENTS WESTERN MASSACHUSETTS ELECTRIC COMPANY AND SUBSIDIARIES 2.2a INCOME STATEMENT AND SURPLUS 12 MONTHS ENDED DECEMBER 31, 1998 CAPITAL STRUCTURE PRO FORMA (THOUSANDS OF DOLLARS) GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK % ADJUSTMENTS TRANSACTION % LONG TERM DEBT 349,314 57.1 349,314 57.1 PREFERRED STOCK SUBJECT TO MANATORY REDEMPTION 18,000 2.9 18,000 2.9 PREFERRRED STOCK NOT SUB TO MANDATORY REDEMP 20,000 3.3 20,000 3.3 COMMON STOCK EQUITY 224,396 36.7 (17) 224,379 36.7 ----------- ------------ ------------ 611,710 (17) 611,693 =========== ============ ============
FINANCIAL STATEMENTS NORTHEAST UTILITIES AND SUBSIDIARIES 3.1a BALANCE SHEET AS OF DECEMBER 31, 1998
PRO FORMA GIVING EFFECT (THOUSANDS OF DOLLARS) PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION ASSETS UTILITY PLANT, AT COST: ELECTRIC 9,570,547 9,570,547 OTHER 195,325 195,325 ------------ ------------ ------------ 9,765,872 0 9,765,872 LESS: ACC. DEPREC. 4,224,416 4,224,416 ------------ ------------ ------------ 5,541,456 0 5,541,456 UNAMORTIZED PSNH ACQ COSTS 352,855 352,855 CONSTRUCTION WORK IN PROGRESS 143,159 143,159 NUCLEAR FUEL, NET 133,411 91 (a) 133,502 ------------ ------------ ------------ TOTAL NET UTILITY PLANT 6,170,881 91 6,170,972 ------------ ------------ ------------ OTHER PROP. AND INVEST.: NUC. DECOM. TRST, AT MARKET. 619,143 619,143 INV. REG. NUC. GEN. COS (EQTY) 85,791 85,791 INV. REG. TRANS COS (EQTY) 17,692 17,692 OTHER, AT COST 136,812 136,812 ------------ ------------ ------------ TOTAL OTHER PROP. & INVEST 859,438 859,438 ------------ ------------ ------------ CURRENT ASSETS: CASH & CASH EQUIVALENTS 136,155 (228)(a) 135,927 NOTES REC., AFFIL. COMPANIES 0 0 SECURITIZABLE ASSETS 182,118 182,118 RECEIVABLES, NET 237,207 237,207 ACCRUED UTILITY REVS 42,145 FUEL, MAT & SUPP (AVG COST) 202,661 202,661 RECOV. ENRG. COST, NET -- CUR 67,181 0 PREPAYMENTS AND OTHER 65,440 65,440 ------------ ------------ ------------ TOTAL CURRENT ASSETS 932,907 (228) 932,679 ------------ ------------ ------------ DEFERRED CHARGES: REGULATORY ASSETS 2,328,949 2,328,949 UNAMORTIZED DEBT EXPENSE 40,416 40,416 OTHER 54,790 54,790 ------------ ------------ ------------ TOTAL DEF. CHARGES 2,424,155 0 2,424,155 ------------ ------------ ------------ TOTAL ASSETS 10,387,381 (137) 10,387,244 ========================== ============= CAPITALIZATION: COMMON SHARES 685,156 685,156 CAPITAL SURPLUS, PAID IN 940,661 940,661 DEFERRED COMPENSATION--(ESOP) (140,619) (140,619) RETAINED EARNINGS 560,769 (89) 560,680 ACCUM OTHER COMP INCOME 1,405 1,405 ------------ ------------ ------------ TOTAL COMMON EQUITY 2,047,372 (89) 2,047,283 PREF. STK NOT SUBJ TO MAND REDEM 136,200 136,200 PREF. STK SUBJ TO MAND REDEM 167,539 167,539 LONG-TERM DEBT 3,282,138 3,282,138 ------------ ------------ ------------ TOTAL CAPITALIZATION 5,633,249 (89) 5,633,160 ------------ ------------ ------------ MINOR. INT. IN CONS. SUBS 100,000 0 100,000 ------------ ------------ ------------ OBLIG. UNDER CAP. LEASES 88,423 0 88,423 ------------ ------------ ------------ CURRENT LIABILITIES: NOTES PAYABLE TO BANK 30,000 30,000 L-T DEBT AND PREF. STOCK, CUR 397,153 397,153 OBLIG. UNDER CAP. LEASES, CUR 120,856 120,856 ACCOUNTS PAYABLE 338,612 338,612 ACCRUED TAXES PAYABLE 50,755 (48)(b) 50,707 ACCRUED INTEREST 51,044 51,044 ACCRUED PENSION BENEFITS 33,034 33,034 OTHER 106,333 106,333 ------------ ------------ ------------ TOT. CURRENT LIABILITIES 1,127,787 (48) 1,127,739 ------------ ------------ ------------ DEFERRED CREDITS: ACCUM. DEF. INCOME TAXES 1,848,694 1,848,694 ACC. DEF.INVEST.TAX CRDT. 143,369 143,369 DECOMMISIONING--UNIT 1 692,000 DEF. CONTRACT. OBLIG. 418,760 418,760 OTHER 335,099 335,099 ------------ ------------ ------------ TOTAL DEFERRED CREDITS 3,437,922 0 3,437,922 ------------ ------------ ------------ TOTAL CAPITALIZATION AND LIAB 10,387,381 (137) 10,387,244 ========================== ============= * See attached Pro Forma Adjustments
FINANCIAL STATEMENTS NORTHEAST UTILITIES AND SUBSIDIARIES PRO FORMA ADJUSTMENTS TO FINANCIAL STATEMENTS (THOUSANDS OF DOLLARS) Debit Credit a)Nuclear Fuel, net 91 Operating Expenses: Fuel Costs 137 Cash 228 b)Accrued Income Taxes Payable 48 Federal and State Income Tax Expense 48 a)To record expenses associated with the Modification of the Nuclear Fuel Financing Arrangements. Approximately 40.0% of these costs will be capitalized. b)To record the reduction in income taxes associated with the Modifications ($228 X 35.00% = $48) FINANCIAL STATEMENTS NORTHEAST UTILITIES AND SUBSIDIARIES 3.2a INCOME STATEMENT AND SURPLUS 12 MONTHS ENDED DECEMBER 31, 1998
INCOME STATEMENT PRO FORMA (THOUSANDS OF DOLLARS) GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION OPERATING REVENUE 3,767,714 0 3,767,714 ---------- ---------- ---------- OPERATING EXPENSES: OPERATION-- FUEL, PURCH & NET INTER PWR 1,296,480 137 (a) 1,296,617 OTHER 977,139 977,139 MAINTENANCE 399,165 399,165 DEPRECIATION 332,807 332,807 AMORT OF REGUL ASSETS, NET 203,132 203,132 FED/ STATE INCOME TAXES 82,332 (48)(b) 82,284 OTHER TAXES 251,932 251,932 ---------- ---------- ---------- TOTAL OPERATING EXPENSES 3,542,987 89 3,543,076 ---------- ---------- ---------- OPERATING LOSS 224,727 (89) 224,638 ---------- ---------- ---------- OTHER INCOME (LOSS): ERNGS OF REGNL COS 12,420 12,420 DEF NUC PLNTS RETN-OTHER 6,896 6,896 MILLSTONE 1--UNRECOV COSTS (143,239) (143,239) OTHER, NET (19,121) (19,121) MIN. INT. IN INCOME OF SUB (9,300) (9,300) INCOME TAXES 76,393 76,393 ---------- ---------- ---------- OTHER INCOME, NET (75,951) 0 (75,951) ---------- ---------- ---------- LOSS BEF. INT. CHARGES 148,776 (89) 148,687 ---------- ---------- ---------- INTEREST CHARGES: INTEREST ON L-T DEBT 273,824 273,824 OTHER INTEREST 7,808 7,808 DEF NUC PLNTS RET--BORROWED FUNDS (12,543) (12,543) INTEREST CHARGES, NET 269,089 0 269,089 ---------- ---------- ---------- NET LOSS AFTER INTEREST CHARGES (120,313) (89) (120,402) ---------- ---------- ---------- PREFERRED DIVIDENDS OF SUBSIDIARIES 26,440 26,440 ---------- ---------- ---------- NET LOSS (146,753) (89) (146,842) =========== ============= ============== RETAINED EARNINGS PRO FORMA (THOUSANDS OF DOLLARS) GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION BAL. AT BEGINNING OF PERIOD 707,522 707,522 NET GAIN (LOSS) (120,313) (89) (120,402) CASH DIVIDENDS ON PREF. STOCK (26,440) (26,440) CASH DIVIDEND ON COMMON STOCK 0 0 ---------- ---------- ---------- BALANCE AT END OF PERIOD 560,769 (89) 560,680 =========== =========== =========== * See attached Pro Forma Adjustments FINANCIAL STATEMENTS NORTHEAST UTILITIES AND SUBSIDIARIES 3.2a INCOME STATEMENT AND SURPLUS 12 MONTHS ENDED DECEMBER 31, 1998 CAPITAL STRUCTURE PRO FORMA (THOUSANDS OF DOLLARS) GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK % ADJUSTMENTS TRANSACTION % LONG TERM DEBT 3,282,138 58.3 3,282,138 58.3 PREFERRED STOCK SUBJECT TO MANATORY REDEMPTION 167,539 3.0 167,539 3.0 PREFERRRED STOCK NOT SUBJ TO MANDATORY REDEMPTION 136,200 2.4 136,200 2.4 COMMON STOCK EQUITY 2,047,372 36.3 (89) 2,047,283 36.3 ----------- ------------ ------------ 5,633,249 (89) 5,633,160 =========== ============ ============
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