-----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, PDJierkj8OUhpENb+f1m6TzbC7EdAbxB7JzRsZLsTYYmIUqAT/Djv4nD+px3ENbM oDm4kqEfH/2XNG5i2/ko6w== 0000071297-96-000042.txt : 19960522 0000071297-96-000042.hdr.sgml : 19960522 ACCESSION NUMBER: 0000071297-96-000042 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19960521 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/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-08819 FILM NUMBER: 96570567 BUSINESS ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01581 BUSINESS PHONE: 5083669011 U-1/A 1 File No. 70-8819 SECURITIES AND EXCHANGE COMMISSION 450 Fifth Street, N.W. Washington, DC 20549 AMENDMENT NO. 1 TO FORM U-1 APPLICATION/DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NEW ENGLAND ELECTRIC SYSTEM (Name of company 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 of applicant) Michael E. Jesanis Kirk L. Ramsauer Treasurer Associate General Counsel 25 Research Drive 25 Research Drive Westborough, MA 01582 Westborough, MA 01582 (Names and address of agents for service) Item 1, Description of Proposed Transactions, is hereby amended and restated in its entirety as follows: "A. NEES Transmission Services, Inc.: Purpose and Activities ------------------------------------------------------------ In response to the Federal Energy Regulatory Commission ("FERC") Notice of Proposed Rulemaking in Docket NO. RM95-8-000 ("NOPR"), on March 13, 1996, NEES, on behalf of its proposed new subsidiary to be formed and named NEES Transmission Services, Inc. ("NEES Trans"), and NEP submitted to FERC wholesale transmission tariffs and related agreements. (See Exhibit D.) By this FERC filing and the Transmission and Distribution Support Agreement (Exhibit J hereto) which relates to the FERC jurisdictional tariff, NEP and the Retail Companies proposed to turn operational control of their transmission facilities over to NEES Trans. On April 24, 1996, FERC issued its Order No. 888 Final Rule in Docket Nos. RM95-8-000 and RM94-7-001 ("Order 888") setting forth its requirements for open and comparable transmission access. In the NOPR and Order 888, the FERC stresses several principles that will govern the availability of transmission services in the future. First, the services must be open to all providers of electric power. Second, the treatment of all parties who will seek to take transmission service must be comparable and non-discriminatory. Third, the transmission portion of the business must be functionally unbundled from the generation business, such that all energy suppliers receive transmission service on the terms and conditions comparable to those upon which a supplier affiliated with the transmitting company receives service for new transactions. While the FERC does not order the corporate unbundling of an integrated company, it acknowledges that such a move would further the principles enumerated above. Finally, the transmission provider must make available on a comparable basis (either through its control area operator or through its own operations) FERC-specified ancillary services necessary to maintain system reliability and integrity. In response to the NOPR and Order 888, NEP proposes to contractually grant NEES Trans authority and operational control over the use of NEP's transmission facilities and entitlements in transmission facilities owned by NEP or subject to NEP's contractual control. NEP will continue to hold title to and maintain the transmission facilities, but the scheduling and performance of maintenance will be at the direction of NEES Trans. NEES Trans will furthermore serve as the interface between wholesale electric customers and the transmission system as the transmission service provider. The contractual rights granted to NEES Trans would, however, be subject to the rights of NEP's mortgage holders under its General and Refunding Mortgage Indenture and Deed of Trust . The transmission facilities to which NEP is granting rights to NEES Trans include NEP's contractual rights to use certain transmission facilities owned by others. NEES Trans intends to conform its use to the rights provided under each contract; in other words, contractual limitations on facilities now used by NEP will be observed by NEES Trans. To the extent that such rights and obligations are contained in contracts with other rights and obligations (e.g. NEP's power purchases from an interconnecting party), NEP is assigning to NEES Trans only the transmission rights and obligations of those contracts. NEP will seek any necessary consents to such assignments. The Transmission and Distribution Support Agreement also grants NEES Trans use of the distribution systems of Mass. Electric, Narragansett and Granite State as they may be needed to support wholesale transactions. Under the terms of the Transmission and Distribution Support Agreement, NEES Trans agrees to reimburse each retail affiliate for the use of its facilities at its cost of service. It is not proposed at this time to transfer ownership of transmission assets to NEES Trans. If the decision were made in the future to transfer transmission assets, such transfer would be the subject of separate filings with the Commission and other state and federal regulatory bodies. NEES Trans will have the responsibility of planning the expansion of the transmission system and will notify NEP of the need for additions to the system. NEES Trans will have the obligation to expand transmission capacity as needed, to arrange for its affiliates to license, engineer and construct the necessary additions, and to provide operational services necessary to maintain transmission system reliability and integrity. These operational services are bundled with transmission and, therefore, are not prohibited by Section 13 of the Act. The net effect of the Transmission and Distribution Support Agreement is that NEP transfers all authority and operational control over the use, operation, maintenance and expansion of the transmission system to NEES Trans. The three retail affiliates, all parties as well, transfer to NEES Trans certain limited authority and control over their systems to the extent they are used for FERC jurisdictional wholesale transactions. NEP and the three retails will become NEES Trans customers and receive transmission service under the same terms and conditions as any other customer, whether affiliated or not. The Transmission and Distribution Support Agreement provides for a one-year notice of termination by any party thereto. By turning over operational control of transmission facilities to NEES Trans as set forth above and committing to take service over those facilities under NEES Trans' tariffs, NEP and NEES, through its formation of NEES Trans, propose to implement the FERC's comparability objectives for open access wholesale transmission. Although the NOPR does not require corporate unbundling, NEES and NEP intend to take this step as part of an overall approach to ensuring the provision of wholesale transmission service on comparable terms to all users of the transmission system, including NEES Trans' affiliates, and to promote ease of transmission access. Establishing NEES Trans as a separate transmission subsidiary of NEES and using the Transmission and Distribution Support Agreement to provide the operational unbundling of the transmission system should advance the ultimate goals of the NOPR. NEES Trans' control over NEP's transmission facilities formalizes the unbundling of the transmission and generation functions and provides the marketplace with assurance that NEP will not be favored in its access to the transmission facilities. NEES believes that turning over operational control of transmission facilities to NEES Trans and committing to take service over these facilities under the proposed tariffs will assure the provision of wholesale transmission services on comparable terms to all users of the transmission system. The unbundling of wholesale transmission and generation services that the proposed FERC tariffs implement is also a critical underpinning for Choice: New England, the NEES companies' plan to allow all customers of electric utilities in Massachusetts, Rhode Island, and New Hampshire to choose their power supplier beginning in 1998. Choice: New England is subject to approval by state and federal regulators and the timetable for their consideration is uncertain. NEES has filed an Application/Declaration (File No. 70-8803) requesting authority to form and finance one or more marketing companies as a step toward implementation of Choice: New England; this filing also requests authorization for marketing affiliates to participate in retail access pilot programs in New Hampshire and Massachusetts. In light of the foregoing, NEES believes that the requirements of Section 10 of the Act are met. In particular, given the announced objectives of FERC and impending deregulation in its operating subsidiaries' service territories, NEES believes that the formation of NEES Trans as set forth herein represents an economic and efficient means of developing the NEES integrated public utility system consistent with the evolving regulatory regime and the public interest (see Section 10(c)(2) of the Act). Further, the formation and activities of NEES Trans as outlined herein represent a necessary and appropriate means of modifying the corporate structure of the NEES system to address FERC requirements and the competitive marketplace in compliance with the requirements of Sections 10(c)(1) and 11 of the Act. The NEP transmission assets over which NEES Trans will exert operational control are subject to the jurisdiction of FERC, exclusive of any state jurisdiction. NEES Trans would have operational control only of NEP transmission assets covered by NEP's approved FERC tariffs. FERC has determined that it has exclusive jurisdiction over unbundled retail transmission in interstate commerce by public utilities, up to the point of local distribution (see Order 888, page 401). In some instances, facilities may be used for both FERC- and state-jurisdictional transactions. NEES Trans will have operational control of those assets only to the extent necessary to accomplish a FERC jurisdictional transmission transaction. Therefore, operation by NEES Trans of these assets would not be subject to state jurisdiction. States affected by the NOPR and Order 888 have the opportunity to intervene, and in some cases have intervened, in these proceedings at the FERC level to protect their interests with respect to operational and FERC ratemaking concerns. It is the position of NEP and NEES that the SEC may defer to the FERC findings in the NOPR and Order 888. In the FERC filing, NEES and NEP requested that the effective date of the FERC tariffs be as of the first day of the calendar month following the later of (i) 60 days from the date of the FERC filing or (ii) five business days following SEC approval of forming and financing NEES Trans. NEES Trans will serve both associate and non-associate companies. A non-associate company will pay the same tariff as an associate company In the event that NEES Trans offers a discount to an associate company, it must offer the same discount to all non-associate companies which it serves. NEES Trans will supply transmission services to generators of electricity and to suppliers of electricity, but will not make retail sales of electricity. B. Formation and Financing of NEES Trans ---------------------------------------- NEES proposes to form NEES Trans for the limited purpose of providing transmission and related services. When formed, NEES Trans would be a public utility within the meaning of Section 2(a)(3) of the Act. NEES proposes to provide initial financing for NEES Trans by the purchase of one thousand shares of common stock, par value $1.00 per share, for a total purchase price of $1,000. NEES then proposes to make subsequent capital contributions and/or loans to NEES Trans from time to time, provided that such NEES financing shall not be in excess of $10 million in the aggregate outstanding at any one time. Any such loans will be in the form of non-interest bearing subordinated notes payable in twenty years or less from the date of issue (see Exhibit B hereto). NEES Trans may prepay any or all of the outstanding notes hereunder, in whole or in part, at any time and from time to time without premium or penalty. NEES shall only make such loans provided: (a) there shall be in full force and effect appropriate orders of all regulatory authorities having jurisdiction in the premises; (b) the making of such loan shall not contravene any provision of law or any provision of the certificate of incorporation or by-laws of NEES Trans or any agreement binding upon NEES Trans; and (c) the making of such loan shall not contravene any provision of law or any provision of the Agreement and Declaration of Trust of NEES. Subsequent capital contributions or open account advances without interest, loans, or extensions of credit, from NEES to NEES Trans in accordance with the terms of Rule 45 of the Act, are exempt from the requirement of authorization by the Commission. It is proposed that the above investments be authorized through December 31, 1999. C. Personnel of NEES Trans --------------------------- Staffing is expected to begin with a small group of employees for NEES Trans. Technical and support staff needed for a particular project could be assigned for the duration of that project from NEP, NEPSCO, and the Retail Companies, and the assigned employees would continue to be employees of NEP, NEPSCO, and the Retail Companies, not to exceed in any one year 2% of the total employees of NEP, NEPSCO, and the Retail Companies. All costs associated with such staff (including compensation, overheads, and benefits) would be fully reimbursed by NEES Trans in accordance with Rules 90 and 91 of the Act. Reimbursements for these costs will be on a thirty-day cycle basis. D. Money Pool and Short-term Borrowing -------------------------------------- NEES Trans seeks short-term borrowing authority through October 31, 1997, including the authority to borrow and lend money in the NEES Money Pool (approved by the Commission in its File No. 70- 7765). NEES Trans seeks $15,000,000 of borrowing authority, such authority to be inclusive of borrowings from both the NEES Money Pool and third parties. The proceeds from the proposed borrowings are to be used (i) to pay then outstanding notes initially issued to banks and/or borrowings from the Money Pool, and (ii) for other corporate purposes relating to ordinary business operations, including working capital and funds to cover timing differences in payments received and payments due. As NEES Trans is a new corporation, it is not possible to provide a meaningful analysis of the source and application of funds through October 31, 1997. 1. Borrowings from the Money Pool NEES Trans proposes to reduce its need for outside borrowing authority through the use of the Money Pool. Under the Money Pool, surplus funds that may be available from day to day in the treasuries of NEES and its participating subsidiaries (File No. 70-8679) are used to make loans to borrowing companies within the NEES system in need of short-term funds. The rate will be 1.08 times the monthly average of the rate for high grade 30-day commercial paper sold through dealers by major corporations as published in the "Wall Street Journal." Although there are no stated maturities, the loans made by the Money Pool are payable on demand, and may be prepaid by the borrower without penalty. Borrowings may, but need not be, evidenced by notes. Borrowings will be available first to the wholly owned subsidiaries of NEES (the Group I Borrowers). Thereafter, if the Money Pool still has additional funds, those will be available to the non-wholly owned subsidiaries of NEES (the Group II Borrowers) before external investments are made. All funds borrowed by the Group II Borrowers will be used for their own internal financing and will not be loaned to stockholders. Each member determines each day, on the basis of cash flow projections, the amount of surplus funds it has available for contribution to the Money Pool. The surplus funds are transferred to an account of NEPSCO, which administers and maintains as agent the Money Pool for the member companies. The proposed amended terms of the Money Pool, reflecting the addition of NEES Trans, are shown in Exhibit K. 2. Borrowings from Banks The proposed borrowings from banks will be evidenced by notes maturing in less than one year from the date of issuance. NEES Trans will negotiate with the banks the interest costs of such borrowings. NEES Trans will pay fees to the banks in lieu of compensating balance arrangements. The effective interest cost of borrowings from a bank will not exceed the greater of the bank's base or prime lending rate, or the rate published in the "Wall Street Journal," as the high federal funds rate, plus, in either case, one percent. Based on the current base lending rate of 8.75% and an equivalent or lower high federal funds rate, the effective interest costs of such a borrowing today would not exceed 9.75% per annum. Certain of such borrowings may be without prepayment privileges. Payment of any short-term promissory notes prior to maturity will be made on the basis most favorable to NEES Trans, taking into account fixed maturities, interest rates, and any other relevant financial considerations. 3. Filing of Certificates of Notification Within 45 days after the end of each calendar quarter, NEES Trans will file a Certificate of Notification covering the transactions effected pursuant to the authority requested herein during such quarter. Such certificate will show the dates and amounts of all new money borrowings, the names of the lenders, the maximum concurrent amount of notes outstanding to the banks, the Money Pool, the aggregate total outstanding at any one time, and the aggregate total outstanding at the end of such quarter. Each certificate will include a statement of whether any of the funds borrowed were paid by a subsidiary company to NEES through dividends for the purpose of NEES acquiring an interest in an exempt wholesale generator or foreign utility company. The amount of such dividend payment must be given. The final certificate of notification will be accompanied by the required past-tense opinion of counsel. If the same lines were maintained over the period of the requested authority, the total of the above fees would be approximately $50,000. E. Compliance with Rule 53 -------------------------- Neither NEES nor any subsidiary currently has an ownership interest in an exempt wholesale generator ("EWG") as defined in Section 32 of the Act or a foreign utility company ("FUCO") as defined in Section 33 of the Act. Additionally, neither NEES nor any subsidiary is a party to, or has any rights under, a service, sales, or construction agreement with an EWG or FUCO. By its Order dated April 15, 1996 (HCAR 35-26504), the Commission has authorized EWG and FUCO acquisitions and financings by NEES and/or NEERI as set forth in their Application/Declaration in File No. 70-8783. In the event that the total amount of authority requested in the above-referenced Application/Declaration (File No. 70-8783) is invested in connection with EWGs and FUCOs, NEES' 'aggregate investment' (determined in accordance with Rule 53(a)(1)(i)) in EWGs and FUCOs would not exceed 50% of NEES' 'consolidated retained earnings' (as defined in Rule 53(a)(1)(ii)) in compliance with the provisions set forth in Rule 53 under the Act. NEES and its subsidiaries shall comply with the requirements of Rules 53 and 54 of the Act in connection with EWG and FUCO acquisitions and financings. No funds or borrowings requested in this filing will be used by NEES, NEERI, NEES Trans, or any associated company to invest in EWGs and/or FUCOs." Item 3, Applicable Statutory Provisions, is hereby amended and restated in its entirety as follows: "The sections of the Act and rules or exemptions thereunder that are believed to be applicable to the transactions are: Sections 6(a), 7, 9(a), 10, 11, 12, and 13, and Rules 45, 52, 90 and 91 all relating to the authority for NEES to undertake the transactions proposed herein. The proposed Money Pool and Short-term Borrowing authorization is subject to the following provisions: (1) The issuance of notes by NEES Trans to banks: Sections 6(a) and 7 of the Act. (2) Borrowings from the Money Pool: Sections 6(a), 7, 9(a), 10, and 12 of the Act and Rules 43 and 45. (3) Loans to the Money Pool: Section 9(a), 10, and 12 of the Act; and exempted from Rule 45(a) by subparagraph (b)(1) thereof. (4) Investments by the Money Pool: Section 9(a), 10, and 12 of the Act. (5) The payment of indebtedness is exempted from Sections 9(a) and 12 and Rule 42(a) by subparagraph (b) (2) of the Rule." Item 6 is hereby amended by supplying the following exhibits and financial statements: (a) Exhibits G-1 Financial Data Schedule for NEES (Parent Company Only) G-2 Financial Data Schedule for NEES (Consolidated) (b) Financial Statements 1-A Balance Sheet of NEES at March 31, 1996, Actual (Parent Company Only) (Pro Forma not included since formation of new company) 1-B Statement of Income and Retained Earnings for NEES for twelve months ended March 31, 1996, Actual (Parent Company Only) (Pro Forma not included since formation of new company) 2-A Consolidated Balance Sheet of NEES at March 31, 1996, Actual (Pro Forma not included since formation of new company) 2-B Statement of Consolidated Income and Consolidated Retained Earnings for NEES for twelve months ended March 31, 1996, Actual (Pro Forma not included since formation of new company) SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this Amendment No. 1 to its Application/Declaration on Form U-1 to be signed on its behalf, as indicated by the undersigned officer thereunto duly authorized. NEW ENGLAND ELECTRIC SYSTEM s/Michael E. Jesanis _______________________________ Michael E. Jesanis, Treasurer Dated: May 21, 1996 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 of Massachusetts. 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 assumes or shall be held to any liability therefore. EX-99 2 EXHIBIT INDEX Exhibit No. Description Page - ----------- ----------- ---- G-1 Financial Data Schedule for Filed NEES (Parent Company only) herewith G-2 Financial Data Schedule Filed for NEES (Consolidated) herewith Financial Statement No. Description Page - ------------- ----------- ---- 1-A Balance Sheet of NEES at March 31, Filed 1996, Actual (Parent Company only) herewith (Pro Forma not included since formation of new company) 1-B Statement of Income and Retained Filed Earnings for NEES for twelve months herewith ended March 31, 1996, Actual (Parent Company only) (Pro Forma not included since formation of new company) 2-A Consolidated Balance Sheet of NEES Filed at March 31, 1996, Actual (Pro herewith Forma not included since formation of new company) 2-B Statement of Consolidated Income Filed and Consolidated Retained Earnings herewith for NEES for twelve months ended March 31, 1996, Actual (Pro Forma not included since formation of new company) EX-27 3 FINANCIAL DATA SCHEDULE G-1 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND RELATED STATEMENTS OF INCOME, RETAINED EARNINGS AND CASH FLOWS OF NEW ENGLAND ELECTRIC SYSTEM (PARENT COMPANY), AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 MAR-31-1996 MAR-31-1996 12-MOS PER-BOOK 0 1,655,119 42,316 3,042 0 1,700,477 64,970 736,567 854,720 1,656,257 0 0 0 0 0 0 0 0 0 0 44,220 1,700,477 0 (364) 4,225 3,861 (3,861) 222,894 219,033 334 218,699 0 218,699 153,329 0 0 0 0 EX-27 4 FINANCIAL DATA SCHEDULE G-2
OPUR1 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED STATEMENTS OF INCOME, RETAINED EARNINGS AND CASH FLOWS OF NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 MAR-31-1996 MAR-31-1996 12-MOS PER-BOOK 3,878,680 395,306 494,776 406,299 0 5,175,061 64,970 736,823 854,720 1,654,112 0 147,016 1,658,291 164,711 0 0 17,085 0 0 0 1,533,846 5,175,061 2,299,616 137,555 1,817,063 1,954,618 344,998 8,517 353,515 118,437 218,591 8,690 218,591 153,221 0 499,802 $3.37 $3.37 Total deferred charges includes other assets and accrued Yankee Atomic costs. Preferred stock reflects preferred stock of subsidiaries. Preferred stock dividends reflect prefrred stock dividends of subsidiaries. Short-term notes includes commercial paper obligations. Total common stockholders equity is reflected net of treasury stock at cost. EX-99 5 FINANCIAL STATEMENT 1-A Financial Statement 1-A NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Balance Sheet At March 31, 1996 (Unaudited) ASSETS ------ (In Thousands) Investments: Common stocks of subsidiaries, at equity $1,627,264 Notes of subsidiaries 24,229 Other investments 3,626 ---------- Total investments 1,655,119 ---------- Current assets: Cash 193 Temporary cash investments - subsidiary companies 26,075 Interest and dividends receivable of subsidiaries 15,991 Other current assets 57 ---------- Total current assets 42,316 ---------- Deferred federal income taxes 3,042 ---------- $1,700,477 ========== CAPITALIZATION AND LIABILITIES ------------------------------ Common share equity: Common shares, par value $1 per share: Authorized - 150,000,000 shares Outstanding - 64,899,369 shares $ 64,970 Paid-in capital 736,567 Retained earnings (including $619,025,000 of undistributed subsidiary earnings) 854,720 ---------- Total common share equity 1,656,257 ---------- Current liabilities: Accounts payable (including $403,000 to subsidiaries) 1,291 Other accrued expenses 1,626 Dividends payable 34,247 ---------- Total current liabilities 37,164 ---------- Deferred credits 7,056 ---------- $1,700,477 ========== EX-99 6 FINANCIAL STATEMENT 1-B Financial Statement 1-B NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Statement of Income Twelve Months Ended March 31, 1996 (Unaudited) (In Thousands) Equity in earnings of subsidiaries $ 222,187 Interest income - subsidiaries 589 --------- Total income from subsidiaries 222,776 Other income 118 --------- Total income 222,894 Corporate and fiscal expenses (includes $558,000 for cost of services billed by an affiliated company) 4,225 Federal income taxes (364) --------- Income before interest 219,033 Interest 334 --------- Net income $ 218,699 ========= Statement of Retained Earnings Retained earnings at beginning of period $ 789,350 Net income 218,699 Dividends declared on common shares (153,329) --------- Retained earnings at end of period $ 854,720 ========= EX-99 7 FINANCIAL STATEMENT 2-A Financial Statement 2-A NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Consolidated Balance Sheet At March 31, 1996 (Unaudited) ASSETS ------ (In Thousands) Utility plant, at original cost $5,534,437 Less accumulated provisions for depreciation and amortization 1,753,950 ---------- 3,780,487 Net investment in Seabrook 1 under rate settlement 11,408 Construction work in progress 86,785 ---------- Net utility plant 3,878,680 ---------- Oil and gas properties, at full cost 1,268,686 Less accumulated provision for amortization 1,048,516 ---------- Net oil and gas properties 220,170 ---------- Investments: Nuclear power companies, at equity 47,302 Other subsidiaries, at equity 38,802 Other investments 89,032 ---------- Total investments 175,136 ---------- Current assets: Cash 4,399 Accounts receivable, less reserves of $19,909,000 277,378 Unbilled revenues 53,781 Fuel, materials, and supplies, at average cost 78,465 Prepaid and other current assets 80,753 ---------- Total current assets 494,776 ---------- Deferred charges and other assets 406,299 ---------- $5,175,061 ========== CAPITALIZATION AND LIABILITIES ------------------------------ Capitalization: Common share equity: Common shares, par value $1 per share: Authorized - 150,000,000 shares Outstanding - 64,899,369 shares $ 64,970 Paid-in capital 736,823 Retained earnings 854,720 Treasury stock - 70,283 shares (2,401) ---------- Total common share equity 1,654,112 Minority interests in consolidated subsidiaries 47,947 Cumulative preferred stock of subsidiaries 147,016 Long-term debt 1,658,291 ---------- Total capitalization 3,507,366 ---------- Current liabilities: Long-term debt due within one year 17,085 Short-term debt 164,711 Accounts payable 123,049 Accrued taxes 72,802 Accrued interest 21,947 Dividends payable 38,197 Other current liabilities 100,486 --------- Total current liabilities 538,277 ---------- Deferred federal and state income taxes 762,765 Unamortized investment tax credits 93,097 Other reserves and deferred credits 273,556 ---------- $5,175,061 ========== EX-99 8 FINANCIAL STATEMENT 2-B Financial Statement 2-B NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Statement of Consolidated Income Twelve Months Ended March 31, 1996 (Unaudited) (In Thousands) Operating revenue $2,299,616 ---------- Operating expenses: Fuel for generation 262,831 Purchased electric energy 528,565 Other operation 504,165 Maintenance 127,212 Depreciation and amortization 258,349 Taxes, other than income taxes 135,941 Income taxes 137,555 ---------- Total operating expenses 1,954,618 ---------- Operating income 344,998 Other income: Allowance for equity funds used during construction 5,238 Equity in income of generating companies 10,668 Other income (expense), net (7,389) ---------- Operating and other income 353,515 ---------- Interest: Interest on long-term debt 110,130 Other interest 19,507 Allowance for borrowed funds used during construction (11,200) ---------- Total interest 118,437 ---------- Income after interest 235,078 Preferred dividends of subsidiaries 8,690 Minority interests 7,797 ---------- Net income $ 218,591 ========== Common shares 64,921,367 Net income per common share $3.37 Dividends declared per share $2.36 Statement of Consolidated Retained Earnings Retained earnings at beginning of period $ 789,350 Net income 218,591 Dividends declared on common shares (153,221) --------- Retained earnings at end of period $ 854,720 ========= -----END PRIVACY-ENHANCED MESSAGE-----