-----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, BpHJI/tZCuNopJW+lH5Y1qM8QSjcSzMzpG6ErtJD+Kjfe99AIoDOtXsAEiXj6ZhZ Y4Q2SEuB/GkfDWaObjAzRw== 0000072741-97-000144.txt : 19980102 0000072741-97-000144.hdr.sgml : 19980102 ACCESSION NUMBER: 0000072741-97-000144 CONFORMED SUBMISSION TYPE: POS AMC PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19971231 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHEAST UTILITIES SYSTEM 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: POS AMC SEC ACT: SEC FILE NUMBER: 070-08875 FILM NUMBER: 97747628 BUSINESS ADDRESS: STREET 1: 174 BRUSH HILL AVE CITY: WEST SPRINGFIELD STATE: MA ZIP: 01090-0010 BUSINESS PHONE: 4137855871 MAIL ADDRESS: STREET 1: 107 SELDON ST CITY: BERLIN STATE: CT ZIP: 06037-1616 POS AMC 1 POST-EFF. AMENDMENT NO. 8 TO FORM U-1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 POST-EFFECTIVE AMENDMENT NO. 8 (AMENDMENT NO. 10) TO FORM U-1 APPLICATION/DECLARATION WITH RESPECT TO (1) PROPOSED REVOLVING CREDIT FACILITY FOR NORTHEAST UTILITIES ("NU"), THE CONNECTICUT LIGHT AND POWER COMPANY ("CL&P") AND WESTERN MASSACHUSETTTS ELECTRIC COMPANY ("WMECO") AND (2) INCREASES AND EXTENSIONS OF SHORT-TERM BORROWING LIMITS OF NU, CL&P, WMECO, PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE, HOLYOKE WATER POWER COMPANY AND NORTH ATLANTIC ENERGY CORPORATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 Northeast Utilities The Connecticut Light Western Massachusetts Electric Company and Power Company 174 Brush Hill Avenue 107 Selden Street West Springfield, MA 01090-0010 Berlin, CT 06037 Holyoke Water Power Company Public Service Company of New Hampshire Canal Street North Atlantic Energy Corporation Holyoke, MA 01040 1000 Elm Street Manchester, NH 03015 (Name of companies filing this statement and addresses of principal executive offices) NORTHEAST UTILITIES (Name of top registered holding company) Robert P. Wax, Esq. Vice President, Secretary and General Counsel Northeast Utilities Service Company 107 Selden Street Berlin, CT 06037 (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. David R. McHale Assistant General Counsel Assistant Treasurer - Finance Northeast Utilities Service Company Northeast Utilities Service Company 107 Selden Street 107 Selden Street Berlin, CT 06037 Berlin, CT 06037 Richard C. MacKenzie, Esq. Day, Berry & Howard CityPlace I Hartford, CT 06103-3499 The Application/Declaration in this proceeding is further amended by the amendment and restatement in full of Post-Effective Amendment No. 7 (Amendment No. 9), as follows: BACKGROUND 1. By Order dated November 20, 1996 (HCAR No. 35-26612), Supplemental Order dated February 11, 1997 (HCAR No. 35-26665), Supplemental Order dated March 25, 1997 (HCAR No. 35-26692) and Supplemental Order dated May 29, 1997 (HCAR 35-26721) in this File No. 70-8875 (collectively, the "Orders"), the Commission, among other things, authorized Northeast Utilities ("NU"), The Connecticut Light and Power Company ("CL&P"), Western Massachusetts Electric Company ("WMECO") and Public Service Company of New Hampshire ("PSNH") to issue short-term notes from time to time through December 31, 2000 pursuant to formal and informal lines of credit. Pursuant to the Orders, each borrower has its own maximum outstanding borrowing limit which, in the case of NU, is $150 million. 2. Primarily because of the financial impact of the increased costs associated with the current nuclear outages on the NU system and other difficulties related to the Millstone nuclear generating units, NU is currently unable to borrow under the existing revolving credit facility ("Existing Revolver") which was entered into pursuant to the Orders. Reference is made to Exhibit B.4(a) in this file. In accordance with the authority granted by the Orders relating to the issuance of short-term debt, NU is negotiating with a lender to enter into a supplementary revolving credit facility in the aggregate principal amount of up to $25 million which would have less restrictive terms and conditions than the Existing Revolver. Advances from this credit facility will be used to meet NU's debt service requirements under its ESOP and to support its other financial requirements, as set forth in Exhibit H.8, until such time as NU begins to receive dividends from its subsidiaries again. Failure of NU to pay principal on the notes between NU and its lenders relating to the ESOP would constitute an immediate default, and failure to pay interest is a default after 30 days. In either case the Trustee, IBJ Shroder Bank and Trust Company, or holders of 25% or more of the ESOP notes may declare the entire outstanding amount to be due and payable. 3. The purpose of this Amendment is to seek authorization pursuant to Sections 6(a), 7 and 12(b) of the Act and Rules 43, 45 and 54 thereunder to increase the interest rate applicable to short-term borrowings by NU to an amount not to exceed the greater of (i) four percentage points over the LIBOR rate and (ii) three percentage points over the lender's base rate. The current maximum interest rate under the Orders is two percentage points above the Federal Funds Effective Rate, and the bank with whom NU is negotiating has sought an interest rate which could exceed the cap specified in the Orders. 4. The Orders also authorize the payment of fees by NU pursuant to formal and informal credit lines in an amount not to exceed 0.30% per annum. NU is hereby filing this Amendment to obtain authorization to increase the maximum annual fee payment to an amount not to exceed 1.00% per annum. AMENDMENTS TO THE APPLICATION To reflect the foregoing, the Application/Declaration in this proceeding is further amended as follows: 5. The second sentence of paragraph 23 is deleted and replaced with the following to take into account the proposed increase in interest payments by NU under the supplemental revolving credit facility: "The interest rate in any case will not exceed two percentage points above the Federal Funds Effective Rate, except that in the case of short-term notes issued by NU, the interest rate will not exceed the higher of four percentage points over the LIBOR rate and three percentage points over the Lender's base rate." 6. The third sentence of paragraph 25 is deleted and replaced with the following to take into account the proposed increase in annual fees to be paid by NU: "Compensating balance requirements will not exceed 5% of the committed line amount, and fees will not exceed 30 basis points per annum, except that in the case of short-term notes issued by NU, fees will not exceed 100 basis points per annum." 7. The issuance of notes by NU under the terms of the proposed revolving credit agreement is within the parameters set forth in Section 7(d) of the Act. As the notes will be unsecured, of a duration of fewer than 270 days and their issuance will have a minimal impact on the capital structure of the NU system, as demonstrated in Exhibits 1.2.1 and 7.2.1, the notes are a reasonable addition to NU's existing security structure and thus the standards of Section 7(d)(1) will be met. As NU will be restricted from borrowing under the new facility unless its subsidiaries can pay an equal amount of dividends to NU and NU does not expect to commence payment of a dividend to its shareholders in the immediate future, it expects to maintain the ability to repay any funds borrowed under the new facility and thus the requirement of Section 7(d)(2) that the security be reasonably adapted to the earnings power of NU will be met. In light of the fact that NU cannot borrow under the terms of the Existing Credit Agreement and proposes to use any borrowed funds to support its ESOP and to support its other financial obligations, as set forth in Exhibit H.8, the issuance of the notes is necessary for the economical and efficient operation of NU's lawful business, as required by Section 7(d)(3). NU believes that the proposed terms and conditions of the note issuances, as well as the fees, commissions and other remuneration to be paid in connection with such issuances, as referenced in Financial Statement 1.2.1, are reasonable in light of NU's current financial condition and in the public interest and thus the standards of Section 7(d)(4) will be met. The requirements of Section 7(d)(5) are inapplicable, as there is no guaranty or other assumption of liability at issue. The terms and conditions of the issuance and sale of the proposed notes have been reached by arms-length negotiation with the bank involved and are conventional and appropriate to NU's present financial circumstances. The proceeds are needed to ensure NU will have sufficient funds to meet its financial obligations while the Millstone nuclear units are being returned to service, with the first such unit, Millstone 3, presently being expected to restart late in the first quarter of 1998. Thus the issuance and sale of the notes will not be detrimental to the public interest of investors or consumers and the standards of Section 7(d)(6) are satisfied. 8. The following additional exhibits and financial statements are filed herewith: (a) Exhibits *F.3 Opinion of Counsel G.2.1 Revised Financial Data Schedule for NU (parent company only) G.2.2 Financial Data Schedule for NU (consolidated) H.8 NU (Parent) 1998 Forecast Cash Flow Statement * To be filed by further post-effective amendment (b) Financial Statements 1. Northeast Utilities 1.1.1 Revised Balance Sheet, per books and pro forma, as of September 30, 1997. 1.2.1 Revised Statement of Income, per books and pro forma, for 12 months ended September 30, 1997 and Capital Structure, per books and pro forma, as of September 30, 1997. 7. Northeast Utilities and Subsidiaries (Consolidated) 7.1.1 Consolidated Balance Sheet, per books and pro forma, as of September 30, 1997. 7.2.1 Consolidated Statement of Income, per books and pro forma, for 12 months ended September 30, 1997 and Capital Structure, per books and pro forma, as of September 30, 1997 SIGNATURES Pursuant to the requirements of the Public Utility Holding Company Act of 1935, as amended, the undersigned have duly caused this Amendment to be signed on behalf of each of them by the undersigned thereunto duly authorized. Date: December 31, 1997 NORTHEAST UTILITIES THE CONNECTICUT LIGHT AND POWER COMPANY WESTERN MASSACHUSETTS ELECTRIC COMPANY PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE HOLYOKE WATER POWER COMPANY NORTH ATLANTIC ENERGY CORPORATION By: /s/David R. McHale Assistant Treasurer - Finance EX-27 2 EXHIBIT G.2.1 TO POST-EFF. AMEND. NO. 8 TO FORM U-1
OPUR1 1000 SEP-30-1997 SEP-30-1997 SEP-30-1997 SEP-30-1997 YEAR YEAR PER-BOOK PRO-FORMA 0 0 2,345,372 2,345,372 31,650 56,245 2,487 2,487 0 0 2,379,509 2,404,104 684,003 684,003 933,080 933,080 701,707 699,874 2,161,284 2,159,451 0 0 0 0 188,000 188,000 0 25,000 0 0 0 0 16,000 16,000 0 0 0 0 0 0 14,225 15,653 2,379,509 2,404,104 0 0 (10,834) (11,821) 9,852 10,257 (982) (1,564) 982 1,564 (156,315) (156,315) (155,333) (154,751) 19,717 22,132 (175,050) (176,883) 0 0 (175,050) (176,883) 64,210 64,210 17,910 17,910 0 0 (1.36) (1.37) (1.36) (1.37)
EX-27.1 3 EXHIBIT G.2.2 TO POST-EFF. AMEND. NO. 8 TO FORM U-1
OPUR1 NORTHEAST UTILITIES AND SUBSIDIARIES 10 1000 SEP-30-1997 SEP-30-1997 SEP-30-1997 SEP-30-1997 YEAR YEAR PER-BOOK PRO-FORMA 6,537,278 6,537,278 745,019 745,019 1,005,865 1,030,460 2,323,855 2,323,855 0 0 10,612,017 10,636,612 684,003 684,003 933,080 933,080 701,707 699,874 2,161,284 2,159,451 245,750 245,750 136,200 136,200 3,653,646 3,653,646 150,000 175,000 0 0 0 0 249,146 249,146 30,250 30,250 172,202 172,202 35,928 35,928 3,777,611 3,779,039 10,612,017 10,636,612 3,792,342 3,792,342 (30,943) (31,930) 3,717,251 3,717,656 3,686,308 3,685,726 106,034 106,616 23,672 23,672 129,706 130,288 273,243 275,658 (143,537) (145,370) 31,513 31,513 (175,050) (176,883) 64,210 64,210 280,272 280,272 0 0 (1.36) (1.37) (1.36) (1.37)
EX-99 4 EXHIBIT H.8 Cash Flow Statement - NU Parent - Exhibit H.8 - Page 1 of 2
Jan-98 Feb-98 Mar-98 Apr-98 May-98 Jun-98 Cash on Hand (12/31/97) 22,700 37,041 34,254 42,546 24,870 24,101 Sources Federal Tax Refund - - - - - - Lawsuits Settlement - - 17,000 - - - COE Proceeds 17,000 ESOP Drip Proceeds 1,206 1,212 1,217 1,223 1,229 1,235 Total Sources 18,206 1,212 18,217 1,223 1,229 1,235 Uses Select Partners (1) 833 833 833 833 833 833 Other Parent (2) 642 642 642 642 642 642 Mode 1 (3) 117 117 117 117 117 117 COE Administration (4) 1,273 73 73 73 73 73 COE Project Require. (4) - 2,000 - - - 2,000 Portland Pipeline (1) 1,000 333 333 333 333 333 Fed Tax Realloc - Subs(5) - - - 16,900 - - ESOP Interest (6) - - 1,927 - - 6,349 ESOP Sinking Fund (6) - - 6,000 - - - Total Uses 3,865 3,998 9,925 18,898 1,998 10,347 Cash (end of month) 37,041 34,254 42,546 24,870 24,101 14,988 Dividends Available 240,034 155,953 CL&P (140,530) (162,152) WMECO 5,625 11,882 PSNH 178,908 72,073 NNECO 2,000 2,000 NAEC 53,501 69,998 Note: Page 1 of 2 reflects forecasted cash flows for NU Parent from January 1998 to December 1998. Page 2 of 2 takes the forecasted cash flows from Page 1 of 2 and reduces the sources of funds by the Charter Oak Energy project sale proceeds and by the federal tax refund. The purpose of providing two scenarios is to show the negative impact on cash flows in the event that certain proceeds are not received as forecasted. Both scenarios assume Millstone 3 at 100% power on 5/1/98, Millstone 2 at 100% power on 7/1/98 and no subsidiary dividend payments in 1998. (1) Investment made pursuant to Rule 58 under the Act. (2) Operating expenses of NU Parent. (3) Exempt telecommunications company pursuant to 34(a)(1) of the Act. (4) Reference File No. 70-8507. (5) Amended and Restated Tax Allocation Agreements pursuant to Rule 45 of the Act. (6) Reference File No. 70-7883 and 70-7954.
Totals Jul-98 Aug-98 Sep-98 Oct-98 Nov-98 Dec-98 1998 Cash on Hand (12/31/97) 14,988 14,230 13,477 25,055 24,314 23,913 Sources Federal Tax Refund - - 16,000 - - 16,000 Lawsuits settlement - - - - - - 17,000 COE Proceeds 17,000 ESOP Drip Proceeds 1,240 1,246 1,252 1,258 1,264 1,270 14,852 Total Sources 1,240 1,246 17,252 1,258 1,264 1,270 64,852 Uses Select Partners (1) 833 833 833 833 833 833 9,998 Other Parent (2) 642 642 642 642 642 642 7,708 Mode 1 (3) 117 117 117 117 117 117 1,400 COE Admin. (4) 73 73 73 73 73 73 2,076 COE Proj. Require. (4) - - 2,000 - - - 6,000 Portland Pipeline (1) 333 333 333 333 - - 4,000 Fed Tax Reall - Subs.(5) - - - - - - 16,900 ESOP Interest (6) - - 1,676 - - 6,349 16,301 ESOP Sinking Fund (6) - - - - - 11,000 17,000 Total Uses 1,998 1,998 5,674 1,998 1,665 19,014 81,383 Cash (end of month) 14,230 13,477 25,055 24,314 23,913 6,169 Dividends Available 215,938 224,514 CL&P (145,922) (132,648) WMECO 22,149 23,500 PSNH 103,750 101,193 NNECO 2,000 2,000 NAEC 88,039 97,821 Note: Page 1 of 2 reflects forecasted cash flows for NU Parent from January 1998 to December 1998. Page 2 of 2 takes the forecasted cash flows from Page 1 of 2 and reduces the sources of funds by the Charter Oak Energy project sale proceeds and by the federal tax refund. The purpose of providing two scenarios is to show the negative impact on cash flows in the event that certain proceeds are not received as forecasted. Both scenarios assume Millstone 3 at 100% power on 5/1/98, Millstone 2 at 100% power on 7/1/98 and no subsidiary dividend payments in 1998. (1) Investment made pursuant to Rule 58 under the Act. (2) Operating expenses of NU Parent. (3) Exempt telecommunications company pursuant to 34(a)(1) of the Act. (4) Reference File No. 70-8507. (5) Amended and Restated Tax Allocation Agreements pursuant to Rule 45 of the Act. (6) Reference File No. 70-7883 and 70-7954.
Cash Flow Statement - NU Parent - Exhibit H.8 - Page 2 of 2
Jan-98 Feb-98 Mar-98 Apr-98 May-98 Jun-98 Cash on Hand (12/31/97) 22,700 20,041 17,254 25,546 7,870 7,101 Sources Federal Tax Refund (out) - - - - - - Lawsuits Settlement - - 17,000 - - - COE Sales (out) - - - - - - ESOP Drip Proceeds 1,206 1,212 1,217 1,223 1,229 1,235 Total Sources 1,206 1,212 18,217 1,223 1,229 1,235 Uses Select Partners (1) 833 833 833 833 833 833 Other Parent (2) 642 642 642 642 642 642 Mode 1 (3) 117 117 117 117 117 117 COE Administration (4) 1,273 73 73 73 73 73 COE Project Require. (4) - 2,000 - - - 2,000 Portland Pipeline (1) 1,000 333 333 333 333 333 Fed. Tax Realloc. to Subs.(5) - - - 16,900 - - ESOP Interest (6) - - 1,927 - - 6,349 ESOP Sinking Fund (6) - - 6,000 - - - Total Uses 3,865 3,998 9,925 18,898 1,998 10,347 Cash (end of month) 20,041 17,254 25,546 7,870 7,101 (2,012) Dividends Available 240,034 155,953 CL&P (140,530) (162,152) WMECO 5,625 11,882 PSNH 178,908 72,073 NNECO 2,000 2,000 NAEC 53,501 69,998 Note: Page 1 of 2 reflects forecasted cash flows for NU Parent from January 1998 to December 1998. Page 2 of 2 takes the forecasted cash flows from Page 1 of 2 and reduces the sources of funds by the Charter Oak Energy project sale proceeds and by the federal tax refund. The purpose of providing two scenarios is to show the negative impact on cash flows in the event that certain proceeds are not received as forecasted. Both scenarios assume Millstone 3 at 100% power on 5/1/98, Millstone 2 at 100% power on 7/1/98 and no subsidiary dividend payments in 1998. (1) Investment made pursuant to Rule 58 under the Act. (2) Operating expenses of NU Parent. (3) Exempt telecommunications company pursuant to 34(a)(1) of the Act. (4) Reference File No. 70-8507. (5) Amended and Restated Tax Allocation Agreements pursuant to Rule 45 of the Act. (6) Reference File No. 70-7883 and 70-7954.
Totals Jul-98 Aug-98 Sep-98 Oct-98 Nov-98 Dec-98 1998 Cash on Hand (12/31/97) (2,012) (2,770) (3,523) (7,945) (8,686) (9,087) Sources Fed. Tax Refund(out) - - - - - - - Lawsuits Settlement - - - - - - 17,000 COE Sales (out) - - - - - - - ESOP Drip Proceeds 1,240 1,246 1,252 1,258 1,264 1,270 14,852 Total Sources 1,240 1,246 1,252 1,258 1,264 1,270 31,852 Uses Select Partners (1) 833 833 833 833 833 833 9,998 Other Parent (2) 642 642 642 642 642 642 7,708 Mode 1 (3) 117 117 117 117 117 117 1,400 COE Admin. (4) 73 73 73 73 73 73 2,076 COE Proj. Require. (4) - - 2,000 - - - 6,000 Portland Pipeline (1) 333 333 333 333 - - 4,000 Fed. Tax Realloc - Subs (5) - - - - - - 16,900 ESOP Interest (6) - - 1,676 - - 6,349 16,301 ESOP Sinking Fund (6) - - - - - 11,000 17,000 Total Uses 1,998 1,998 5,674 1,998 1,665 19,014 81,383 Cash (end of month) (2,770) (3,523) (7,945) (8,686) (9,087) (26,831) Dividends Available 215,938 224,514 CL&P (145,922) (132,648) WMECO 22,149 23,500 PSNH 103,750 101,193 NNECO 2,000 2,000 NAEC 88,039 97,821 Note: Page 1 of 2 reflects forecasted cash flows for NU Parent from January 1998 to December 1998. Page 2 of 2 takes the forecasted cash flows from Page 1 of 2 and reduces the sources of funds by the Charter Oak Energy project sale proceeds and by the federal tax refund. The purpose of providing two scenarios is to show the negative impact on cash flows in the event that certain proceeds are not received as forecasted. Both scenarios assume Millstone 3 at 100% power on 5/1/98, Millstone 2 at 100% power on 7/1/98 and no subsidiary dividend payments in 1998. (1) Investment made pursuant to Rule 58 under the Act. (2) Operating expenses of NU Parent. (3) Exempt telecommunications company pursuant to 34(a)(1) of the Act. (4) Reference File No. 70-8507. (5) Amended and Restated Tax Allocation Agreements pursuant to Rule 45 of the Act. (6) Reference File No. 70-7883 and 70-7954.
EX-99 5 FINANCIAL STATEMENTS (ITEMS 1.1.1, 1.2.1, 7.1.1 AND 7.2.1) NORTHEAST UTILITIES (PARENT) BALANCE SHEET AS OF SEPTEMBER 30, 1997 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 1.1.1 PAGE 1 OF 2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION ASSETS OTHER PROPERTY AND INVESTMENTS: INVESTMENTS IN SUB. CO'S AT EQUITY $2,323,774 $2,323,774 INVESTMENTS IN TRANSMISSION COMPANIES, AT EQUITY 21,191 21,191 OTHER, AT COST 407 407 --------------------------------------- TOTAL OTHER PROPERTY & INVESTMENTS 2,345,372 0 2,345,372 CURRENT ASSETS: CASH AND SPECIAL DEPOSITS 10 24,595 (a) 24,605 NOTES REC. FROM AFF. CO'S 29,900 29,900 NOTES AND ACCOUNTS REC. 699 699 ACCOUNTS REC. FROM AFF. CO'S 641 641 PREPAYMENTS 400 400 --------------------------------------------- TOTAL CURRENT ASSETS 31,650 24,595 56,245 --------------------------------------------- DEFERRED CHARGES: ACCUMULATED DEF. INCOME TAXES 2,173 2,173 UNAMORTIZED DEBT EXPENSE 267 267 OTHER 47 47 --------------------------------------------- TOTAL DEFERRED CHARGES 2,487 0 2,487 --------------------------------------------- TOTAL ASSETS $2,379,509 $24,595 $2,404,104 *EXPLANATION AT FINANCIAL STATEMENT 1.2.1 PAGE 3 OF 3 NORTHEAST UTILITIES (PARENT) BALANCE SHEET AS OF SEPTEMBER 30, 1997 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 1.1.1 PAGE 2 OF 2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION CAPITALIZATION AND LIABILITIES CAPITALIZATION: COMMON SHARES $684,003 $684,003 CAPITAL SURPLUS, PAID IN 933,080 933,080 DEF. BENEFIT PLAN - ESOP (157,506) (157,506) RETAINED EARNINGS 701,707 (1,833) 699,874 --------------------------------------------- TOTAL COMMON STOCKHOLDER'S EQUITY 2,161,284 (1,833) 2,159,451 LONG-TERM DEBT, NET 188,000 188,000 --------------------------------------------- TOTAL CAPITALIZATION 2,349,284 (1,833) 2,347,451 CURRENT LIABILITIES: NOTES PAYABLE TO BANK 0 25,000 (a) 25,000 ACCOUNTS PAYABLE 1,939 1,939 ACCOUNTS PAYABLE TO AFF. CO'S 516 516 CURR. POR. OF LONG-TERM DEBT 16,000 16,000 ACCRUED INTEREST 4,840 2,415 (b) 7,255 ACCRUED TAXES 6,356 (987)(c) 5,369 OTHER 130 130 ----------------------- ------------------- TOTAL CURRENT LIABILITIES 29,781 26,428 56,209 DEFERRED CREDITS: OTHER 444 444 --------------------------------------------- TOTAL DEFERRED CREDITS 444 0 444 --------------------------------------------- TOTAL CAPITALIZATION AND LIABILITIES $2,379,509 $24,595 $2,404,104 *EXPLANATION AT FINANCIAL STATEMENT 1.2.1 PAGE 3 OF 3 NORTHEAST UTILITIES (PARENT) INCOME STATEMENT FOR 12 MONTHS ENDED SEPTEMBER 30, 1997 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 1.2.1 PAGE 1 OF 3 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION OPERATING REVENUE $0 $0 $0 --------------------------------------------- OPERATING EXPENSES: OPERATION EXPENSE 9,788 405 (a) 10,193 FED. AND STATE INCOME TAXES (10,834) (987)(c) (11,821) TAXES OTHER THAN INCOME TAXES 64 64 --------------------------------------------- TOTAL OPERATING EXPENSES (982) (582) (1,564) --------------------------------------------- OPERATING INCOME 982 582 1,564 --------------------------------------------- OTHER INCOME (LOSS): EQUITY IN EARNINGS OF SUBS. (161,118) (161,118) EQUITY IN EARNINGS OF TRANSMISSION COMPANIES 3,019 3,019 OTHER, NET 1,784 1,784 --------------------------------------------- OTHER LOSS, NET (156,315) 0 (156,315) --------------------------------------------- LOSS BEFORE INTEREST CHARGES (155,333) 582 (154,751) --------------------------------------------- INTEREST CHARGES: INTEREST ON LONG-TERM DEBT 17,910 17,910 OTHER INTEREST 1,807 2,415 (b) 4,222 --------------------------------------------- TOTAL INTEREST CHARGES 19,717 2,415 22,132 --------------------------------------------- NET INCOME (175,050) (1,833) (176,883) --------------------------------------------- EARNINGS FOR COMMON SHARES (175,050) (1,833) (176,883) EARNINGS PER COMMON SHARE (1.36) (1.37) COMMON SHARES OUTSTANDING (AVERAGE) 129,122,239 129,122,239 *EXPLANATION AT FINANCIAL STATEMENT 1.2.1 PAGE 3 OF 3 NORTHEAST UTILITIES (PARENT) CAPITAL STRUCTURE AS OF SEPTEMBER 30, 1997 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 1.2.1 PAGE 2 OF 3 PER BOOK ADJUSTED TO PRO FORMA REFLECT % PER BOOK ADJUSTMENT PRO FORMA % DEBT: NOTES PAYABLE TO BANK $0 $25,000 $25,000 LONG-TERM DEBT 204,000 204,000 --------------------------------------------- TOTAL DEBT 8.6% 204,000 25,000 229,000 9.6% COMMON EQUITY: COMMON SHARES 684,003 684,003 CAPITAL SURPLUS, PAID IN 933,080 933,080 DEFERRED BENEFIT PLAN -ESOP (157,506) (157,506) RETAINED EARNINGS 701,707 (1,833) 699,874 --------------------------------------------- TOTAL COMMON STOCKHOLDER'S EQUITY 91.4% 2,161,284 (1,833) 2,159,451 90.4% --------------------------------------------- TOTAL CAPITAL 100.0%$2,365,284 23,167 $2,388,451 100.0% EXPLANATION OF ADJUSTMENTS (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 1.2.1 PAGE 3 OF 3 DEBIT CREDIT (a) CASH $24,595 OPERATION EXPENSE 405 NOTES PAYABLE TO BANK $25,000 To record the borrowing of up to the entire $25 million available to the company under the additional facility and related structuring fees and legal expenses. (b) OTHER INTEREST EXPENSE 2,415 ACCRUED INTEREST 2,415 To record interest expense on the additional proposed borrowing at LIBOR as of 11/10/97 [5.66%] + 4.00% $25,000 x 9.66% = 2,415 (c) ACCRUED TAXES 987 FEDERAL AND STATE INCOME TAX EXPENSE 987 To record the reduction in income taxes due to the higher expenses: $2,820 x 35.00% = 987 Note: The journal entries above reflect an interest rate of LIBOR plus four percentage points which is the maximum under the LIBOR option that the Company is seeking for the duration of the Commission's Order in this docket. However, based on a LIBOR rate quote as of 11/10/97 of 5.66%, a borrowing spread of three percentage points (3.00%) as currently contemplated in the new revolver's terms and conditions, a structuring fee of $375,000 (1.50%), and estimated legal expenses of $30,000 (.12%) the effective cost of borrowing to NU on this new revolver would be 10.28%. The facility does not contain compensating balance requirements, however NU will be required to pay a commitment fee of 62.5 basis points on the unused portion of the facility. NORTHEAST UTILITIES AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 7.1.1 PAGE 1 OF 2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION ASSETS UTILITY PLANT, AT COST: ELECTRIC $9,802,205 $9,802,205 OTHER 189,561 189,561 -------------------------------------------- $9,991,766 9,991,766 LESS: ACC.PROV. FOR DEPREC. 4,243,306 4,243,306 -------------------------------------------- 5,748,460 0 5,748,460 UNAMORT. PSNH ACQ. COSTS 424,641 424,641 CONSTRUCT. WORK IN PROGRESS 168,381 168,381 NUCLEAR FUEL, NET 195,796 195,796 -------------------------------------------- TOTAL NET UTILITY PLANT 6,537,278 0 6,537,278 -------------------------------------------- OTHER PROPERTY AND INVESTMENTS: NUC. DECOM. TRUSTS, AT MKT. 470,424 470,424 INVESTMENTS IN SUB. CO'S AT EQUITY 90,804 90,804 INVESTMENTS IN TRANSMISSION COMPANIES, AT EQUITY 21,191 21,191 INVESTMENTS IN CHARTER OAK ENERGY, INC. PROJECTS 78,417 78,417 OTHER, AT COST 84,183 84,183 -------------------------------------------- TOTAL OTHER PROPERTY & INVESTMENTS 745,019 0 745,019 CURRENT ASSETS: CASH AND CASH EQUIVALENTS 213,084 24,595 (a) 237,679 SPECIAL DEPOSITS 669 669 RECEIVABLES, NET 365,409 365,409 ACCRUED UTILITY REVENUES 106,882 106,882 FUEL, MATERIALS AND SUPPLIES, AT AVERAGE COST 213,557 213,557 RECOV. ENERGY COST, NET -- CURRENT PORTION 41,460 41,460 PREPAYMENTS AND OTHER 64,804 64,804 -------------------------------------------- TOTAL CURRENT ASSETS 1,005,865 24,595 1,030,460 -------------------------------------------- DEFERRED CHARGES: REGULATORY ASSETS: INCOME TAXES, NET 948,594 948,594 DEF. COSTS - NUC. PLANTS 200,438 200,438 UNREC. CONTRACTUAL OBLIGS 555,380 555,380 REC. ENERGY COSTS, NET 322,853 322,853 DEF. DEMAND SIDE MGMT. COSTS 45,652 45,652 COGENERATION COST 42,269 42,269 OTHER 96,279 96,279 UNAMORTIZED DEBT EXPENSE 39,912 39,912 OTHER 72,478 72,478 -------------------------------------------- TOTAL DEFERRED CHARGES 2,323,855 0 2,323,855 -------------------------------------------- TOTAL ASSETS $10,612,017 $24,595 $10,636,612 *EXPLANATION AT FINANCIAL STATEMENT 7.2.1 PAGE 3 OF 3 NORTHEAST UTILITIES AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1997 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 7.1.1 PAGE 2 OF 2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION CAPITALIZATION AND LIABILITIES CAPITALIZATION: COMMON SHARES $684,003 $684,003 CAPITAL SURPLUS, PAID IN 933,080 933,080 DEF. BENEFIT PLAN - ESOP (157,506) (157,506) RETAINED EARNINGS 701,707 (1,833) 699,874 -------------------------------------------- TOTAL COMMON STOCKHOLDER'S EQUITY 2,161,284 (1,833) 2,159,451 PREF. STOCK NOT SUBJECT TO MANDATORY REDEMPTION 136,200 136,200 PREF. STOCK SUBJECT TO MANDATORY REDEMPTION 245,750 245,750 LONG-TERM DEBT 3,653,646 3,653,646 -------------------------------------------- TOTAL CAPITALIZATION 6,196,880 (1,833) 6,195,047 MINORITY INTEREST IN CONS. SUBS 99,855 99,855 OBLIGATIONS UNDER CAP. LEASES 172,202 172,202 CURRENT LIABILITIES: NOTES PAYABLE TO BANK 150,000 25,000 (a) 175,000 LONG-TERM DEBT AND PREF. STOCK CURRENT PORTION 279,396 279,396 OBLIGATIONS UNDER CAP. LEASES CURRENT PORTION 35,928 35,928 ACCOUNTS PAYABLE 322,207 322,207 ACCRUED TAXES 41,656 (987)(c) 40,669 ACCRUED INTEREST 63,162 2,415 (b) 65,577 ACCRUED PENSION BENEFITS 88,099 88,099 NUCLEAR COMPLIANCE 100,160 100,160 OTHER 99,242 99,242 ---------------------- ------------------- TOTAL CURRENT LIABILITIES 1,179,850 26,428 1,206,278 DEFERRED CREDITS: ACCUM. DEF. INCOME TAXES 1,958,684 1,958,684 ACCUM. DEF.INVEST.TAX CREDIT 161,238 161,238 DEF. CONTRACTUAL OBLIGATIONS 564,129 564,129 OTHER 279,179 279,179 -------------------------------------------- TOTAL DEFERRED CREDITS 2,963,230 0 2,963,230 -------------------------------------------- TOTAL CAPITALIZATION AND LIABILITIES $10,612,017 $24,595 $10,636,612 *EXPLANATION AT FINANCIAL STATEMENT 7.2.1 PAGE 3 OF 3 NORTHEAST UTILITIES AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT FOR 12 MONTHS ENDED SEPTEMBER 30, 1997 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 7.2.1 PAGE 1 OF 3 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION OPERATING REVENUE $3,792,342 $0 $3,792,342 -------------------------------------------- OPERATING EXPENSES: OPERATION FUEL, PURCH. AND NET INTERCHANGE POWER 1,274,969 1,274,969 OTHER 1,193,967 405 (a) 1,194,372 MAINTENANCE 506,480 506,480 DEPRECIATION 357,079 357,079 AMORT. OF REG. ASSETS, NET 133,596 133,596 FED. AND STATE INCOME TAXES (30,943) (987)(c) (31,930) TAXES OTHER THAN INC. TAXES 251,160 251,160 -------------------------------------------- TOTAL OPERATING EXPENSES 3,686,308 (582) 3,685,726 -------------------------------------------- OPERATING INCOME 106,034 582 106,616 -------------------------------------------- OTHER INCOME (LOSS): DEF. NUCLEAR PLANTS RETURN OTHER FUNDS 7,076 7,076 EQUITY IN EARNINGS OF REG. NUCLEAR GEN. AND TRANS. 11,803 11,803 OTHER, NET 7,492 7,492 MIN. INT. IN INCOME OF SUB (9,300) (9,300) INCOME TAXES 6,601 6,601 -------------------------------------------- OTHER INCOME, NET 23,672 0 23,672 -------------------------------------------- INCOME BEFORE INTEREST CHARGES 129,706 582 130,288 -------------------------------------------- INTEREST CHARGES: INTEREST ON LONG-TERM DEBT 280,272 280,272 OTHER INTEREST 6,277 2,415 (b) 8,692 DEF. NUC. PLANTS RETURN BORROWED FUNDS (13,306) (13,306) -------------------------------------------- INTEREST CHARGES, NET 273,243 2,415 275,658 -------------------------------------------- LOSS BEFORE PREF. DIVIDEN (143,537) (1,833) (145,370) PREF. DIVIDENDS OF SUBS 31,513 31,513 -------------------------------------------- NET (LOSS) / INCOME (175,050) (1,833) (176,883) EARNINGS FOR COMMON SHARES (175,050) (1,833) (176,883) EARNINGS PER COMMON SHARE (1.36) (1.37) COMMON SHARES OUTSTANDING (AVERAGE) 129,122,239 129,122,239 *EXPLANATION AT FINANCIAL STATEMENT 7.2.1 PAGE 3 OF 3 NORTHEAST UTILITIES AND SUBSIDIARIES CAPITAL STRUCTURE AS OF SEPTEMBER 30, 1997 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 7.2.1 PAGE 2 OF 3 PER BOOK ADJUSTED TO PRO FORMA REFLECT % PER BOOK ADJUSTMENT PRO FORMA % DEBT: NOTES PAYABLE TO BANK $150,000 $25,000 $175,000 LONG-TERM DEBT 3,902,792 3,902,792 -------------------------------------------- TOTAL DEBT 61.2% 4,052,792 25,000 4,077,792 61.3% PREFERRED STOCK: NOT SUBJECT TO REDEMPTION 136,200 136,200 SUBJECT TO REDEMPTION 276,000 276,000 -------------------------------------------- TOTAL PREF. STOCK 6.2% 412,200 0 412,200 6.2% COMMON EQUITY: COMMON SHARES 684,003 684,003 CAPITAL SURPLUS, PAID IN 933,080 933,080 DEFERRED BENEFIT PLAN -ESOP (157,506) (157,506) RETAINED EARNINGS 701,707 (1,833) 699,874 -------------------------------------------- TOTAL COMMON STOCKHOLDER'S EQUITY 32.6% 2,161,284 (1,833) 2,159,451 32.5% -------------------------------------------- TOTAL CAPITAL 100.0%$6,626,276 23,167 $6,649,443 100.0% EXPLANATION OF ADJUSTMENTS (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 7.2.1 PAGE 3 OF 3 DEBIT CREDIT (a) CASH $24,595 OPERATION EXPENSE 405 NOTES PAYABLE TO BANK $25,000 To record the borrowing of up to the entire $25 million available to NU Parent under the additional facility and related structuring fees and legal expenses. (b) OTHER INTEREST EXPENSE 2,415 ACCRUED INTEREST 2,415 To record interest expense on the additional proposed borrowing at LIBOR as of 11/10/97 [5.66%] + 4.00% $25,000 x 9.66% 2,415 (c) ACCRUED TAXES 987 FEDERAL AND STATE INCOME TAX EXPENSE 987 To record the reduction in income taxes due to the higher expenses: $2,820 x 35.00% 987 -----END PRIVACY-ENHANCED MESSAGE-----