-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KWHIKpCaOoXRVv1JWvcUkTD79Q4rIqwG5/jup5/P5nJl/F5Y1eSzNFcBoIID8EPR R/32iCvGn8qG8cljL88YtA== 0000071297-95-000012.txt : 19950515 0000071297-95-000012.hdr.sgml : 19950515 ACCESSION NUMBER: 0000071297-95-000012 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19950214 SROS: BSE SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND ELECTRIC SYSTEM CENTRAL INDEX KEY: 0000071297 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 041663060 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: 1935 Act SEC FILE NUMBER: 070-08571 FILM NUMBER: 95510220 BUSINESS ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01581 BUSINESS PHONE: 5083669011 U-1 1 File No. 70- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NEW ENGLAND ENERGY INCORPORATED NEW ENGLAND ELECTRIC SYSTEM NEW ENGLAND POWER COMPANY (Name of companies filing this statement) 25 Research Drive, Westborough, Massachusetts 01582 (Address of principal executive offices) NEW ENGLAND ELECTRIC SYSTEM (Name of top registered holding company parent in system) John G. Cochrane Robert King Wulff Treasurer Corporation Counsel New England Energy Incorporated 25 Research Drive 25 Research Drive Westborough, Massachusetts 01582 Westborough, Massachusetts 01582 (Names and addresses of agents for service) Item 1. Description of Proposed Transaction - -------------------------------------------- By this Application/Declaration, Applicants seek Commission authorization for New England Energy Incorporated (NEEI) to refinance its existing bank debt by entering into financing arrangements with a syndicate of participating banks (the Banks) led by Credit Suisse, as Agent, (the New Credit Agreement) pursuant to which NEEI may borrow up to $225 million. In connection therewith, Applicants also propose to amend and extend the term of the Fuel Purchase Contract between NEEI and New England Power Company (NEP) (the Fuel Purchase Contract), the Capital Funds Agreement and the Loan Agreement and the Capital Maintenance Agreement between NEEI and New England Electric System (NEES), all of which have previously been approved by the Commission. The authority requested in this filing shall have no effect on NEEI's existing authorization to enter into interest rate swap agreements, which authorization was most recently extended by the Commission in its Order dated December 1, 1993 (HCAR 25935, File No. 70-6971). A. Background - ---------------- NEEI is a subsidiary of NEES, a registered holding company under the Public Utility Holding Company Act of 1935 (the Act), engaged in various activities relating to fuel supply for the NEES system as authorized by the Commission. These activities presently include participation in ventures for exploration, development and production of oil and gas, the sale of such production to nonaffiliates, and the sale of fuel oil to NEP. NEEI is also authorized to engage in fuel procurement and inventory transactions, and transportation of fuel for NEP. NEP is the generation and transmission subsidiary of the NEES system and sells power at wholesale to the retail operating companies within the NEES system. NEEI has participated in most of its oil and gas exploration and development through its partnership with Samedan Oil Corporation, a subsidiary of Noble Affiliates, Inc. Since its inception in October, 1974, the relationship between NEEI and Samedan has been thoroughly documented in File Nos. 70-5543, 70-6823 and 70-7055. In 1980 NEEI entered into a similar arrangement with Dorchester Exploration, Inc., as described in Commission File No. 70-6513. This partnership was terminated on December 29, 1981. As of January 1, 1987, NEEI no longer participates in new prospects initiated by Samedan, but Samedan continues to manage the exploration, development and production of Partnership Prospects initiated prior to that date. By its order dated July 19, 1978, the Commission set forth a policy (the Pricing Policy) authorizing the methods by which NEEI accounts for the costs of its oil and gas program and determines the prices at which it sells fuel to NEP. The Pricing Policy authorized the sale by NEEI to NEP of fuel derived from its oil and gas program pursuant to a Fuel Purchase Contract dated as of July 19, 1978, as amended (Exhibit B-5). Under this contract, NEP was required to purchase all fuel meeting its requirements offered to it by NEEI, at a price determined in accordance with the Pricing Policy. This Fuel Purchase Contract has been assigned to the participating banks and provides a portion of the credit behind the Existing Credit Agreement (defined below). By Order dated October 22 1985 (File No. 70-6958), the Pricing Policy was modified such that the Fuel Purchase Contract does not apply to oil and gas prospects recorded on NEEI's books after December 31, 1983, and will eventually terminate as to all prospects. See File No. 70-6958 for further details. Prospects to which the Fuel Purchase Contract applies are those recorded on NEEI's books through December 31, 1983 (Old Program). Prospects recorded on NEEI's books in the period January 1, 1984 through December 31, 1986, and all costs and expenses related thereto, are accounted for, financed, and operated by NEEI outside the Pricing Policy and the Fuel Purchase Contract, solely for the account of NEEI and NEES and comprise the New Program. Reference is made to the quarterly reports filed by NEEI under Rule 24 (File Nos. 70-5543, 70-6513, 70-6823) providing detailed information through September 30, 1994, regarding its oil and gas exploration and development activities. These reports provide detailed information with respect to NEEI's costs, including capital costs, incurred in production of oil and gas, and the use of these costs in the pricing of fuel oil sold by NEEI to NEP pursuant to the Pricing Policy. B. NEEI Financing - -------------------- 1. Bank Debt --------- Since 1979, NEEI has financed its exploration and development program in part by bank loans approved by the Commission. By Order dated April 8, 1985 (HCAR 23658; File No. 70-7064), the Commission authorized NEEI to enter into an Amended and Restated Credit Agreement with Bank of Montreal, New York Branch, as agent and others (the Montreal Credit Agreement). The terms of the Montreal Credit Agreement provided for borrowings by NEEI up to a total of $500 million through four "tranches". By Order dated March 29, 1989 (HCAR 24847; File No 70-7613), the Commission authorized NEEI to refinance the Montreal Credit Agreement by entering into a Credit Agreement with Citibank, N.A., as agent and others (the Existing Credit Agreement). Interest Margins under the Existing Credit Agreement are as follows: YEAR LIBOR CD BASE RATE ---- ----- ---- --------- 1-3 1/4% 3/8% 0% 4-5 3/8% 1/2% 1/8% 6-7 5/8% 3/4% 3/8% 8-10 7/8% 1% 5/8% The amount of the facility available under the Existing Credit Agreement is currently $250,000,000 and reduces incrementally according to a set schedule (Existing Revolving Facility Availability) with termination of the facility December 31, 1998. Under the Existing Credit Agreement, a facility fee of 1/8% per year is payable on the Existing Revolving Facility Availability; and a commitment fee of 1/16% per year is payable on the unused balance of the Existing Revolving Facility Availability. As security for the borrowings under the Existing Credit Agreement, NEEI assigned to the participating banks its rights under the Fuel Purchase Contract with NEP, and the Capital Funds Agreement and Loan Agreement with NEES to secure Old Program borrowings; and its rights under the Capital Maintenance Agreement with NEES to secure New Program borrowings. 2. NEES Equity and Deferred Taxes ------------------------------ In addition to the Existing Credit Agreement, NEEI has financed its exploration and development program through (i) investments by NEES and (ii) deferred Federal income taxes. (i) NEES Investment --------------- NEES has authority to invest up to $45 million, plus an amount equal to the portion of NEEI's after tax net loss attributable to the expensing of interest on $37.2 million of Old Program borrowings, in NEEI's Old Program prospects through capital contributions, acquisition of common stock and subordinated notes under the terms of a Capital Funds Agreement dated November 1, 1974, as amended (Capital Funds Agreement) and the associated Loan Agreement dated July 19, 1978, as amended (the Loan Agreement) pursuant to authority given by the Commission in its order of August 8, 1990 (HCAR 25129; File No. 70-7613). See Exhibits B-3 and B-4. As of September 30, 1994, the total outstanding common stock and subordinated notes issued to NEES under the Capital Funds Agreement was $2.3 million. By its order of March 28, 1989 (HCAR No. 24847) issued in File No. 70-7613, the Commission authorized investment by NEES of up to $75 million in NEEI, to be used, inter alia, to fund New Program activities or to make investments in NEEI in lieu of those required under a Capital Maintenance Agreement described below (the Capital Maintenance Agreement). As of September 30, 1994, NEES had invested approximately $16 million in NEEI pursuant to this authority. The Capital Maintenance Agreement (approved in HCAR No. 23873) requires NEES to purchase NEEI capital stock, or to make capital contributions or non-interest bearing subordinated loans to NEEI equal to any after tax net loss which NEEI may incur from activities on New Program prospects. The Capital Maintenance Agreement obligates NEES to make a payment, to the extent that NEEI has not done so, to the agent for the account of lending banks on each amortization date occurring under the Existing Credit Facility, in an amount equal to the aggregate principal amount of outstanding advances in excess of the availability under the Existing Credit Facility on such date (after giving effect to any reduction of availability on such date). (ii) Deferred Taxes -------------- Pursuant to a Tax Allocation Agreement adopted and filed pursuant to Rule 45(c), NEEI is credited with and receives the cash equivalent of reductions in consolidated tax liabilities arising from the inclusion of its tax losses in the consolidated tax return of the NEES system. These payments are accounted for by NEEI as deferred federal income taxes. NEEI expects to have a net tax liability for the foreseeable future. 3. Future Financing Needs ---------------------- Exhibit G-1 shows NEEI's estimated sources and uses of funds through 2002. Exhibit G-2 shows NEEI's estimated Old Program production by year through 2004 and the total remaining reserves to be produced after 1994. Together, these exhibits clearly show that NEEI's oil and gas program is winding down. Since NEEI decided to cease participating in new prospects as of December 31, 1986, the level of expenditures since that date for exploration and development of existing properties has and will continue to decline. Exhibit G-1 also shows bank borrowings continuing to decline. Bank borrowings are expected to be retired in their entirety in 2002. Based on these cash flow projections and bank debt retirements, and in order to reduce its borrowing costs, NEEI has held discussions with a number of banks seeking proposals for refinancing the Existing Credit Agreement on the most favorable terms available. On the basis of these discussions, NEEI has arranged to refinance the Existing Credit Agreement with a new credit facility described below. C. The New Credit Agreement ------------------------ NEEI proposes to enter into the New Credit Agreement described herein with Credit Suisse as Agent for the Banks. Credit Suisse is in the process of putting together the bank syndication. As stated above, NEEI believes the New Credit Agreement will permit it to refinance its Existing Credit Agreement and lower its costs of financing. A draft of the New Credit Agreement, Exhibit B- 2 to this filing, will be filed by amendment. Exhibit B-1, the Summary of Terms and Conditions, provides a detailed outline of the principal terms of the New Credit Agreement. The terms of the New Credit Agreement would provide for borrowings by NEEI up to a total outstanding of $225 million. The New Credit Agreement provides for a revolving facility of $225 million which reduces incrementally on each anniversary of the transaction closing date. The New Credit Agreement's term will be for seven years with an option to extend the term for an additional eighth year if all the Banks agree to such extension. NEEI would have the following interest rate options during the term of the New Credit Agreement: (1) LIBOR Borrowings - NEEI may borrow at a periodic fixed Eurodollar rate with maturities of 1, 2, 3, 6 or 9 months or, subject to availability, 12 months at the then applicable LIBOR for such maturities plus (as specified in the Pricing Grid below) a margin over LIBOR (the LIBOR Margin), payable at the end of each interest period or quarterly for interest periods longer than 3 months. The LIBOR Margin varies according to the lowest debt rating assigned to NEP's senior secured long-term debt by Standard & Poors and Moody's Investor Service, respectively, as shown in the Pricing Grid. If the Fuel Purchase Contract has been terminated then, in accordance with the New Credit Agreement, the LIBOR Margin varies according to the lowest debt rating assigned to NEES' senior secured long-term debt by Standard & Poors and Moody's Investor Service, respectively, as shown in the Pricing Grid, provided, however, that if NEES has no such debt outstanding, the LIBOR Margin will continue to vary according to the lowest debt rating assigned to NEP's senior secured long-term debt as set forth above. (2) Base Rate Borrowings - NEEI may borrow at Credit Suisse's base rate. Such base rate borrowings will be payable quarterly in arrears and will be calculated on the basis of a 365/366 day year. (3) Competitive Bid Borrowings - NEEI may be able to borrow at the rate obtained through Competitive Bids. NEEI may request competitive bids in amounts of $10,000,000 or more. Banks may, at the request of NEEI, but without obligation, bid competitively to make loans at rates determined by each Bank and with maturities requested by NEEI. The Banks' bids will be accepted by NEEI in order of effective cost, starting with the bid at the lowest rate. The proposed Pricing Grid to the banks is as follows: (in basis AA+/Aa1 AA/Aa2 A/A2 BBB/Baa2 BBB-/Baa3 points) or Better or Better or Better or Better or below Facility Fee 7.0 8.0 9.0 11.5 17.5 LIBOR Margin 13.0 17.0 23.5 28.5 37.5 The amount of the facility available under the New Credit Agreement reduces incrementally according to a set schedule (Revolving Facility Availability). In addition, NEEI has the right, upon 30 days' notice, to further reduce the unused portion of Revolving Facility Availability. Under the New Credit Agreement, a facility fee will be payable on the percentage amount of each Bank's obligation to make advances to NEEI under the New Credit Agreement in accordance with the above Pricing Grid (the Facility Fee). The Facility Fee is payable upon each Bank's commitment, irrespective of usage, and will be calculated on the basis of the actual number of days elapsed in a year of 360 days. The Facility Fee is payable by NEEI quarterly in arrears. A one-time arrangement fee of $40,000 will be payable to the Agent upon closing of the facility. The administration of the New Credit Agreement will be conducted by the Agent for an annual fee of $20,000, payable upon closing of the facility and on each anniversary thereafter. An additional charge of $750 will be payable to the Agent for each NEEI request for a competitive bid, whether or not bids are accepted by NEEI. As security for the borrowings under the New Credit Agreement, NEEI proposes to assign to the Banks its rights under the Fuel Purchase Contract with NEP, and the Capital Funds Agreement and Loan Agreement with NEES. Upon termination of the Fuel Purchase Contract, all borrowings will be secured by NEEI's rights under the Capital Maintenance Agreement with NEES. As part of the collateral assignment, appropriate amendments to these agreements will be made (see Exhibits B-3A, B-4A, B-5A, and B-6A hereto). D. Cost of Funds ------------- The effective cost of funds over the life of the New Credit Agreement will be approximately 32.5 basis points over LIBOR, based upon current NEP senior secured long term debt ratings and excluding expenses. Under the Existing Credit Agreement, the current effective spread over LIBOR is 5/8%, increasing to 7/8% in the period 1996 through 1998. This clearly demonstrates that the New Credit Agreement provides NEEI significant savings over the Existing Credit Agreement. Item 2. Fees, Commission and Expenses - -------------------------------------- In addition to the fees described in Item 1, NEEI will also pay the fees and expenses of the Agent's counsel, Messrs. King & Spalding, of New York. An estimate of such fees will be supplied by amendment. Services incidental to the transactions described herein will be performed by New England Power Service Company at the actual cost thereof. New England Power Service Company is an affiliated service company operating pursuant to Section 13 of the Act and the Commission's rules thereunder. An estimate of such costs will be supplied by amendment. Item 3. Applicable Statutory Provisions - ---------------------------------------- The proposed transactions are believed to require approval of the Commission under sections 6, 7, 9(a) and 10 of the Act. Item 4. Regulatory Approval - ---------------------------- With respect to the proposed transactions for which authorization is requested, no federal or state commission or regulatory body, other than the Commission, has jurisdiction. Item 5. Procedure - ------------------ It is requested that the Commission's Order with respect to this Application/Declaration be issued on or before March 30, 1995, or as soon thereafter as practicable. Applicants (i) do not request a recommended decision by a hearing officer, (ii) do not request a recommended decision by any other responsible officer of the Commission, (iii) hereby specify that the Office of Public Utility Regulation may assist in the preparation of the Commission's decision, and (iv) hereby request that there be no 30-day waiting period between the date of issuance of the Commission's Order and the date on which it is to become effective. Item 6. Exhibits and Financial Statements - ------------------------------------------ Exhibits B-1 Summary of Terms and Conditions *B-2 Form of Revolving Credit Agreement B-3 Capital Funds Agreement, as previously amended *B-3A Form of Amendment to Capital Funds Agreement B-4 Loan Agreement, as previously amended *B-4A Form of Amendment to Loan Agreement B-5 Fuel Purchase Contract, as previously amended *B-5A Form of Amendment to Fuel Purchase Contract B-6 Capital Maintenance Agreement, as previously amended *B-6A Form of Amendment to Capital Maintenance Agreement *F-1 Opinion of Counsel G-1 NEEI Projected 1995 - 2002 Cash Flow G-2 NEEI Estimated Production Cycle *H-1 Fees and Expenses of Issue N-1 Proposed Form of Notice Financial Statements 1-a NEEI Balance Sheet at September 30, 1994 1-b NEEI Statement of Income and Retained Earnings for twelve months ended September 30, 1994 2-a Consolidated Balance Sheet of NEES and Subsidiaries at September 30, 1994 2-b Statements of Consolidated Income & Retained Earnings of NEES and Subsidiaries for twelve months ended September 30, 1994 3-a NEP Balance Sheet at September 30, 1994 3-b NEP Statement of Income for Twelve Months Ended September 30, 1994 * to be supplied by amendment. ** The proposed transaction will have no material immediate effect on the Balance Sheet and Income Statement of NEEI; pro forma statements are, therefore, omitted. Pro forma financial statements for NEES have been omitted because they are not considered necessary for the proper disposition of the proposed transaction. Item 7. Information as to Environmental Effects - ------------------------------------------------ The transactions proposed by this Application/Declaration do not involve a major Federal action significantly affecting the quality of the human environment. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this Form U-1 Application/Declaration to be signed on their behalf, as indicated by the undersigned officers thereunto duly authorized by such companies. NEW ENGLAND ENERGY INCORPORATED s/ John G. Cochrane By: John G. Cochrane, Treasurer NEW ENGLAND POWER COMPANY s/ John G. Cochrane By: John G. Cochrane, Assistant Treasurer NEW ENGLAND ELECTRIC SYSTEM s/ Michael E. Jesanis By: Michael E. Jesanis, Treasurer Date: February 14, 1995 The name "New England Electric System" means the trustee or trustees for the time being (as trustee or trustees but not personally) under an agreement and declaration of trust dated January 2, 1926, as amended, which is hereby referred to, and a copy of which as amended has been filed with the Secretary of the Commonwealth. Any agreement, obligation or liability made, entered into or incurred by or on behalf of New England Electric System binds only its trust estate, and no shareholder, director, trustee, officer or agent thereof assumed or shall be held to any liability therefore. EX-99 2 EXHIBIT AND FINANCIAL STATEMENT INDEX EXHIBIT NO. DESCRIPTION PAGE - ----------- ----------- ---- B-1 Summary of Terms and Conditions Filed under cover of Form SE B-2 Form of Revolving Credit Agreement To be filed by amendment B-3 Capital Funds Agreement, as Filed under cover previously amended of Form SE B-3A Form of Amendment to Capital Funds To be filed by Agreement amendment B-4 Loan Agreement, as previously Filed under cover amended of Form SE B-4A Form of Amendment to Loan Agreement To be filed by amendment B-5 Fuel Purchase Contract, as Filed under cover previously amended of Form SE B-5A Form of Amendment to Fuel Purchase To be filed by Contract amendment B-6 Capital Maintenance Agreement, Filed under cover as previously amended of Form SE B-6A Form of Amendment to Capital To be filed by Maintenance Agreement amendment F-1 Opinion of Counsel To be filed by amendment G-1 NEEI Projected 1995 - 2002 Cash Flow Filed herewith G-2 NEEI Estimated Production Cycle Filed herewith H-1 Fees and Expenses of Issue To be filed by amendment N-1 Proposed Form of Notice Filed herewith EXHIBIT AND FINANCIAL STATEMENT INDEX FINANCIAL STATEMENT NO. DESCRIPTION PAGE - ------------- ----------- ---- 1-a NEEI Balance Sheet at September 30, Filed herewith 1994 1-b NEEI Statement of Income and Retained Filed herewith Earnings for twelve months ended September 30, 1994 2-a Consolidated Balance Sheet of NEES Filed herewith and Subsidiaries at September 30, 1994 2-b Statements of Consolidated Income and Filed herewith Retained Earnings of NEES and Subsidiaries for twelve months ended September 30, 1994 3-a NEP Balance Sheet at September 30, 1994 Filed herewith 3-b NEP Statement of Income for twelve Filed herewith months ended September 30, 1994 EX-99 3 EXHIBIT G-1 Exhibit G-1 TOTAL NEEI ESTIMATED CASH FLOW ($ in millions)
SOURCES 1995 1996 1997 1998 1999 2000 2001 2002* Total ---- ---- ---- ---- ---- ---- ---- ----- ----- 1 Revenues $ 32 $ 34 $ 26 $ 24 $ 21 $17 $13 $ 3 $170 2 NEP Payments (Prior YR Loss) 40 42 35 22 18 17 16 13 203 3 NEES Equity 2 2 2 2 2 2 2 29** 43 ---- ---- ---- ---- ---- --- --- --- ---- Total $ 74 $ 78 $ 63 $ 48 $ 41 $36 $31 $45 $416 USES 4 Exploration & Development $ 6 $ 6 $ 3 $ 5 $ 5 $ 4 $ 1 $ 1 $ 31 5 Taxes Payable 16 18 15 9 7 7 7 2 81 6 Management Fee / G&A 3 3 3 3 3 3 2 0 20 7 Bank Interest 13 10 8 5 5 3 3 1 48 8 Production Expense 4 4 3 3 2 2 1 1 20 ---- ---- ---- ---- ---- --- --- --- ---- Total $ 42 $ 41 $ 32 $ 25 $ 22 $19 $14 $ 5 $200 9 Available for Debt Payment $ 32 $ 37 $ 31 $ 23 $ 19 $17 $17 $40 $216 10 Bank Debt at Year-End $184 $147 $116 $ 93 $ 74 $57 $40 $ 0 11 Year-End Commitment Level $225 $195 $165 $135 $105 $75 $45 $ 0 ____________________ * Adjusted to maturity date 4/30/02. **$29 million of NEES equity contributed to NEEI by 4/30/02.
EX-99 4 EXHIBIT G-2 Exhibit G-2 NEEI PRODUCTION ESTIMATE (1995 through 2004) ------------------------ GAS GAS OIL TOTAL YEAR MCF MOBE MBBL MBOE - ---- --- ---- ---- ----- 1995 17,112 2,852 298 3,150 1996 16,674 2,779 273 3,052 1997 12,198 2,033 211 2,244 1998 10,284 1,714 172 1,886 1999 8,514 1,419 138 1,557 2000 6,618 1,103 102 1,205 2001 5,028 838 73 911 2002 3,660 610 68 678 2003 2,682 447 0 447 2004 1,848 308 0 308 ------ ------ ----- ------ Total 84,618 14,103 1,335 15,438 EX-99 5 EXHIBIT N-1 Exhibit N-1 PROPOSED FORM OF NOTICE New England Electric System (NEES), a registered holding company, its fuel subsidiary, New England Energy Incorporated (NEEI) and its generation and transmission subsidiary New England Power Company (NEP), 25 Research Drive, Westborough, MA 01582, have filed an application pursuant to Sections 6, 7, 9(a), and 10 of the Act. NEEI proposes to refinance its existing bank debt by entering into financing arrangements with a syndicate of banks led by Credit Suisse, as Agent (New Credit Agreement). The New Credit Agreement would provide for a revolving facility of $225 million which would reduce incrementally on each anniversary of the transaction closing date. The New Credit Agreement's term will be seven years with an option for a one year extension beyond that term. The security for the borrowings would be an assignment by NEEI to the banks of its rights under the Fuel Purchase Contract, the Capital Funds Agreement, the Loan Agreement, and the Capital Maintenance Agreement. In connection with the New Credit Agreement, Applicants also propose to amend these contracts. All of these contracts have previously been approved by the Commission. EX-99 6 FINANCIAL STATEMENT 1-A Financial Statement 1-a NEW ENGLAND ENERGY INCORPORATED Balance Sheet At September 30, 1994 (Unaudited) ASSETS ------ (In Thousands) Current assets: Cash $ 33 Temporary cash investments - affiliated companies 4,075 Accounts receivable from affiliates 48,726 Other current assets 2,105 ---------- Total current assets 54,939 ---------- Proved oil and gas properties, at full cost 1,240,098 Unproved properties 1,464 ---------- 1,241,562 Less accumulated provision for amortization 951,872 ---------- Net oil and gas properties 289,690 ---------- $ 344,629 ========== LIABILITIES AND PARENT COMPANY'S INVESTMENT -------------------------------------------- Current liabilities: Accounts payable (including $108,000 to affiliates) $ 2,321 Other current liabilities 1,148 ---------- Total current liabilities 3,469 ---------- Deferred income taxes 107,927 Deferred credits 6,631 Notes payable to banks under credit agreement 230,000 Parent company's investment: Common stock, par value $1 per share (authorized 250,000 shares; outstanding 2,500 shares) 2 Paid-in capital 248 Accumulated deficit (21,377) Subordinated notes payable to parent 17,729 ---------- Total parent company's investment (3,398) ---------- $ 344,629 ========== EX-99 7 FINANCIAL STATEMENT 1-B Financial Statement 1-b NEW ENGLAND ENERGY INCORPORATED Statement of Loss and Accumulated Deficit Twelve Months Ended September 30, 1994 (Unaudited) (In Thousands) Operating revenue: Sales to non-affiliates: Oil $ 5,922 Gas 37,071 Accrued revenue due from an affiliate 45,607 ---------- Total operating revenue 88,600 Operating expenses: Amortization 85,682 Production costs 5,177 General and administrative expense 7 ---------- Total operating expenses 90,866 ---------- Operating loss (2,266) Other income (expense): Interest income 16 Interest expense (1,637) ---------- Loss before income taxes (3,887) Income tax benefit 2,790 ---------- Net loss (1,097) Accumulated deficit at beginning of year (20,280) ---------- Accumulated deficit at end of year $ (21,377) ========== EX-99 8 FINANCIAL STATEMENT 2-A Financial Statement 2-a NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Consolidated Balance Sheet At Sepember 30, 1994 (Unaudited) ASSETS ------ (In Thousands) Utility plant, at original cost $4,846,064 Less accumulated provisions for depreciation and amortization 1,595,413 ---------- 3,250,651 Net investment in Seabrook 1 under rate settlement 55,206 Construction work in progress 348,988 ---------- Net utility plant 3,654,845 ---------- Oil and gas properties, at full cost 1,241,562 Less accumulated provision for amortization 951,872 ---------- Net oil and gas properties 289,690 ---------- Investments: Nuclear power companies, at equity 47,041 Other subsidiaries, at equity 42,354 Other investments, at cost 48,602 ---------- Total investments 137,997 ---------- Current assets: Cash 4,033 Accounts receivable, less reserves of $17,354,000 265,879 Unbilled revenues 48,875 Fuel, materials and supplies, at average cost 86,447 Prepaid and other current assets 64,961 ---------- Total current assets 470,195 ---------- Accrued Yankee Atomic costs 132,920 Deferred charges and other assets 298,981 ---------- $4,984,628 ========== CAPITALIZATION AND LIABILITIES ------------------------------ Capitalization: Common share equity: Common shares, par value $1 per share: Authorized - 150,000,000 shares Outstanding - 64,969,652 shares $ 64,970 Paid-in capital 736,823 Retained earnings 778,685 ---------- Total common share equity 1,580,478 Minority interests in consolidated subsidiaries 55,254 Cumulative preferred stock of subsidiaries 147,016 Long-term debt 1,512,499 ---------- Total capitalization 3,295,247 ---------- Current liabilities: Long-term debt due within one year 47,920 Short-term debt 147,475 Accounts payable 137,392 Accrued taxes 24,428 Accrued interest 19,920 Dividends payable 35,172 Other current liabilities 133,214 ---------- Total current liabilities 545,521 ---------- Deferred federal and state income taxes 716,723 Unamortized investment tax credits 97,415 Accrued Yankee Atomic costs 132,920 Other reserves and deferred credits 196,802 ---------- $4,984,628 ========== EX-99 9 FINANCIAL STATEMENT 2-B Financial Statement 2-b NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Statement of Consolidated Income Twelve Months Ended September 30, 1994 (Unaudited) (In Thousands) Operating revenue $2,245,325 ---------- Operating expenses: Fuel for generation 232,616 Purchased electric energy 503,013 Other operation 466,638 Maintenance 145,946 Depreciation and amortization 303,663 Taxes, other than income taxes 126,298 Income taxes 139,551 ---------- Total operating expenses 1,917,725 ---------- Operating income 327,600 Other income: Allowance for equity funds used during construction 8,597 Equity in income of generating companies 10,925 Other income (expense) - net (5,063) ---------- Operating and other income 342,059 ---------- Interest: Interest on long-term debt 93,193 Other interest 15,052 Allowance for borrowed funds used during construction (6,198) ---------- Total interest 102,047 ---------- Income after interest 240,012 Preferred dividends of subsidiaries 8,819 Minority interests 7,525 ---------- Net income $ 223,668 ========== Statement of Consolidated Retained Earnings Retained earnings at beginning of period $ 703,314 Net income 223,668 Dividends declared on common shares (147,481) Premium on redemption of preferred stock of subsidiaries (816) ---------- Retained earnings at end of period $ 778,685 ========== EX-99 10 FINANCIAL STATEMENT 3-A Financial Statement 3-a NEW ENGLAND POWER COMPANY Balance Sheet At September 30, 1994 (Unaudited) ASSETS ------ (In Thousands) Utility plant, at original cost $2,503,384 Less accumulated provisions for depreciation and amortization 992,656 ---------- 1,510,728 Net investment in Seabrook 1 under rate settlement 55,206 Construction work in progress 285,727 ---------- Net utility plant 1,851,661 ---------- Investments: Nuclear power companies, at equity 47,041 Nonutility property and other investments, at cost 20,245 ---------- Total investments 67,286 ---------- Current assets: Cash 1,227 Accounts receivable, principally from sales of electric energy: Affiliated companies 206,052 Others 67,610 Fuel, materials and supplies, at average cost 63,055 Prepaid and other current assets 27,400 ---------- Total current assets 365,344 ---------- Accrued Yankee Atomic costs 132,920 Deferred charges and other assets 165,966 ---------- $2,583,177 ========== CAPITALIZATION AND LIABILITIES ------------------------------ Capitalization: Common stock, par value $20 per share, authorized and outstanding 6,449,896 shares $ 128,998 Premiums on capital stocks 86,829 Other paid-in capital 288,000 Retained earnings 383,299 ---------- Total common equity 887,126 Cumulative preferred stock, par value $100 per share 60,516 Long-term debt 672,541 ---------- Total capitalization 1,620,183 ---------- Current liabilities: Short-term debt (including $2,500,000 to affiliates) 92,405 Accounts payable (including $66,613,000 to affiliates) 156,326 Accrued liabilities: Taxes 25,283 Interest 8,541 Other accrued expenses 12,021 Dividends payable 40,312 ---------- Total current liabilities 334,888 ---------- Deferred federal and state income taxes 349,452 Unamortized investment tax credits 61,192 Accrued Yankee Atomic costs 132,920 Other reserves and deferred credits 84,542 ---------- $2,583,177 ========== EX-99 11 FINANCIAL STATEMENT 3-B Financial Statement 3-b NEW ENGLAND POWER COMPANY Statement of Income Twelve Months Ended September 30, 1994 (Unaudited) (In Thousands) Operating revenue, principally from affiliates $1,550,523 ---------- Operating expenses: Fuel for generation 277,986 Purchased electric energy 502,452 Other operation 191,765 Maintenance 106,386 Depreciation and amortization 135,733 Taxes, other than income taxes 54,553 Income taxes 98,961 ---------- Total operating expenses 1,367,836 ---------- Operating income 182,687 Other income: Allowance for equity funds used during construction 7,387 Equity in income of nuclear power companies 5,899 Other income (expense) - net (2,868) ---------- Operating and other income 193,105 ---------- Interest: Interest on long-term debt 38,937 Other interest 6,077 Allowance for borrowed funds used during construction - credit (4,459) ---------- Total interest 40,555 ---------- Net income $ 152,550 ========== Statement of Retained Earnings Retained earnings at beginning of period $ 334,170 Net income 152,550 Dividends declared on cumulative preferred stock (3,448) Dividends declared on common stock (99,973) ---------- Retained earnings at end of period $ 383,299 ========== -----END PRIVACY-ENHANCED MESSAGE-----