-----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, VHOxjb/Zf9HXXxRndhJ35AHN38AcKf9W3xqxHg05DBaN7KpOd+3KxIqpQhF1IBst 20ekrEeywxI76BF7EIYvLQ== 0000072741-96-000052.txt : 19960328 0000072741-96-000052.hdr.sgml : 19960328 ACCESSION NUMBER: 0000072741-96-000052 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19960327 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHEAST UTILITIES CENTRAL INDEX KEY: 0000072741 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 042147929 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: 1935 Act SEC FILE NUMBER: 070-08825 FILM NUMBER: 96539326 BUSINESS ADDRESS: STREET 1: 174 BRUSH HILL AVE CITY: WEST SPRINGFIELD STATE: MA ZIP: 01090-0010 BUSINESS PHONE: 2036655000 MAIL ADDRESS: STREET 1: 107 SELDON ST CITY: BERLIN STATE: CT ZIP: 06037-1616 U-1 1 FORM U-1 RELATING TO DIVERSIFICATION File No. 70- SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM U-1 APPLICATION/DECLARATION WITH RESPECT TO DIVERSIFICATION ACTIVITIES UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NORTHEAST UTILITIES PUBLIC SERVICE COMPANY OF WESTERN MASSACHUSETTS ELECTRIC COMPANY NEW HAMPSHIRE 174 Brush Hill Avenue NORTH ATLANTIC ENERGY West Springfield, MA 08109 CORPORATION 100 Elm Street Manchester, NH 03105 NORTHEAST UTILITIES SERVICE COMPANY NORTH ATLANTIC ENERGY THE CONNECTICUT LIGHT AND POWER COMPANY SERVICE CORPORATION NORTHEAST NUCLEAR ENERGY COMPANY Route 1, Lafayette Road 107 Selden Street Seabrook, NH 03874 Berlin, CT 06037 (Name of company or companies filing this statement and addresses of principal executive offices) NORTHEAST UTILITIES (Name of top registered holding company parent of each applicant or declarant) Robert P. Wax, Esq. Vice President, Secretary and General Counsel Northeast Utilities P. O. Box 270 Hartford, CT 06141-0270 (Name and address of agent for service) The Commission is requested to mail signed copies of all orders, notices and communications to: Jeffrey C. Miller, Esq. John T. Muro Assistant General Counsel Vice President - Retail Marketing Northeast Utilities Service Company Northeast Utilities Service Company 107 Selden Street 107 Selden Street Berlin, CT 06037 Berlin, CT 06037 Item 1. Description of Proposed Transaction 1. Authorization to Engage in Diversification Activities Northeast Utilities, a registered electric utility holding company ("NU"), Northeast Utilities Service Company ("NUSCO"), North Atlantic Energy Corporation ("NAEC"), North Atlantic Energy Service Corporation ("NAESCO"), Northeast Nuclear Energy Company ("NNECO") and the principal operating utility subsidiaries of NU, The Connecticut Light and Power Company, Public Service Company of New Hampshire, and Western Massachusetts Electric Company (the "Operating Companies") (NU, NUSCO, NAEC, NAESCO, NNECO and the Operating Companies are hereinafter collectively called "Applicants") hereby request authority to engage in the following diversification activities, to the extent the following activities are deemed jurisdictional and not regulated by the applicable state commissions as electric utility services, either directly or through one or more special purpose direct or indirect subsidiaries of any Applicant or joint ventures/alliances with other unregulated companies, for nonassociates, including customers of the Operating Companies, and associate companies, or through investments in existing companies engaged in these activities (collectively, "NEWCOs"): (A) develop and commercialize electrotechnologies related to energy conservation, storage, conditioning and conversion, energy efficiency, heating/cooling/climate conditioning, waste treatment, greenhouse gas reduction, safety/security systems and similar innovations; (B) engage in the sale, leasing or renting, installation, operation and servicing of electric appliances, devices or systems for residential, commercial, governmental and industrial use, to customers of associated and nonassociated utility companies; for example lighting systems, home security or fire alarm systems, power quality devices, energy monitoring systems and other energy conversion, control or storage systems; (C) engage in the sale, leasing, installation, operation, financing and servicing of electric utility equipment such as power generating equipment, back-up generators, fuel cells, solar and photovoltaic systems, energy storage systems, motors, engines, drives and controls, windturbines, environmental equipment and other similar equipment, including the ownership and operation of "qualifying facilities" within the meaning of the Public Utility Regulatory Policies Act of 1978 as amended; - --------------------- The Commission has previously authorized various investments related to the manufacturing, development and marketing of electrotechnologies. See e.g. Southern Co., Release No. 35-23888 (1985); Entergy Corp., Release No. 35-25718 (1992); Allegheny Power System Inc., Release No. 35-26225 (1995) and General Public Utilities Corp., Release No. 35- 26230 (1995). The Commission has allowed registered holding companies to engage in the sale and marketing of appliances or other energy-utilizing devices directly or through affiliated companies. See e.g. Engineers Public Service Co., Release No. 35-3796 (1942); CNG Energy Company, Release No. 35-23734 (1985); Consolidated Natural Gas Co., Release No. 35-26234 (1995); and PSI Energy, Inc., Release No. 35-26412 (1995). These activities are functionally related to the Applicant's core utility operations. (D) engage in the production, sale, conversion, and distribution of thermal energy products, such as process steam, heat, hot water, chilled water, ice/"snow", air conditioning, compressed air and similar products; alternative fuels; and renewable energy resources; (E) engage in the sale of services (e.g. construction, consulting, maintenance/repair, diagnostics/preventative care, sales/representation services, marketing/distribution services, contract operation, facilities licensing/permitting assistance, safety inspection) or intellectual property (e.g. software, training, data, patents) related to technical, operational, management, administrative, financial, marketing and/or other expertise, developed in the course of utility operations in such areas as power plant, transmission and distribution system engineering, development, design and rehabilitation; construction, maintenance, installation and operation of all types of energy and heating, ventilating and air conditioning equipment; specification, installation and operation of high voltage equipment; fuel procurement, delivery, management and sale; transportation and fleet vehicle management; environmental licensing, testing and remediation; credit and collections management (including billing services); personnel training and development programs and other similar areas; (F) own, operate, install or manage fuel procurement, transportation, handling and storage facilities, scrubbers, and resource recovery and waste treatment facilities; (G) develop and commercialize technologies or processes which utilize by-products or waste from basic utility operations as an integral component of such technologies or processes; - -------------------- The Commission has permitted the acquisition of steam production facilities inside an industrial site and the development of, and limited investments in, facilities for producing or recovering alternative fuels and energy resources. See e.g. Southern Co., Release No. 35-26185 (1994); Southern Co., Release No. 35-26221 (1982); New England Electric System, Release No. 35-22719 (1995) and Cinergy Corp., Release No. 35-26474 (1996). The Commission has authorized a number of registered holding companies to engage in the sale of various services. See e.g., Southern Co., Release No. 35-22132 (1981); American Electric Power Co., 35-22468 (1982); Middle South Utilities Inc., Release No. 35-22818 (1983); Cedar Coal Company, Release No. 35-23973 (1985); Entergy Corp., Release No. 35-26322 (1995) and Consolidated Natural Gas Co., Release No. 35-26363 (1995). The Commission has authorized various investments related to such activities. See e.g., Ohio Power Co., Release No. 35-19594 (1976) (rail-to- barge coal handling facility); Middle South Utilities, Inc., Release No. 35- 18221 (1973) (bulk oil storage facilities); Jersey Central Power & Light Co., Release No. 35-24664 (1988) (reservoir, dam and related facilities for storage and discharge of water); and New England Electric System, Release No. 35-26277 (1995) (installation of equipment at power stations owned by nonaffiliates to separate unburned carbon from coal ash). New England Electric System, Release No. 35-2627 (1995). (H) to the extent not provided by "exempt telecommunications companies" associated with the Applicants under the Telecommunications Act of 1996, provide telecommunications service, data acquisition/control systems or distribution/courier services supported primarily by facilities utilizing existing utility structures, equipment and/or rights-of-way, or using excess capacity of systems, property or services originally installed or used primarily for the utility's own use; (I) to the extent not otherwise permitted under Rule 40, lend money to, guarantee obligations of, and arrange for financing or finance leases for, customers or potential customers of the Applicants and joint venture partners or allied parties of the Applicants primarily to facilitate investments in programs and/or equipment which will encourage utility load growth through process improvement, increased cost-effectiveness of electric power or any other application of electrotechnologies which provides production efficiencies or other benefits to the customer; (J) purchase accounts receivable of associate companies and of nonassociate companies whose primary revenues are derived from the sale of electricity, and of other nonassociate companies, including utility companies, that generate receivables from large numbers of customers, subject to the 50 percent test found in the CSW series of orders; (K) engage in sales/representation and marketing/distribution services for insurance programs provided by non-associate companies related to electrical service to customers of the Applicants, including but not limited to utility bill payment protection in the event of unemployment, disability or death; also (provided entirely or in part by associate companies) service contracts for maintenance of electrical appliances or equipment; water heater life insurance and appliance/equipment extended service warranty agreements; (L) engage in the development and sale of any product or service directly related to the electric vehicle, hybrid vehicle or transportation market, including infrastructure support, energy storage devices and sales or maintenance of vehicles or their motive power components. - ------------------- The Commission has previously approved activities related to communication services. See e.g., Southern Co., Release No. 35-23440 (1984) and Release No. 35-26211 (1994). The Commission has approved customer and non-customer financing programs. See e.g., Consolidated Natural Gas Co., Release No. 35-26234 (1995); and American Electric Power Company, Release No. 35-26473 (1996). See e.g. CSW Credit, Inc., Release No. 35-24157 (1986), authorizing financing of subsidiary to provide funds to factor accounts receivable of nonassociate electric utility companies. The Commission has approved activities related to the development of electric and gas vehicles. See e.g., Consolidated Natural Gas Co., Release No. 35-25615 (1992); Central Power and Light Co., Release No. 35-26160 (1994) and Columbia Gas System, Inc., Release No. 35-26295 (1995). (M) engage in the brokering, marketing, generation, production, transportation, transmission, distribution, storage and sale of energy (including but not limited to electricity or natural or manufactured gas) and "paper products" such as futures, hedges, load aggregations, fuel tolling, fuel conversions and other instruments expected to be required in a competitive energy marketplace; and (N) sell, rent, lease or operate for the benefit of a third party any surplus physical asset (land, mineral rights, timber, buildings, air rights, equipment, material) originally acquired in good faith for the operation of the utility business, including the right to make any improvements necessary to make such assets marketable in a free-market environment. The Applicants request authority to (i) engage in the above activities ("Diversification Activities"); (ii) organize NEWCOs and transfer, sell, convey and dispose of such assets and goods, and perform construction and services for, and among each other and each NEWCO; (iii) make investments in NEWCOs to enable them to engage in such Diversification Activities; (iv) allow NEWCOs to finance their Diversification Activities by issuing securities to parties other than the Applicants; (v) allow the Applicants to issue guarantees of such NEWCOs' securities; and (vi) allow NU to issue guarantees of such Applicants securities. The Applicants believe these Diversification Activities have a clear relationship to the core business of the Applicants, and undertaking these Diversification Activities will permit the Applicants to respond to competition in their core business from other energy companies. They represent opportunities for the Applicants to provide additional services and technologies to their customers and potential customers as well as other consumers of energy while utilizing the Applicants' expertise and technical resources developed in the course of their energy-related businesses. As indicated above, most of these activities have previously been authorized by the Commission. The Applicants do not intend to limit the Diversification Activities to their service territory. The Commission s proposed Rule 58 (Rel. No. 35-26313) may, if adopted, supersede and make redundant a portion of this Application. However, the Applicants intend to pursue any additional authority needed to perform the full range of Diversification Activities specified herein whether or not Rule 58 is adopted. Any construction for or services or goods provided by any associate company to any other associate companies hereunder will be at cost in compliance with Rules 90 and 91 or, subject to approval by the state regulatory authorities where applicable, negotiated prices limited to a range between cost and fair market value; services or goods sold by any Applicants or NEWCOs to nonassociate companies will be provided at market or negotiated prices. The Diversification Activities of the Applicants and any NEWCO will be conducted so that the risks associated with the operations of nonassociate companies will be borne by the Applicants' shareholders and not the Operating Companies or their ratepayers, unless permitted under applicable law or approved by the applicable state regulatory agency. Separate audited accounting records will be maintained for the Diversification Activities in respect of each nonassociate customer. Initially, the Applicants anticipate that each NEWCO may or may not have paid employees. In addition, personnel employed by the Applicants or other NEWCOs may provide a wide range of services on an as-needed basis to such NEWCO pursuant to a service agreement, substantially in the form of Exhibit B.1 hereto ("Service Agreement"), to be entered into between such NEWCO and the Applicant or other NEWCO. Under this Service Agreement, the NEWCO will reimburse the Applicant or other NEWCO for the cost of services provided, computed in compliance with Rules 90 and 91 of the Act, as well as applicable rules and regulations. All time spent by an Applicant's employees working for such NEWCO will be billed to and paid by such NEWCO pursuant to the Service Agreement. Furthermore, the Applicants have acquired and will acquire certain properties or other resources. The Applicants will provide such property and resources to NEWCOs at cost, determined in compliance under Rules 90 and 91 of the Act, as well as applicable rules and regulations, and in accordance with the Service Agreement. Each NEWCO will maintain separate financial records and detailed supporting records, including profit/loss statements. These records will be available to any proper federal regulatory agency or state regulatory agency for review. The accounting staff of NUSCO, pursuant to the Service Agreement with each NEWCO, will be responsible for record keeping and maintaining audit procedures which are in compliance with generally accepted accounting principles. 2. Investment in, and Financing of, Applicants and NEWCOs. The Applicants and any NEWCOs authorized by the Commission hereunder propose to invest an aggregate of $300 million (less than 3 percent of NU's 1995 consolidated asset value) through December 31, 2000 in Diversification Activities through any combination of (i) issuance of the Applicants' common stock, (ii) cash capital contributions to the Applicants and any NEWCOs by NU, (iii) loans or advances made by NU to the Applicants or any NEWCO and loans or advances by any Applicants (other than NU) to any NEWCO, and (iv) direct investments via loans to or stock purchase of companies principally engaged in these Diversification Activities. In addition, the Applicants propose to obtain loans from banks or other lenders or issue other recourse obligations which may or may not be guaranteed by NU. Any such borrowings by the Applicants from third parties that are guaranteed by NU would be included in and subject to the $300 million investment authority requested by the Applicants. The Applicants request approval for such transactions to the extent they are not otherwise exempted under Rules 45 and 52 or other applicable Rules of the Commission issued under the Act. To the extent such investments involve NU loans to the Applicants, or Applicants loans to any NEWCO, such loans will be made from time to time prior to December 31, 2000, with maturities no later than December 31, 2015. Such loans will bear an interest rate not exceeding the prevailing commercial rates appropriate for loans of similar term length and comparable risk. In the case of loans from lenders other than NU, the loans will be made with maturities of no later than December 31, 2018 and with a fixed interest rate not to exceed, on the date of the loan, prevailing commercial rates appropriate for loans of similar term length and comparable risk. Any notes sold to a lender other than an Applicant may be guaranteed by any Applicant as to principal, premium, if any, and interest. In connection with any such sale, lender fees such as underwriting and commitment fees may be paid in an amount not greater than that which is generally recognized as reasonable and customary for similar transactions (in any event, not to exceed 3 percent). It is further proposed that any notes issued to any Applicant hereunder may, at the option of such Applicant, be converted to capital contributions to the Applicant through such Applicant s forgiveness of the debt represented thereby. 3. Reporting The Applicants will provide, not later than 60 days after the end of the first three calendar quarters and not later than 90 days after the end of the fourth quarter of each year, a notification of each investment made by an Applicant, directly or indirectly, in any other Applicant or in any NEWCO in the previous quarter pursuant to the authority granted herein in a form that is consistent with proposed Form U-9C-3, as set forth in the Commission's proposed Rule 58. 4. Other Matters Except in accordance with the Act, neither NU nor any subsidiary thereof (a) has acquired an ownership interest in an exempt wholesale generator ("EWG") or a foreign utility company ("FUCO") as defined in Sections 32 and 33 of the Act, or (b) now is or as a consequence of the transactions proposed herein will become a party to, or has or will as a consequence of the transactions proposed herein have a right under, a service, sales, or construction contract with an exempt wholesale generator or a foreign utility company. None of the proceeds from the transactions proposed herein will be used by the Companies to acquire any securities of, or any interest in, an exempt wholesale generator or a foreign utility company. The NU system is in compliance with Rule 53(a), (b), and (c), as demonstrated by the following determinations: (i) NU's aggregate investment in EWGs and FUCOs (i.e., amounts invested in or committed to be invested in EWGs and FUCOs, for which there is recourse to NU) does not exceed 50 percent of the NU system's consolidated retained earnings as reported for the four most recent quarterly periods on NU's Form 10-K and 10-Qs. At December 31, 1995, the ratio of such investment ($39 million) to such consolidated retained earnings ($1.0 billion) was 4 percent. (ii) Encoe Partners, Central Termica San Miguel de Tucuman, S.A. ("C.T.S.M.T."), Ave Fenix and Plantas Eolicas, S.A. (NU's only EWGs or FUCOs at this time) (collectively, "EWGs/FUCOs") maintain books and records, and prepares financial statements in accordance with Rule 53(a)(2). Furthermore, NU has undertaken to provide the Commission access to such books and records and financial statements, as it may request. (iii) No employees of the NU system's public utility companies have rendered services to the EWGs/FUCOs. (iv) NU has submitted (a) a copy of each Form U-1 and Rule 24 certificates that have been filed with the Commission under Rule 53 and (b) a copy of Item 9 of Form U5S and Exhibits G and H thereof to each state regulator having jurisdiction over the retail rates of the NU system public utility companies. (v) Neither NU nor any NU subsidiary has been subject of a bankruptcy or similar proceeding unless a plan of reorganization has been confirmed in such proceeding. In addition, NU's average consolidated retained earnings for the four most recent quarterly periods has not decreased by 10 percent or more from the average for the previous four quarterly periods. (vi) In the previous fiscal year, NU's operating losses attributable to its investment in the EWGs/FUCOs did not exceed 5 percent of NU's consolidated retained earnings. Item 2. Fees, Commissions and Expenses No fees, commissions or expenses have been paid or will be paid or incurred in connection with the proposed transactions, other than (i) the Commission's $2,000 filing fee; (ii) expenses for legal, financial and other services billed to the Applicants at reasonable cost by NUSCO not exceeding $5,000, and (iii) such other expenses to be included in the Applicants' quarterly report, which expenses cannot be estimated at this time. Item 3. Applicable Statutory Provisions Sections 6(a), 7, 9(a), 10, 11(b), 12 and 13(b) of the Public Utility Holding Company Act of 1935 and Rules 23, 40, 45, 52, 53, 81, 87(b)(1), 90 and 91 thereunder are or may be applicable to the proposed transactions. To the extent any other sections of the Act may be applicable to the proposed transaction, the Applicants request appropriate orders thereunder. Item 4. Regulatory Approval Various state commissions may have jurisdiction over the licensing, pricing and costs associated with the Diversification Activities. Such approvals will be applied for and obtained by the Applicants as necessary. Item 5. Procedure It is respectfully requested that the Commission enter not later than June 1, 1996 an appropriate order granting and permitting this Application/Declaration to become effective. No recommended decision by a hearing officer or other responsible officer of the Commission is necessary or required in this matter. The Office of Public Utility Regulation within the Division of Investment Management of the Commission may assist in the preparation of the Commission's decision in this matter. There should be no 30 day waiting period between the issuance and the effective date of any order issued by the Commission in this matter, and it is requested that any such order be made effective immediately upon the entry thereof. Item 6. Exhibits and Financial Statements (a) Exhibits B.1 Form of Service Agreement F.1. Opinion of Counsel (To be filed by amendment.) G.1. Proposed Form of Notice under the Act. (b) Financial Statements. Financial statements have not been included because this transaction is not expected to have any material pro forma effects on the financial statements of the Applicants. Item 7. Information as to Environmental Effects The issuance of an order with respect to this Application/Declaration will not constitute a major federal action significantly affecting the quality of the human environment. No other federal agency has prepared or is preparing an environmental impact statement with respect to the proposed transaction. SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned companies have duly caused this statement to be signed on their behalf by the undersigned thereunto duly authorized. NORTHEAST UTILITIES NORTHEAST UTILITIES SERVICE COMPANY NORTHEAST NUCLEAR ENERGY COMPANY NORTH ATLANTIC ENERGY SERVICE CORPORATION NORTH ATLANTIC ENERGY CORPORATION THE CONNECTICUT LIGHT AND POWER COMPANY PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE WESTERN MASSACHUSETTS ELECTRIC COMPANY By: /s/Jeffrey C. Miller Their Attorney Dated: March 27, 1996 EX-99 2 FORM OF SERVICE AGREEMENT Exhibit B.1 Draft - 3/27/96 FORM OF MUTUAL SERVICE AGREEMENT BETWEEN [INSERT NAME OF APPLICANT] and [INSERT NAME OF NEW CORPORATION] dated ______________, 19__ THIS AGREEMENT, made and entered into as of ____________, 199__ by and between [INSERT NAME OF APPLICANT], a corporation organized under the laws of the State of ________ (hereinafter sometimes referred to as "Existing Company") and [INSERT NAME OF NEW CORPORATION], a corporation organized under the laws of the State of _________ (hereinafter sometimes referred to as "NEWCO"). W I T N E S S E T H: WHEREAS, Existing Company and NEWCO are both subsidiaries of Northeast Utilities ("NU"), a Massachusetts business trust, and, together with NU's other direct and indirect subsidiaries form the NU System; and WHEREAS, Existing Company is organized, staffed and equipped to render to NEWCO services as herein provided; and WHEREAS, in the course of its operations, Existing Company has acquired and will acquire certain properties and other resources; and WHEREAS subject to the provisions set forth herein, NEWCO is authorized by order of the Commission dated ________, 199__, as it may be amended, or applicable rule of the Securities and Exchange Commission (collectively, the "Authorization") to utilize those services, properties and resources of Existing Company to engage in certain Diversification Activities as authorized in the Order; and WHEREAS, economies and increased efficiencies benefiting the NU System will result from the performance by Existing Company of services for NEWCO and the provision of certain property and resources to NEWCO as herein provided; and WHEREAS, subject to the terms and conditions herein described Existing Company is willing, upon request by NEWCO, to render such services and provide such property and resources to NEWCO at cost, determined in accordance with applicable rules, regulations and orders of the Commission, taking into consideration the fulfillment of Existing Company's utility responsibilities; and WHEREAS, during the course of developing the Diversification Activities, NEWCO may acquire new expertise or other properties and resources, which will benefit the Existing Company; and WHEREAS subject to the provisions set forth herein, the Existing Company is authorized by the Authorization to utilize services, properties and resources developed by NEWCO in the course of its Diversification Activities; and WHEREAS, NEWCO is willing, upon request by the Existing Company, to render such services and provide such property and resources to Existing Company at cost, determined in accordance with applicable rules, regulations and orders of the Commission; and NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein, the parties hereto hereby agree as follows: 1. Definitions As used hereinafter, the following terms, in addition to those elsewhere defined in this Agreement, shall have the following meanings unless the context otherwise requires: A. "Services" shall mean those services described in Articles 3, 4 and 5 hereof. B. "Non-Affiliate" means any corporation, company, agency, government, business, entity or person other than NU, a direct or indirect subsidiary of NU, or a person employed by NU or any of such subsidiaries. C. "Intellectual Property" means any process, program or technique which is protected by the copyright, patent or trademark laws, or by virtue of being a trade secret, and which has been specifically and knowingly incorporated into, exhibited in, or reduced to a tangible writing, drawing, manual, computer program, product or similar manifestation or thing. 2. Agreement to Furnish Services A. Upon its receipt of a request therefor, either party will, if it has or can have available the personnel and resources needed to fill the request, furnish to the other party upon the terms and conditions hereinafter set forth such of the Services, at such times, for such periods and in such manner as the other party may from time to time request; provided, however, that the determination of whether a party has the available personnel and resources to perform in accordance with the request will be entirely within the discretion of such party, and a party may at its option elect not to perform any requested Service, except that, once having agreed to perform pursuant to a request, a party cannot withdraw or depart from such performance without the consent of the other party. In making its determination as to the availability of personnel and resources, a party may consider whether the use thereof by the other party will interfere with its own use of such personnel and resources. B. The provision of Services by either party pursuant to this Agreement shall in all cases and notwithstanding anything herein contained to the contrary be subject to any limitations contained in authorizations, rules or regulations of those governmental agencies, if any, having jurisdiction over either party or such provision of Services. 3. Description of Services The Services which may be provided hereunder are described as follows: A. Development of New Diversification Activities. Advise and assist in the investigation of new energy-related activities, the development of such new energy-related activities and the provision of facilities all as approved by the Commission in the Authorization. B. Engineering. Perform general engineering work, including system production and transmission studies and detailed design work; prepare and analyze apparatus specifications, distribution studies and standards, civil engineering and hydraulic studies and problems, and fuel supply studies; and advise and assist in connection with analyses of operations and operating and construction budgets. C. Sales and Marketing. Provide general sales, marketing and promotional work and services. D. Accounting, Statistical and Legal. Provide accounting, statistical and legal services, including, but not limited to advice and assistance in connection with the installation of accounting systems and similar problems, requirements of regulatory bodies with respect to accounting, studies of accounting procedures and practices to improve efficiency, book entries resulting from unusual financial transactions, internal audits, employment of independent auditors, preparation and analysis of financial and operating reports and other statistical matters relating to customers, preparation of reports to regulatory commissions, insurance companies and others, standardization of accounting and statistical forms in the interest of economy, and other accounting, legal and statistical matters. E. Budgeting. Advise and assist in matters involving the preparation and development of capital and operating budgets, cash and cost forecasts, and budgetary controls. F. Business Promotion and Public Relations. Advise and assist in the development of marketing and sales programs, in the preparation and use of advertising and sales materials, and in the determination and carrying out of promotional programs. G. Systems and Procedures. Advise and assist in the formation of good operating practices and methods of procedure, the standardization of forms, the purchase, rental and use of mechanical and electronic data processing, computing and communications equipment, in conducting economic research and planning and in the development of special economic studies. H. Training. Assist in providing training to personnel of the other party or of Non-Affiliates; develop and make available training procedures, materials and facilities, and provide instructors. I. General. Make available services in the areas of construction planning and supervision, design, management programs, quality assurance licensing matters, research and development, and communications systems and procedures. J. Other Services. Render advice and assistance in connection with such other matters as either party may request and may be able to perform with respect to the other party's business and operations. 4. Provision of Personnel Where specifically requested by either party, a party may loan its employees to the other party. In that event, such loaned employees will be under the sole supervision and control of the other party for such period or periods of time as are necessary to complete the work to be performed by such employees. Such employees may be withdrawn by either party from tasks assigned by the other party only with the consent of such other party. Each party will be responsible for the actions and activities of such employees while engaged in the performance of the work for the other party to the same degree as though such persons were employees of such other party. However, as part of the Services, during periods when such employees are loaned to another party, the employer party will continue to provide to, and with respect to such employees those same payroll, pension, savings, tax withholding, Social Security, unemployment, bookkeeping and other personnel support services then being utilized by the employer company in connection with compensating and benefiting such employees. 5. Exchange of Property and Resources As part of the Services, each party will make available to the other party its property, including Intellectual Property, and resources heretofore or hereafter developed or obtained by such party in the course of its operations at cost, (except as otherwise provided in Article 8 below), provided, however, that such availability shall be dependent upon and subject to any contractual commitments of either party to Non-Affiliates, applicable laws and regulations, and the legal rights and entitlements of others. 6. Compensation A. As compensation for Services actually requested by NEWCO and rendered to it by Existing Company, NEWCO hereby agrees to reimburse Existing Company for all costs properly chargeable or allocable thereto, as controlled through a cost allocation procedure. Such costs and the allocation thereof shall be determined as outlined on Appendix A attached hereto and incorporated herein by reference. B. As compensation for Services actually requested by Existing Company and rendered to it by NEWCO, Existing Company hereby agrees to reimburse NEWCO for all costs properly chargeable or allocable thereto, as controlled through a cost allocation procedure. Such costs shall be determined as outlined on Appendix A attached hereto and incorporated herein by reference. 7. Requests for Services The Services will be performed in accordance with requests issued or made by or on behalf of either party, and all Services will be tracked to enable specific work to be properly allocated by project or other appropriate basis. Requests shall be as specific as practicable in defining the Services requested to be performed and will set forth the scope and duration of the Services to be performed and the specific employees to be loaned to the other party pursuant to the requests. A party shall have the right from time to time to amend, alter or rescind any request for services, provided that (i) any such amendment or alteration which results in a material change in the scope of the work to be performed or equipment to be provided is agreed to by the other party; (ii) the costs for the Services covered by the request will include any expense incurred as a direct result of such amendment, alteration or rescission of the request, and (iii) no amendment, alteration or rescission of a request will release a party from liability for all such costs already incurred or contracted for to the request, regardless of whether the work associated with such costs is discontinued by such amendment, alteration or rescission. 8. Disposition of Intellectual Property In the event either party ("Transferring Party") with the express written consent of the other party ("Owner Party") sells or licenses to or otherwise makes available for utilization by Non-Affiliates Intellectual Property heretofore or hereafter developed or otherwise acquired by Owner Party for its own use and as a result of such sale or license such Intellectual Property is no longer available for use by Owner Party, Transferring Party shall receive, as and when received from such Non- Affiliates, a commission [to be negotiated] of all net profits (after deducting marketing and any other applicable expenses incurred by Transferring Party) earned from such sale or licensing, and Owner Party shall receive a percentage of such net profits to be negotiated. 9. Limitation of Liability and Indemnification In performing the Services hereunder (except to the extent such Services are being performed by employees loaned to and under the supervision of the other party), each party will exercise due care to assure that the Services are performed in a workmanlike manner, meet the standards and specifications set forth in the applicable request for such Services, and comply with applicable standards of law and regulation. However, failure to meet these obligations shall in no event subject either party to any claims or liabilities other than to reperform the work and be reimbursed at cost for such reperformance such that it fully complies with the request or standard, as the case may be. Each party makes no other warranty with respect to its performance of the Services, and the other party agrees to accept such Services without further warranty of any nature. Each party shall and does hereby indemnify and agree to save harmless and defend the other party from liabilities, taxes, losses, obligations, claims, damages, penalties, causes of action, suits, costs and expenses or judgments of any nature on account of or resulting from: (i) injuries to or the death of any person; (ii) damage to or loss of any property: (iii) any alleged or actual violation of law, court order, or governmental agency rule or regulation committed by or existing with respect to the party providing the Services or its employees, agents or subcontractors; (iv) any alleged or actual breaches of contract by such party; (v) any claims by or on account of any employee, agent or subcontractor of such party; (vi) services or labor performed, labor force, materials, provisions or supplies furnished or allegedly contracted for by or on behalf of such party, its employees, agents or subcontractors; and/or (vii) other damages; which in all cases, are attributable to or arise out of the performance and prosecution of any project or work performed by or on behalf of the other party, whether or not the same results or allegedly results from the claimed or actual negligence or breach of warranty of, or breach of contract or willful conduct by, the other party or of its employees, agents or contractors or its or their subcontractors or any combination thereof. 10. Miscellaneous This Agreement shall be binding upon the successors and assigns of the parties hereto, provided that neither party shall be entitled to assign or subcontract out any of its obligations under this Agreement or under any purchase order or work order issued hereunder without the prior written approval of the other party. This Agreement may not be modified or amended in any respect except in writing executed by the parties hereto. This Agreement shall be construed and enforced under and in accordance with the laws of the State of . This Agreement may be executed in counterparts, each one of which when fully executed shall be deemed to have the same force and effect as an original. No provision of this Agreement shall be deemed waived nor breach of this Agreement consented to unless such waiver or consent is set forth in writing and executed by the party hereto making such waiver or consent. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their respective corporate names by their respective Presidents or one of their respective Vice Presidents and their respective seals to be hereunto affixed and attested by their respective Secretaries or one of their respective Assistant Secretaries as of the day and year first above written. [INSERT NAME OF EXISTING COMPANY] (Existing Company) ATTEST: ---------------- By: -------------------- Secretary President [INSERT NAME OF NEW CORPORATION] (NEWCO) ATTEST: ---------------- By: -------------------- Secretary President EX-99 3 PROPOSED FORM OF NOTICE Exhibit G.1 Form of Proposed Notice Northeast Utilities ("NU"), 174 Brush Hill Avenue, West Springfield, Massachusetts 01090-0010, a registered electric utility holding company and its subsidiaries Northeast Utilities Service Company, North Atlantic Energy Corporation, North Atlantic Energy Service Corporation, Northeast Nuclear Energy Company, The Connecticut Light and Power Company, Public Service Company of New Hampshire, and Western Massachusetts Electric Company (collectively, "Applicants") have filed an application/declaration under Sections 6(a), 7, 9(a), 10, 11(b), 12 and 13(b) of the Public Utility Holding Company Act of 1935 and Rules 23, 40, 45, 52, 53, 81, 87(b)(1), 90 and 91 thereunder for authority to engage in certain diversification activities, both inside or outside of the service territories of NU s operating utility subsidiaries, either directly or through investment in existing or future subsidiary companies or joint ventures/alliances with other companies (collectively, "NEWCOs"). Diversification activities proposed in the application/declaration include research, development, commercialization, financing, marketing, sale, leasing, licensing, operation, and maintenance, as appropriate, of various products including electrotechnologies, electric utility or telecommunications equipment, "qualifying facilities" within the meaning of the Public Utility Regulatory Policies Act of 1978 as amended, electric appliances and lighting systems, electric vehicles, thermal energy products, alternative fuels, renewable energy resources, financial products and intellectual property; sale or lease to, or operation for the benefit of, third parties of surplus physical assets; and performance of engineering, construction, fuel storage, telecommunications, procurement, transportation, environmental, financial, management and personnel development and training, and similar, services. The Applicants seek authority through December 31, 2000 to form NEWCOs and to invest up to $300 million in diversification activities, through a combination of equity, debt, and guarantee obligations. Any loans from NU to the Applicants or NEWCOs will mature no later than 2015 and will bear an interest rate not exceeding the prevailing rates for loans of similar term and risk. Any resources, services or goods provided by an Applicant or NEWCO to an associate company in connection with diversification activities will be provided pursuant to a written service agreement at cost or, subject to approval by state regulatory authorities where applicable, negotiated prices limited to a range between cost and fair market value, in compliance with Rules 90 and 91 under the Act. Each NEWCO will maintain separate financial records and detailed supporting records, including profit/loss statements. NUSCO, pursuant to its service agreement with each NEWCO, will provide recordkeeping, accounting and audit services in compliance with generally accepted accounting principles.The Applicants will report to the Commission quarterly concerning each investment made with respect to diversification activities in the previous quarter. -----END PRIVACY-ENHANCED MESSAGE-----