-----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, K/UjCDFNE1eYYgcQYeKSI1Pku2NeqzY9IaulHBZddhuDATt7D6oKYnANtJ0vNAhx iDGfLLJMhqUnpm/1/pR8bw== 0000906602-97-000246.txt : 19971211 0000906602-97-000246.hdr.sgml : 19971211 ACCESSION NUMBER: 0000906602-97-000246 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19971210 SROS: NONE 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: U-1 SEC ACT: SEC FILE NUMBER: 070-09151 FILM NUMBER: 97735772 BUSINESS ADDRESS: STREET 1: SELDEN STREET CITY: BERLIN STATE: CT ZIP: 06037-1616 BUSINESS PHONE: 2036655000 U-1 1 U-1 FILING FOR CONNECTICUT LIGHT & POWER SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM U-1 APPLICATION/DECLARATION WITH RESPECT TO PROPOSED AMENDMENT OF A CREDIT FACILITY FOR NUCLEAR FUEL FINANCING 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 107 Selden Street Berlin, Connecticut 06037 (Name of companies filing this statement and address of principal executive offices) NORTHEAST UTILITIES (Name of top registered holding company) Robert P. Wax, 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: David R. McHale Jeffrey C. Miller, Esq. Assistant Treasurer Northeast Utilities Service Company Northeast Utilities Service Company P.O. Box 270 P.O. Box 270 Hartford, Connecticut 06141-0270 Hartford, Connecticut 06141-0270 Paula Lacey Herman, Esq. Day, Berry & Howard CityPlace I Hartford, Connecticut 06103-3499 ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION 1. The Connecticut Light and Power Company ("CL&P") and Western Massachusetts Electric Company ("WMECO"), (together, the "Applicants"), 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 submit a Declaration/Application to the Commission pursuant to the Act with respect to proposed modifications of a credit facility for nuclear fuel financing previously approved by the Commission by its order dated January 23, 1992 in File No. 70-7875 (HCA Release No. 35-25458). 2. 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 Nos. 1 and 2. CL&P and WMECO have a 52.933% and 12.239% (aggregating 65.172%) ownership interest, respectively, in Millstone Unit No. 3 ("Millstone 3"). Millstone Unit No. 1 ("Millstone 1") has a capacity of approximately 659,500 kw and was placed in operation in 1970. Millstone Unit No. 2 ("Millstone 2") has a capacity of approximately 862,000 kw and was placed in operation in 1975. Millstone 3 has a capacity of approximately 1,146,000 kw and was placed in operation in 1986. 3. In order to provide a single, comprehensive, efficient framework for the financing of nuclear fuel through the burn-up stage of the nuclear fuel cycle for Millstone 1 and Millstone 2, as well as the Applicants' approximately 65.172% ownership interest in the nuclear fuel for Millstone 3, the Applicants entered into arrangements with Bankers Trust Company, not in its individual capacity but solely as trustee (the "Trustee") of the Niantic Bay Fuel Trust (the "Trust") which was specially created for the purpose of such financing pursuant to a Trust Agreement between The Connecticut Bank and Trust Company, as trustor, the Trustee and CL&P, WMECO and The Hartford Electric Light Company (which merged with and into CL&P on June 30, 1982), as beneficiaries, 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 (the "Trust Agreement") 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 (the "Trustor"), and CL&P and WMECO, as beneficiaries. Pursuant to a Nuclear Fuel Lease Agreement (the "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, between CL&P and WMECO, The Hartford Electric Light Company, and the Trustee, the Applicants have assigned to the Trustee all of their right, title, and interest in and to all or part of certain nuclear fuel contracts and nuclear fuel. Under the Lease Agreement, the Trustee, in turn, has agreed to either reimburse the Applicants for payments made to contractors under the assigned nuclear fuel contracts or to make such payments directly to the contractors. 4. Upon making a payment with respect to nuclear fuel, the Trustee acquires title to such nuclear fuel and the related nuclear fuel contract rights (or under certain circumstances related to enrichment contracts with the United States Government, the right to acquire title in the future). The Lease Agreement obligates the Trustee to finance the nuclear fuel for the entire period through acquisition and processing of uranium, fabrication of the fuel assemblies, delivery of such fuel assemblies to the plant site, and the insertion and use of such assemblies in the reactors. Prior to the insertion of fuel into a reactor, finance charges and administrative expenses are capitalized and added to the Trustee's investment in the fuel. When the fuel is inserted in the reactor and heat production begins, the Lease Agreement requires the Applicants to pay the Trustee quarterly lease payments which are structured to fully amortize the cost of the fuel as it is burned up in the reactor. Under Section 5 of the Lease Agreement, the Applicants' obligation to lease the fuel and to make such lease payments to the Trustee is absolute and unconditional and is not subject to any right of setoff, counterclaim, recoupment, defense, abatement, suspension, deferment or reduction. 5. By its orders in File No. 70-6639 dated December 30, 1981 and May 19, 1982 (HCA Release Nos. 22342 and 22501, respectively), the Commission gave necessary approvals for, among other things, the formation of the Trust, the assignment of nuclear fuel and nuclear fuel contracts, and the financing for acquisition of nuclear fuel, including approval for (i) the issuance by the Trust of intermediate term notes in an aggregate outstanding principal amount not to exceed $300,000,000 at any one time, and (ii) the sale of the Trust's commercial paper notes, backed by an irrevocable master letter of credit issued by The First National Bank of Boston ("FNBB") and borrowing under revolving credit loans from FNBB pursuant to a credit agreement dated as of January 4, 1982 between the Trustee and FNBB, in a combined aggregate principal amount not to exceed $230,000,000. 6. By its order in File No. 70-7875 dated January 23, 1992 (HCA Release No. 35-25458), the Commission gave necessary approvals for, among other things, the substitution of a $230,000,000 revolving credit facility (the "Facility") with a syndicate of banks to replace the prior revolving credit facility with FNBB in the same amount and, in connection therewith, a credit agreement (the "Credit Agreement") dated as of February 11, 1992, as amended pursuant to a First Amendment dated as of April 30, 1993 and a Second Amendment dated as of May 12, 1995, with Bankers Trust Company, each of the financial institutions party thereto, and the First National Bank of Chicago (the "Agent"), as agent for such financial institutions (as so named and as it may have been otherwise supplemented or modified through the date hereof). Such approval extended through December 31, 1998. 7. Under the Credit Agreement, each participating bank is severally responsible for making advances (each, a "Ratable Advance") in an amount not to exceed the amount of its commitment, ratably in proportion to the aggregate commitment of all the participating banks. Each Ratable Advance bears interest at a rate selected by the Trustee, as directed by the Applicants, from among three options: (i) the Eurodollar Rate plus an increment which shall not exceed 0.50%, (ii) a Fixed CD Rate plus an increment which shall not exceed 0.875%, or (iii) a Floating Rate equal to the higher of (a) a rate based on the overnight federal funds rate, plus 0.50% and (b) the Agent's corporate base rate. The Credit Agreement provides for an initial term of three years and for successive extensions in one-year increments upon the request of the Applicants and the consent of all the banks. 8. The Facility is presently scheduled to mature on February 19, 1998. The Applicants seek the Commission's approval for the Trust to pay additional fees and interest under the Facility so that it can be extended for nine months through November 19, 1998 and seek extension of the Commission's authorization through December 31, 2003. The amount which the Applicants are presently seeking from the banks under the Facility will be up to $100,000,000. This is an amount which is realistic in light of the Applicants' current financial and operational conditions, including outages at the Millstone nuclear plants, but may have to be increased after the Millstone units are placed back in operation up to any amount not exceeding the $230,000,000 presently authorized. It is expected that a more permanent restructuring of the Facility may occur after the Millstone units begin to return to service in 1998. In the interest of greater financial flexibility, the Applicants seek the Commission's approval to effect future extensions for any intervals of up to two years through December 31, 2003 with the consent of the banks and with terms at least as favorable as those approved by the Commission herein with respect to interest rates. 9. The proposed amendment would (i) increase the maximum spread over the Eurodollar Rate from 0.50% to 1.625%, (ii) increase the maximum spread over the Fixed CD Rate from 0.875% to 1.75% and (iii) under the second Floating Rate option, provide for an increase from the Agent's corporate base rate to a spread of 0.50% per annum over the Agent's corporate base rate. The higher interest rates reflect the lower credit ratings of the Companies, which in turn reflect the Millstone outages, the electric utility restructuring initiatives in Connecticut and Massachusetts and general market perceptions of the risk of electric utilities in general and nuclear operations in particular. 10. 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 the NU system companies to acquire any securities of, or any interest in, an EWG or a FUCO. The NU system is 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 the NU system's consolidated retained earnings as reported for the four most recent quarterly periods on NU's Form 10-K and 10-Qs. At September 30, 1997, the ratio of such investment ($78 million) to such consolidated retained earnings ($702 million) was 11.1 percent. (ii) Central Termica San Miguel de Tucuman, S.A., Ave Fenix and Plantas Eolicas, S.A. (NU's only EWGs or FUCOs at this time) maintain 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 the NU system's public utility companies 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 the NU system public utility companies. (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 has decreased by 10% or more from the average for the previous four quarterly periods (at 9/30/96, NU's CREs were $941 million; at 9/30/97, NU's CREs were $702 million), NU's aggregate investment in EWGs/FUCOs at such date ($78 million) did not exceed two percent of NU's consolidated capital invested in utility operations ($133.7 million). (vi) In the previous fiscal year, NU did not report operating losses attributable to its investment in Encoe Partners, unless such losses did not exceed 5 percent of NU's consolidated retained earnings. ITEM 2. FEES, COMMISSIONS, AND EXPENSES 11. The Companies will pay the following fees in connection with the proposed amendment of the Facility: (i) a maximum commitment fee on the average unused commitment equal to 0.50% per annum, (ii) an amendment fee equal to 0.375% of the total commitment, (iii) an arrangement fee of $250,000, (iv) an annual administration fee of $5,000, (v) legal fees of approximately $45,000 and (vi) Northeast Utilities Service Company (NUSCO) expenses of approximately $10,000. 12. None of such fees, commissions or expenses is to be paid to any associate company or affiliate of the Applicants, except for financial and other services to be performed at cost by NUSCO, an affiliated service company. ITEM 3. APPLICABLE STATUTORY PROVISIONS 13. Sections 6(a), 7, 9(a)(1), 10, and 12(d) of the Act and the related regulations of the Commission are or may be applicable to the modifications to the Facility as herein proposed. ITEM 4. REGULATORY APPROVAL 14. CL&P and WMECO have requested that the Connecticut Department of Public Utility Control ("DPUC"), pursuant to Section 16-43 of the Connecticut General Statutes, approve the modifications described herein. WMECO has petitioned the Massachusetts Department of Telecommunications and Energy ("DTE"), pursuant to Section 17A of Chapter 164 of the Massachusetts General Laws, for approval of the modifications described herein. A copy of the request to the DPUC has been filed herewith as Exhibit D.1. A copy of the petition to the DTE has been filed herewith as Exhibit D.2. A copy of the DPUC's order approving the proposed modifications will be filed by amendment as Exhibit D.3. A copy of the DTE's order approving the proposed modifications will be filed by amendment as Exhibit D.4. 15. No other consent or approval of any other State commission or any Federal commission (other than the Securities and Exchange Commission) is required for the amendments proposed herein. ITEM 5. PROCEDURE 16. In order to enable the Applicants to extend the Facility prior to its maturity on February 19, 1998, Commission action with respect to this Application is requested on or before January 21, 1998. 17. The Applicants hereby waive a recommended decision by a hearing officer or other responsible officer of the Commission and consent that the Division of Corporate Regulation may assist in the preparation of the Commission's findings and/or order and hereby request that the Commission's order become effective forthwith upon issuance. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS a. EXHIBITS A. Form of Third Amendment to Credit Agreement dated as of November 13, 1997 with exhibits. B.1. Form of Nuclear Fuel Lease Agreement. (Incorporated by reference to Exhibit B.1. to Form U-1, File No. 70-7876 dated April 29, 1991). B.2. Form of Security Agreement and Assignment of Contracts. (Incorporated by reference to Exhibit B.2. to Form U-1, File No. 70-7876 dated April 29, 1991.) B.3. Form of CP Note. (Incorporated by reference to Exhibit B.3. to Amendment No. 1 to Form U-1, File No. 70-7876 dated November 27, 1991.) B.4. Form of Depositary Agreement. (See Exhibit K to Credit Agreement). (Incorporated by reference to Exhibit B.4. to Amendment No. 1 to Form U-1, File No. 70-7876 dated November 27, 1991.) B.5. Form of Dealer Agreement. (Incorporated by reference to Exhibit B.5. to Amendment No. 1 to Form U-1, File No. 70-7876 dated November 27, 1991.) C. Not Applicable. D.1. Application to Connecticut Department of Public Utility Control for approval of amendments proposed herein pursuant to Section 16-43 of the Connecticut General Statutes. D.2. Petition to Massachusetts Department of Telecommunications and Energy for approval of amendments proposed herein pursuant to Section 17A of Chapter 164 of the Massachusetts General Laws. D.3. Order of Connecticut Department of Public Utility Control approving amendments proposed herein pursuant to Section 16-43 of the Connecticut General Statutes. (To be filed by amendment.) D.4. Order of Massachusetts Department of Public Utilities approving amendments proposed herein pursuant to Section 17A of Chapter 164 of the Massachusetts General Laws. (To be filed by amendment.) E. Not applicable. F. Form of opinion of Day, Berry & Howard. (To be filed by amendment.) G. Financial Data Schedules. (To be filed by amendment.) H. Form of Proposed Notice. I. Schedules of Fees, Commissions and Expenses. (To be filed by amendment.) b. FINANCIAL STATEMENTS (To be filed by amendment.) 1. The Connecticut Light and Power Company 1.1 Balance Sheet, per books and pro forma, as of September 30, 1997. 1.2 Statement of Income and Surplus, per books and pro forma, 12 months ended September 30, 1997. 2. Western Massachusetts Electric Company 2.1 Balance Sheet, per books and pro forma, as of September 30, 1997. 2.2 Statement of Income and Surplus, per books and pro forma, 12 months ended September 30, 1997. 3. Northeast Utilities and Subsidiaries 3.1 Consolidated Balance Sheet, per books and pro forma, as of September 30, 1997. 3.2 Consolidated Statement of Income and Surplus, per books and pro forma, 12 months ended September 30, 1997. There has been no material change, not in the ordinary course of business, in the balance sheets listed above since the date thereof. ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS a. The proposed amendments affect only the arrangements for financing the nuclear fuel for Millstone 1, 2, and 3. As such, they will have no environmental impact. Therefore, the issuance by the Commission of an order with respect to this Application is not a major federal action significantly affecting the quality of the human environment and Section 102(2)(c) of the National Environmental Policy Act, 42 U.S.C.
4232(2)(c), does not apply in connection with the proposed transaction. b. No other federal agency has prepared or is preparing an environmental impact statement with respect to the proposed transaction. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, each of the undersigned companies has duly caused this statement to be signed on its behalf by the undersigned officer or attorney thereunto duly authorized. Date: December 10, 1997 NORTHEAST UTILITIES THE CONNECTICUT LIGHT AND POWER COMPANY WESTERN MASSACHUSETTS ELECTRIC COMPANY By: /S/DAVID R. MCHALE David R. McHale Assistant Treasurer EX-99.1 2 FORM OF THIRD AMENDMENT TO CREDIT AGREEMENT Exhibit A DRAFT OF 11/13/97 FORM OF THIRD AMENDMENT THIRD AMENDMENT dated as of January , 1998 (this "Third Amendment") to the Credit Agreement dated as of February 11, 1992, as amended pursuant to a First Amendment dated as of April 30, 1993 and a Second Amendment dated as of May 12, 1995, among 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, 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 and Western Massachusetts Electric Company, as Beneficiaries, each of the financial institutions party thereto, and The First National Bank of Chicago, as agent for such financial institutions (as so amended and as it may have been otherwise supplemented or modified through the date hereof, the "Existing Credit Agreement"). RECITALS: A. The Lessees and the Trustee have requested that the Maturity Date be extended. B. The Banks are willing to agree to the requested extension provided that the Trustee and the Lessees agree to certain amendments to the Existing Credit Agreement. Accordingly, the parties hereto wish to amend the Existing Credit Agreement in certain respects and accordingly hereby agree as follows: 1. Definitions. Unless the context otherwise requires, all terms used herein which are defined in the Existing Credit Agreement shall have the meanings assigned to them therein. 2. Amendments to Existing Credit Agreement. Upon the satisfaction of the conditions precedent set forth in Section 4 of this Third Amendment on or before [January 31, 1998], the Existing Credit Agreement shall be amended as follows: (a) The definition of "Eurodollar Rate" set forth in Article I of the Existing Credit Agreement shall be amended by deleting the phrase "1/2% per annum" where it appears therein and inserting the phrase "1-5/8% per annum" in lieu thereof. (b) The definition of "Fixed CD Rate" set forth in Article I of the Existing Credit Agreement shall be amended by deleting the phrase "5/8% per annum" where it appears therein and inserting the phrase "1-3/4% per annum" in lieu thereof. (c) The definition of "Floating Rate" set forth in Article I of the Existing Credit Agreement shall be amended by deleting clause (b) thereof and inserting in lieu thereof the following new clause (b): "(b) the Corporate Base Rate plus 1/2% per annum" (d) The definition of "Maturity Date" set forth in Article I of the Existing Credit Agreement shall be amended by deleting it in its entirety and substituting in lieu thereof the following new definition: "'Maturity Date' means November 19, 1998." (e) Section 2.4.3 of the Existing Credit Agreement shall be amended by deleting the phrase ".135% per annum" where it appears therein and inserting the phrase ".50% per annum" in lieu thereof. (f) Section 2.5.6 of the Existing Credit Agreement shall be amended by deleting it in its entirety and substituting in lieu thereof the following: "2.5.6. INTENTIONALLY DELETED AND LEFT BLANK. (g) Schedule "I" attached to the Existing Credit Agreement shall be amended by deleting it in its entirety and substituting in lieu thereof the Schedule "I" attached hereto. 3. Representations and Warranties. The Trustee hereby confirms, reaffirms and restates as of the Effective Date (as defined in Section 4 of this Third Amendment) the representations and warranties set forth in Article V of the Existing Credit Agreement provided that such representations and warranties shall be and are hereby amended as follows: each reference therein to "this Credit Agreement" shall be deemed to be a collective reference to the Existing Credit Agreement, this Third Amendment and the Existing Credit Agreement as amended by this Third Amendment. 4. Conditions Precedent. This Third Amendment and the provisions contained herein shall become effective on the date (the "Effective Date") on or before [January 31, 1998] on which all of the following conditions precedent shall have been satisfied: (a) This Third Amendment shall have been duly executed and delivered by the Bank Agent and the Trustee on one or more counterparts and all the Banks shall have signed a counterpart or counterparts hereof and notified the Bank Agent by telex or telecopy that such action has been taken and that such executed counterpart or counterparts will be mailed or otherwise delivered to the Bank Agent. (b) A Ratable Note payable to the order of each Bank shall have been duly executed and delivered by the Trustee to the Bank Agent. (c) the Majority Lenders (as defined in the Security Agreement) shall have executed and delivered to the Collateral Agent a letter agreement in substantially the form attached hereto as Exhibit "A". (d) (i) The representations and warranties of the Trustee contained in Article V of the Existing Credit Agreement, in the Depositary Agreement, and in the Trust Agreement shall be true and correct in all material respects on and as of the Effective Date with the same effect as if made on and as of the Effective Date, (ii) no Event of Default, Unmatured Event of Default or Event of Termination shall be in existence on the Effective Date or shall occur as a result of the execution and delivery of this Third Amendment, and (iii) each of the Basic Agreements shall be in full force and effect without amendment or modification, except as approved in writing by the Bank Agent and the Required Banks. (e) The representations and warranties of the Lessees contained in Sections 2 and 35 of the Lease Agreement shall be true and correct in all material respects on and as of the Effective Date with the same effect as if made on and as of the Effective Date. (f) The Trustee and the Bank Agent shall have received a certificate of the Lessees in substantially the form of Exhibit "B" hereto, appropriately completed and signed by a Vice President, Treasurer or Assistant Treasurer of each Lessee. (g) The Lessees shall have paid to the Bank Agent for pro rata distribution to the Banks based on their respective Commitments an amendment fee equal to 3/8% of the aggregate Commitments of the Banks. (h) The Lessees shall have paid to First Chicago Capital Markets, Inc. for its own account the arrangement fee provided for in the letter agreement among the Lessees, the Bank Agent and First Chicago Capital Markets, Inc. with respect to the extension of the Maturity Date. (i) The Bank Agent shall have received with sufficient copies for each of the Banks all of the following documents: (i) A certificate of incumbency signed by an authorized employee of Bankers Trust Company which shall certify the names of the employees of Bankers Trust Company authorized to execute any document hereunder on behalf of the Trustee, together with specimen signatures of each such employee, and the Bank Agent and each Bank may conclusively rely on such certificate until it shall receive a further certificate of an authorized employee of Bankers Trust Company cancelling or amending the prior certificate and submitting the signatures of the employees named in such further certificate. (ii) Copies of each authorization, license, permit, consent, order or approval of, or registration, declaration or filing with, any governmental authority (including without limitation the Securities and Exchange Commission, and the Commonwealth of Massachusetts and the State of Connecticut and any applicable agency of either thereof) obtained or made or required to be obtained or made in connection with the transactions contemplated by this Third Amendment. (iii) A copy of the consent or waiver given pursuant to the Credit Agreement dated as of November 21, 1996, as amended, among Northeast Utilities, the Lessees, the Banks and Co-Agents party thereto, and Citibank, N.A., as administrative agent, pursuant to which the Lessees are permitted to reduce the Aggregate Commitment to $100,000,000. (iv) An opinion of Messrs. Cahill Gordon & Reindel, counsel for the Trustee, dated the Effective Date and in substantially the form attached hereto as Exhibit "C". (v) An opinion of Messrs. Day, Berry and Howard, counsel for the Lessees, dated the Effective Date and in substantially the form attached hereto as Exhibit "D". (vi) An opinion of Messrs. Day, Berry and Howard, counsel for the Trustor, dated the Effective Date and in substantially the form attached hereto as Exhibit "E". 5. Amendment to Form U-7D. The Trustee hereby agrees that (i) within 30 days after the Effective Date the Trustee and the Lessees shall file an amendment (acceptable in form and substance to the Bank Agent and its counsel) to the Form U-7D previously filed with the Securities and Exchange Commission in connection with the Lease Agreement and the Existing Credit Agreement reflecting the extension of the Maturity Date and the other amendments to the Existing Credit Agreement provided for herein, and (ii) any failure to file such amendment in accordance with clause (i) of this Section 5 shall constitute an immediate Event of Default under the Existing Credit Agreement as amended by this Third Amendment. 6. Effect on the Existing Credit Agreement. Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of the Existing Credit Agreement and the Bank Notes (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 Third Amendment, all references in the Existing Credit Agreement (including references in the Existing Credit Agreement as amended by this Third Amendment) to "this Credit Agreement" (and all indirect references such as "hereby", "herein", "hereof" and "hereunder") shall be deemed to be references to the Existing Credit Agreement as amended by this Third Amendment. 7. Expenses. The Trustee shall reimburse the Bank Agent for any and all reasonable costs, internal charges and out-of-pocket expenses (including attorneys' fees and time charges of attorneys for the Bank Agent, which attorneys may be employees of the Bank Agent) paid or incurred by the Bank Agent in connection with the preparation, review, execution and delivery of this Third Amendment. 8. Entire Agreement. This Third Amendment, the Existing Credit Agreement as amended by this Third Amendment, and the Bank Notes 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. 9. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 10. Counterparts. This Third Amendment 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 Third Amendment by signing any such counterpart. IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed as of the date first above written. 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: Title: THE FIRST NATIONAL BANK OF CHICAGO, individually as Bank Agent and as Collateral Agent By: Title: THE BANK OF NOVA SCOTIA By: Title: THE BANK OF NEW YORK By: Title: BANKBOSTON, N.A. By: Title: BANK OF MONTREAL By: Title: CIBC, INC. By: Title: THE TORONTO-DOMINION BANK By: Title: UNION BANK OF CALIFORNIA, N.A. By: Title: BARCLAYS BANK PLC By: Title: MELLON BANK, N.A. By: Title: FLEET BANK, N.A. By: Title: SWISS BANK CORPORATION By: Title: By: Title: EXHIBIT "A" to Third Amendment November __, 1997 The Lenders Listed on the Schedule of Addressees Attached Hereto Re: CONSENT TO WAIVER Ladies and Gentlemen: We refer to that certain Security Agreement and Assignment of Contracts dated as of January 4, 1982, as theretofore amended and as amended and restated by the Amendment to and Restatement of Security Agreement and Assignment of Contracts dated as of February 11, 1992 (as so amended and amended and restated, the "Security Agreement"), made by 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 (the "Trustor"), and The Connecticut Light and Power Company and Western Massachusetts Electric Company, as Beneficiaries, to The First National Bank of Chicago, as pledgee and collateral agent (in such capacity, the "Collateral Agent") for the ratable benefit of the secured parties referred to therein. Unless the context otherwise requires, all terms used herein which are defined in the Security Agreement shall have the meanings assigned to them therein. The Lessees have requested that the Trustee grant certain waivers under Section 23 of the Lease Agreement by executing and delivering a waiver letter in substantially the form attached hereto as Annex "I". Pursuant to Section 36(a) of the Lease Agreement the Trustee may not grant a waiver under the Lease Agreement without the prior written consent of the Collateral Agent. Accordingly, this is to request that by signing and returning to the Collateral Agent a copy of this letter agreement you instruct the Collateral Agent pursuant to Section 11(c) of the Security Agreement to consent to the Trustee's execution and delivery to the Lessees of a waiver letter in substantially the form attached hereto as Annex "I". This letter agreement and the instructions to the Collateral Agent set forth herein shall become effective as of the date hereof when the Collateral Agent shall have received counterparts of this letter signed by the Majority Lenders. This letter agreement 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 letter agreement. Please acknowledge your receipt of this letter agreement and your agreement with the terms and provisions contained herein by signing and returning a copy of this letter agreement to the Collateral Agent. Very truly yours, THE FIRST NATIONAL BANK OF CHICAGO, as Collateral Agent By: Title: AGREED AND INSTRUCTED: THE FIRST NATIONAL BANK OF CHICAGO By: Title: THE BANK OF NOVA SCOTIA By: Title: THE BANK OF NEW YORK By: Title: BANKBOSTON, N.A. By: Title: BANK OF MONTREAL By: Title: CIBC, INC. By: Title: THE TORONTO-DOMINION BANK By: Title: UNION BANK CALIFORNIA, N.A. By: Title: BARCLAYS BANK PLC By: Title: MELLON BANK, N.A. By: Title: FLEET BANK, N.A. By: Title: SWISS BANK CORPORATION By: Title: By: Title: WHITING & CO. By: Title: TRAL & CO. By: Title: THE PRUDENTIAL INSURANCE COMPANY By: Title: SEINE & CO. By: Title: PRINCIPAL MUTUAL LIFE INSURANCE CO. By: Title: AETNA LIFE INSURANCE By: Title: PLAYPORT & CO. By: Title: NEW YORK LIFE INSURANCE CO. By: Title: KANE & CO. By: Title: BOSTON & CO. By: Title: BOUYCHAIN & CO. By: Title: BEING & CO. By: Title: SCHEDULE OF ADDRESSEES THE FIRST NATIONAL BANK OF CHICAGO THE BANK OF NOVA SCOTIA THE BANK OF NEW YORK BANKBOSTON, N.A. BANK OF MONTREAL CIBC, INC. THE TORONTO-DOMINION BANK UNION BANK OF CALIFORNIA, N.A. BARCLAYS BANK PLC MELLON BANK, N.A. FLEET BANK, N.A. SWISS BANK CORPORATION WHITING & CO. TRAL & CO. THE PRUDENTIAL INSURANCE COMPANY SEINE & CO. PRINCIPAL MUTUAL LIFE INSURANCE CO. AETNA LIFE INSURANCE PLAYPORT & CO. NEW YORK LIFE INSURANCE CO. KANE & CO. BOSTON & CO. BOUYCHAIN & CO. BEING & CO. ANNEX "I" to Consent to Waiver , 1997 The Connecticut Light and Power Company Western Massachusetts Electric Company c/o Northeast Utilities Service Company 107 Selden Street Berlin, Connecticut 06037 Attn: Assistant Treasurer Re: WAIVER LETTER Ladies and Gentlemen: We refer to that certain 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 amended, supplemented or otherwise modified through the date hereof, the "Lease Agreement") between Bankers Trust Company, as Trustee of the Niantic Bay Fuel Trust, as lessor, and The Connecticut Light and Power Company and Western Massachusetts Electric Company, as Lessees. Unless the context otherwise requires, each term used herein which is defined in the Lease Agreement shall have the meaning assigned to it therein. As you know, the Units have been in extended outages for varying reasons since various times in 1995 and 1996. Although the Lessees have informed the Lessor and the Collateral Agent that they believe all the Units have throughout this period continued to be in commercial operation and in possession of all necessary licenses, approvals and consents required for the operation of the Units, the Lessees have nonetheless requested that the Lessor waive any potential or actual Event of Termination under Section 23(a)(vii) or Section 23(a)(ix) of the Lease Agreement existing through November 19, 1998 as a result of any of these circumstances. Accordingly, this is to advise the Lessees that, subject to the terms and conditions hereof, the Lessor hereby specifically waives any potential or actual Event of Termination under Section 23(a)(vii) or Section 23(a)(ix) of the Lease Agreement caused by any of the Units being out of commercial operation through November 19, 1998 as a result of any of the circumstances referred to in any of the Lessees' Quarterly Reports on Form 10-Q to the Securities and Exchange Commission for the quarters ended March 30, 1996, June 30, 1996, September 30, 1996, March 31, 1997, June 30, 1997 and September 30, 1997 and the Lessees' Annual Report on Form 10-K to the Securities and Exchange Commission for the years ended December 31, 1995 and December 31, 1996. The waiver set forth herein applies only to the above-specified Events of Termination under Section 23(a)(vii) or Section 23(a)(ix) of the Lease Agreement prior to November 20, 1998 and the waiver set forth herein shall not apply to (i) any Event of Termination which may exist after November 19, 1998 under Section 23(a)(vii) of the Lease Agreement if any of the Units is not in commercial operation before November 20, 1998, (ii) any Event of Termination which may exist after November 19, 1998 under Section 23(a)(ix) of the Lease Agreement if any event described in Section 23(a)(ix) of the Lease Agreement exists or occurs with respect to any Unit after November 19, 1998, (iii) any Event of Termination under any subsection of Section 23(a) of the Lease Agreement which may occur after any of the Units is placed in service between the date hereof and November 19, 1998, and (iv) any Event of Termination under any subsection of Section 23(a) of the Lease Agreement other than subsection (vii) or subsection (ix) thereof which may occur, or may have occurred, at any time before or after the date hereof. All of the terms, conditions and covenants of the Lease Agreement, except as specifically waived herein, shall remain unaltered and in full force and effect and shall continue to be binding upon the Lessees. This waiver letter and the waiver set forth herein shall become effective as of the date hereof when (i) the Collateral Agent shall have received a copy of this waiver letter signed by the Lessor and both of the Lessees, (ii) the Collateral Agent shall have consented to this waiver letter by signing and delivering to the Lessor a copy hereof, and (iii) the Lessor shall have received a copy of this waiver letter signed by both of the Lessees and consented to by the Collateral Agent. Please acknowledge your acceptance of this waiver letter and of the terms and provisions contained herein by signing and returning a copy of this waiver letter to each of the Lessor and the Collateral Agent. Very truly yours, 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: Title: ACCEPTED: THE CONNECTICUT LIGHT AND POWER COMPANY By: Title: WESTERN MASSACHUSETTS ELECTRIC COMPANY By: Title: CONSENTED: THE FIRST NATIONAL BANK OF CHICAGO, as Collateral Agent By: Title: EXHIBIT "B" to Third Amendment CERTIFICATE OF THE CONNECTICUT LIGHT AND POWER COMPANY AND WESTERN MASSACHUSETTS ELECTRIC COMPANY This Certificate is being delivered to The First National Bank of Chicago, as Bank Agent under the Credit Agreement referred to herein (in such capacity, the "Bank Agent"), and the other financial institutions party to such Credit Agreement (the "Banks") by The Connecticut Light and Power Company and Western Massachusetts Electric Company (each of which is referred to herein individually as a "Company" and collectively as the "Companies"), pursuant to the Credit Agreement dated as of February 11, 1992 (as amended pursuant to a First Amendment dated as of April 30, 1993, the Second Amendment dated as of may 12, 1995 and the Third Amendment referred to below, the "Credit Agreement") among the Bank Agent, the Banks and Bankers Trust Company, not in its individual capacity but solely as trustee (in such capacity, the "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 Beneficiaries named therein. Terms defined in the Credit Agreement are used herein with the same meanings ascribed to them therein, unless otherwise defined herein. In order to induce the Bank Agent and the Banks to enter into that certain Third Amendment dated as of January __, 1998 among the Trustee, the Banks and the Bank Agent (the "Third Amendment") which amends the Credit Agreement, each Company DOES HEREBY CERTIFY, severally and for itself alone, that: 1. The execution, delivery and performance, or the acceptance, as the case may be, by the Trustee, of the Credit Agreement, the Third Amendment, the Basic Agreements, the Nuclear Fuel Contracts, the Bank Notes and the CP Notes do not and will not violate any provision of any law or regulation or of any writ or decree of any court or governmental instrumentality applicable to the Company or the Trustee, and no consent, license, approval, order or authorization of, or filing, registration or declaration with, any governmental authority, bureau or agency or any court or other Person is or was required in connection with the execution, delivery, performance, acceptance, validity or enforceability of any of the above-mentioned documents and instruments or the IT Notes (provided that no representation is given with respect to the Nuclear Fuel Contracts insofar as the respective Contractors are concerned), except for (i) a general license to own Nuclear Fuel from the Nuclear Regulatory Commission (currently granted under 10 C.F.R. Sections 40.21 and 70.20); (ii) a license to possess and use special nuclear material granted by the Nuclear Regulatory Commission; (iii) orders of the Securities and Exchange Commission ("SEC") under Sections 7 and 10 of the Public Utility Holding Company Act of 1935; (iv) the approval of the Connecticut Department of Public Utility Control under Section 16-43 of the Connecticut General Statutes; (v) the approval of the Massachusetts Department of Public Utilities; and (vi) a certificate on Form U-7D filed by the Trustee with the SEC pursuant to the SEC's Rule 7(d), all of which licenses, orders and approvals have been duly obtained and, are final and are in full force and effect, and (except as disclosed in the opinion of Day, Berry and Howard delivered in connection with the Third Amendment) all periods of appeal relating thereto have expired, and none of such licenses, orders and approvals is the subject of any pending or, to the best of our knowledge, any threatened attack by direct proceedings or otherwise with respect to which there is a reasonable possibility of a decision which would have a material adverse effect on (A) the financial condition of the Trustee or the Company, (B) the ability of the Trustee or the Company to carry on its business, (C) the ability of the Trustee to perform its obligations under the Credit Agreement, the Third Amendment, the Basic Agreements, the Nuclear Fuel Contracts, the Bank Notes, the CP Notes or the IT Notes, or (D) the ability of the Company to perform its obligations under the Basic Agreements to which it is a party; provided that no representation is given with respect to Federal, New York or Massachusetts banking or trust laws or regulations or the securities or blue sky laws or regulations of any State. 2. The Trustee is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. The Trustee is not a "public-utility company" or a "holding company", or an "affiliate" of a "holding company", or a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. The Security Agreement is not required to be qualified under the Trust Indenture Act of 1939, as amended, and the creation of the security interest in the Collateral in favor of the holders of the CP Notes under the Security Agreement did not require an indenture to be qualified under said Act. 3. The representations and warranties of the Company contained in Sections 2 and 35 of the Lease Agreement are true and correct in all material respects on and as of the date hereof. 4. Each of the Basic Agreements is in full force and effect without amendment or modification, except as approved in writing by the Bank Agent and the Required Banks. 5. No Event of Default or Unmatured Event of Default has occurred under the Credit Agreement, and no Event of Termination has occurred under the Lease Agreement. 6. The Security Agreement is effective to create in favor of the Collateral Agent for the ratable benefit of the Secured Parties a legal, valid and enforceable first Lien on and security interest in all of the Collateral, and a legal, valid and enforceable purchase money security interest in all Nuclear Fuel Contracts and Inventory, and all filings, recordings and other action that are necessary in order to establish, preserve and perfect the Collateral Agent's Lien on and security interest in the Collateral as a legal, valid and enforceable first Lien and security interest, or purchase money security interest, as the case may be, have been duly effected, except that the foregoing representation shall not be deemed to be violated as a result of (i) the existence or priority of any Lien permitted by Section 17 of the Lease Agreement or (ii) the failure to file financing statements under the Uniform Commercial Code of the State of Tennessee prior to the time Lessees are obligated to pay the indebtedness tax with respect thereto pursuant to Section 36(c)(ii) of the Lease Agreement. IN WITNESS WHEREOF, each of the Companies has signed this Certificate, this day of January, 1998. THE CONNECTICUT LIGHT AND POWER COMPANY By: Title: WESTERN MASSACHUSETTS ELECTRIC COMPANY By: Title: EXHIBIT "C" to Third Amendment OPINION OF MESSRS. CAHILL GORDON & REINDEL (counsel for the Trustee) EXHIBIT "D" to Third Amendment OPINION OF MESSRS. DAY, BERRY AND HOWARD (counsel for the Lessees) EXHIBIT "E" to Third Amendment OPINION OF MESSRS. DAY, BERRY AND HOWARD (counsel for the Trustor) SCHEDULE "I" TO CREDIT AGREEMENT COMMITMENTS Bank Commitment The First National Bank of Chicago $ 15,428,571.43 The Bank of Nova Scotia $ 12,571,428.57 BankBoston, N.A. $ 10,857,142.86 The Bank of New York $ 10,857,142.86 Bank of Montreal $ 8,571,428.57 CIBC, Inc. $ 8,571,428.57 The Toronto-Dominion Bank $ 8,571,428.57 Union Bank of California, N.A. $ 6,285,714.29 Barclays Bank PLC $ 4,571,428.57 Mellon Bank, N.A. $ 4,571,428.57 Fleet Bank, N.A. $ 4,571,428.57 Swiss Bank Corporation $ 4,571,428.57 TOTAL $ 100,000,000.00 EX-99.2 3 APPLICATION TO DPUC Exhibit D.1 November 26, 1997 Mr. Robert J. Murphy 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 and Western Massachusetts Electric Company with Respect to Nuclear Fuel Financing Arrangements Dear Mr. Murphy: The Connecticut Light and Power Company (CL&P) and Western Massachusetts Electric Company (WMECO and, together with CL&P, the Companies), each an electric utility subsidiary of Northeast Utilities and a public service company as defined in Conn. Gen. Stat. Section 16-1 of the Connecticut General Statutes, hereby request that the Department reopen the above-referenced Docket in order to modify its Decision dated July 31, 1991 (the Decision) to approve proposed changes to certain nuclear fuel financing arrangements utilized by the Niantic Bay Fuel Trust (the Trust) as a part of the financing arrangements for the Companies' interest in the nuclear fuel for the Millstone nuclear generating units. In the Decision, in accordance with Section 16-43 of the Connecticut General Statutes, the Department approved a restructuring of the nuclear fuel financing arrangements, which included a $230,000,000 bank revolving credit facility (the Facility). The Decision authorized the credit agreement for the Facility (Credit Agreement) for an initial term of three years with successive extensions in one-year increments upon the request of the Companies and the consent of the banks. The Facility is currently scheduled to mature on February 19, 1998. As detailed in the prepared written testimony of David R. McHale, submitted herewith, in light of their current financial circumstances, the Companies are required to reduce the amount of and re-price the Facility in order to extend the Facility for an additional nine months, until a more comprehensive restructuring of the Facility can occur in a more favorable climate, after the Millstone units begin to return to service. As stated in CL&P's Reply Brief in Docket No. 97-05-12, "DPUC Financial and Operations Review of The Connecticut Light and Power Company" (pgs. 8-9), this proposed amendment is a vital part of the Companies' liquidity arrangements, and the Companies respectfully request prompt attention to this application. In light of the changes to the terms of the Credit Agreement, the Companies are returning to the Department for its approval pursuant to Section 16-43 of the General Statutes of Connecticut of the authorization for the nuclear fuel financing arrangements described in this letter and accompanying testimony and exhibits, including the revised terms set forth in the amended Credit Agreement, in order to permit the Trust to continue to finance the purchase of nuclear fuel. In order to enable the Companies to extend the Facility prior to its maturity, the Companies request approval by January 14, 1998. The Companies request that the service list be modified so that the name, title, address and telephone number of the persons to whom correspondence or communications in regard to this request be as follows: Daniel P. Venora, Esq. c/o Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141 Telephone: (860) 665-3395 David R. McHale Assistant Treasurer - Finance Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141-0270 Telephone: (860) 665-5601 Paula Lacey Herman, Esq. Day, Berry & Howard CityPlace I Hartford, Connecticut 06103-3499 Telephone: (860) 275-0270 Enclosed herewith are one (1) original and ten (10) copies of this application, together with prepared written testimony and exhibits. Very truly yours, THE CONNECTICUT LIGHT AND POWER COMPANY and WESTERN MASSACHUSETTS ELECTRIC COMPANY BY /s/Jane P. Seidl, Esq. Senior Counsel Northeast Utilities Service Company Their Attorney STATE OF CONNECTICUT DEPARTMENT OF PUBLIC UTILITY CONTROL APPLICATION OF THE CONNECTICUT LIGHT AND POWER COMPANY AND WESTERN MASSACHUSETTS ELECTRIC COMPANY WITH RESPECT TO NUCLEAR FUEL FINANCING ARRANGEMENTS PREPARED TESTIMONY OF DAVID R. McHALE ON BEHALF OF THE CONNECTICUT LIGHT AND POWER COMPANY AND WESTERN MASSACHUSETTS ELECTRIC COMPANY I. INTRODUCTION Q. Please state your name. A. My name is David R. McHale. Q. Will you please state your position with The Connecticut Light and Power Company (CL&P) and Western Massachusetts Electric Company (WMECO and, together with CL&P, the Companies)? A. I am the Assistant Treasurer - Finance of CL&P and WMECO. I am also the Assistant Treasurer-Finance of Northeast Utilities Service Company (NUSCO) and of Northeast Utilities (NU). Q. Will you please state the relationship of NUSCO to CL&P and WMECO? A. NUSCO is a service company that provides, among other things, financial planning services to the affiliated companies of the NU System. The applicants in this proceeding, CL&P and WMECO, together with Public Service Company of New Hampshire and Holyoke Water Power Company, are the largest operating companies in the NU System. Q. What is the purpose of your testimony? A. I will describe certain proposed changes in the terms of the credit agreement (the Credit Agreement) applicable to the financing of nuclear fuel by the Niantic Bay Fuel Trust (the Trust). II. BACKGROUND Q. What is the purpose of the Trust? A. The Trust was formed in order to provide an efficient framework for the financing of nuclear fuel for the Millstone nuclear units. CL&P and WMECO own approximately 81.221% and 18.779% (aggregating 100%), respectively, of Millstone Unit Nos. 1 and 2 and are responsible for the fuel costs of those units. CL&P and WMECO own approximately 52.933% and 12.239% (aggregating 65.172%), respectively, of Millstone Unit No. 3 (and are responsible for a like percentage of the fuel costs of Millstone Unit No. 3). The other joint owners of Millstone Unit No. 3 are responsible for the remainder of the fuel costs for that unit. Q. What is the role of the Trust in the Companies' nuclear fuel financing? A. The Trust uses the proceeds of credit financing arrangements to obtain nuclear fuel. The Trust leases the nuclear fuel to the Companies and utilizes the Companies' lease payments to service the credit financing. Q. When did the Department approve the Trust and the nuclear fuel financing arrangements? A. The Department initially approved the Trust and the nuclear fuel financing arrangements in Docket No. 81-09-07 in its Decision dated October 29, 1981 and Supplemental Decision dated May 12, 1982. The Department approved structural changes to the financing arrangements in its Decision dated July 31, 1991 in Docket No. 91-06-04 (the Decision). Q. Please briefly describe the financing arrangements approved by the Department in the Decision. A. The Department approved the substitution of a $230,000,000 revolving credit facility with a syndicate of banks (the Facility) agented by First National Bank of Chicago (the Agent) to replace the prior revolving credit facility. Under the Credit Agreement, each participating bank is severally responsible for making advances (each, a Ratable Advance) in an amount not to exceed the amount of its commitment, ratably in proportion to the aggregate commitment of all the participating banks. Each Ratable Advance bears interest at a rate selected by the Trustee, as directed by the Companies, from among three options: (i) Eurodollar Rate plus an increment which shall not exceed 0.50%; (ii) a Fixed CD Rate plus an increment which shall not exceed 0.875%; or (iii) a Floating Rate equal to the higher of (A) a rate based on the overnight federal funds rate, plus 0.50% and (B) the Agent's corporate base rate. The restructuring of the Trust's financing arrangements also required numerous changes to the previous documentation with respect to those arrangements. III. PROPOSED AMENDMENT TO THE FINANCING ARRANGEMENTS Q. Please explain why the Companies have requested a modification of the Decision in this Docket. A. The Credit Agreement provides for an initial term of three years and for successive extensions in one-year increments upon the request of the Companies and the consent of all the banks. The Facility is presently scheduled to mature on February 19, 1998. The purpose of the proposed modifications is to seek authority to allow the Trust to pay additional fees and interest under the Facility so that it can be extended for nine months. A more permanent restructuring of the Facility can occur after the Millstone units begin to return to service in 1998. A draft of the proposed amendment to the Credit Agreement is attached hereto as Exhibit 1. Q. What is the amount of the commitment which the Companies are seeking from the banks? A. The amount which the Companies are seeking under the Facility through November 19, 1998 will be up to $100,000,000 limit. This is an amount which is realistic in light of the Companies' current financial and operational conditions, but it may have to be increased after the Millstone units are placed back in operation. Q. Are you seeking approval to change the intervals for further extensions? A. Yes. The Decision presently allows the Companies to extend the Facility in one-year increments from February 19 with the consent of the banks. This present extension is for nine months, to November 19, 1998. The Companies seek authority, in the interests of greater financial flexibility, to effect future extensions for any intervals of up to two years with the consent of the banks and with terms at least as favorable as those of the Decision, as modified herein, with respect to interest rates. Q. Please describe the changes in the interest rate provisions. A. The proposed amendment would (i) increase the maximum spread over the Eurodollar Rate from 0.50% to 1.625%, (ii) increase the maximum spread over the Fixed CD Rate from 0.875% to 1.75% and (iii) under the second Floating Rate option, provide for an increase from the Agent's corporate base rate to a spread of 0.50% per annum over the Agent's corporate base rate. Q. Why are the banks requiring a higher maximum increment over the Eurodollar, Fixed CD and the second Floating Rate option? A. The higher interest rates reflect the lower credit ratings of the Companies, which in turn reflect the Millstone outages, the restructuring initiatives in Connecticut and Massachusetts and general market perceptions of the risk of electric utilities in general and nuclear operations in particular. Q. What fees will the Companies pay in connection with the proposed amendment of the Facility? A. The Companies will pay (i) a maximum commitment fee on the average unused commitment equal to 0.50% per annum, (ii) an amendment fee equal to .375% of the total commitment, (iii) an arrangement fee of $250,000, (iv) an annual administration fee of $5,000, (v) legal fees of approximately $45,000 and (vi) NUSCO expenses of approximately $10,000. Q. What benefit will the Companies obtain from the proposed amendment? A. The amendment will permit the Trust to continue to finance the purchase of nuclear fuel in an efficient and cost effective manner, relative to current market conditions and operational needs, while the Millstone units are being returned to service. The Companies hope to reevaluate the Trust in its entirety in mid-1998, but they believe it would be more advantageous to do so after the Millstone units begin returning to service. By deferring a restructuring of the Facility until that occurs, the Companies hope to find a more receptive bank environment and more favorable terms than would be available at present. Q. Will the proposed amendment require the approval of any other regulatory body? A. Yes. WMECO will shortly file a Petition with the Massachusetts Department of Public Utilities and the Companies will shortly file a Declaration/Application with the Securities and Exchange Commission for approvals relating to the Facility. Q. Is it your opinion that the proposed amendment is in the public interest? A. Yes. Q. Does that complete your testimony? A. Yes. APPENDIX I EXHIBITS 1. Form of Third Amendment to Credit Agreement 2. Financial Statements The Connecticut Light and Power Company 2.1 Balance Sheet of The Connecticut Light and Power Company, per books and pro forma, as of September 30, 1997. (To be filed by amendment.) 2.2 Statement of Income and Statement of Retained Earnings of The Connecticut Light and Power Company, per books and pro forma, 12 months ended as of September 30, 1997. (To be filed by amendment.) Western Massachusetts Electric Company 2.3 Balance Sheet of Western Massachusetts Electric Company, per books and pro forma, as of September 30, 1997. (To be filed by amendment.) 2.4 Statement of Income and Statement of Retained Earnings of Western Massachusetts Electric Company, per books and pro forma, 12 months ended as of September 30, 1997. (To be filed by amendment.) Northeast Utilities 2.5. The Annual Report on Form 10-K for 1996 for Northeast Utilities, The Connecticut Light and Power Company and Western Massachusetts Electric Company. 3. Resolutions of the Boards of Directors of The Connecticut Light and Power Company and Western Massachusetts Electric Company approving the proposed amendments to the Credit Agreement. (To be filed by amendment.) 4. Application/Declaration on Form U-1 filed with the Securities and Exchange Commission, seeking approval of the amendment to the credit facility, under the Public Utility Holding Company Act of 1935. (To be filed by amendment.) EX-99.3 4 EXHIBIT D.2 [LOGO] Western Massachusetts 260 Franklin Street - 21st floor Electric Boston, MA 02110-3179 (617) 345-4778 Fax (617) 345-4780 Steve Klionsky Senior Counsel December 5, 1997 Mary L. Cottrell, Secretary Department of Telecommunications and Energy 100 Cambridge Street, 12th Floor Boston, Massachusetts 02202 Re: Petition of Western Massachusetts Electric Company for Approval of Proposed Modifications to Certain Nuclear Fuel Financing Arrangements Dear Ms. Cottrell: Western Massachusetts Electric Company ("WMECO") hereby requests approval by the Department of Telecommunications and Energy ("Department"), pursuant to M.G.L. c. 164,
17A, of proposed changes to certain nuclear fuel financing arrangements utilized by the Niantic Bay Fuel Trust (the "Trust") as a part of the financing arrangements for WMECO's and The Connecticut Light and Power Company's (together with WMECO, the "Companies") interest in the nuclear fuel for the Millstone nuclear generating units. In D.P.U. 91-129 (December 13, 1991), the Department approved a restructuring of the nuclear fuel financing arrangements, which included a $230,000,000 bank revolving credit facility (the "Facility"). The credit agreement for the Facility provides for an initial term of three years and for successive extensions in one-year increments upon the request of the Companies and the consent of all the banks. The Facility is presently scheduled to mature on February 19, 1998. As detailed in the attached written testimony of David R. McHale, the purpose of this application is to seek authority to allow the Trust to pay additional fees and interest under the Facility so that it can be extended for nine months. It is expected that a more permanent restructuring of the Facility can occur after the Millstone units begin to return to service in 1998. In order to enable the Companies to extend the Facility prior to its maturity, WMECO requests approval of this request by January 21, 1998. Enclosed are one original and nine copies of this application, along with a filing fee of $100. Sincerely, /s/ Stephen Klionsky Stephen Klionsky cc: Mike Ernst, General Counsel COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF TELECOMMUNICATIONS AND ENERGY PETITION OF WESTERN ) MASSACHUSETTS ELECTRIC ) COMPANY FOR APPROVAL OF ) D.T.E. ______________ PROPOSED MODIFICATIONS ) TO CERTAIN NUCLEAR FUEL ) FINANCING ARRANGEMENTS ) A. INTRODUCTION 1. This is a petition by Western Massachusetts Electric Company (WMECO or the Petitioner), a subsidiary of Northeast Utilities and an electric utility company duly organized and existing under the laws of the Commonwealth and 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
17A 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 and for extension of the Department's authorization for such nuclear fuel financing arrangements. 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: David R. McHale Assistant Treasurer - Finance Western Massachusetts Electric Company c/o Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141 Telephone: (860) 665-5601 and Jane P. Seidl, Esq. Western Massachusetts Electric Company c/o Northeast Utilities Service Company P.0. Box 270 Hartford, Connecticut 06141-0270 (860) 665-5051 5. The Petitioner and The Connecticut Light and Power Company (CL&P and, together with the Petitioner, the Companies) and own approximately 18.779% and 81.221% (aggregating 100%), respectively, of Millstone Unit Nos. 1 and 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 No. 3 (and are responsible for a like percentage of the fuel costs of Millstone Unit No. 3). The other joint owners of Millstone Unit No. 3 are responsible for the remainder of the fuel costs for that unit. 6. The Niantic Bay Fuel Trust (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. 7. On December 15, 1981, the Department issued an order in D.P.U. 873 approving WMECO's participation in the Trust. The order required WMECO to obtain the Department's prior approval of material amendments to the Trust's 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). 8. In its Order dated December 13, 1991 in Docket No. 91-129 (the Order), the Department approved a restructuring of the nuclear fuel financing arrangements, which included a $230,000,000 bank credit facility (the Facility). The Order authorized the credit agreement for the Facility (the Credit Agreement) for an initial term of three years with successive extensions in one year increments upon the request of the Companies and the consent of the banks. 9. Under the Credit Agreement, each participating bank is severally responsible for making advances (each, a Ratable Advance) in an amount not to exceed the amount of its commitment, ratably in proportion to the aggregate commitment of all the participating banks. Each Ratable Advance bears interest at a rate selected by the Trustee, as directed by the Companies, from among three options: (i) Eurodollar Rate plus an increment which shall not exceed 0.50%; (ii) a Fixed CD Rate plus an increment which shall not exceed 0.875%; or (iii) a Floating Rate equal to the higher of (A) a rate based on the overnight federal funds rate, plus 0.50% and (B) the Agent's corporate base rate. The restructuring of the Trust's financing arrangements also required numerous changes to the previous documentation with respect to those arrangements. 10. The Facility is presently scheduled to mature on February 19, 1998. In light of their current financial circumstances, the Companies are required to reduce the amount of and re-price the Facility in order to extend the Facility for an additional nine months until a more comprehensive restructuring of the Facility can occur in a more favorable climate, after the Millstone units begin to return to service. 11. The modifications to the terms of the Facility will be effected through an amendment of the Credit Agreement. C. DESCRIPTION OF PROPOSED CHANGES TO THE CREDIT AGREEMENT 12. The amount of the banks' commitment under the Facility will be lowered from $230,000,000 to $100,000,000. 13. The Companies will pay a higher interest rate under the Facility. The proposed amendment would (i) increase the maximum spread over the Eurodollar Rate from 0.50% to 1.625%, (ii) increase the maximum spread over the Fixed CD Rate from 0.875% to 1.75% and (iii) under the second Floating Rate option, provide for an increase from the Agent's corporate base rate to a spread of 0.50% per annum over the Agent's corporate base rate. 14. The maturity of the Facility will be extended through November 19, 1998. In the interests of greater financial flexibility, the Petitioner requests that the Department authorize the Petitioner to effect future extensions for any intervals of up to two years with the consent of the banks and with terms at least as favorable as those approved in the Order as modified herein with respect to interest rates. 15. The Companies will pay the following fees in connection with the proposed amendment of the Facility: (i) a maximum commitment fee on the average unused commitment equal to 0.50% per annum, (ii) an amendment fee equal to 0.375% of the total commitment, (iii) an arrangement fee of $250,000, (iv) an annual administration fee of $5,000, (v) legal fees of approximately $45,000 and (vi) NUSCO expenses of approximately $10,000. D. USE OF PROCEEDS 16. The amendment will permit the Trust to continue to finance the purchase of nuclear fuel in an efficient and cost effective manner, relative to current market conditions and operational needs, while the Millstone units are being returned to service. The Facility, modified as proposed herein, constitutes the most practical and economical method currently available to meet the Trust's financing needs. E OTHER APPROVALS 17. The Petitioner is subject to the jurisdiction of the Securities and Exchange Commission (SEC) under the Public Utility Holding Company Act of 1935 (1935 Act) and will shortly file an Application/Declaration with the SEC seeking approval of the proposed modification to the terms of the Facility. The Department's attention is directed to 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. 18. The Companies have requested that the State of Connecticut Department of Public Utilities Control reopen its Docket No. 91-06-04, in which it approved the 1991 restructuring of the nuclear fuel financing arrangements, in order to approve the current proposed modifications to the terms of the Facility. F. TESTIMONY AND EXHIBITS 19. At least seven days prior to the hearing on this Petition, the Petitioner will file in support of this Petition the exhibits not listed with an asterisk in Appendix I hereto. Those exhibits listed with an asterisk are being filed with this Petition. WHEREFORE, pursuant to
17A of Chapter 164 of the General Laws of Massachusetts and the Department's orders dated December 15, 1981 (in D.P.U. 873) and December 13, 1991 (in Docket No. 91-129), the Petitioner hereby requests: A. That the Department approve the proposed amendments to the nuclear fuel financing arrangements. In order to enable the Petitioner to extend the Facility prior to its maturity, the Petitioner requests such approval by January 21, 1998. B. That, in the interests of greater financial flexibility, the Department authorize the Petitioner to effect future extensions for any intervals of up to two years with the consent of the banks and with terms at least as favorable as those approved in the Order as modified herein with respect to interest rates. C. That the Department grant such other and further orders, approvals and consents as it shall deem proper. Dated this 5th day of December, 1997. Respectfully submitted, WESTERN MASSACHUSETTS ELECTRIC COMPANY By /s/ Stephen Klionsky Stephen Klionsky, Esq. Northeast Utilities Service Company APPENDIX I The following testimony and exhibits will be filed as part of the Petition of Western Massachusetts Electric Company (WMECO) for the Department of Telecommunications and Energy's approval of proposed modifications to certain nuclear fuel financing arrangements. Those exhibits noted with an asterisk are being filed with this initial Petition and the remaining exhibits will be filed at least seven days prior to a hearing on this matter. *1. Testimony of Mr.David R. McHale, Assistant Treasurer - Finance of WMECO. 2. Financial Statements 2.1 Balance Sheet of Western Massachusetts Electric Company, per books and pro forma, as of September 30, 1997. 2.2 Statement of Income and Statement of Retained Earnings of Western Massachusetts Electric Company, per books and pro forma, 12 months ended as of September 30, 1997. 3. Resolutions of the Boards of Directors of Western Massachusetts Electric Company approving the proposed amendments to the Credit Agreement. 4. Application/Declaration on form U-1 filed with the Securities and Exchange Commission, seeking approval of the amendment to the credit facility, under the Public Utility Holding Company Act of 1935. *5. Letter to the State of Connecticut Department of Public Utilities Control requesting the reopening of its Docket No. 91-06-04, in which it approved the 1991 restructuring of the nuclear fuel financing arrangements, and accompanying testimony and exhibits. *6. Form of Amended Credit Agreement. COMMONWEALTH OF MASSACHUSETTS DEPARTMENT OF TELECOMMUNICATIONS AND ENERGY ---------------------------- PETITION OF WESTERN MASSACHUSETTS ELECTRIC COMPANY FOR APPROVAL OF PROPOSED AMENDMENTS TO CERTAIN NUCLEAR FUEL FINANCING ARRANGEMENTS D.T.E. __________ ---------------------------- PREPARED TESTIMONY OF DAVID R. MCHALE ON BEHALF OF WESTERN MASSACHUSETTS ELECTRIC COMPANY I. INTRODUCTION Q. Please state your name. A. My name is David R. McHale. Q. Please state your position with Western Massachusetts Electric Company (WMECO or the Company). A. I am the Assistant Treasurer - Finance of WMECO. I am also the Assistant Treasurer - Finance of The Connecticut Light and Power Company (CL&P and, together with WMECO, the Companies), Northeast Utilities Service Company (NUSCO) and of Northeast Utilities (NU). Q. Will you please state the relationship of NUSCO to WMECO? A. NUSCO is a service company that provides, among other things, financial planning services to the affiliated companies of the NU System. WMECO, together with CL&P, Public Service Company of New Hampshire and Holyoke Water Power Company, are the largest operating companies in the NU System. Q. What is the purpose of your testimony? A. I will describe certain proposed changes in the terms of the credit agreement for the Facility (the Credit Agreement) applicable to the financing of nuclear fuel by the Niantic Bay Fuel Trust (the Trust). II. BACKGROUND Q. What is the purpose of the Trust? A. The Trust was formed in order to provide an efficient framework for the financing of nuclear fuel for the Millstone nuclear units. WMECO and CL&P own approximately 18.779% and 81.221% (aggregating 100%), respectively, of Millstone Unit Nos. 1 and 2 and are responsible for the fuel costs of those units. WMECO and CL&P own approximately 12.239% and 52.933% (aggregating 65.172%), respectively, of Millstone Unit No. 3 (and are responsible for a like percentage of the fuel costs of Millstone Unit No. 3). The other joint owners of Millstone Unit No. 3 are responsible for the remainder of the fuel costs for that unit. Q. What is the role of the Trust in the Companies' nuclear fuel financing? A. The Trust uses the proceeds of credit financing arrangements to obtain nuclear fuel. The Trust leases the nuclear fuel to the Companies and utilizes the Companies' lease payments to service the credit financing. Q. When did the Department approve the Trust and the nuclear fuel financing arrangements? A. The Department initially approved WMECO's participation in the Trust in D.P.U. 873. WESTERN MASSACHUSETTS ELECTRIC COMPANY, D.P.U 873, p. 15 (1981); WESTERN MASSACHUSETTS ELECTRIC COMPANY, D.P.U. 873-A, p. 1 (1982). Those orders required WMECO to obtain prior Department approval of material amendments to the Trust arrangements. The Department approved certain material changes to the nuclear fuel financing arrangements in the Trust in its Order dated December 13, 1991 in Docket No. 91-129 (the Order). Q. Please briefly describe the financing arrangements approved by the Department in the Order. A. The Department approved the substitution of a $230,000,000 revolving credit facility with a syndicate of banks (the Facility) agented by First National Bank of Chicago (the Agent) to replace the prior revolving credit facility. Under the Credit Agreement, each participating bank is severally responsible for making advances (each, a Ratable Advance) in an amount not to exceed the amount of its commitment, ratably in proportion to the aggregate commitment of all the participating banks. Each Ratable Advance bears interest at a rate selected by the Trustee, as directed by the Companies, from among three options: (i) Eurodollar Rate plus an increment which shall not exceed 0.50%; (ii) a Fixed CD Rate plus an increment which shall not exceed 0.875%; or (iii) a Floating Rate equal to the higher of (A) a rate based on the overnight federal funds rate, plus 0.50% and (B) the Agent's corporate base rate. The restructuring of the Trust's financing arrangements also required numerous changes to the previous documentation with respect to those arrangements. III. PROPOSED AMENDMENT TO THE FINANCING ARRANGEMENTS Q. Why is WMECO proposing to modify the nuclear fuel financing arrangements? A. The Credit Agreement provides for an initial term of three years and for successive extensions in one-year increments upon the request of the Companies and the consent of all the banks. The Facility is presently scheduled to mature on February 19, 1998. The purpose of the proposed modifications is to seek authority to allow the Trust to pay additional fees and interest under the Facility so that it can be extended for nine months. It is expected that a more permanent restructuring of the Facility can occur after the Millstone units begin to return to service in 1998. Q. What is the amount of the commitment which WMECO is seeking from the banks? A. The amount which the Companies are seeking under the Facility through November 19, 1998 will be up to $100,000,000. This is an amount which is realistic in light of the Companies' current financial and operational conditions, but it may have to be increased after the Millstone units are placed back in operation. Q. Are you seeking approval to change the intervals for further extensions? A. Yes. The Order presently allows the Petitioner to extend the Facility in one-year increments from February 19 with the consent of the banks. This present extension is for nine months, to November 19, 1998. The Petitioner seeks authority, in the interests of greater financial flexibility, to effect future extensions for any intervals of up to two years with the consent of the banks and with terms at least as favorable as those approved in the Order as modified herein with respect to interest rates. Q. Please describe the changes in the interest rate provisions. A. The proposed amendment would (i) increase the maximum spread over the Eurodollar Rate from 0.50% to 1.625%, (ii) increase the maximum spread over the Fixed CD Rate from 0.875% to 1.75% and (iii) under the second Floating Rate option, provide for an increase from the Agent's corporate base rate to a spread of 0.50% per annum over the Agent's corporate base rate. Q. Why are the banks requiring a higher maximum increment over the Eurodollar, Fixed CD and the second floating rate options? A. The higher interest rates reflect the lower credit ratings of the Companies, which in turn reflect the Millstone outages, the restructuring initiatives in Massachusetts and Connecticut and general market perceptions of the risk of electric utilities in general and nuclear operations in particular. Q. What fees will the Companies pay in connection with the proposed amendment of the Facility? A. The Companies will pay (i) a maximum commitment fee on the average unused commitment equal to 0.50% per annum, (ii) an amendment fee equal to 0.375% of the total commitment, (iii) an arrangement fee of $250,000, (iv) an annual administration fee of $5,000, (v) legal fees of approximately $45,000 and (vi) NUSCO expenses of approximately $10,000. Q. What benefit will the Companies obtain from the proposed amendment? A. The amendment will permit the Trust to continue to finance the purchase of nuclear fuel in an efficient and cost effective manner, relative to current market conditions and operational needs, while the Millstone units are being returned to service. The Companies hope to reevaluate the Trust in its entirety in mid-1998, but they believe it would be more advantageous to do so after the Millstone units begin returning to service. By deferring a restructuring of the Facility until that occurs, the Companies hope to find a more receptive bank environment and more favorable terms than would be available at present. Q. Will the modifications to the Facility affect Petitioner's ability to restructure if so required? A. The proposed modifications to the Facility will have essentially no impact on WMECO's stranded costs or its ability to comply with the electric industry restructuring legislation. The Facility affects only nuclear fuel financing requirements and under the new statute it is assumed that WMECO or an affiliate will continue to have to finance its nuclear fuel requirements through the Trust, assuming that this form of financing remains available beyond November 19, 1998. Q. Will the proposed amendment require the approval of any other regulatory body? A. Yes. The Companies have requested the State of Connecticut Department of Public Utility Control to approve the proposed modifications and the Companies will shortly file a Declaration/Application with the Securities and Exchange Commission for such approval. Q. Is it your opinion that the proposed amendment is in the public interest? A. Yes. Q. Do you have anything that you wish to add? A. Yes. The extension of the Facility is a vital part of the Petitioner's liquidity arrangements and, for that reason, the Petitioner respectfully requests the Department's prompt attention to this Petition. Q. Does that complete your testimony? A. Yes. EX-99.4 5 EXHIBIT H TO FORM U-1 PROPOSED FORM OF NOTICE [Release No. ] THE CONNECTICUT LIGHT AND POWER COMPANY; WESTERN MASSACHUSETTS ELECTRIC COMPANY PROPOSAL TO AMEND CREDIT FACILITY ________________, 1997 The Connecticut Light and Power Company, 107 Selden Street, Berlin, Connecticut 06037, and Western Massachusetts Electric Company, 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 a Declaration/Application with this Commission pursuant to sections 6(a), 7, 9(a) (1), 10, and 12(d) of the Act. The Applicants have joint ownership interests in three nuclear electric generating units located at Millstone Point in Waterford, Connecticut, aggregating 100% in Millstone Unit Nos. 1 and 2 and approximately 65% in Millstone Unit No. 3. By orders dated December 30, 1981 (HCA Release No. 22342) and May 19, 1982 (HCA Release No. 22501) this Commission authorized certain nuclear fuel financing arrangements between the Applicants and Bankers Trust Company, not in its individual capacity but solely as Trustee (the "Trustee") of the Niantic Bay Fuel Trust (the "Trust"). Under those arrangements, the Applicants have assigned to the Trustee all of their right, title, and interest in and to all or part of certain nuclear fuel contracts and nuclear fuel. Pursuant to a lease agreement, the Trustee agreed to either reimburse the Applicants for payments made to contractors under the assigned nuclear fuel contracts or to make such payments directly. As part of a comprehensive scheme of financing nuclear fuel for the Millstone Units, the Trustee entered into a $230,000,000 credit facility with The First National Bank of Boston ("FNBB"). By an order dated January 23, 1992 (HCA Release No. 35-25458), this Commission authorized, among other things, the substitution of a $230,000,000 revolving credit facility (the "Facility") with a group of banks (the "Banks") agented by the First National Bank of Chicago (the "Agent") to replace the prior revolving credit facility with FNBB, which was terminated. The initial term of the Facility was three years, which could be extended with the Banks' consent for one year increments. Under the credit agreement for the Facility (the "Credit Agreement"), each Bank is severally responsible for making advances (each, a "Ratable Advance") in an amount not to exceed the amount of its commitment, ratably in proportion to the aggregate commitment of all the participating banks. Each Ratable Advance bears interest at a rate selected by the Trustee, as directed by the Applicants, from among three options: (i) the Eurodollar Rate plus an increment which shall not exceed 0.50%, (ii) a Fixed CD Rate plus an increment which shall not exceed 0.875%, or (iii) a Floating Rate equal to the higher of (a) a rate based on the overnight federal funds rate, plus 0.50% and (b) the Agent's corporate base rate. The Facility is presently scheduled to mature on February 19, 1998. The Applicants have requested the Commission's approval for the Trust to pay additional fees and interest under the Facility so that it can be extended for nine months through November 19, 1998 and seek extension of the Commission's authorization through December 31, 2003. The amount which the Applicants are presently seeking from the Banks under the Facility will be up to $100,000,000. This amount reflects the Applicants' current financial and operational conditions, including outages at the Millstone nuclear plants, but may have to be increased after the Millstone units are placed back in operation up to any amount not exceeding the $230,000,000 presently authorized. It is expected that a more permanent restructuring of the Facility may occur after the Millstone units begin to return to service in 1998. In the interest of greater financial flexibility, the Applicants have requested the Commission's approval to effect future extensions for any intervals of up to two years through December 31, 2003 with the consent of the banks and with terms at least as favorable as set forth below with respect to interest rates. The proposed amendments would (i) increase the maximum spread over the Eurodollar Rate from 0.50% to 1.625%, (ii) increase the maximum spread over the Fixed CD Rate from 0.875% to 1.75% and (iii) under the second Floating Rate option, provide for an increase from the Agent's corporate base rate to a spread of 0.50% per annum over the Agent's corporate base rate. The higher interest rates reflect the lower credit ratings of the Applicants Under the amended Facility, the Applicants will pay a maximum commitment fee on the average unused commitment equal to 0.50% per annum, an amendment fee equal to 0.375% of the total commitment, an arrangement fee of $250,000, and an annual administration fee of $5,000. The Declaration/Application and any amendments thereto are available for public inspection through the Commission's Office of Public Reference. Interested persons wishing to comment or request a hearing should submit their views in writing by ____________, 1997 to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549, and serve a copy on the Applicants at the addresses specified above. Proof of service (by affidavit, or in the case of an attorney at law, by certificate) should be filed with the request. Any request for a hearing shall identify specifically the issues of fact or law that are disputed. Any person who so requests will be notified of a hearing, if ordered, and will receive a copy of any notice or order issued in this matter. After said date, the amended declaration, as filed or as it may be further amended, may be granted. For the Commission, by the Division of Investment Management, pursuant to delegated authority. -----END PRIVACY-ENHANCED MESSAGE-----