-----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, EYygwlgF9Ql1wt5ELYAf2hz8TqXXIgGptOrDbNebHBLK8k72m3B1eHF9yivIOmav X/ZfhFxoVdlzHjnVBRfI+Q== 0000071297-96-000073.txt : 19961101 0000071297-96-000073.hdr.sgml : 19961101 ACCESSION NUMBER: 0000071297-96-000073 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19961031 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: 070-08921 FILM NUMBER: 96650914 BUSINESS ADDRESS: STREET 1: 25 RESEARCH DR CITY: WESTBOROUGH STATE: MA ZIP: 01581 BUSINESS PHONE: 5083669011 U-1/A 1 File No. 70-8921 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 and NEES ENERGY, INC. (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 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) 1. Item 1 is hereby amended to read in its entirety as follows: "New England Electric System (NEES) is a registered holding company under the Public Utility Holding Company Act of 1935 (the Act) whose subsidiary companies include New England Power Company, an electric generation subsidiary (NEP), retail electric utility subsidiaries (the Retail Companies), New England Power Service Company (NEPSCO, a service company subsidiary), New England Electric Resources, Inc. (NEERI), a wholly-owned, non-utility subsidiary of NEES, an energy company subsidiary, and two electric power marketing subsidiaries (collectively, the NEES System) and a proposed new energy marketing subsidiary: AllEnergy Marketing Company L.L.C., having offices at 3 University Office Park, 95 Sawyer Road, Waltham, Massachusetts 02154. By its Order dated May 23, 1996 (HCAR No. 26520) (the May Order) and August 28, 1996 (HCAR No. 26563) (the August Order), the Commission approved the formation of one or more marketing companies (Marketing Companies) by NEES. In the May Order the Commission authorized the formation of Marketing Companies in Massachusetts, New Hampshire, Rhode Island, Maryland, Delaware, Pennsylvania, New Jersey, and New York; in the August Order the Commission authorized the formation of Marketing Companies in Connecticut, Maine, and Vermont. The May and August Orders authorized Marketing Companies to: (i) market electric power at wholesale, (ii) market electric power at retail pursuant to participation in the New Hampshire retail competition pilot program and two Massachusetts retail competition pilot programs, and (iii) provide a broad range of electrical related services, including, but not limited to, audits, power quality, fuel supply, repair, maintenance, construction, design, engineering, and consulting. In the May and August Orders, the Commission reserved jurisdiction over retail electric sales by Marketing Companies, except to the extent electric retail marketing is permitted under the aforementioned New Hampshire and Massachusetts pilot programs, pending a filing demonstrating that the relevant jurisdiction has authorized such retail sales. The May and August Orders authorized NEES to invest not exceeding $15 million in the Marketing Companies. Pursuant to the May Order, NEES has formed NEES Energy, Inc. (NEES Energy), a Massachusetts corporation, and Granite State Energy, Inc. (Granite State Energy), a New Hampshire corporation, to undertake marketing activities consistent with the Commission's Orders. A. AllEnergy LLC Investment ---------------------------- NEES Energy intends to enter into a joint venture with a subsidiary of Eastern Enterprises (Eastern) to engage in the marketing of energy and related services and products. The retail electric utility subsidiaries of NEES serve approximately 1.3 million customers and have peak demand and capacity resources above 4300 MW and 5500 MW, respectively. Eastern, an exempt public utility holding company, owns and operates Boston Gas Company, New England's largest distributor of natural gas, serving over 500,000 customers in eastern and central Massachusetts including Boston, and Midland Enterprises, Inc. a coal and other dry bulk cargo inland waterway carrier. NEES Energy proposes to invest, from time to time, not exceeding $50 million in, and be a voting member of, AllEnergy Marketing Company, L. L. C., a limited liability corporation to be formed under the laws of The Commonwealth of Massachusetts on September 18, 1996 (AllEnergy LLC) pursuant to a Limited Liability Company Agreement (the LLC Agreement), a copy of which is attached hereto as Exhibit B-1. NEES Energy proposes to own not exceeding a fifty percent (50%) voting interest in AllEnergy LLC. The remaining fifty percent (50%) voting interest in AllEnergy LLC will initially be owned by AllEnergy Marketing Company, Inc., a wholly owned subsidiary of Eastern Enterprises (Eastern Sub). The LLC Agreement makes NEES Energy's obligation to invest in AllEnergy LLC conditional upon NEES Energy's receipt of investment authorization from the Commission in a satisfactory form. Third parties may later invest in owning an interest in AllEnergy LLC pursuant to the terms of the LLC Agreement. AllEnergy LLC will engage in the business of marketing and selling: (i) energy commodities, including electricity, natural gas, oil and other energy sources as well as options, futures contracts, forward contracts, collars, spot contracts or swap contracts related to the choice, purchase or consumption of any such energy commodity and any other financial products marketed or used in connection therewith (see, e.g. American Electric Power Company, Inc., Holding Company Act Release No. 26583, September 27, 1996), and (ii) incidental and reasonably necessary products and services related to the choice, purchase or consumption of any such energy commodity, such as, but not limited to, audits, power quality, fuel supply, repair, maintenance, construction, design, engineering, and consulting, whether or not sold or provided on a bundled basis with such natural gas, electricity, oil, or other energy source(see, e.g. SEI Holdings, Inc., Holding Company Act Release No. 26581, September 26, 1996). AllEnergy LLC will employ various risk-reduction measures to limit potential losses that could be incurred through AllEnergy LLC activities. These measures may include energy commodity hedging transactions; provided, however, that AllEnergy LLC will not engage in speculative trading. Management of AllEnergy LLC will be by its members, NEES Energy, Eastern Sub, and other entities (if any) subsequently admitted to membership in AllEnergy LLC. The members of AllEnergy LLC may delegate powers and authority to officers of AllEnergy LLC, subject to the restrictions of the LLC Agreement. AllEnergy LLC has developed a five year business plan to implement its marketing strategy. Although AllEnergy LLC's initial efforts will be focused on the Northeast region, AllEnergy LLC may expand its business to all 50 United States and Canada. AllEnergy LLC will engage in brokering and retail marketing of electric power and natural gas within a state or other jurisdiction only to the extent permitted or authorized under such state's or other jurisdiction's laws or programs. (See, e.g. Eastern Utilities Associates, Holding Company Act Release No. 26586, October 2, 1996). The applicants request that the Commission reserve jurisdiction over AllEnergy LLC's doing business as outlined in this filing outside of the United States. To date, three New England states have initiated programs for the retail wheeling of electricity. Granite State Energy is participating in the New Hampshire pilot program to establish retail electric competition adopted by the New Hampshire Public Utilities Commission. NEES Energy is participating in two of the Massachusetts retail electric competition pilot programs approved by the Massachusetts Department of Public Utilities. On August 7, 1996, the Governor of Rhode Island signed into law the Electric Restructuring Act of 1996 (96-H 8124 SUB B; the RI Act). The RI Act authorizes retail wheeling in Rhode Island on the following timetable for the indicated customer classes: July 1, 1997 -- All new customers over 200 KW, existing manufacturing customers over 1500 KW, and all state accounts January 1, 1998 -- All manufacturing customers over 200 KW, and all municipal accounts July 1, 1998 -- All remaining customers The RI Act provides that, if 40 percent of New England has customer choice before July 1998, all Rhode Island customers will have choice within three months, regardless of the above timetable. Gas deregulation in Massachusetts is proceeding on a company by company basis. Boston Gas Company has a rate case on file with the Massachusetts Department of Public Utilities setting forth a plan to transition from traditional bundled service to a "distribution only" company (by exiting the merchant function of buying and arranging transport of gas) by the end of 1999 for all commercial/industrial and residential customers; Boston Gas Company's system is presently open for its largest customer class. AllEnergy LLC may choose to form one or more subsidiaries in order, among other things, to pursue its business in a particular state; AllEnergy LLC requests authority to form such subsidiaries. AllEnergy LLC will make an initial equity contribution not exceeding $100,000 in any such subsidiary. The form of AllEnergy LLC's initial equity investment, together with the formalities of the subsidiary's formation, may differ based on the type of entity organized: if such a subsidiary is a corporation, AllEnergy LLC's initial investment may involve a purchase of common shares; if such a subsidiary is a limited liability corporation or a partnership, AllEnergy LLC may enter into an organization agreement and purchase a membership or partnership interest. Subsequent capital contributions or open account advances without interest, loans, or extension of credit, from AllEnergy LLC to any such subsidiary in accordance with Rule 45 of the Act are exempt from the requirement of authorization from the Commission. AllEnergy LLC may have opportunities to acquire businesses to complement its business such as, without limitation, engineering services providers and propane gas businesses, and rather than acquire assets may prefer to acquire the securities thereof, but will not acquire any securities of third parties without the further authorization of the Commission. The applicants request that the Commission reserve jurisdiction over AllEnergy LLC's acquisition of such other businesses. AllEnergy LLC requests authorization to acquire or construct physical assets that are incidental and reasonably necessary in the day-to-day conduct of its operations. Prior to the issuance of the Commission's Order in connection with this filing, AllEnergy LLC may have entered into a commitment to acquire a propane gas marketing business located in the Eastern United States; the applicants request authorization to acquire an interest in the business of such propane gas marketing business, paying therefore not exceeding $3.5 million. The terms of such acquisition will likely require, without limitation, (i) the payment or cancellation of the acquired entity's outstanding debt prior to the acquisition, (ii) execution of agreements by key employees of the acquired entity to continue employment with such entity for a period of time following the acquisition, (iii) the assignment, without violation of the terms thereof, of material contracts, contract rights, and leases , and other rights and commitments of the acquired entity to AllEnergy LLC, and (iv) the making of customary representations and warranties by the acquired entity and AllEnergy LLC, respectively. AllEnergy LLC will not acquire any utility assets or gas distribution facilities, as those terms are defined under the Act and regulations and orders issued thereunder, and will, therefore, not be either an electric or gas utility under the Act. NEES and/or NEES Energy may also be required to supply guarantees or other credit support agreements for the benefit of AllEnergy LLC in the ordinary course of AllEnergy LLC's business including, without limitation, in connection with its execution of office leases, or of long term gas or electrical supply contracts. NEES and NEES Energy request authorization to provide such guarantees or credit support in amounts not to exceed, in the aggregate and inclusive of guarantees or credit support provided in connection with short term borrowing as set forth in Section E of this filing, $20 million. B. LLC Agreement Loan and Transfer Provisions ---------------------------------------------- Section 3.7 of the LLC Agreement provides that in the event an AllEnergy LLC member defaults in making a required capital contribution to AllEnergy LLC, the non-defaulting member may, at its discretion, advance to AllEnergy LLC on behalf of the defaulting member all or a portion of such required capital contribution (a Member Default Loan). The defaulting member is responsible for repaying the Member Default Loan to the member making such loan in accordance with Section 3.7.3 of the LLC Agreement. In the event that (i) the non-defaulting member elects not to make such a Member Default Loan, or (ii) the Member Default Loan is not repaid, then the members' percentage interests in AllEnergy LLC shall, at the election of the non-defaulting member, be adjusted to reflect the failure of the defaulting member to either make the required capital contribution, or repay the Member Default Loan, as the case may be, in accordance with a formula set forth in Section 3.7.4 of the LLC Agreement. The applicants request authorization to make or repay any such Member Default Loan, or effect such adjustments of member interests, pursuant to the terms of the LLC Agreement. Members of AllEnergy LLC may effect a transfer of all or a portion of their interest therein in accordance with Article 9 of the LLC Agreement. Such transfers may include required regulatory transfers, transfers to affiliates, transfers to another member of AllEnergy LLC, and transfers to third parties. Section 9.3 of the LLC Agreement provides that, in the event an AllEnergy LLC member receives an offer to purchase its interest therein and intends to transfer its interest pursuant to such offer, or must make a required regulatory transfer of all or a portion of its interest, the other member shall have a right to purchase such interest at the offer price, or at the fair market value of the transferred portion of such interest (in the case of a required regulatory transfer), (the Purchase Right). The applicants request authorization to make from time to time such transfers, and to exercise such Purchase Right, pursuant to the terms of the LLC Agreement. The LLC Agreement provides a mechanism whereby either NEES Energy or Eastern Sub may trigger a withdrawal of either party from AllEnergy LLC by means of a buy/sell transaction (the Buy/Sell Provision). In summary, the Buy/Sell Provision permits either party to withdraw by giving the other party a notice of intention to withdraw indicating a cash price at which the withdrawing party would be willing to either buy or sell its interest in AllEnergy LLC. The party receiving such notice may then either buy the other party's AllEnergy LLC interest, or sell its own AllEnergy LLC interest to such other party, at such price. The Buy/Sell Provision may, among other things, be used to address conflicts between NEES Energy and Eastern Sub in connection with AllEnergy LLC which the parties are unable to resolve. The Buy/Sell Provision is set forth in detail in Section 9.6 of the LLC Agreement (see Exhibit B-1). The applicants request authorization to consummate a Buy/Sell Provision transaction, should this become necessary, without further approval from the Commission. C. Financing of AllEnergy LLC Investment ----------------------------------------- NEES proposes to provide initial financing for NEES Energy's investment in AllEnergy LLC by making capital contributions and/or loans to NEES Energy from time to time, provided that such NEES financing shall not be in excess of $50 million in the aggregate outstanding at any one time, including any short term loans made by NEES and/or NEES Energy pursuant to the authority requested in Item 1, Part E hereof and any amounts provided by NEES and/or NEES Energy which are used by AllEnergy LLC to acquire the assets or securities of third parties, or to invest in a subsidiary, pursuant to the authority requested in Item 1, Part A hereof, and excluding any guarantees from NEES and/or NEES Energy supplied pursuant to the authority requested in the last paragraph of Item 1, Part A. 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-2 hereto). NEES Energy may prepay any or all of such outstanding notes, 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 Energy or any agreement binding upon NEES Energy; 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 Energy 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, 2001. D. Personnel ------------- AllEnergy LLC staffing is expected to begin with a small group of employees. It is intended that four employees of NEPSCO will be assigned to AllEnergy LLC on a full-time basis; to the extent any more NEPSCO personnel are assigned to AllEnergy LLC, they will become employees of AllEnergy LLC. Other than such four NEPSCO employees, AllEnergy LLC will have its own employees and only rely on NEPSCO or an Eastern subsidiary for administrative services such as accounting, tax, legal, information services, insurance, and personnel management. All costs associated with these NEPSCO services, and with services of the above four NEPSCO employees assigned to AllEnergy LLC on a full-time basis, would be fully reimbursed on a cost basis by AllEnergy LLC in accordance with Rules 90 and 91 of the Act; reimbursements for these costs will be on a thirty-day cycle basis. E. Short-term Borrowing ------------------------ AllEnergy LLC intends to engage in short-term borrowing from third parties pursuant to Rule 52(b) of the Act. Such borrowings will be solely for the purpose of financing AllEnergy LLC's existing business; the interest rates and maturity dates of any debt security issued to an associate company of AllEnergy LLC will be designed to parallel the effective cost of capital of that associate company. In connection with such borrowings, it may be necessary for NEES and/or NEES Energy to enter into guarantee or other credit support agreements with lenders. NEES and NEES Energy request authorization to enter into such agreements from time to time in connection with such borrowings. F. 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 financings by NEES and/or NEERI for the purpose of acquiring EWGs and FUCOs 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 Energy, AllEnergy LLC, or any associated company to invest in EWGs and/or FUCOs. G. Rule 24 Certificates ------------------------ NEES Energy and AllEnergy LLC shall file certificates with the Commission pursuant to the terms and conditions of Rule 24 under the Act on an annual basis, within 90 days of the end of each year, in connection with the business of AllEnergy LLC. As part of such Rule 24 filings, NEES Energy and AllEnergy LLC shall provide the Commission with: (1) a report of the number of permanent employees assigned to AllEnergy LLC during such period, (2) a balance sheet, twelve months ending income statement, and statement of cash flow for AllEnergy LLC, and (3) a description of the general category of energy commodity related services and products provided by AllEnergy LLC during such period. In addition, AllEnergy LLC shall file a Rule 24 certificate with the Commission informing it of any of the following transactions, within thirty (30) days following the consummation of any such transaction: (i) the formation of any subsidiary of AllEnergy LLC, (ii) a Buy/Sell Provision transaction, or (iii) any other transaction resulting in a change in the ownership of membership interests in AllEnergy LLC. Finally, within 90 days after the end of each calendar quarter, AllEnergy LLC will file a Rule 24 certificate covering the transactions effected pursuant to the short-term borrowing authority requested in Section E hereof 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 lenders, 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." 2. Item 6 (a) is hereby amended by filing the following exhibits: *B-1 LLC Agreement G-1 Financial Data Schedule for NEES (Parent Company Only) G-2 Financial Data Schedule for NEES (Consolidated) G-3 Financial Data Schedule for NEES Energy Pursuant to Section 22 and Rule 104, the applicants hereby object to the public disclosure of any part or parts of Exhibit B-1 and request confidential treatment therefor. The information contained in Exhibit B-1 is commercially sensitive and the public disclosure of such information has the potential to harm commercial prospects for AllEnergy LLC and/or the applicants. Since the contents of Exhibit B-1 are of a technical nature or concern the rights and obligations as between the private parties to the LLC Agreement, public disclosure of such information is not necessary or appropriate in the public interest or for the protection of consumers or investors. *Filed under cover of Form SE 3. Item 6(b) is hereby amended by filing the following financial statements: (b) Financial Statements 1-A Balance Sheet of NEES at June 30, 1996, Actual and Pro Forma (Parent Company Only) 1-B Statement of Income and Retained Earnings for NEES for twelve months ended June 30, 1996, Actual and Pro Forma (Parent Company Only) 2-A Consolidated Balance Sheet of NEES at June 30, 1996, Actual and Pro Forma 2-B Statement of Consolidated Income for NEES for twelve months ended June 30, 1996, Actual and Pro Forma 3-A Balance Sheet of NEES Energy at June 30, 1996, Actual and Pro Forma 3-B Statement of Income and Retained Earnings for NEES Energy for twelve months ended June 30, 1996, Actual and Pro Forma SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this Amendment No. 1 to their Application/Declaration on Form U-1 to be signed on their behalf, as indicated by the undersigned officers thereunto duly authorized. NEW ENGLAND ELECTRIC SYSTEM s/Michael E. Jesanis _______________________________________ Michael E. Jesanis, Treasurer NEES ENERGY, INC. s/John G. Cochrane _______________________________________ John G. Cochrane, Treasurer Dated: October 31, 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 - ----------- ----------------------------- --------------- B-1 LLC Agreement Filed under cover of Form SE G-1 Financial Data Schedule Filed herewith for NEES (Parent Company Only) G-2 Financial Data Schedule Filed herewith for NEES (Consolidated) G-3 Financial Data Schedule Filed herewith for NEES Energy FINANCIAL STATEMENT INDEX Financial Statement No. Description Page - ------------- ----------- ---- 1-A Balance Sheet of NEES at Filed herewith June 30, 1996, Actual and Pro Forma (Parent Company only) 1-B Statement of Income and Filed herewith Retained Earnings for NEES for twelve months ended June 30, 1996, Actual and Pro Forma (Parent Company only) 2-A Consolidated Balance Filed herewith Sheet of NEES at June 30, 1996, Actual and Pro Forma 2-B Statement of Consolidated Filed herewith Income for NEES for twelve months ended June 30, 1996, Actual and Pro Forma 3-A Balance Sheet of Filed herewith NEES Energy at June 30,1996, Actual and Pro Forma 3-B Statement of Income for Filed herewith NEES Energy for twelve months ended June 30, 1996, Actual and Pro Forma 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 AND RETAINED EARNINGS OF NEW ENGLAND ELECTRIC SYSTEM (PARENT COMPANY), AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 DEC-31-1996 JUN-30-1996 12-MOS PER-BOOK 0 1,649,242 44,431 2,845 0 1,696,518 64,970 736,566 851,389 1,652,925 0 0 0 0 0 0 0 0 0 0 43,593 1,696,518 0 (533) 4,303 3,770 (3,770) 224,271 220,501 333 220,168 0 220,168 153,328 0 0 0 0 EX-27 4 FINANCIAL DATA SCHEDULE G-2 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEET AND RELATED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS OF NEW ENGLAND ELECTRIC SYSTEM, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 DEC-31-1996 JUN-30-1996 12-MOS PER-BOOK 3,889,104 384,926 483,007 389,639 0 5,146,676 64,970 736,814 850,939 1,650,222 0 132,016 1,609,179 0 0 195,902 52,585 0 0 0 1,506,772 5,146,676 2,317,179 139,481 1,823,448 1,962,929 354,250 5,891 360,141 124,013 220,061 8,510 220,061 153,221 110,343 0 $3.39 $3.39 EX-27 5 FINANCIAL DATA SCHEDULE G-3
OPUR1 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET OF NEES ENERGY, INC., AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 12-MOS DEC-31-1996 JUN-30-1996 PER-BOOK 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 EX-99 6 FINANCIAL STATEMENT 1-A FINANCIAL STATEMENT 1-A NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Balance Sheet At June 30, 1996 (Actual and Pro Forma) (Unaudited) ASSETS ------
ActualAdjustments Pro Forma ----------------- --------- (In Thousands) Investments: Common stocks of subsidiaries, at equity $1,619,806 $1,619,806 Notes of subsidiaries 25,784 $50,000 75,784 Other investments 3,652 3,652 ---------- ----------------- Total investments 1,649,242 50,000 1,699,242 ---------- ----------------- Current assets: Cash 113 113 Temporary cash investments - subsidiary companies 1,225 1,225 Accounts receivable 2 2 Interest and dividends receivable of subsidiaries 43,047 43,047 Other current assets 44 44 ---------- ----------------- Total current assets 44,431 44,431 ---------- ----------------- Deferred federal income taxes 2,845 2,845 ---------- ----------------- $1,696,518 $50,000$1,746,518 ========== ================= CAPITALIZATION AND LIABILITIES ------------------------------ Common share equity: Common shares, par value $1 per share: Authorized - 150,000,000 shares Issued - 64,969,652 shares $ 64,970 $ 64,970 Paid-in capital 736,566 736,566 Retained earnings (including $611,566,000 of undistributed subsidiary earnings) 851,389 851,389 ---------- ----------------- Total common share equity 1,652,925 1,652,925 ---------- ----------------- Current liabilities: Short-term debt $50,000 50,000 Accounts payable 895 895 Other accrued expenses 1,439 1,439 Dividends payable 34,194 34,194 ---------- ----------------- Total current liabilities 36,528 50,000 86,528 ---------- ----------------- Deferred credits 7,065 7,065 ---------- ----------------- $1,696,518 $50,000$1,746,518 ========== =================
NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) The pro forma adjustments to show the estimated effect of the proposed transactions on the foregoing Balance Sheet at June 30, 1996 are as follows: Debit - Notes of subsidiaries $50,000,000 Credit - Short-term debt $50,000,000 To reflect (1) a subordinated interest-free note from New England Electric System in the amount of $50 million to NEES Energy, Inc. and (2) the funding of this contribution through the issuance of short-term debt. EX-99 7 FINANCIAL STATEMENT 1-B FINANCIAL STATEMENT 1-B NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) Statement of Income Twelve Months Ended June 30, 1996 (Actual and Pro Forma) (Unaudited)
Actual AdjustmentsPro Forma ------ ----------- --------- (In Thousands) Equity in earnings of subsidiaries $ 223,691 $ 223,691 Interest income - subsidiaries 470 470 --------- ---------------- Total income from subsidiaries 224,161 224,161 Other income 110 110 --------- ---------------- Total income 224,271 224,271 Corporate and fiscal expenses (includes $1,798,000 for cost of services billed by an affiliated company) 4,303 4,303 Federal income taxes (533) $(1,750) (2,283) --------- ---------------- Income before interest 220,501 1,750 222,251 Interest 333 5,000 5,333 --------- ---------------- Net income $ 220,168 $(3,250)$ 216,918 ========= ================ Statement of Retained Earnings Retained earnings at beginning of period$ 784,549 Net income 220,168 Dividends declared on common shares (153,328) --------- Retained earnings at end of period $ 851,389 =========
NEW ENGLAND ELECTRIC SYSTEM (Parent Company Only) The pro forma adjustments to show the estimated effect of the proposed transactions on the foregoing Statement of Income for the twelve months ended June 30, 1996 are as follows: Debit - Interest $5,000,000 Interest calculated on $50,000,000 principal amount of New Note issue at assumed interest rate of 10 percent. Credit - Federal income taxes $1,750,000 To reflect the federal income tax effect as a result of the above adjustment to interest expense. EX-99 8 FINANCIAL STATEMENT 2-A FINANCIAL STATEMENT 2-A NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Balance Sheet At June 30, 1996 (Actual and Pro Forma) (Unaudited) ASSETS ------
Actual Adjustments Pro Forma ------ ----------- --------- (In Thousands) Utility plant, at original cost $5,581,144 $5,581,144 Less accumulated provisions for depreciation and amortization 1,783,968 1,783,968 ---------- ------- ---------- 3,797,176 3,797,176 Net investment in Seabrook 1 under rate settlement 7,605 7,605 Construction work in progress 84,323 84,323 ---------- ------- ---------- Net utility plant 3,889,104 3,889,104 ---------- ------- ---------- Oil and gas properties, at full cost 1,272,417 1,272,417 Less accumulated provision for amortization 1,063,471 1,063,471 ---------- ------- ---------- Net oil and gas properties 208,946 208,946 ---------- ------- ---------- Investments: Nuclear power companies, at equity 47,524 47,524 Other subsidiaries, at equity 38,322 $50,000 88,322 Other investments, at cost 90,134 90,134 ---------- ------- ---------- Total investments 175,980 50,000 225,980 ---------- ------- ---------- Current assets: Cash 2,759 2,759 Accounts receivable, less reserves of $20,226,000 255,710 255,710 Unbilled revenues 60,139 60,139 Fuel, materials and supplies, at average cost 83,385 83,385 Prepaid and other current assets 81,014 81,014 ---------- ------- ---------- Total current assets 483,007 483,007 ---------- ------- ---------- Deferred charges and other assets 389,639 389,639 ---------- ------- ---------- $5,146,676 $50,000 $5,196,676 ========== ======== ========== CAPITALIZATION AND LIABILITIES ------------------------------ Capitalization: Common shares, par value $1 per share: Authorized - 150,000,000 shares Issued - 64,969,652 shares Outstanding - 64,898,262 shares $ 64,970 $ 64,970 Paid-in capital 736,814 736,814 Retained earnings 850,939 850,939 Treasury stock - 71,390 shares (2,501) (2,501) ---------- ------- ---------- Total common share equity 1,650,222 1,650,222 Minority interests in consolidated subsidiaries 47,697 47,697 Cumulative preferred stock of subsidiaries 132,016 132,016 Long-term debt 1,609,179 1,609,179 ---------- ------- ---------- Total capitalization 3,439,114 3,439,114 ---------- ------- ---------- Current liabilities: Long-term debt due within one year 52,585 52,585 Short-term debt 195,902 $50,000 245,902 Accounts payable 132,163 132,163 Accrued taxes 31,289 31,289 Accrued interest 26,857 26,857 Dividends payable 37,626 37,626 Other current liabilities 113,743 113,743 ---------- ------- ---------- Total current liabilities 590,165 50,000 640,165 ---------- ------- ---------- Deferred federal and state income taxes 755,666 755,666 Unamortized investment tax credits 92,575 92,575 Other reserves and deferred credits 269,156 269,156 ---------- ------- ---------- $5,146,676 $50,000 $5,196,676 ========== ======= ==========
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARES The pro forma adjustments to show the estimated effect of the proposed transactions on the foregoing Balance Sheet at June 30, 1996 are as follows: Debit - Other subsidiaries, at equity $50,000,000 Credit - Short-term debt $50,000,000 To reflect an increase in investment in a subsidiary, at equity due to the issuance of short-term debt by a wholly-owned subsidiary. EX-99 9 FINANCIAL STATEMENT 2-B FINANCIAL STATEMENT 2-B NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARIES Statement of Consolidated Income Twelve Months Ended June 30, 1996 (Actual and Pro Forma) (Unaudited)
Actual Adjustments Pro Forma ------ ----------- --------- (In Thousands) Operating revenue $2,317,179 $2,317,179 ---------- ------- ---------- Operating expenses: Fuel for generation 276,803 276,803 Purchased electric energy 513,168 513,168 Other operation 511,184 511,184 Maintenance 127,853 127,853 Depreciation and amortization 254,747 254,747 Taxes, other than income taxes 139,693 139,693 Income taxes 139,481 $(1,750) 137,731 ---------- ------- ---------- Total operating expenses 1,962,929 (1,750) 1,961,179 ---------- ------- ---------- Operating income 354,250 1,750 356,000 Other income: Allowance for equity funds used during construction 2,471 2,471 Equity in income of generating companies 10,710 10,710 Other income (expense), net (7,290) (7,290) ---------- ------- ---------- Operating and other income 360,141 1,750 361,891 ---------- ------- ---------- Interest: Interest on long-term debt 110,343 110,343 Other interest 22,048 $ 5,000 27,048 Allowance for borrowed funds used during construction (8,378) (8,378) ---------- ------- ---------- Total interest 124,013 5,000 129,013 ---------- ------- ---------- Income after interest 236,128 (3,250) 232,878 Preferred dividends of subsidiaries 8,510 8,510 Minority interests 7,557 7,557 ---------- ------- ---------- Net income (loss) $ 220,061 $(3,250) $ 216,811 ========== ======= ========== Average common shares 64,906,229 64,906,229 Net income (loss) per average common share $3.39 $(.05) $3.34 Statement of Retained Earnings Retained earnings at beginning of period $ 784,549 Net income 220,061 Dividends declared on common shares (153,221) Premium on redemption of preferred stock (450) --------- Retained earnings at end of period $ 850,939 =========
NEW ENGLAND ELECTRIC SYSTEM AND SUBSIDIARES The pro forma adjustments to show the estimated effect of the proposed transactions as applied to the foregoing Statement of Income for the twelve months ended June 30, 1996 are as follows: Debit - Other interest $5,000,000 Interest calculated on $50,000,000 principal amount of New Note issued at assumed interest rate of 10 percent. Credit - Income taxes $1,750,000 To reflect the federal income tax effect as a result of the above adjustment to interest expense. EX-99 10 FINANCIAL STATEMENT 3-A FINANCIAL STATEMENT 3-A NEES ENERGY, INC. Balance Sheet At June 30, 1996 (Actual and Pro Forma) (Unaudited) ASSETS ------ Actual Adjustments Pro Forma ------ ----------- --------- (In Thousands) Investment in AllEnergy LLC $0 $50,000 $50,000 ---- ------- ------- $0 $50,000 $50,000 ==== ======= ======= PARENT COMPANY'S INVESTMENT AND LIABILITIES ------------------------------------------- Long-term note payable to parent $0 $50,000 $50,000 ---- ------- ------- $0 $50,000 $50,000 ==== ======= ======= NEES ENERGY, INC. The pro forma adjustments to show the estimated effect of the proposed transactions on the foregoing Balance Sheet at June 30, 1996 are as follows: Debit - Cash $50,000,000 Credit - Long-term note payable to parent $50,000,000 To reflect cash received from New England Electric System. Debit - Investment in AllEnergy LLC $50,000,000 Credit - Cash $50,000,000 To reflect the use of the above non-interest bearing note proceeds to fund a proposed 50 percent investment in AllEnergy Marketing Company, L.L.C. EX-99 11 FINANCIAL STATEMENT 3-B EXHIBIT 3-B There was no income statement for NEES Energy, Inc. for the twelve months ended June 30, 1996. -----END PRIVACY-ENHANCED MESSAGE-----