-----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, Ugla2R3MvwqFORdjgBNaFa4Ti1Wmlrv+63xqbMRwPEM4OKEpB4S1YxMOznBPVxXS XxuDOiDgpWbMtTLJP25X/w== 0000072741-98-000140.txt : 19980810 0000072741-98-000140.hdr.sgml : 19980810 ACCESSION NUMBER: 0000072741-98-000140 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19980807 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: U-1 SEC ACT: SEC FILE NUMBER: 070-09343 FILM NUMBER: 98679384 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 U-1 1 FORM U-1 File No. 70- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM U-1 APPLICATION/DECLARATION Under THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 NORTHEAST UTILITIES 174 Brush Hill Avenue West Springfield, Massachusetts 08109 NORTHEAST UTILITIES SERVICE COMPANY 107 Selden Street Berlin, Connecticut 06037 (Name of companies filing this statement and address of principal executive offices) NORTHEAST UTILITIES (Name of top registered holding company) Cheryl W. Grise, Esq. Senior Vice President, Secretary and General Counsel Northeast Utilities Service Company P.O. Box 270 Hartford, Connecticut 06141-0270 (Name of address of agent for service) The Commission is requested to mail signed copies of all orders, notices and communications to: Jeffrey C. Miller, Esq. Assistant General Counsel David R. McHale Jane P. Seidl, Esq. Vice President and Treasurer Senior Counsel Northeast Utilities Service Company Northeast Utilities Service Company P.O. Box 270 P.O. Box 270 Hartford, Connecticut 06141-0270 Hartford, Connecticut 06141-0270 ITEM 1. DESCRIPTION OF PROPOSED TRANSACTIONS 1. The purpose of this Application/Declaration is to seek the Commission's authorization for a variety of related transactions under which Northeast Utilities ("NU") would (A) create and finance a subsidiary (a "first tier subsidiary") that would, through multiple subsidiaries ("second tier subsidiaries"), engage in a variety of energy-related and other activities and acquire and manage nonnuclear generating plants, (B) fund the first tier subsidiary's preliminary development and administrative costs, whether done internally or through one or more unaffiliated third parties, for the period ending December 31, 1999, and (C) create and finance through the first tier subsidiary one or more new second-tier subsidiaries that are expected to participate as purchasers in affiliate and nonaffiliate companies' sales of nonnuclear generation. Organization of NEWCO 2. The transactions for which authorization under the Public Utility Holding Company Act of 1935 ("Act") is sought herein in connection with the creation of a new first-tier subsidiary involve (i) the completion of the initial steps necessary for the organization of NEWCO, Inc. ("NEWCO"), a corporation to be organized under the laws of the State of Connecticut as a new wholly-owned first tier subsidiary of NU, a registered holding company under the Act, in the NU system (the "NU System"); (ii) the issuance by NEWCO and acquisition by NU of one hundred shares of the common stock, par value $1 per share ("NEWCO Common Stock") of NEWCO for $100,000; and (iii) the investment by NU of up to an additional $150 million through December 31, 1999 for the purpose of funding NEWCO's preliminary development activities and administrative costs associated with, among other things, (i) identifying and analyzing feasible nonnuclear generation ("Generation") acquisition opportunities and initiating the financing for such projects (in the aggregate amount of up to $10 million) and (ii) developing and managing NEWCO's other investments, as described more fully below (in the aggregate amount of up to $140 million). To the extent that such purchases of Generation will be made outside of New England, it is anticipated that one or more subsidiaries of NEWCO will be formed as exempt wholesale generators ("EWGs") to implement such acquisition(s). Generation purchases within New England may be made by EWGs or by non-EWGs; Generation which is acquired by non-EWGs will be used to provide both wholesale and retail service within such territory. 3. NEWCO intends to directly or indirectly acquire, without seeking any further Commission authority, the securities of one or more companies ("New Subsidiaries") organized for the purposes of performing energy-related and other activities currently authorized, or which may be authorized in the future, by the Commission by rule or statute. These associate companies would include EWGs, foreign utility companies ("FUCOs"), exempt telecommunications companies ("ETCs"), energy-related companies within the meaning of Rule 58 ("ERCs"), other New Subsidiaries and certain existing subsidiaries of NU ("Authorized Subsidiary Companies"). EWGs, FUCOs, ETCs, ERCs, New Subsidiaries and Authorized Subsidiary Companies are referred to in this Application collectively as "Nonutility Companies." NEWCO's associate companies formed to invest in generation may also be formed as independent power producers ("IPPs") to sell at wholesale and retail within New England; such activities are addressed beginning in paragraph 9 below. 4. The Nonutility Companies may be direct or indirect subsidiaries of NEWCO, and may perform development activities and administrative services and/or other services, as described below. Investments by NU, through NEWCO, in Nonutility Companies may take the form of any combination of: (i) purchases of capital shares, partnership interests, member interests in limited liability companies, trust certificates or other forms of equity interests (collectively, "Capital Stock"); (ii) capital contributions; (iii) open account advances without interest; (iv) loans; and (v) Guarantees, as defined below, issued in support of securities or other obligations of Nonutility Companies. The source of funds for direct or indirect investments by NU or NEWCO in any Nonutility Company will include (a) dividends received from operating companies derived from proceeds of sales of nonnuclear generation assets in NU's franchised retail sales territory and/or proceeds from the securitization of financial assets such as stranded costs; (b) proceeds derived from securities issuances authorized by the Commission in future orders; and (c) other available cash resources. Loans by NU to NEWCO or by NEWCO to a Nonutility Company will have interest rates and maturity dates that are designed to provide a return to NU or NEWCO, as the case may be, of not less than NU's or NEWCO's effective cost of capital. To the extent not exempt or otherwise authorized by the Commission, initial investments in the Capital Stock of Nonutility Companies will be included in the Aggregate Authorization, as described below. 5. To the extent that NU or NEWCO provides funds to a Nonutility Company which are used to invest in any EWG or FUCO, the amount of the investment will be included in the calculation of "aggregate investment" required under Rule 53. In addition, to the extent that NU provides funds to NEWCO which are used to invest in an ERC, the amount of the investment will be included in the calculation of "aggregate investment" required under Rule 58. 6. From time to time, NU proposes, without further order of the Commission, to consolidate or reorganize all or any part of its ownership interests in one or more Nonutility Companies and/or New Subsidiaries authorized by the Commission. 7. Initially, the Applicants anticipate that NEWCO and each of its subsidiaries may not have paid employees. It is likely that personnel employed by Applicants or other associate companies of NU (including Northeast Utilities Service Company) may provide a wide range of services on an as-needed basis to NEWCO or its subsidiaries pursuant to a service agreement ("Service Agreement") to be entered into between NEWCO (or a NEWCO subsidiary or other affiliate) and such associate company. Under this Service Agreement, NEWCO or its affiliate will reimburse the NU system company rendering such service for the cost of services provided, computed in accordance with Rules 90 and 91 under the Act, as well as applicable rules and regulations. In addition, in the event that such services are performed on behalf of an EWG or FUCO, such services will be rendered in accordance with Rule 53 under the Act. 8. NEWCO may also determine from time to time that it is efficient and advantageous to have certain development activities performed by unaffiliated third parties. Such arrangements will be on a fee-for-service negotiated basis at market rates. NEWCO's Generation-Related Activities 9. In addition to the acquisition of securities of Nonutility Companies and other activities described above, NEWCO is also being formed as a first tier subsidiary of NU for the purpose of facilitating the investment by the NU System in Generation to support the NU System's wholesale and retail power marketing and brokering efforts in deregulated retail markets. The increasing number of sales of generating facilities is part of a nationwide trend spurred by efforts to deregulate the electric power industry. Utility operating companies such as NU's subsidiaries, The Connecticut Light and Power Company ("CL&P") and Western Massachusetts Electric Company ("WMECO"), are increasingly choosing or being required by law to divest themselves of power plants to concentrate on other portions of the energy business such as electric power distribution. NU believes that its ability to purchase Generation, including through its participation in legislatively-mandated auctions of nonnuclear generation plants, may be profitable and is complementary to the NU System's regulated electric business. The Applicants believe that the activities proposed herein have a clear relationship to the core business of the NU System and undertaking these activities will permit the NU System to respond to competition in its core business from other energy companies. 10. Initially, NEWCO intends to explore acquisitions of, and possibly invest in, Generation in NU's service territory and throughout New England, as well as in Delaware, Maryland, New Jersey, New York and Pennsylvania. In the near term, NEWCO will also be exploring the potential acquisition of Generation to be auctioned by, among others, its affiliates, WMECO, CL&P and Public Service Company of New Hampshire ("PSNH"). To the extent that such purchases of generation will be made outside of New England, it is anticipated that one or more subsidiaries of NEWCO will be formed as EWGs to implement such acquisition(s). Generation purchases within New England may be made by EWGs or by non-EWGs; Generation acquired by non-EWGs will be used to provide both wholesale and retail service within such territory. It is possible that NEWCO may also invest in cogeneration facilities and small power production facilities, within the meaning of such terms under the Public Utility Regulatory Policies Act of 1978 ("PURPA") and the rules and regulations promulgated thereunder by the Federal Energy Regulatory Commission ("FERC"). If, under applicable law, rules, regulations, or orders in effect at the time, prior approval of the Commission is required under the Act for NEWCO or any other subsidiary or affiliate of NU or NEWCO to invest in Generation, applications will be made for such approval at that time. 11. NEWCO intends to undertake the proposed acquisitions of Generation on its own, either directly or through one or more wholly-owned subsidiaries, formed as corporations, partnerships, limited liability companies or other legal entities. Alternatively, to mitigate risk or access skills and relationships that NEWCO may require, Applicants expect that NEWCO may pursue proposed business activities in certain instances through alliances with nonassociates. Certain of these alliances may be informal, not involving the formation of any new entities; others may encompass formal joint ventures, possibly involving the formation of one or more wholly - or partly - owned subsidiaries of NEWCO. The decision of form in which to conduct acquisition activities will hinge on applicable business, legal, tax, accounting and strategic considerations. 12. The preliminary development activities in which NEWCO or one or more of its subsidiaries formed to acquire Generation will engage include the investigation of plant sites, preliminary engineering and licensing activities, contract drafting and negotiating, preparation of bid proposals (including posting of bid bonds, cash deposits and the like), negotiation and execution of related financing commitments and agreements and the other necessary activities to identify and analyze feasible investment opportunities and to initiate the acquisition of Generation. Administration would include the ongoing personnel, accounting, engineering, legal, financial and other support activities necessary for NEWCO to develop and manage its investments in Generation, its marketing and brokering activities relating thereto and other energy-related activities in which NEWCO or its subsidiaries may engage under Rule 58 or by further Commission order. 13. The Applicants expect that each of NEWCO's potential investments in Generation that is determined to be a suitable candidate for acquisition will take place through one or more first or second tier special purpose subsidiaries of NEWCO, which entities will be second tier subsidiaries of NU. In the case of NEWCO's participation in the upcoming auctions of non-nuclear generating assets, including the expected upcoming auction of WMECO's non-nuclear generating assets pursuant to Massachusetts legislation, that subsidiary will be GENCO, Inc. ("GENCO"). Accordingly, the transactions for which authorization under the Act is sought at this time in connection with the NU System's proposed investments in Generation include (i) the completion of the initial steps necessary for the organization of GENCO, a corporation to be organized under the laws of the State of Connecticut as a new wholly-owned subsidiary of NEWCO; (ii) the issuance by GENCO and acquisition by NEWCO of one hundred shares of the common stock, par value $1 per share ("GENCO Common Stock") of GENCO and (iii) NEWCO's additional investment of up to $10 million in GENCO through December 31, 1999. Following the receipt of an order of this Commission granting or permitting this Application/Declaration to become effective, NEWCO will issue to NU and NU will acquire 100 shares of NEWCO Common Stock for $100,000, payable in cash, constituting all of the issued and outstanding shares of NEWCO Common Stock, and, in turn, GENCO will issue to NEWCO and NEWCO will acquire 100 shares of GENCO Common Stock, for $10,000, payable in cash, constituting all of the issued and outstanding shares of GENCO Common Stock. NEWCO will thereupon become a direct subsidiary of NU within the meaning of Section 2(a)(8) of the Act, and GENCO will become a direct subsidiary of NEWCO within the meaning of the same section. Proposed forms of the certificate of incorporation and by-laws of NEWCO and of GENCO will be filed by amendment. Additional Investments in NEWCO 14. As set forth above, NEWCO believes that it will need a budget of approximately $150 million through December 31, 1999 to engage in the activities described herein, including $10 million for the administration and preliminary development activities described above in connection with potential acquisitions of Generation. NEWCO will receive these funds from NU. Each such investment or investments by NU in NEWCO will take the form of additional acquisitions of capital stock, capital contributions, open account advances or subordinated loans. In addition, NEWCO or any of its subsidiaries which are involved in the acquisition or ownership of Generation may obtain debt financing from unaffiliated third parties. The terms and conditions applicable to NU's investment of funds in NEWCO for investment in Generation, as well as the details of any financing required in connection with such acquisitions, will be the subject of future filings with the Commission to the extent such items are jurisdictional. Such debt financing may also require a guaranty by NU, for which Commission authorization will also be sought to the extent required. 15. Beyond the initial $100,000 invested in NEWCO by NU and the $10,000 invested in GENCO and the amounts of up to $150 million through December 31, 1999 to be invested by NU in NEWCO for the purposes of funding preliminary development activities and administration of NEWCO and GENCO, additional investments in NEWCO will be made by NU from time to time to form additional subsidiaries to acquire Generation or to fund other activities described herein. Each such investment or investments will take the form of additional acquisitions of capital stock, capital contributions, open account advances or subordinated loans. It is contemplated that the balance of such acquisition price for Generation to be purchased by such subsidiaries will be debt financed by non-affiliated third parties and Commission approval will be sought as required for such financing authority. Such debt financing may require a guarantee by NU, for which additional Commission authorization will also be requested if required. Guarantees 16. NU and NEWCO also propose to issue guarantees or provide other forms of credit support or enhancements (collectively, "Guarantees") to or for the benefit of Nonutility Companies, GENCO and other direct or indirect subsidiaries or affiliates of NEWCO in an aggregate amount not to exceed $ 75 million ("Aggregate Authorization"), through December 31, 1999. Guarantees may take the form of NU or NEWCO agreeing to guarantee, undertake reimbursement obligations, assume liabilities or other obligations with respect to or act as surety on, bonds, letters of credit, evidences of indebtedness, equity commitments, performance and other obligations undertaken by NU, NEWCO, the Nonutility Companies or GENCO or its affiliates. NU and NEWCO represent that the terms and conditions of Guarantees will be established through arm's-length negotiations based upon current market conditions. NU and NEWCO further undertake that any Guarantee they issue will be without recourse to any System operating company to the extent not authorized under Rule 52 under the Act. 17. To the extent that NU or NEWCO provides Guarantees in support of its investment in any EWG or FUCO, the amount of the investment will be included in the calculation of "aggregate investment" required under Rule 53. Moreover, to the extent that NU or NEWCO provides Guarantees in support of its investment in an ERC, the amount of the investment will be included in the calculation of "aggregate investment" required under Rule 58. 18. 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 EWG or a FUCO. None of the proceeds from the transactions proposed herein will be used by the NU system companies to acquire any securities of, or any interest in, an EWG or a FUCO. 19. 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% 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 March 31, 1998, the ratio of such investment ($57 million) to such consolidated retained earnings ($715 million) was 8.0 percent. (ii) Ave Fenix (NU's only EWG or FUCO at this time) maintains 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 certificate that has been filed with the Commission under Rule 53 and (b) a copy of Item 9 of the 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 the subject of a bankruptcy or similar proceeding unless a plan of reorganization has been confirmed in such proceeding. In addition, although NU's average consolidated retained earnings ("CREs") for the four most recent quarterly periods has decreased by 10% or more from the average for the previous four quarterly periods (at March 31, 1997, NU's CREs were $838 million; at March 31, 1998, NU's CREs were $715 million), NU's aggregate investment in EWGs/FUCOs at such date ($57 million) did not exceed two percent of NU's consolidated capital invested in utility operations ($132.7 million). (vi) In the previous fiscal year, NU's operating losses attributable to its investment in EWGs/FUCOs did not exceed 5 percent of NU's consolidated retained earnings (excluding the effects of a reserve for the potential loss on the sale of Ave Fenix). ITEM 2. FEES COMMISSIONS, AND EXPENSES 20. The estimated fees, commissions and expenses paid or incurred, or to be paid or incurred, directly or indirectly, in connection with the proposed transactions will be specified in Exhibit H (to be filed by amendment). 21. None of such fees, commissions or expenses are to be paid to any associate company or affiliate of the Applicants, except for financial, legal and other services to be performed at cost by NUSCO, an affiliated service company. ITEM 3. APPLICABLE STATUTORY PROVISIONS 22. Sections 6(a), 7, 9(a), 10, 11, 12 and 13 of the Act and the related regulations of the Commission are or may be applicable to the transactions as herein proposed. 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 23. Other than as set forth above, no other consent or approval of any other State commission or any Federal commission (other than the Securities and Exchange Commission) is required for the transactions contemplated herein. ITEM 5. PROCEDURE 24. In order to enable the Applicants to participate in upcoming auctions of nonnuclear generating assets, Commission action with respect to this Application is respectfully requested on or before October 1, 1998. 25. 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 respectfully requested that any such order be made effective immediately upon the entry thereof. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS 26. The following exhibits and financial statements are filed as part of this Application: a. Exhibits A.1 Copy of Certificate of Incorporation of NEWCO (To be filed by amendment) A.2 Copy of By-Laws of NEWCO (To be filed by amendment) A.3 Copy of Certificate of Incorporation of GENCO (To be filed by amendment) A.4 Copy of By-Laws of GENCO (To be filed by amendment) F. Opinion of Counsel. (To be filed by amendment) G. Financial Data Schedules. G.1 Northeast Utilities (Parent Only) G.2 Northeast Utilities and Subsidiaries G.3 NEWCO G.4 NEWCO and Subsidiaries H. Form of Proposed Notice. I. Schedules of Fees, Commissions and Expenses. (To be filed by amendment.) b. Financial Statements 1. Northeast Utilities (Parent Only) 1.1 Balance Sheet, per books and pro forma, as of March 31, 1998. 1.2 Statement of Income and Surplus, per books and pro forma, 12 months ended March 31, 1998. 2. Northeast Utilities and Subsidiaries 2.1 Consolidated Balance Sheet, per books and pro forma, as of March 31, 1998. 2.2 Consolidated Statement of Income and Surplus, per books and pro forma, 12 months ended March 31, 1998. 3. NEWCO 3.1 Pro Forma Balance Sheet as of March 31, 1998. 3.2 Pro Forma Statement of Income and Surplus, 12 months ended March 31, 1998. 4. NEWCO and Subsidiaries 4.1 Pro forma Consolidated Balance Sheet as of March 31, 1998. 4.2 Pro forma Consolidated Statement of Income and Surplus, 12 months ended March 31, 1998. 27. There has been no material change, not in the ordinary course of business, in the balance sheets listed above since the date thereof. ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS a. This Application relates to the formation and financing of certain corporate entities and, as such, it is believed that the granting and permitting to become effective of this Application will have no environmental impact. Therefore, the issuance by the Commission of an order with respect to this Application is not a major federal action significantly affecting the quality of the human environment. b. No other federal agency has prepared or is preparing an environmental impact statement with respect to the proposed transaction. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, each of the undersigned companies has duly caused this statement to be signed on its behalf by the undersigned officer or attorney thereunto duly authorized. Date: August 6, 1998 NORTHEAST UTILITIES By /s/John H. Forsgren Executive Vice President and Chief Financial Officer EX-27.1 2 EXHIBIT G.1, FDS (NU PARENT) WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 1000 MAR-31-1998 MAR-31-1998 MAR-31-1998 MAR-31-1998 YEAR YEAR PER-BOOK PRO-FORMA 0 0 2,320,408 2,320,508 30,663 30,563 7,371 7,371 0 0 2,358,442 2,358,442 684,287 684,287 934,825 934,825 689,573 689,573 2,158,081 2,158,081 0 0 0 0 171,000 171,000 0 0 0 0 0 0 17,000 17,000 0 0 0 0 0 0 12,361 12,361 2,358,442 2,358,442 0 0 (3,089) (3,089) 7,165 7,165 4,076 4,076 (4,076) (4,076) (127,050) (127,050) (131,126) (131,126) 17,695 17,695 (148,821) (148,821) 0 0 (148,821) (148,821) 0 0 17,250 17,250 0 0 (1.14) (1.14) (1.14) (1.14) EX-27.2 3 EXHIBIT G.2, FDS (NU & SUBS) WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 1000 MAR-31-1998 MAR-31-1998 MAR-31-1998 MAR-31-1998 YEAR YEAR PER-BOOK PRO-FORMA 6,353,106 6,353,106 790,262 790,262 927,202 927,202 2,201,174 2,201,174 0 0 10,271,744 10,271,744 684,287 684,287 934,825 934,825 689,573 689,573 2,158,081 2,158,081 222,072 222,072 136,200 136,200 3,462,197 3,462,197 35,000 35,000 0 0 0 0 394,808 394,808 30,250 30,250 29,129 29,129 179,138 179,138 3,624,869 3,624,869 10,271,744 10,271,744 3,818,343 3,818,343 14,203 14,203 3,642,282 3,642,282 3,656,485 3,656,485 161,858 161,858 (9,165) (9,165) 152,693 152,693 271,809 271,809 (119,116) (119,116) 29,705 29,705 (148,821) (148,821) 0 0 282,115 282,115 0 0 (1.14) (1.14) (1.14) (1.14) EX-27.3 4 EXHIBIT G.3, FDS (NEWCO) WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
OPUR1 1000 MAR-31-1998 MAR-31-1998 MAR-31-1998 MAR-31-1998 YEAR YEAR PER-BOOK PRO-FORMA 0 0 0 10,451 0 90 0 0 0 0 0 10,541 0 0 0 10,541 0 0 0 10,541 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 10,541 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 0.00 0.00
EX-27.4 5 EXHIBIT G.4, FDS (NEWCO & SUBS)
OPUR1 1000 MAR-31-1998 MAR-31-1998 MAR-31-1998 MAR-31-1998 YEAR YEAR PER-BOOK PRO-FORMA 1,625 1,625 5,594 5,594 7,422 7,522 3,246 3,246 0 0 17,887 17,987 0 0 17,568 10,541 (7,127) 0 10,441 10,541 0 0 0 0 325 325 0 0 0 0 0 0 0 0 0 0 0 0 0 0 7,121 7,121 17,887 17,987 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 PROPOSED FORM OF NOTICE EXHIBIT H FORM OF PROPOSED NOTICE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 Release No. 35- / , 1998 Filings Under the Public Utility Holding Company Act of 1935 ("Act") Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated thereunder. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendment(s) thereto is/are available for public inspection through the Commission's Office of Public Reference. Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by , 1998 to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) specified below. Proof of service (by affidavit or, in case of an attorney at law, by certificate) should be filed with the request. Any request for hearing shall identify specifically the issues of fact or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After said date, the application(s) and/or declaration(s), as filed, or as amended, may be granted and/or permitted to become effective. Northeast Utilities, et al. (70- ) Northeast Utilities ("NU"), a registered holding company, located at 174 Brush Hill Avenue, West Springfield, MA 01090-0010, and NU's wholly-owned subsidiary, Northeast Utilities Service Company, located at 107 Selden Street, Berlin, Connecticut 06037, have filed an application-declaration pursuant to Sections 6(a), 7, 9(a), 10, 12 and 13 of the Act and the related rules thereunder. NU proposes to organize, acquire the capital stock of and provide initial financing for a wholly-owned subsidiary, NEWCO ("NEWCO"), that would, through multiple subsidiaries ("second tier subsidiaries"), engage in a variety of energy-related and other activities and acquire and manage nonnuclear generating plants. NU proposes to fund the first tier subsidiary's preliminary development and administrative costs, whether done internally or through one or more unaffiliated third parties, for the period ending December 31, 1999 in the aggregate amount of $150 million. NU also seeks authorization to create and finance through the first tier subsidiary one or more new second-tier subsidiaries that are expected to participate as purchasers in affiliate and nonaffiliate companies' sales of nonnuclear generation ("Generation"). Organization of NEWCO The transactions for which authorization under the Act is sought herein in connection with the creation of a new first-tier subsidiary involve (i) the completion of the initial steps necessary for the organization of NEWCO, (ii) the issuance by NEWCO and acquisition by NU of one hundred shares of the common stock, par value $1 per share ("NEWCO Common Stock") of NEWCO for $100,000 and (iii) the investment by NU of up to an additional $150 million through December 31, 1999 for the purpose of funding NEWCO's preliminary development activities and administrative costs associated with, among other things, (i) identifying and analyzing Generation acquisition opportunities and initiating the financing for such projects (in the aggregate amount of up to $10 million) and (ii) developing and managing NEWCO's other investments, as described more fully below (in the aggregate amount of up to $140 million). NEWCO intends to directly or indirectly acquire, without seeking any further Commission authority, the securities of one or more companies ("New Subsidiaries") organized for the purposes of performing energy-related and other activities currently authorized, or which may be authorized in the future, by the Commission by rule or statute. These associate companies would include exempt wholesale generators ("EWGs"), foreign utility companies ("FUCOs"), exempt telecommunications companies ("ETCs"), energy-related companies within the meaning of Rule 58 ("ERCs"), other New Subsidiaries and certain existing subsidiaries of NU ("Authorized Subsidiary Companies"). EWGs, FUCOs, ETCs, ERCs, New Subsidiaries and Authorized Subsidiary Companies are referred to collectively as "Nonutility Companies." NEWCO's associate companies formed to invest in generation may also be formed as independent power producers ("IPPs") to sell at wholesale and retail within New England. The Nonutility Companies may be direct or indirect subsidiaries of NEWCO, and may perform development activities and administrative services and/or other services, as described below. Investments by NU, through NEWCO, in Nonutility Companies may take the form of any combination of: (i) purchases of capital shares, partnership interests, member interests in limited liability companies, trust certificates or other forms of equity interests (collectively, "Capital Stock"); (ii) capital contributions; (iii) open account advances without interest; (iv) loans; and (v) Guarantees, as defined below, issued in support of securities or other obligations of Nonutility Companies. The source of funds for direct or indirect investments by NU or NEWCO in any Nonutility Company will include (a) dividends received from operating companies derived from proceeds of sales of nonnuclear generation assets in NU's franchised retail sales territory and/or proceeds from the securitization of financial assets such as stranded costs, etc.; (b) proceeds derived from securities issuances authorized by the Commission in future orders; and (c) other available cash resources. To the extent that NU or NEWCO provides funds to a Nonutility Company which are used to invest in any EWG or FUCO, the amount of the investment will be included in the calculation of "aggregate investment" required under Rule 53. In addition, to the extent that NU provides funds to NEWCO which are used to invest in an ERC, the amount of the investment will be included in the calculation of "aggregate investment" required under Rule 58. From time to time, NU proposes, without further order of the Commission, to consolidate or reorganize all or any part of its ownership interests in one or more Nonutility Companies and/or New Subsidiaries authorized by the Commission. It is likely that personnel employed by NUSCO or other associate companies of NU may provide a wide range of services on an as-needed basis to NEWCO or its subsidiaries pursuant to a service agreement to be entered into between NEWCO (or a NEWCO subsidiary or other affiliate) and such associate company. Under this agreement, NEWCO or its affiliate will reimburse the NU system company rendering such service for the cost of services provided, computed in accordance with Rules 90 and 91 under the Act, as well as applicable rules and regulations. In addition, in the event that such services are performed on behalf of an EWG or FUCO, such services will be rendered in accordance with Rule 53 under the Act. NEWCO's Generation-Related Activities In addition to the acquisition of securities of Nonutility Companies and other activities described above, NEWCO is also being formed as a first tier subsidiary of NU for the purpose of facilitating the investment by the NU System in Generation to support the NU System's wholesale and retail power marketing and brokering efforts in deregulated retail markets. Each investment by NU in NEWCO will take the form of additional acquisitions of capital stock, capital contributions, open account advances or subordinated loans. In addition, NEWCO or any of its subsidiaries which are involved in the acquisition or ownership of Generation may obtain debt financing from unaffiliated third parties. The terms and conditions applicable to NU's investment of funds in NEWCO for investment in Generation, as well as the details of any financing required in connection with such acquisitions, will be the subject of future filings with the Commission to the extent such items are jurisdictional. Such debt financing may also require a guaranty by NU, for which Commission authorization will also be sought to the extent required. Beyond the initial $100,000 invested in NEWCO by NU and the $10,000 invested in GENCO and the amounts of up to $150 million through December 31, 1999 to be invested by NU in NEWCO and GENCO for the purposes of funding preliminary development activities and administration of NEWCO, additional investments in NEWCO will be made by NU from time to time to form additional subsidiaries to acquire Generation or to fund other activities described herein. Each such investment or investments will take the form of additional acquisitions of capital stock, capital contributions, open account advances or subordinated loans. It is contemplated that the balance of such acquisition price for Generation to be purchased by such subsidiaries will be debt financed by non-affiliated third parties and Commission approval will be sought as required for such financing authority. Such debt financing may require a guarantee by NU, for which additional Commission authorization will also be requested if required. Guarantees NU and NEWCO also propose to issue guarantees or provide other forms of credit support or enhancements (collectively, "Guarantees") to or for the benefit of Nonutility Companies, GENCO and other direct or indirect subsidiaries or affiliates of NEWCO in an aggregate amount not to exceed $ 75 million ("Aggregate Authorization"), through December 31, 1999. Guarantees may take the form of NU or NEWCO agreeing to guarantee, undertake reimbursement obligations, assume liabilities or other obligations with respect to or act as surety on, bonds, letters of credit, evidences of indebtedness, equity commitments, performance and other obligations undertaken by NU, NEWCO, the Nonutility Companies or GENCO or its affiliates. NU and NEWCO represent that the terms and conditions of Guarantees will be established through arm's-length negotiations based upon current market conditions. NU and NEWCO further undertake that any Guarantee they issue will be without recourse to any System operating company to the extent not authorized under Rule 52 under the Act. To the extent that NU or NEWCO provides Guarantees in support of its investment in any EWG or FUCO, the amount of the investment will be included in the calculation of "aggregate investment" required under Rule 53. Moreover, to the extent that NU or NEWCO provides Guarantees in support of its investment in an ERC, the amount of the investment will be included in the calculation of "aggregate investment" required under Rule 58. For the Commission, by the Division of Investment Management, pursuant to delegated authority. EX-99 7 FINANCIAL STATEMENTS - NU (PARENT ONLY) EXHIBIT 6.b.1.1 NORTHEAST UTILITIES (PARENT) BALANCE SHEET AS OF MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.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 $2,299,530 $100 (a) $2,299,630 INVESTMENTS IN TRANSMISSION COMPANIES, AT EQUITY 20,466 20,466 OTHER, AT COST 412 412 ---------------------------------------- TOTAL OTHER PROPERTY & INVESTMENTS 2,320,408 100 2,320,508 CURRENT ASSETS: CASH AND SPECIAL DEPOSITS 10 (100)(a) (90) NOTES REC. FROM AFF. CO'S 16,350 16,350 NOTES AND ACCOUNTS REC. 0 0 ACCOUNTS REC. FROM AFF. CO'S 667 667 PREPAYMENTS 13,636 13,636 ----------------------------------------- TOTAL CURRENT ASSETS 30,663 (100) 30,563 ----------------------------------------- DEFERRED CHARGES: ACCUMULATED DEF. INCOME TAXES 7,127 7,127 UNAMORTIZED DEBT EXPENSE 198 198 OTHER 46 46 ----------------------------------------- TOTAL DEFERRED CHARGES 7,371 0 7,371 ----------------------------------------- TOTAL ASSETS $2,358,442 $0 $2,358,442 ========================================= NORTHEAST UTILITIES (PARENT) BALANCE SHEET AS OF MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.1.1 PAGE 2 OF 2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION CAPITALIZATION AND LIABILITIES CAPITALIZATION: COMMON SHARES $684,287 $684,287 CAPITAL SURPLUS, PAID IN 934,825 934,825 DEF. BENEFIT PLAN - ESOP (150,604) (150,604) RETAINED EARNINGS 689,573 689,573 ------------------------------------------ TOTAL COMMON STOCKHOLDER'S EQUITY 2,158,081 0 2,158,081 LONG-TERM DEBT, NET 171,000 171,000 ------------------------------------------ TOTAL CAPITALIZATION 2,329,081 0 2,329,081 CURRENT LIABILITIES: NOTES PAYABLE TO BANK 0 0 ACCOUNTS PAYABLE 7,320 7,320 ACCOUNTS PAYABLE TO AFF. CO'S 214 214 CURR. POR. OF LONG-TERM DEBT 17,000 17,000 ACCRUED INTEREST 4,491 4,491 ACCRUED TAXES 0 0 OTHER 0 0 ------------------------------------------ TOTAL CURRENT LIABILITIES 29,025 0 29,025 DEFERRED CREDITS: OTHER 336 336 ------------------------------------------- TOTAL DEFERRED CREDITS 336 0 336 ------------------------------------------- TOTAL CAPITALIZATION AND LIABILITIES $2,358,442 $0 $2,358,442 ============================================= EXHIBIT 6.b.1.2 NORTHEAST UTILITIES (PARENT) INCOME STATEMENT FOR 12 MONTHS ENDED MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.1.2 PAGE 1 OF 1 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION OPERATING REVENUE $0 $0 ----------------------------------------- OPERATING EXPENSES: OPERATION EXPENSE 7,105 7,105 FED. AND STATE INCOME TAXES (3,089) (3,089) TAXES OTHER THAN INCOME TAXES 60 60 ----------------------------------------- TOTAL OPERATING EXPENSES 4,076 0 4,076 ----------------------------------------- OPERATING INCOME (4,076) 0 (4,076) ----------------------------------------- OTHER INCOME (LOSS): EQUITY IN EARNINGS OF SUBS. (149,203) (149,203) EQUITY IN EARNINGS OF TRANSMISSION COMPANIES 3,041 3,041 OTHER, NET 19,112 19,112 ----------------------------------------- OTHER LOSS, NET (127,050) 0 (127,050) ----------------------------------------- LOSS BEFORE INTEREST CHARGES (131,126) 0 (131,126) ----------------------------------------- INTEREST CHARGES: INTEREST ON LONG-TERM DEBT 17,250 17,250 OTHER INTEREST 445 445 ----------------------------------------- TOTAL INTEREST CHARGES 17,695 0 17,695 ----------------------------------------- NET INCOME (148,821) 0 (148,821) ----------------------------------------- EARNINGS FOR COMMON SHARES (148,821) 0 (148,821) EARNINGS PER COMMON SHARE (1.14) (1.14) COMMON SHARES OUTSTANDING (AVERAGE) 129,986,000 129,986,000 NORTHEAST UTILITIES (PARENT) * EXPLANATION OF ADJUSTMENTS (THOUSANDS OF DOLLARS) DEBIT CREDIT (a) INVESTMENTS IN SUB. CO'S 100 CASH 100 To record the additional investment in NewCo on NU's books. EX-99 8 FINANCIAL STATEMENTS (NU AND SUBS) EXHIBIT 6.b.2.1 NORTHEAST UTILITIES AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.2.1 PAGE 1 OF 2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION ASSETS UTILITY PLANT, AT COST: ELECTRIC $9,881,327 $9,881,327 OTHER 187,646 187,646 --------------------------------------- $10,068,973 $0 10,068,973 LESS: ACC.PROV. FOR DEPREC. 4,429,221 4,429,221 --------------------------------------- 5,639,752 0 5,639,752 UNAMORT. PSNH ACQ. COSTS 379,929 379,929 CONSTRUCT. WORK IN PROGRESS 140,471 140,471 NUCLEAR FUEL, NET 192,954 192,954 --------------------------------------- TOTAL NET UTILITY PLANT 6,353,106 0 6,353,106 --------------------------------------- OTHER PROPERTY AND INVESTMENTS: NUC. DECOM. TRUSTS, AT MKT. 542,376 542,376 INVESTMENTS IN SUB. CO'S AT EQUITY 90,532 90,532 INVESTMENTS IN TRANSMISSION COMPANIES, AT EQUITY 20,465 20,465 INVESTMENTS IN CHARTER OAK ENERGY, INC. PROJECTS 32,428 32,428 OTHER, AT COST 104,461 104,461 --------------------------------------- TOTAL OTHER PROPERTY & INVESTMENTS 790,262 0 790,262 CURRENT ASSETS: CASH AND CASH EQUIVALENTS 268,663 268,663 SPECIAL DEPOSITS 2,757 2,757 RECEIVABLES, NET 302,779 302,779 ACCRUED UTILITY REVENUES 33,592 33,592 FUEL, MATERIALS AND SUPPLIES, AT AVERAGE COST 208,690 208,690 RECOV. ENERGY COST, NET -- CURRENT PORTION 62,917 62,917 PREPAYMENTS AND OTHER 47,804 47,804 --------------------------------------- TOTAL CURRENT ASSETS 927,202 0 927,202 --------------------------------------- DEFERRED CHARGES: REGULATORY ASSETS: INCOME TAXES, NET 2,091,849 2,091,849 DEF. COSTS - NUC. PLANTS 0 0 UNREC. CONTRACTUAL OBLIGS 0 0 REC. ENERGY COSTS, NET 0 0 DEF. DEMAND SIDE MGMT. COSTS 0 0 COGENERATION COST 0 0 OTHER 0 0 UNAMORTIZED DEBT EXPENSE 37,505 37,505 OTHER 71,820 71,820 --------------------------------------- TOTAL DEFERRED CHARGES 2,201,174 0 2,201,174 --------------------------------------- TOTAL ASSETS $10,271,744 $0 $10,271,744 ======================================= NORTHEAST UTILITIES AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.2.1 PAGE 2 OF 2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION CAPITALIZATION AND LIABILITIES CAPITALIZATION: COMMON SHARES $684,287 $684,287 CAPITAL SURPLUS, PAID IN 934,825 934,825 DEF. BENEFIT PLAN - ESOP (150,604) (150,604) RETAINED EARNINGS 689,573 689,573 --------------------------------------- TOTAL COMMON STOCKHOLDER'S EQUITY 2,158,081 0 2,158,081 PREF. STOCK NOT SUBJECT TO MANDATORY REDEMPTION 136,200 136,200 PREF. STOCK SUBJECT TO MANDATORY REDEMPTION 222,072 222,072 LONG-TERM DEBT 3,462,197 3,462,197 --------------------------------------- TOTAL CAPITALIZATION 5,978,550 0 5,978,550 MINORITY INTEREST IN CONS. SUBS 100,000 100,000 OBLIGATIONS UNDER CAP. LEASES 29,129 29,129 CURRENT LIABILITIES: NOTES PAYABLE TO BANK 35,000 35,000 LONG-TERM DEBT AND PREF. STOCK CURRENT PORTION 425,058 425,058 OBLIGATIONS UNDER CAP. LEASES CURRENT PORTION 179,138 179,138 ACCOUNTS PAYABLE 315,199 315,199 ACCRUED TAXES 75,328 75,328 ACCRUED INTEREST 67,473 67,473 ACCRUED PENSION BENEFITS 68,722 68,722 NUCLEAR COMPLIANCE 0 0 OTHER 89,970 89,970 ---------------------- ------------- TOTAL CURRENT LIABILITIES 1,255,888 0 1,255,888 DEFERRED CREDITS: ACCUM. DEF. INCOME TAXES 1,976,929 1,976,929 ACCUM. DEF.INVEST.TAX CREDIT 156,443 156,443 DEF. CONTRACTUAL OBLIGATIONS 503,243 503,243 OTHER 271,562 271,562 --------------------------------------- TOTAL DEFERRED CREDITS 2,908,177 0 2,908,177 --------------------------------------- TOTAL CAPITALIZATION AND LIABILITIES $10,271,744 $0 $10,271,744 ======================================== EXHIBIT 6.b.2.2 NORTHEAST UTILITIES AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT FOR 12 MONTHS ENDED MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.2.2 PAGE 1 OF 1 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION OPERATING REVENUE $3,818,343 $0 $3,818,343 --------------------------------------- OPERATING EXPENSES: OPERATION FUEL, PURCH. AND NET INTERCHANGE POWER 1,305,672 1,305,672 OTHER 1,086,752 1,086,752 MAINTENANCE 523,452 523,452 DEPRECIATION 352,379 352,379 AMORT. OF REG. ASSETS, NET 120,553 120,553 FED. AND STATE INCOME TAXES 14,203 14,203 TAXES OTHER THAN INC. TAXES 253,474 253,474 --------------------------------------- TOTAL OPERATING EXPENSES 3,656,485 0 3,656,485 --------------------------------------- OPERATING INCOME 161,858 0 161,858 --------------------------------------- OTHER INCOME (LOSS): DEF. NUCLEAR PLANTS RETURN OTHER FUNDS 7,389 7,389 EQUITY IN EARNINGS OF REG. NUCLEAR GEN. AND TRANS. COSTS 11,989 11,989 OTHER, NET (33,439) (33,439) MIN. INT. IN INCOME OF SUB (9,300) (9,300) INCOME TAXES 14,196 14,196 --------------------------------------- OTHER INCOME, NET (9,165) 0 (9,165) --------------------------------------- INCOME BEFORE INTEREST CHARGES 152,693 0 152,693 --------------------------------------- INTEREST CHARGES: INTEREST ON LONG-TERM DEBT 282,115 282,115 OTHER INTEREST 3,572 3,572 DEF. NUC. PLANTS RETURN BORROWED FUNDS (13,878) (13,878) --------------------------------------- INTEREST CHARGES, NET 271,809 0 271,809 --------------------------------------- LOSS BEFORE PREF. DIVIDEN (119,116) 0 (119,116) PREF. DIVIDENDS OF SUBS 29,705 29,705 --------------------------------------- NET (LOSS) / INCOME (148,821) 0 (148,821) EARNINGS FOR COMMON SHARES (148,821) 0 (148,821) EARNINGS PER COMMON SHARE (1.14) (1.14) COMMON SHARES OUTSTANDING (AVERAGE) 129,986,000 129,986,000 NORTHEAST UTILITIES AND SUBSIDIARIES *EXPLANATION OF ADJUSTMENTS (THOUSANDS OF DOLLARS) DEBIT CREDIT All entries were made on the books of NU Parent and Newco, with no change to Northeast Utilities and Subsidiaries consolidated. EX-99 9 FINANCIAL STATEMENTS (NEWCO) EXHIBIT 6.b.3.1 NEWCO (PARENT) BALANCE SHEET AS OF MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.3.1 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 $0 $10,451 (b,c) $10,451 INVESTMENTS IN TRANSMISSION COMPANIES, AT EQUITY 0 0 OTHER, AT COST 0 0 ---------------------------------------- TOTAL OTHER PROPERTY & INVESTMENTS 0 10,451 10,451 CURRENT ASSETS: CASH AND SPECIAL DEPOSITS 0 90 (a,b) 90 NOTES REC. FROM AFF. CO'S 0 0 NOTES AND ACCOUNTS REC. 0 0 ACCOUNTS REC. FROM AFF. CO'S 0 0 PREPAYMENTS 0 0 ---------------------------------------- TOTAL CURRENT ASSETS 0 90 90 ---------------------------------------- DEFERRED CHARGES: ACCUMULATED DEF. INCOME TAXES 0 0 UNAMORTIZED DEBT EXPENSE 0 0 OTHER 0 0 ---------------------------------------- TOTAL DEFERRED CHARGES 0 0 0 ---------------------------------------- TOTAL ASSETS $0 $10,541 $10,541 ======================================== NEWCO (PARENT) BALANCE SHEET AS OF MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.3.1 PAGE 2 OF 2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION CAPITALIZATION AND LIABILITIES CAPITALIZATION: COMMON SHARES $0 $0 CAPITAL SURPLUS, PAID IN 0 10,541 (a,c) 10,541 DEF. BENEFIT PLAN - ESOP 0 0 RETAINED EARNINGS 0 0 ---------------------------------------- TOTAL COMMON STOCKHOLDER'S EQUITY 0 10,541 10,541 LONG-TERM DEBT, NET 0 0 ---------------------------------------- TOTAL CAPITALIZATION 0 10,541 10,541 CURRENT LIABILITIES: NOTES PAYABLE TO BANK 0 0 ACCOUNTS PAYABLE 0 0 ACCOUNTS PAYABLE TO AFF. CO'S 0 0 CURR. POR. OF LONG-TERM DEBT 0 0 ACCRUED INTEREST 0 0 ACCRUED TAXES 0 0 OTHER 0 0 ---------------------------------------- TOTAL CURRENT LIABILITIES 0 0 0 DEFERRED CREDITS: OTHER 0 0 ---------------------------------------- TOTAL DEFERRED CREDITS 0 0 0 ---------------------------------------- TOTAL CAPITALIZATION AND LIABILITIES $0 $10,541 $10,541 ======================================== EXHIBIT 6.b.3.2 NEWCO (PARENT) INCOME STATEMENT FOR 12 MONTHS ENDED MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.3.2 PAGE 1 OF 1 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION OPERATING REVENUE $0 $0 ----------------------------------------- OPERATING EXPENSES: OPERATION EXPENSE 0 0 FED. AND STATE INCOME TAXES 0 0 TAXES OTHER THAN INCOME TAXES 0 0 ----------------------------------------- TOTAL OPERATING EXPENSES 0 0 0 ----------------------------------------- OPERATING INCOME 0 0 0 ----------------------------------------- OTHER INCOME (LOSS): EQUITY IN EARNINGS OF SUBS. 0 0 EQUITY IN EARNINGS OF TRANSMISSION COMPANIES 0 0 OTHER, NET 0 0 ----------------------------------------- OTHER LOSS, NET 0 0 0 ----------------------------------------- LOSS BEFORE INTEREST CHARGES 0 0 0 ----------------------------------------- INTEREST CHARGES: INTEREST ON LONG-TERM DEBT 0 0 OTHER INTEREST 0 0 ----------------------------------------- TOTAL INTEREST CHARGES 0 0 0 ----------------------------------------- NET INCOME 0 0 0 ----------------------------------------- EARNINGS FOR COMMON SHARES 0 0 0 NEWCO (PARENT) *EXPLANATION OF ADJUSTMENTS (THOUSANDS OF DOLLARS) DEBIT CREDIT (a) CASH 100 CAPITAL SURPLUS, PAID IN 100 To record the Initial entry on NewCo's books (to establish NewCo and issue 100 shares of common stock at $1 per share par value). (b) INVESTMENTS IN SUBSIDIARY CO. 10 CASH 10 To record the initial investment in Genco (and its creation) on NewCo's books. (c) INVESTMENTS IN SUBSIDIARY CO. 10,441 CAPITAL SURPLUS, PAID IN 10,441 To record the investment in existing subsidiaries [HEC, MODE 1 and Select] on NewCo's books. EX-99 10 FINANCIAL STATEMENTS (NEWCO AND SUBS) EXHIBIT 6.b.4.1 NEWCO AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.4.1 PAGE 1 OF 2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION ASSETS UTILITY PLANT, AT COST: ELECTRIC $0 $0 OTHER 4,190 4,190 ---------------------------------------- $4,190 $0 4,190 LESS: ACC.PROV. FOR DEPREC. 2,683 2,683 ---------------------------------------- 1,507 0 1,507 UNAMORT. PSNH ACQ. COSTS 0 0 CONSTRUCT. WORK IN PROGRESS 118 118 NUCLEAR FUEL, NET 0 0 --------------------------------------- TOTAL NET UTILITY PLANT 1,625 0 1,625 --------------------------------------- OTHER PROPERTY AND INVESTMENTS: NUC. DECOM. TRUSTS, AT MKT. 0 0 INVESTMENTS IN SUB. CO'S AT EQUITY 0 0 INVESTMENTS IN TRANSMISSION COMPANIES, AT EQUITY 0 0 INVESTMENTS IN CHARTER OAK ENERGY, INC. PROJECTS 0 0 OTHER, AT COST 5,594 5,594 --------------------------------------- TOTAL OTHER PROPERTY & INVESTMENTS 5,594 0 5,594 CURRENT ASSETS: CASH AND CASH EQUIVALENTS 211 100 (a) 311 TAXES RECEIVABLES 3,921 3,921 RECEIVABLES, NET 2,915 2,915 RECEIVABLES FROM AFFILIATES 219 219 FUEL, MATERIALS AND SUPPLIES, AT AVERAGE COST 28 28 RECOV. ENERGY COST, NET -- CURRENT PORTION 0 0 PREPAYMENTS AND OTHER 128 128 -------------------------------------- TOTAL CURRENT ASSETS 7,422 100 7,522 -------------------------------------- DEFERRED CHARGES: REGULATORY ASSETS: DEFERRED INCOME TAXES 80 80 DEF. COSTS - NUC. PLANTS 0 0 UNREC. CONTRACTUAL OBLIGS 0 0 REC. ENERGY COSTS, NET 0 0 DEF. DEMAND SIDE MGMT. COSTS 0 0 COGENERATION COST 0 0 OTHER 0 0 UNAMORTIZED DEBT EXPENSE 0 0 OTHER 3,166 3,166 -------------------------------------- TOTAL DEFERRED CHARGES 3,246 0 3,246 -------------------------------------- TOTAL ASSETS $17,887 $100 $17,987 ===================================== NEWCO AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.4.1 PAGE 2 OF 2 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION CAPITALIZATION AND LIABILITIES CAPITALIZATION: COMMON SHARES $0 $0 CAPITAL SURPLUS, PAID IN 17,568 (7,027)(a,b) 10,541 DEF. BENEFIT PLAN - ESOP 0 0 RETAINED EARNINGS (7,127) 7,127 (b) 0 --------------------------------------- TOTAL COMMON STOCKHOLDER'S EQUITY 10,441 100 10,541 PREF. STOCK NOT SUBJECT TO MANDATORY REDEMPTION 0 0 PREF. STOCK SUBJECT TO MANDATORY REDEMPTION 0 0 LONG-TERM DEBT 325 325 -------------------------------------- TOTAL CAPITALIZATION 10,766 100 10,866 MINORITY INTEREST IN CONS. SUBS 0 0 OBLIGATIONS UNDER CAP. LEASES 0 0 CURRENT LIABILITIES: NOTES PAYABLE TO BANK 0 0 LONG-TERM DEBT AND PREF. STOCK CURRENT PORTION 0 0 OBLIGATIONS UNDER CAP. LEASES CURRENT PORTION 0 0 ACCOUNTS PAYABLE 4,889 4,889 ACCRUED TAXES 200 200 NOTES PAYABLE TO AFFILIATES 1,150 1,150 ACCOUNTS PAYABLE TO AFFILIATES 64 64 NUCLEAR COMPLIANCE 0 0 OTHER 413 413 -------------------------------------- TOTAL CURRENT LIABILITIES 6,716 0 6,716 DEFERRED CREDITS: ACCUM. DEF. INCOME TAXES 405 405 ACCUM. DEF.INVEST.TAX CREDIT 0 0 DEF. CONTRACTUAL OBLIGATIONS 0 0 OTHER 0 0 -------------------------------------- TOTAL DEFERRED CREDITS 405 0 405 -------------------------------------- TOTAL CAPITALIZATION AND LIABILITIES $17,887 $100 $17,987 ===================================== EXHIBIT 6.b.4.2 NEWCO AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT FOR 12 MONTHS ENDED MARCH 31, 1998 (THOUSANDS OF DOLLARS) FINANCIAL STATEMENT 6.b.4.2 PAGE 1 OF 1 PRO FORMA GIVING EFFECT PRO FORMA TO PROPOSED PER BOOK ADJUSTMENTS* TRANSACTION OPERATING REVENUE $0 $0 $0 --------------------------------------- OPERATING EXPENSES: OPERATION FUEL, PURCH. AND NET INTERCHANGE POWER 0 0 OTHER 0 0 MAINTENANCE 0 0 DEPRECIATION 0 0 AMORT. OF REG. ASSETS, NET 0 0 FED. AND STATE INCOME TAXES 0 0 TAXES OTHER THAN INC. TAXES 0 0 --------------------------------------- TOTAL OPERATING EXPENSES 0 0 0 --------------------------------------- OPERATING INCOME 0 0 0 --------------------------------------- OTHER INCOME (LOSS): DEF. NUCLEAR PLANTS RETURN OTHER FUNDS 0 0 EQUITY IN EARNINGS OF REG. NUCLEAR GEN. AND TRANS. COSTS 0 0 OTHER, NET 0 0 MIN. INT. IN INCOME OF SUB 0 0 INCOME TAXES 0 0 -------------------------------------- OTHER INCOME, NET 0 0 0 -------------------------------------- INCOME BEFORE INTEREST CHARGES 0 0 0 -------------------------------------- INTEREST CHARGES: INTEREST ON LONG-TERM DEBT 0 0 OTHER INTEREST 0 0 DEF. NUC. PLANTS RETURN BORROWED FUNDS 0 0 -------------------------------------- INTEREST CHARGES, NET 0 0 0 -------------------------------------- LOSS BEFORE PREF. DIVIDENDS 0 0 0 PREF. DIVIDENDS OF SUBS 0 0 -------------------------------------- NET (LOSS) / INCOME 0 0 0 EARNINGS FOR COMMON SHARES 0 0 0 EARNINGS PER COMMON SHARE 0.00 0.00 COMMON SHARES OUTSTANDING (AVERAGE) 100 100 NEWCO AND SUBSIDIARIES *EXPLANATION OF ADJUSTMENTS (THOUSANDS OF DOLLARS) NOTE: The Per Book column represents the combined accounts of the first level subsidiaries that were wholly owned by NU prior to the creation of NewCo and GenCo, namely Select Energy, Inc.; Mode1 Communications, Inc.; and HEC, Inc. The stock of these companies which was previously held by NU will now be held by NewCo, and the stock of NewCo will in turn be wholly owned by NU. The effect of this is to have the existing subsidiaries go from first tier to second tier sub's of NU. The income statement shows no activity as the existing subs only had earnings prior to the new consolidation. DEBIT CREDIT (a) Cash $100 Capital Surplus, paid in $100 Initial entry on NewCo's books (to establish NewCo and issue 100 shares of common stock at $1 per share par value): (b) Capital Surplus, paid in $7,127 Retained Earnings $7,127 Eliminating entries on Newco's consolidating balance sheet to remove the retained earnings of the original subsidiaries of Select Energy, Inc.; Mode 1 Communications, Inc. and HEC, Inc. -----END PRIVACY-ENHANCED MESSAGE-----